Exhibit 99.2
NETWORK ALLIANCE AGREEMENT
BETWEEN
FLAG TELECOM IRELAND NETWORK LIMITED
AND
VERIZON GLOBAL SOLUTIONS HOLDINGS II LTD.
NETWORK ALLIANCE AGREEMENT
This Network Alliance Agreement ("AGREEMENT") is entered into as of
April 3, 2001, between FLAG Telecom Ireland Network Limited ("FTINL" and,
together with FLAG Telecom Holdings Limited and all directly or indirectly
wholly-owned subsidiaries of FLAG Telecom Holdings Limited, and any other
Affiliates (as defined below) added pursuant to Section 1.2 below, "FLAG"), a
company limited by shares organized under the laws of Ireland with its
registered office located at 0 Xxxxxxxxxxx Xxxxxx, Xxxxxx 0, Xxxxxxx, and
Verizon Global Solutions Holdings II Ltd. ("VGSL" and, together with its
Affiliates, "VGS"), a company organized under the laws of Bermuda with its
registered office located at 00 Xxxxx Xxxxxx, Xxxxxxxx XX 12, Bermuda.
Hereinafter, FTINL and VGSL may be referred to together as "PARTIES", and
individually as a "PARTY".
WHEREAS:
A. VGS wishes to establish, own and operate a European backbone network (the
"VGSIEN") with sufficient capacity and geographic scope to enable both VGS (and
its Affiliates) and FLAG to provide end-to-end provisioning of network services
to their respective customers and to market such service offerings under their
separate, proprietary brands.
B. FLAG has spent considerable time in the planning of extensions to its
existing network.
C. VGS and FLAG desire to create a network alliance to participate in the
establishment and use of the VGSIEN (the "ALLIANCE"). The initial scope of the
VGSIEN is that set out in Exhibit C and may be expanded in accordance with the
terms of this Agreement.
D. As part of the Alliance, VGS desires to provide transport and related
telecommunications services to FLAG to support the services that FLAG offers to
their customers.
In consideration of the premises recited above and of the mutual promises
and undertakings set forth in this Agreement, and intending to be legally bound,
the Parties hereby agree as follows:
1. SERVICES; FORECASTS; SERVICE ORDERS
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1.1 The services which VGS will make available through the VGSIEN (the
"SERVICES") are set forth in Exhibit B hereto, which is incorporated
by reference and which may be amended from time to time in order to
add additional Services by mutual agreement of the Parties.
1.2 VGS shall provide Services under the terms of this Agreement to FLAG
Telecom Holdings Limited and any directly or indirectly wholly owned
subsidiary of FLAG Telecom Holdings Limited, as well as to such
other Affiliates of FTINL as FTINL may request, and VGSL in its sole
discretion shall agree to in writing. VGSL may provide the Services
through one or more operating Affiliates. As used herein, an
"AFFILIATE" of any company shall mean another company which
controls, is controlled by, or is under common control with such
company. FTINL shall be responsible for all orders placed by any
member of FLAG, and shall be liable to VGSL for all amounts due
hereunder with respect to any Services provided to any member of
FLAG as well as for performance by all members of FLAG of all of
their respective obligations hereunder. FTINL shall be bound by any
action taken pursuant to or in connection with this Agreement by any
member of FLAG. VGSL shall be responsible for all Services provided
by any member of VGS. VGSL shall be bound by any action taken
pursuant to or in connection with this Agreement by any member of
VGS. The Purchase Commitments (as defined in Section 1.4) shall be
determined on an aggregate basis for FLAG, and any Service provided
to any member of FLAG shall be counted toward the applicable
Purchase Commitment for such order, with VGSL having no
responsibility to allocate such Purchase Commitment among the
members of FLAG except as provided in Section 3. FLAG may purchase
and use the Services only for
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purposes of providing bundled end-to-end services to end-users, and
are strictly prohibited from reselling any Service unless bundled
with other products or services provided by FLAG or other suppliers.
1.3 Not later than October 1 of each calendar year, FTINL shall provide
VGSL with a good faith forecast of FLAG's projected need for
Services in each of the following three calendar years, which
forecast shall be in such form as shall be mutually agreed upon by
FTINL and VGSL and shall indicate, for each Service, the aggregate
quantity of such Service forecasted for each individual designated
PoP pair on the VGSIEN (a "ROUTE") for each calendar quarter. The
forecast for the balance of 2001 (the "INITIAL FORECAST") is
attached to this Agreement as Exhibit A and is accepted as to 2001.
