EXHIBIT 10.11
GLOBAL TELECOMMUNICATIONS OPERATIONS, INC.
CONTRACT NUMBER 2
By and between the undersigned, XXXXXX XXXXXX XXXXXXXXX, of legal age and
resident of Santa Fe de Bogota, bearing the passport number 00000000, issued in
Santa Fe de Bogota D.C., who acts as Special Attorney to GLOBAL
TELECOMMUNICATIONS OPERATIONS, INC., with the authority invested in him and, who
in this document shall hereinafter be referred to as THE CORPORATION on the one
hand; and on the other hand SIEMENS AKTIENGESELLSCHAFT established and extant
company in accordance with the laws of the Federal Republic of Germany,
established in Berlin, and Munich, represented by SIEMENS COMPANY LIMITED,
registered and licensed at the Commercial Register of the Chamber of Commerce of
Bogota, in accordance with the Registration Number 003.206, represented in this
transaction by XXXXX XXXXX XXXXXXXX AND XXXXXXX XXXXX DEL XXXXXX, of legal ages,
residents of the city of Santa Fe de Bogota, bearing the social security number
19.067.988 and social security number 19.182.384, respectively, both issued in
Bogota, company established in Santa Fe de Bogota, all of which is demonstrated
in the Certificate of Commercial and Sole Agency, issued by the Chamber of
Commerce of Bogota, who shall hereinafter be referred to as THE CONTRACTOR, this
contract has been made, consisting of the following clauses:..................
FIRST CLAUSE. PURPOSE: THE CONTRACTOR agrees to transfer in the capacity of
contract of sale to THE CORPORATION equipment with the following destinations:
A) CARTAGO: EWSD commutation equipment for a total of 17,008 telephone lines,
distributed in a central matrix and two remote concentrators, SDH transmission
equipment, the necessary materials for the expansion and replacement of the
external grid for a total of 15,000 pairs, as well as the necessary materials
for the fiber optic grid between the central and the two concentrators; B) BUGA:
EWSD commutation equipment for a total of 17,880 telephone Lines, distributed in
a central matrix, two remote concentrators and a ONU shelter, SDH transmission
equipment, DECTLINK cordless access equipment for 120 subscribers, radio
equipment for the interconnection of the ONU shelter, as well as the necessary
materials for the fiber optic interconnection of the central matrix with the two
concentrators, E.R.T. and Telecom; C) YUMBO: EWSD commutation equipment for a
total of 30,000 cordless telephone lines, SDH transmission equipment, DECTLINK
cordless access equipment for 30,000 subscribers, radio equipment for the
interconnection of the central matrix with the DECTLINK base stations. All of
the aforementioned in accordance with the Technical Appendix.-------------------
---------------------------------------------------------------------PARAGRAPH:
In accordance with the stipulations of the Technical Appendix, of the 30,000
cordless subscribers, 20,000 are technically defined. The technical definition
of the remaining 10,000 shall be carried out upon mutual agreement.-------------
SECOND CLAUSE. CONTRACT DOCUMENTS: The Technical Appendix shall be included in
this contract. The said Appendix includes, among others, the following aspects:
A) General summary of prices. B) List of Materials. C) Delivery timetable D)
Diagrams; E) Readjustment formula for future purchases; F) Specifications and
technical characteristics of the goods and equipment, and the proposal THE
CONTRACTOR.---------------------------------------------------------------------
-----------------------THIRD CLAUSE. VALUE OF THE CONTRACT: 1) The value of
the CIP importation supplies described in the Technical Appendix of this
contract is THIRTY FOUR MILLION FORTY TWO THOUSAND TWO HUNDRED NINETY ONE AND
43/100 UNITED STATES DOLLARS (US$34,042,291.43) which is distributed in the
following manner: A) CARTAGO: FOUR MILLION TWO HUNDRED NINETEEN SEVEN HUNDRED
XXXXXX XXX XXX 00/000 XXXXXX XXXXXX DOLLARS (US$4,219,732.26). BUGA: TWO MILLION
EIGHT HUNDRED SEVENTY FIVE THOUSAND FOUR HUNDRED XXXXX XXX XXX 00/000 XXXXXX
XXXXXX DOLLARS (US$2,875,462.OO). YUMBO: TWENTY SIX MILLION NINE HUNDRED FORTY
SEVEN THOUSAND NINETY SEVEN UNITED STATES DOLLARS (US$26,947,097.OO). The value