FTINL shall have the right to amend Exhibit A, not later than March
30, 2001, to provide for purchase of different Services (within each
category of Service) of equivalent value. If VGSL believes that the
VGSIEN will be unable to provide any part of the Services (for any
Route, for any period) shown on any forecast (except for the Initial
Forecast), it shall so notify FTINL, and the Parties shall discuss
the matter in good faith with the objective of satisfying FLAG's
forecast. The forecast shall be reduced or the timing of activation
of Services adjusted, as the case may be, by the amounts VGSL
believes cannot reasonably be provided by the VGSIEN, or by such
other amounts as may be agreed in writing by the Parties not later
than 30 days after the date the forecast was provided to VGSL. Each
such forecast, as so reduced or adjusted if applicable, shall be
referred to herein as a "FORECAST" (which term includes the Initial
Forecast).
1.4 FLAG's initial purchase hereunder (the "INITIAL PURCHASE") shall be
as set forth in Exhibit D. Upon finalization (which for purposes of
this Agreement shall be deemed to have occurred 30 days after
submission of a forecast by FTINL) of the Forecast in each year,
FLAG shall make a further purchase hereunder (the "INCREMENTAL
PURCHASE") equal to the aggregate IRU Prices
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(as defined in Exhibit B) for the Aggregate Purchase Commitment (as
defined below) for the following calendar year. The "AGGREGATE
PURCHASE COMMITMENT" shall be equal to the sum of the Purchase
Commitments for each Service on each Route. The "PURCHASE
COMMITMENT" for each Service on each Route for any calendar year
shall be equal to [*] of the incremental quantity of Service on such
Route shown on the Forecast submitted in the year preceding such
calendar year.
1.5 FLAG shall have the right to purchase additional Services on any
Route in any calendar quarter, in addition to the Initial Purchase
and/or Incremental Purchase for the applicable year, up to 100% of
the amount of Service forecasted for such Route for such calendar
quarter in the current Forecast for such year. In the event FLAG
wishes to purchase such additional services, FLAG shall make such
request in writing to VGSL, and VGSL shall advise FLAG of the date
on which such Services will be ready for service. In the event FLAG
wishes to purchase additional Services beyond such 100% level, FLAG
shall make such request in writing to VGSL, and VGSL, within 30 days
after such request, shall notify FLAG whether, to what extent, for
what price and on what date it is willing to provide such Services.
FLAG shall either accept or decline such offer within 15 days after
receiving it from VGSL.
1.6 All Services purchased hereunder shall be purchased and provided on
an indefeasible right of use ("IRU") basis. For purposes of this
Agreement, an "IRU" shall mean an exclusive, irrevocable and
non-transferable right to use a Service for a period of [*] years
from activation (or such other period of time as may be mutually
agreed between the Parties) that is vested in FLAG but which will
not include the right to control any Service-related facilities nor
any right to salvage value upon decommissioning of any such
facilities.
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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1.7 Orders for Services shall be transmitted by FLAG, and processed by
VGSL, in accordance with VGSL's then-current, standard order
procedures and guidelines as notified to FTINL in writing (as such
procedures and guidelines may be modified from time to time by VGSL
upon reasonable prior written notice to FTINL). Services shown in
any calendar quarter of any Forecast, to the extent such Services
are contained in the associated Purchase Commitment, shall be ready
for service on the first day of such calendar quarter, except that
Services shown in the second quarter of 2001 in the Initial Forecast
may not be ready for service until the end of such quarter.
2. TERM OF THE AGREEMENT
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2.1 This Agreement is effective and the Parties' obligations shall
commence upon the date first set forth above ("EFFECTIVE Date").
This Agreement shall continue in effect for a period of [*] years
from the Effective Date ("INITIAL TERM"), unless (and then only to
the extent) terminated earlier in accordance with Section 5.
2.2 Upon expiration of the Initial Term, this Agreement shall continue
from year to year unless and until (i) this Agreement is terminated
by one Party giving the other Party 180 days' written notice of
termination, with the earliest date for such notice being 180 days
prior to the expiration of the Initial Term, or (ii) this Agreement
is terminated pursuant to Section 5 (and then only to the extent so
terminated).
2.3 The Parties acknowledge and agree that except with respect to a
termination of this Agreement pursuant to Sections 5.2, 5.3, 5.4 or
5.5, no termination of this Agreement will terminate or otherwise
affect any Services theretofore purchased on an IRU basis, meaning
that FLAG shall continue to have the
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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right to use such Services and shall continue to pay O&M Charges (as
defined in Exhibit B) relating to such Services. Any Party
terminating this Agreement in whole or in part pursuant to Sections
5.2, 5.3, 5.4 or 5.5 shall have the right, by notice to the other
Party, to terminate any or all Services which were theretofore
purchased on an IRU basis, in which case FLAG shall have no further
right to use such Service and FLAG shall not be entitled to any
refund of any part of the initial payment made for such IRU except
as set forth in the last sentence of this Section 2.3. FLAG,
however, will continue to be obligated to pay O&M Charges relating
to such Services except (a) with respect to any Services terminated
pursuant to Section 5.5, as to which such obligation will cease as
of the effective date of the termination, and (b) with respect to
any Services actually resold by VGSL, as to which such obligation
will cease as described in the next sentence. If any Service is so
terminated, VGSL will use commercially reasonable efforts to resell
any such Service which FLAG had purchased on an IRU basis, and if
VGSL does resell such Service, such IRU will be terminated (but
except as described in the next sentence, no part of the initial
payment made therefor shall be refundable) and FLAG will be released
from its obligation to pay O&M Charges relating to such Service from
and after the effective date of the resale. If VGSL actually resells
any Service on an IRU basis following a termination pursuant to
Section 5.5, VGSL shall, upon receipt of payment for such resale,
make a payment to FTINL (or to such other FLAG entity as may be
specified by FTINL in writing) equal to (a) the payment so received,
times (b) the number of years remaining in the IRU term for such
Service under FLAG's IRU (i.e., [*] less the number of years elapsed
since such Service was placed in service hereunder), divided by (c)
the number of years in the term of the IRU in such resale; provided
that such payment shall in no event be greater than the
proportionate part of the IRU Price paid
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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by FLAG for such Service applicable to the remaining term of FLAG's
IRU for such Service.
2.4 If FLAG determines that it has Service purchased on an IRU basis for
a given Route which it is not using or which it will not need in the
future (the "EXCESS IRU SERVICE"), and has a need for additional
Service on another Route (the "NEW IRU SERVICE"), FLAG may so notify
VGSL and request a termination of the Excess IRU Service in exchange
for purchase of the New IRU Service. If VGSL has capacity available,
or is able through commercially reasonable efforts to obtain
capacity, to provide the New IRU Service, then it will permit FLAG
to terminate the Excess IRU Service in exchange for purchase of the
New IRU Service. The foregoing notwithstanding, VGSL shall have no
obligation to permit any such exchange (x) with respect to Service
on a Route which was implemented at the request of FLAG and is not
being used by any other customer of VGSL other than FLAG, or (y) to
the extent that the Excess IRU Price (as defined below) of such
Excess IRU Service, when aggregated with the Excess IRU Prices of
all other Excess IRU Services theretofore exchanged, exceeds [*]% of
the total price theretofore paid by FLAG for Services under this
Agreement. The IRU term for the New IRU Service shall be equal to
the remaining term of the Excess IRU Service. The purchase price for
the New IRU Service shall be equal to the sum of (a) the amount (if
any) by which the New IRU Price (as defined below) exceeds the
Excess IRU Price (as defined below), plus (b) all costs and expenses
incurred by VGSL to plan and implement the exchange of Services,
plus a margin of [*]% on such costs and expenses, plus (c) a
rearrangement fee, calculated at the rate of [*]% per annum of the
Excess IRU Price, payable monthly for each month through and
including the earlier of (i) the month in which VGSL resells the
Excess IRU Service and (ii) the twelfth month after the effective
date of the exchange. For
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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exchanges made during the Initial Term, the total rearrangement fees
paid pursuant to clause (c) above shall be limited to $[*]. The "NEW
IRU PRICE", as to any New IRU Service, shall be the amount VGSL
would have charged for such Service on such Route on an IRU basis at
the time the Excess IRU Service was purchased (prorated to reflect
the elapsed term of the Excess IRU Service). The "EXCESS IRU PRICE"
shall be that portion of the initial purchase price for the IRU of
which the Excess IRU Service is a part which is allocable to the
Excess IRU Service, and shall be equal to the initial purchase price
for such IRU prorated to reflect both the capacity of such IRU being
retained by FLAG and the elapsed term of such IRU. VGSL shall make
commercially reasonable efforts to resell any exchanged Excess IRU
Service. If the New IRU Price is less than the Excess IRU Price, the
difference shall be carried forward as a credit usable by FLAG
solely toward the purchase price for any subsequent exchanges for
New IRU Services, provided that such credit shall automatically be
amortized to zero over the remaining term of the Excess IRU.