corresponding to 20,000 subscribers is SEVENTEEN MILLION FOUR HUNDRED TWENTY SIX
THOUSAND FOUR HUNDRED SEVENTY ONE UNITED STATES DOLLARS (US$ 17,426,471.OO) and
the value of the 10,000 remaining subscribers yet to be technically defined has
been estimated in the amount of NINE MILLION FIVE HUNDRED TWENTY THOUSAND SIX
HUNDRED TWENTY SIX UNITED STATES DOLLARS (US$9,520,626.OO). The definitive
value shall be the resultant of multiplying the unitary prices by the same
discount factor applied to the first 20,000 subscribers for the supplied
quantities.------------------------------------------------------
FIRST PARAGRAPH: The insurance costs, local transportation costs, storage and
customs agency in Colombia of the imported goods shall be paid by THE
CORPORATION or its leaseholders. THE CORPORATION or its leaseholders shall
assume and directly pay the duty, IVA and other nationalization costs in
Colombia. THE CONTRACTOR shall be responsible for all direct and indirect
taxes, prices and prevailing rates at the date of ratification of this contract
and which are brought about by virtue of the same.-SECOND PARAGRAPH: If any tax,
tariff or rate, national or territorial, is imposed due to delayed CIP delivery
of the purchased goods, THE CONTRACTOR shall assume said resulting value for
this reason.----------------------------
FOURTH CLAUSE. FORM OF PAYMENT: THE CORPORATION shall pay THE CONTRACTOR the
costs stipulated in the Third Clause in the following manner 1.) The sum of
THREE MILLION SIX HUNDRED SEVENTY EIGHT THOUSAND TWO HUNDRED XXXXX XXXX XXX
00/000 XXXXXX XXXXXX DOLLLARS (US$3,678,249.82) as advance payment, which is the
equivalent of fifteen percent (15%) of the CIP value of the imported goods,
(keeping in mind the value of the 20,000 subscribers for Yumbo), within the
thirty days following the signing of this contract, once respective importation
inspections have been approved (if applicable), payable by way of direct deposit
to the order of SIEMENS AKTIENGESELLSCHAFT Depto XXX XX 73 in Munich Federal
Republic of Germany. This same advanced payment percentage shall be kept in mind
for the 10,000 remaining subscribers, which shall be paid within the thirty (30)
days following the notification of order carried out by THE CORPORATION. 2.)
Eighty five percent (85%) of the value of each CIP supply of the imported
equipment, by means of dealer financing in accordance with the following
conditions: A) FINANCING BACKER: SIEMENS AKTIENGESELLSCHAFT. B) CREDIT TERM:
10 years beginning from the date of each signing of the transactions of receipt
of the goods and their placing in working order, that THE CONTRACTOR and each
Lessee shall witness, by virtue of the supplies and services contracts that
shall be signed for above-mentioned purpose; C) GRACE PERIOD: Six (6) months
beginning from each transaction of receipt of the goods and their placing in
working order as referred to in the previous literal; D) REDEMPTION TERMS:
Eighty five percent (85%) of the total value of each partial delivery of the
equipment in operation shall be paid in 20 biannual installments, equal and
consecutive. The first installment shall be due six (6) months after each date
of the transaction of receipt of the goods and their placing in operation. E)
FINANCING INTEREST: Upon adverse balances an interest rate shall be applied
equal to that of the Libor rate plus 1% a year, calculated starting from the
date of CIP provision, payable together with each installment of capital. F)
GUARANTEES: 1. Promissory notes or bills of exchange duly signed by TELEYUMBO
S.A. E.S.P., CARTAGO TELEPHONES S.A. E.S.P. and the basic telephone operating
Company established in the city of Buga, to the order of THE CONTRACTOR. 2. A)
Pledging to the order of THE CONTRACTOR of the revenue of the corporation
CARTAGO TELEPHONES S.A. E.S.P. as follows: sixty thousand dollars (US$60,000)
every thirty days starting from the first of January, 1998, and so on until the
termination of the obligations pertaining to financing. This pledging shall
ensure that a reserve exists that covers two (2) installments of capital, plus
interest, a fund that shall be utilized as source of payment and also as