2.5 The obligations of the Parties to each other under this Agreement
are conditional upon VGS and FLAG entering into the Resale and
Purchase Agreement (Dark Fibre and Co-location Facilities) dated as
of April 3, 2001, which provides for acquisition by VGS of certain
dark fiber capacity and licensing by VGS of certain collocation
space from FLAG to the aggregate value of at least $[*] which FLAG
has acquired and licensed respectively from KPNQwest Services UK
Limited.
3. BILLING AND PAYMENT; RATES AND CHARGES; TAXES AND ASSESSMENTS
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3.1 The IRU Price and O&M Charge (both as defined in Exhibit B) for the
Services set forth in the Initial Forecast (and for the Initial
Purchase) are set
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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forth in Exhibit D. The IRU Prices and O&M Charges for the Services
ordered pursuant to Incremental Purchases shall be determined as set
forth in Exhibit B.
3.2 VGS shall invoice ("INVOICE") such entity as shall be designated by
FTINL with respect to each Service (the "BILLED ENTITY") as set
forth in this Section. VGS shall Invoice the Billed Entity:
(a) Promptly after the date of this Agreement, for the amount of
the Initial Purchase;
(b) At the beginning of each calendar quarter (or as soon as
practicable thereafter), for the amount of Services called for
to be provided in the next following calendar quarter under
the Incremental Purchase;
(c) Monthly, for (i) the IRU Price of any new Service placed in
service in such month which was not included in an Incremental
Purchase payment, (ii) the O&M Charge for the balance of such
calendar quarter for any Service Invoiced in such month
pursuant to clause (c)(i), (iii) any costs incurred during
such month for any FLAG-specific development work in the BSS
or network OSS Architecture, plus [*]% margin, and (iv) any
other costs incurred in such month which are chargeable to
FLAG in accordance with Exhibit B, plus [*]% margin; and
(d) On the first day of each calendar quarter, for the O&M Charges
for such quarter for each Service then in service or being
placed in service as of the start of such quarter.
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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3.3 Each Invoice shall be paid by the Billed Entity by wire transfer,
made pursuant to the instructions set forth below, in immediately
available U.S. funds, so that the payment is received by VGS not
later than the date (the "DUE DATE") which is 30 calendar days from
the date of the Invoice; provided, however, that the Due Date for
payment of the amount of the Initial Purchase shall be the date on
which VGS makes payment for the initial payment of at least $[*]
under the definitive agreement(s) referred to in Section 2.5.
Subject to Section 4, any delinquent Invoice shall bear late payment
fees at the rate of 1.5% per month (or such lower rate as may be
required by law) from the Due Date until paid.
Wire Transfer Instructions (subject to change by VGSL by not less
than 10 Business Days prior notice in writing) as follows (to be
advised):
BANK NAME
ADDRESS
CITY, STATE, ZIP AND COUNTRY
PHONE #
ABA #
FOR CREDIT TO:
ACCOUNT #
SPECIAL INSTRUCTIONS:
A "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
or a day on which banks in the City of London are permitted to
remain closed.
3.4 FLAG shall be responsible for the collection and remittance of all
governmental assessments, surcharges and fees pertaining to its
resale of the Services. FLAG shall provide VGSL with, and maintain,
valid and properly executed certificates of exemption for such
assessments, surcharges and fees, as applicable. Each Party shall be
responsible for own taxes on its net income arising under this
Agreement. If FLAG or VGS is required by law to deduct or withhold
any taxes from any amounts payable under this Agreement, such
amounts shall be increased as necessary so that VGS receives an
amount equal to the sum it would have received had no such deduction
or withholding been
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made, provided that VGSL provides evidence (in a form reasonably
satisfactory to FTINL) that no credit is available for any amount
withheld or deducted. FLAG shall make timely payment of, the amount
withheld (before penalties attach thereto or interest accrues
thereon) to the applicable taxing authority. To the extent that the
Services are subject to Value Added Tax, VGS and FLAG shall work
together in good faith and within applicable laws such that prior to
the issuance of any invoices, any invoicing arrangements are
structured so as to facilitate FLAG's recovery of any Value Added
Tax that VGS is required to invoice to FLAG hereunder in the most
expeditious manner.
4. BILLING DISPUTES
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The Billed Entity shall have the affirmative obligation of providing
written notice of any dispute regarding any Invoice within 30 days after
receipt of the Invoice by the Billed Entity (which notice shall include
sufficient detail for VGS to investigate the dispute). The Billed Entity
shall not withhold any payment except for amounts legitimately in dispute
and notified to VGSL in accordance with the preceding sentence. If the
Billed Entity does not provide timely notice of a dispute with respect to
an Invoice, the Billed Entity is deemed to have waived its dispute rights
for that Invoice and to have agreed to pay the same. Provided the Billed
Entity has provided sufficient detail for investigation of the dispute,
VGS will use reasonable efforts to resolve and communicate its position
regarding the dispute to the Billed Entity in writing within 60 days of
its receipt of the dispute notice from the Billed Entity. In the event
that the Parties are unable to resolve any such dispute within 120 days of
notice from the Billed Entity to VGSL, at the request of either Party the
dispute shall promptly be submitted to the President, FLAG Network
Services and the Group Vice President of Carrier Sales of VGS (together,
the "SENIOR OFFICERS") for resolution of the dispute or determination of
an appropriate procedure for resolving the dispute. If the dispute is
resolved in VGS's favor any amounts to be paid by the Billed Entity
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shall be subject to the late payment charges under Section 3.3 retroactive
to the Due Date of the disputed Invoice.
5. TERMINATION RIGHTS
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5.1 If any governmental authority or court having jurisdiction over VGS,
any part of the VGSIEN or any of the Services issues a rule,
regulation, law or order which has the effect of canceling,
changing, or superseding any material term or provision of this
Agreement (collectively, "REGULATORY REQUIREMENT"), then this
Agreement shall be deemed modified in such a way as the Parties
mutually agree is consistent with the form, intent and purpose of
this Agreement and is necessary to comply with such Regulatory
Requirement. Should the Parties not be able to agree on
modifications necessary to comply with a Regulatory Requirement
within 30 days after the Regulatory Requirement is effective, then
upon written notice either Party may terminate that portion of this
Agreement impacted by the Regulatory Requirement, or, if partial
termination is not practicable or substantially alters the
fundamental terms of this Agreement, terminate this Agreement in its
entirety.
5.2 Either Party may terminate this Agreement upon the other Party's
insolvency, dissolution or cessation of business operations.
5.3 VGSL may terminate this Agreement upon 30 days written notice to
FTINL for a Billed Entity's failure to pay any Invoice by 60 days
after the Due Date therefor (except for items being disputed in
accordance with Section 4), unless the Billed Entity pays such
invoice in full during the 30 day period.
5.4 In the event of a breach of any material term or condition of this
Agreement by a Party (other than a failure to pay a delinquent
Invoice which is covered under Section 5.3, and other than failure
to meet Service Level Agreements which is covered in Section 5.5),
the other Party may terminate this Agreement upon 60 days written
notice, unless the breaching Party cures the breach during the 60
day period or, if such breach cannot be reasonably be cured within a
60 day
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period, if the breaching Party institutes good faith efforts to cure
such breach during such 60 day period and such breach is cured
within 180 days.
5.5 In the event that VGSL substantially fails to meet Service Level
Agreements for any Service in any three consecutive months, or in
any four months in any consecutive twelve-month period, and FLAG
customers representing committed revenues to FLAG of at least US$[*]
for either the current and preceding calendar year combined or the
current and next calendar year combined have notified FLAG in
writing that they intend to terminate or non-renew their service
agreements with FLAG as a result of such failures, FTINL shall have
the right to terminate this Agreement upon 60 days written notice,
unless VGSL meets the Service Level Agreements for such Service
during such period (or, if such failure cannot be reasonably be
cured within a 60 day period, if VGSL institutes good faith efforts
(as approved by FTINL, which approval shall not be unreasonably
withheld) to cure such failure during such 60 day period and such
failure is cured within 120 days); provided that if VGSL fails to
meet the Service Level Agreements for such Service during any of the
next three months after the end of such 60-day or 120-day period, as
applicable, FTINL shall have the right to terminate this Agreement
upon 30 days written notice without giving VGSL any further
opportunity to cure. This termination right will not be available to
FTINL to the extent that the failure of a Service to achieve the
Service Level Agreements results from any event or circumstance
described in Section 10 or a breach by FTINL of its obligations
under this Agreement.