guarantee of said payment, such that the
minimum total amount this fund contains shall be the equivalent of one
installment; B) Pledging to the order of THE CONTRACTOR of the revenue of
TELEYUMBO S.A. E.S.P., as follows: two hundred fifty eight thousand dollars
(US$258,000.oo) for the first 20,000 subscribers, every thirty days starting
from the first of January, 1998; and one hundred forty two thousand dollars
(US$142,000) every thirty days starting the sixth month of the estimated date of
approval of the goods in operation of the remaining 10,000 subscribers and so on
until the termination of the obligations pertaining to financing. Said pledging
shall ensure that a reserve exists that covers two (2) installments of capital,
plus interest, a fund that shall be utilized as source of payment and also as
guarantee of said payment, such that the minimum total amount this fund contains
shall be the equivalent of one installment; C) Pledging to the order of THE
CONTRACTOR of the revenue of the operating Company of basic telephony
established in the city of Buga, as follows: forty thousand dollars
(US$40,000.oo) every thirty days starting from the first of January, 1998 and so
on until the termination of the obligations pertaining to financing. This
pledging shall ensure that a reserve exists that covers two (2) installments of
capital, plus interest, a fund that shall be utilized as source of payment and
also as a guarantee of said payment, such that the minimum total amount the fund
contains shall be the equivalent of one installment.-------------------
FIRST PARAGRAPH: DELAYED INTEREST PAYMENTS: In the event of delay in the payment
of capital in the foreign exchange markets referred to in numbers 1 and/or 2 of
this clause, in connection with the total amount in default THE CORPORATION
shall acknowledge and pay SIEMENS AKTIENGESELLSCHAFT, in dollars and upon the
presentation of the respective liquidation, the interests in default at the rate
equal to that referred to in this clause, number 2e, with an increase of two
percent (2%), calculated from the payment date of the sum in default, until the
date in which said sum has been credited to the bank account of SIEMENS
AKTIENGESELLSCHAFT.-----------SECOND PARAGRAPH: THE CONTRACTOR states that they
have presented the petition for coverage of the exported goods, through the
national company of the Federal Republic of Germany, referred to as "HERMES". In
the event that above-mentioned institution denies approval of said petition, the
guarantees stipulated in Literal f) of the Fourth Clause shall continue to
prevail, on the contrary, that is if HERMES grants said approval, the guarantees
referred to in Literal f) under number 2 shall be declared null and void and the
financing interest referred to in literal e) of number 2) of this clause shall
decrease 0.25% that is, interest at 6 months in accordance with the Libor shall
be applied plus 0.75%.-------------------------------------------
THIRD PARAGRAPH: The form of payment of the value of CIP supplies for Yumbo,
that correspond to the 10,000 subscribers yet to be technically defined, shall
comply with the same conditions mentioned in the numbers 1 and 2 of this
clause.-----------------
FIFTH CLAUSE. DELIVERY DATE: THE CONTRACTOR agrees to deliver, all of the
imported equipment and materials, in accordance with the timetable of the
Technical Appendix for each city, if and when the advance has been received
within the time period stipulated in the Fourth Clause and if and when the
importation license has been duly approved, if applicable.----------------------
PARAGRAPH. THE CORPORATION agrees to determine within six (6) months the
destination of and technical assessment of the 10,000 subscribers that
correspond to TELEYUMBO S.A. E.S.P., to which end the parties shall agree upon
the corresponding timetable, which shall be included in this contract.----------
SIXTH CLAUSE. EXTENSION OF DELIVERY DATE: The specified time periods and other
obligations referred to in this contract, shall be extended if causes arise from
force majeure or by chance in accordance with the definition of the Civil Code.