5.6 [*]
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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5.7 Either Party may terminate this Agreement upon 30 days written
notice to the other in the event that (i) Verizon Communications
Inc. and its controlled affiliates shall own, in the aggregate, less
than 9% of the outstanding voting shares of FLAG Telecom Holdings
Limited, or (ii) a majority of the members of FLAG Telecom Holdings
Limited's board of directors then in office shall have been
nominated, appointed or elected by any person, or group of persons
acting in concert, other than Verizon Communications Inc. and its
controlled affiliates, or (iii) FLAG Telecom Holdings Limited shall
have sold a controlling interest in its telecom network business or
any significant portion thereof to any person, or group of persons
acting in concert, other than Verizon Communications Inc. and its
controlled affiliates. Notwithstanding a termination pursuant to
this Section 5.7, all then-existing performance and payment
obligations of the Parties relating to purchased IRUs and the
associated operations and maintenance responsibilities shall remain
fully in effect.
5.8 Upon any material breach by FTINL not cured after expiration of all
applicable notice and cure periods, if any, in addition to any other
rights and remedies available to it, VGSL may at its sole option do
any or all of the following:
A. Cease accepting or processing orders for Service and suspend
Service;
B. Cease all electronically and manually generated information
and reports;
C. Terminate this Agreement, either in whole or with respect to
any or all of the Services, without liability to FTINL;
D. Pursue any other legal or equitable remedy or relief available
to it.
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6. SERVICE LEVEL AGREEMENTS
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Set forth in Exhibit B-3 are performance standards for each of the
Services ("SERVICE LEVEL AGREEMENTS" or "SLAS"). Compliance by VGSL with
each of the Service Level Agreements shall be monitored and reported in
writing to FTINL by VGSL for each calendar month, unless a different
timeframe is agreed in writing between the Parties. Except as may
otherwise be specifically provided herein, VGSL shall exercise all
reasonable efforts to provide such written reports to FTINL by the
twentieth day of the next succeeding calendar month.
7. ACQUISITION OF FLAG CAPACITY BY VGSIEN; EXPANSION OF THE VGSIEN
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7.1 The Parties acknowledge that FLAG may from time to time have
opportunities to acquire terrestrial network capacity and/or
facilities which may be complementary to the VGSIEN. The Parties
agree to discuss in good faith the possibility of including any such
capacity and/or facilities in the VGSIEN.
7.2 [*]
8. INDEMNIFICATION; LIMITATION OF LIABILITY
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8.1 Each Party (in each case the "INDEMNITOR") shall defend and
indemnify the other Party and its directors, officers, employees,
representatives and agents (together the "INDEMNITEES") from any and
all claims, taxes, penalties, interest, expenses, damages, lawsuits
or other liabilities (including without limitation, reasonable
attorney fees and court costs) resulting from (i) the failure of the
Indemnitor to comply with any applicable law or regulation as
required by Section 13, (ii) knowing infringement or
misappropriation by the Indemnitor or any of its Representatives in
the performance of this Agreement of any intellectual property right
necessary for the Indemnitor's performance
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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hereunder, or (iii) the Indemnitor's breach, or failure to exercise
reasonable care in the performance, of this Agreement; provided,
however, that VGSL shall not be liable and shall not be obligated to
indemnify FTINL, and FTINL shall defend and indemnify VGSL
hereunder, for any claims by any third party, including end-users,
with respect to services provided by FLAG which may incorporate any
of VGSL's Services except to the extent that such claim relates to
the Services provided by VGSL.
8.2 EACH PARTY'S LIABILITY IN CONNECTION WITH THIS AGREEMENT (WHETHER
BASED IN CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE),
MISREPRESENTATION, WARRANTY OR ANY OTHER LEGAL OR EQUITABLE
GROUNDS), SHALL IN ALL CASES BE LIMITED TO DIRECT DAMAGES SUFFERED
BY THE OTHER PARTY, AND THE ENTIRE AGGREGATE LIABILITY OF EACH PARTY
IN CONNECTION WITH THIS AGREEMENT, OTHER THAN LIABILITY FOR FAILURE
TO PAY AMOUNTS DUE AND OWING HEREUNDER FOR SERVICES, SHALL NOT
EXCEED IN ANY CALENDAR YEAR AN AMOUNT EQUAL TO [*] OF THE INITIAL
PURCHASE. IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY IN
CONNECTION WITH THIS AGREEMENT (WHETHER BASED IN CONTRACT, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), MISREPRESENTATION,
WARRANTY OR ANY OTHER LEGAL OR EQUITABLE GROUNDS) FOR, AND EACH
PARTY HEREBY WAIVES AND RELEASES ANY CLAIMS IT MIGHT OTHERWISE HAVE
TO BE COMPENSATED BY THE OTHER IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE FOR, ANY: (A) CONSEQUENTIAL, SPECIAL, INCIDENTAL OR
INDIRECT DAMAGES (SUCH AS, WITHOUT LIMITATION, LOSS OF REVENUE,
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* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
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LOSS OF PROFIT, LOSS OF DATA, LOSS OF USE, LOSS OF GOODWILL, LOSS OF
SAVINGS, INTERRUPTION OF BUSINESS OR CLAIMS OF THIRD PARTIES), EVEN
IF SUCH FIRST PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
LOSSES OR DAMAGES; OR (B) PUNITIVE OR EXEMPLARY DAMAGES.
9. RELATIONSHIP OF THE PARTIES
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The Parties acknowledge and agree that the relationship between them is
solely that of independent contractors, and nothing herein shall be deemed
to constitute a partnership between the Parties nor the appointment of one
of the Parties as agent for the other. Neither Party, nor their respective
employees, agents or representatives, has any right, power or authority to
act or create any obligation, express or implied, on behalf of the other
Party.
10. FORCE MAJEURE
10.1 Other than with respect to failure to make payments due hereunder,
neither Party shall be liable under this Agreement for delays,
failures to perform, damages, losses or destruction, or malfunction
of any equipment, or any consequence thereof, caused by or due to
fire, earthquake, flood, water, the elements, third party labor
disputes, utility curtailments, power failures (provided that VGSL
shall have provided reasonable backup in relation to industry
standards), explosions, civil disturbances, governmental actions,
shortages of equipment or supplies, unavailability of
transportation, acts or omissions of third parties, or any other
cause beyond its reasonable control; provided, however, that in the
event that any such event of force majeure causes any delay or
failure on the part of VGSL to deliver any Service on any Route for
a continuous period of 180 days or more, FTINL may terminate this
Agreement as to such Service on such Route or PoP by notice to VGS
in writing effective immediately. VGSL shall give FTINL notice
promptly after it becomes aware of the occurrence of an event of the
types specified in this
-17-
Section, and shall use commercially reasonable efforts to mitigate
the impact of any such event.
10.2 The Parties acknowledge that at time of this Agreement, some of the
licenses, permits and consents required for the installation and
operation of the VGSIEN have not been obtained. VGSL shall not be
liable for any failure or delay in providing any Service which is
due to failure or delay in obtaining any license, certification,
authorization or similar governmental authority needed to supply
such Service, provided that VGSL shall have made commercially
reasonable efforts to obtain such authority. VGSL and FTINL shall,
and shall procure that the other members of VGSL and FLAG,
respectively, shall, cooperate in good faith to use their respective
assets, and to take such steps, as may be reasonable and practicable
to avoid or limit the impact of any such failure or delay.
11. DISPUTE RESOLUTION
------------------
11.1 Except as otherwise provided in Section 4, all disputes,
controversies or differences arising out of this Agreement will be
submitted by the Parties to a panel composed of one principal
appointed by each of the Parties. This panel will meet for three
days, or for such longer period as they may agree, in order to
resolve the dispute, controversy or difference. All information
exchanged by the principals in resolving the dispute, controversy,
or difference may be used by the Parties only for the purpose of
resolving the dispute, controversy, or difference and for no other
purpose except as may be agreed by the Parties in writing. If the
principals resolve the dispute, the terms of the resolution will be
set forth in a written settlement agreement that will be signed by
the Parties. If the dispute, difference, or controversy is not
resolved by the principals after three days of meetings, or for such
longer period as the principals may agree, then the Parties may
pursue formal arbitration as set forth below. Each Party will bear
its own costs in connection with this informal dispute resolution
process except as the Parties otherwise agree in writing. Nothing in
the
-18-
foregoing shall be deemed to limit any rights or remedies available
to either Party at law or in equity.