In these cases, new time periods and obligations shall be indicated by mutual
agreement if and when the party encumbered by the occurrences caused by force
majeure or by chance, demonstrates this to the other party and notifies in
writing said party within three (3) days following the date when notification
and proof are possible. The extension considered herein in no event shall
exceed the delay incurred by the party as a result of force majeure or chance
occurrence as claimed by the affected party, or in the event that a specified
time period expires during the time passed between the day the occurrences began
and that in which the obligation should have been complied with. ---
SEVENTH CLAUSE. TRADEMARKS AND PATENTS: THE CONTRACTOR guarantees THE
CORPORATION the use of the trademarks and patents of the equipment, materials
and elements he has agreed to supply. THE CONTRACTOR agrees to defend, at their
own expense, at any trial initiated against THE CORPORATION, for the wrongful
use of registered trademarks and patents and shall pay the penalties and
expenses arising from such trials. If in the course of one of these lawsuits
THE CORPORATION is judicially or administratively instructed to suspend use of
one or more of the goods referred to herein, THE CONTRACTOR agrees to (A)
guarantee to the third party its financial losses, as much as possible given the
respective procedure, such that THE CORPORATION may continue using the goods
without having resolved the issue of continuity or (B) in the event that the
aforementioned proves judicially impossible, to supply him, within five (5) days
after the order of cessation is issued, with replacement goods of similar
characteristics or to make corrections in the goods, within the same period of
five (5) days, that eliminate the infraction without harming its technical or
performance characteristics. In both cases THE CORPORATION should be able to
guarantee the continuity of public home telecommunication service.--------------
EIGHTH CLAUSE. SCOPE OF THE GUARANTEE OF TECHNICAL QUALITY: The equipment THE
CONTRACTOR shall supply to THE CORPORATION shall be new and of the best quality
and shall be manufactured in a manner which ensures their resistance to the
climate and the meteorological conditions of the places they are to be
installed. In the event of failures, including those arising from installation,
THE CONTRACTOR shall be held responsible, to the exclusion of all other claims,
in the following manner:-All parts that within 18 months, starting from the date
of signing of each transaction of receipt and placing in operation for each
location, become unusable or which have been damaged due to defective
construction, deficient materials or faulty manufacturing shall be supplied or
repaired free of charge, if and when the maintenance during the warranty period
was carried out in a satisfactory manner. THE CONTRACTOR must be officially
notified of the existence of said defects within a maximum period of fifteen
(15) days from the day in which the defects become known to
the leaseholders of THE CORPORATION. The parts replaced in accordance with the
above established stipulations, shall become the property of THE CONTRACTOR. The
warranty shall not cover aging, natural wear due to mechanical causes, nor shall
it cover imperfections as a result of inappropriate or negligent handling, or as
a result of the use of inappropriate servicing materials, as well as defective
repairs in the buildings, chemical and electrochemical factors originating from
natural causes and not by fault of THE CONTRACTOR. The warranty of the equipment
implies the reparation or replacement of said equipment whenever necessary for
its normal operation, however said obligation automatically expires after 18
months, starting from the date of signing of each transaction of receipt and
placing in operation for each location. This guarantee of quality shall not
cover existing equipment nor that which is not referred to herein.------------
NINTH CLAUSE. GUARANTEES: THE CONTRACTOR shall establish guarantees for THE
CORPORATION and its leaseholders issued by a Bank or Insurance Company legally
authorized to function in Colombia, and which shall be founded upon the value of
the contract that shall guarantee the compliance with the obligations referred
to herein, as follows: (A) Full compliance with this contract including
penalties in the amount of 10% of said contract and that shall prevail for the
duration of its term plus three (3) months. (B) The quality and proper working
order of the goods supplied in the amount of ten percent (10%) of the value of
the imported goods referred to herein and which shall be valid for 18 months
starting from the date of signing of each of the transactions of receipt and
placing in working order. The warranty referred to in the Literals a) shall
be established and presented to THE CORPORATION and their leaseholders by THE
CONTRACTOR along with the proof of payment of the premium within the five (5)
days following the date of signing of this contract. The guarantee referred to
in Literal b) shall be established and presented to THE CORPORATION and their
leaseholders by THE CONTRACTOR along with proof of payment of the premium within
the five (5) days following the date of signing of each one of the transactions
of receipt and placing in operation. PARAGRAPH: THE CONTRACTOR agrees to
maintain the validity of the aforementioned insurance policies for the duration
of the term of the obligations guaranteed by said policies and to extend the
policies in the event of their expiration until the fulfillment of the
stipulated time period. THE CORPORATION shall be authorized to request
certification of validity of said policies at any time.------------------------
TENTH CLAUSE. REPLENISHMENT OF WARRANTY: THE CONTRACTOR agrees to replenish the
total amount of the warranty whenever due to fines imposed on said warranty it
should diminish or be depleted.----------------------------------------
ELEVENTH CLAUSE. FINES: THE CONTRACTOR agrees to pay THE CORPORATION penalties
or fines imposed due to delayed payment, a sum in the amount of one tenth of one
percent (.1%) the value of the supplies or goods not delivered within the
stipulated time period, for each day of delay, without the value of the fines
imposed exceeding ten percent (10%) of the total value of the contract. The
fines shall be imposed through written notification, duly provided by THE
CORPORATION or its leaseholders. THE CONTRACTOR shall be authorized to
present its disclaimers within five (5) calendar days after receipt of the
above-mentioned notification. THE CORPORATION or its leaseholders shall comply
with the disclaimers within five (5) calendar days. In the event of confirmation
of said fine, and if THE CONTRACTOR insists on his disclaimer, he shall refer to
the Clause of Commitment pertaining to the Fourteenth Clause within five (5)
days after said confirmation.-------------------------------------------------
PARAGRAPH: Once a fine is confirmed, THE CORPORATION shall be authorized to
deduct the value of said fine, from the sum owed to THE CONTRACTOR, as well as
the resulting interest, at a rate equivalent to that indicated in the Fourth
Clause, first paragraph, from the date of imposition of the fine on the part of
THE CORPORATION.--
TWELFTH CLAUSE. REGISTERED OFFICE AND APPLICABLE LAW: For all legal purposes,
New York shall be the contractual site. This contract shall be subject to the
laws of the state of New York and any controversy that arises shall be referred
to said jurisdiction.-----------------------------------------------------------
THIRTEENTH CLAUSE. CONFIDENTIALITY: This contract as well as all information
furnished by THE CORPORATION and its leaseholders to THE CONTRACTOR concerning
the project for the duration of the negotiations as well as the information
provided in the fulfillment of the contract shall be maintained by THE
CONTRACTOR in the strictest confidence, and said party shall be obligated to
maintain the same discretion as with its commercial secrets and privileged
information. At the termination of the contract THE CONTRACTOR agrees to return
the information received to THE CORPORATION or its leaseholders or to destroy
said information and present proof of
destruction signed by the fiscal investigator.----------------------------------
FOURTEENTH CLAUSE. RESOLUTION OF DIFFERENCES: Any conflict that arises between
the parties with respect to the making, executing, interpretation or termination
of this contract shall be subject to the following procedure: A) When the
conflict is known and within ten (10) days following this either party may
solicit in writing from the other party that, within a time period of no more
than five (5) days from the notification, the legal representatives of each
party meet and endeavor to find a solution; and B) If the legal representatives
fail to reach an agreement within the twenty (20) following days or they fail to
meet within the five (5) days indicated in the previous literal, the dispute
shall be subject to the decision of an arbitration court in accordance with the
laws of the state of New York, which shall dictate its finding in law and shall
be subject, with respect to their implementation, to the laws of said Court
where, they shall also have their headquarters.---------------------------------
FIFTEENTH CLAUSE. FUTURE PURCHASES AND SPARE PARTS: THE CONTRACTOR guarantees
to THE CORPORATION the due supply of spare parts and materials required for the
operation and maintenance of the goods supplied for the duration of ten (10)
years from the date of CIP supplying. Also, THE CONTRACTOR agrees to comply
with requests for future purchases of equipment and software that THE
CORPORATION or its leaseholders present and shall offer these at the lowest
price between A) the unitary prices referred to in the Technical Appendix of
this contract readjusted in accordance with the readjustment formula and
applying the discounts established by the Technical Appendix, and B) the
prevailing listed price on the date of
the purchase order.--------------------------------------------------
SIXTEENTH CLAUSE. COMMON LIABILITY: With the purpose of counter-guaranteeing
the obligations of GLOBAL TELECOMMUNICATIONS OPERATIONS INC., referred to
herein, the leasing companies and TRANSTEL S.A., are mutually liable pro rata
for the value of the acquired goods to be installed in each of the locations
that correspond to each, without either of them holding responsibility for the
percentage of any of the others.
As proof, this contract is signed in this city of Panama, the thirtieth (30) of
May in the year nineteen ninety seven (1997).
GLOBAL TELECOMMUNICATIONS OPERATIONS, INC.
______________________________
XXXXXX XXXXXX XXXXXXXXX
SPECIAL ATTORNEY
TELEYUMBO S.A. E.S.P.
______________________
XXXXXX XXXXXXX XXXXX XXXXXX
SPECIAL ATTORNEY
C.C. 16.611.702 OF CALI
CARTAGO TELEPHONES S.A. E.S.P.
_________________
XXXXXXXXX X. XXXXX XXXXXXXX
SPECIAL ATTORNEY
C.C. 16.614.481 OF CALI
From page 15 of the contract made between GLOBAL TELECOMMUNICATIONS OPERATIONS,
INC. AND SIEMENS AKTIENGESELLSCHAFT
TRANSTEL S.A.
___________________
XXXXXXXXX X. XXXXX E.
PRESIDENT
C.C. 16.614.481 OF CALI
SIEMENS AKTIENGESELLSCHAFT
REPRESENTED BY
SIEMENS COMPANY LIMITED
__________________________ __________________
VICE PRESIDENT SPECIAL ATTORNEY
OF TELECOMMUNICATIONS
C.C. 19.067.988 OF BOGOTA C.C. 19.182.384 OF BOGOTA
_