11.2 In the event that a dispute remains unsettled after the procedures
set forth above have been exhausted, either Party notify the other
in writing that the dispute is being submitted to arbitration in
accordance with and subject to the Rules of Arbitration of the
International Chamber of Commerce and finally settled by three
arbitrators appointed in accordance with such rules, unless the
Parties to the arbitration agree upon a single arbitrator under such
rules. The place of arbitration shall be London, U.K. The
arbitrators shall decide any such dispute strictly in accordance
with the governing law specified in Section 14.6. Any decision or
award of the arbitral tribunal shall be final and binding upon the
Parties, and judgment on the decision or award may be entered in any
court having jurisdiction thereof or having jurisdiction over either
of the Parties or any of their assets, and the Parties hereby
consent to the jurisdiction of any court in a proceeding to enforce
such decision or award. The arbitrator(s) shall have the right to
award costs, including legal fees.
12. CONFIDENTIALITY
---------------
12.1 Each Party agrees that all information furnished to it by the other
Party (or its Affiliates), or to which it has access under this
Agreement, shall be deemed the confidential and proprietary
information or trade secrets (collectively referred to as
"PROPRIETARY INFORMATION") of the Disclosing Party and shall remain
the sole and exclusive property of the Disclosing Party (the Party
furnishing the Proprietary Information referred to as the
"DISCLOSING PARTY" and the other Party referred to as the "RECEIVING
PARTY"). Neither Party shall use the Proprietary Information of the
other Party for any purpose other than the performance of its
obligations under this Agreement. Each Party shall treat the
Proprietary Information of the other Party, and the contents of this
Agreement, in a confidential manner and shall not, without the
written consent of the Disclosing Party, directly or indirectly
disclose the same to anyone other
-19-
than its employees and Affiliates, and its consultants, vendors and
contractors, who need to know such information for the purposes of
this Agreement and who agree to be bound by the terms of this
Section 12.
12.2 The confidentiality of obligations of this Section 12 do not apply
to any portion of the Proprietary Information which is (i) or
becomes public knowledge through no fault of the Receiving Party;
(ii) in the lawful possession of Receiving Party prior to disclosure
of the Proprietary Information to the Receiving Party by the
Disclosing Party (as confirmed by the Receiving Party's records); or
(iii) disclosed to the Receiving Party without restriction on
disclosure by a person who has the lawful right to disclose the
information. If the Receiving Party is requested or legally
compelled by any court, agency, authority, department, regulatory
body or other instrumentality of any government or country to
disclose any of the Proprietary Information of the Disclosing Party
or any of the contents of this Agreement, the Receiving Party agrees
that it will provide the Disclosing Party with prompt written notice
of such requests so that the Disclosing Party has the opportunity to
pursue its legal and equitable remedies regarding potential
disclosure, and the Receiving Party will seek confidential treatment
for any such information which it is ultimately required to
disclose.
12.3 Each Party acknowledges that its breach or threatened breach of this
Section 12 may cause the Disclosing Party irreparable harm which
would not be adequately compensated by monetary damages.
Accordingly, in the event of any such breach or threatened breach,
the Receiving Party agrees that equitable relief, including
temporary or permanent injunctions, is an available remedy in
addition to any legal remedies to which the Disclosing Party may be
entitled.
12.4 Neither Party may use the name, logo, trade name, service marks,
trade marks, or printed materials of the other Party, in any
promotional or advertising material, statement, document, press
release or broadcast without the prior
-20-
written consent of the other Party, which consent may be granted or
withheld at the other Party's sole discretion.
12.5 Each Party shall ensure that each of its managers and executive
employees engaged in Alliance is legally bound by confidentiality
obligations in connection with his or her employment by such Party.
13. COMPLIANCE WITH LAWS
--------------------
During the term of this Agreement, the Parties shall comply with all
local, state, federal and national laws and regulations applicable to this
Agreement and to their respective businesses. Further, each Party shall
obtain, file and maintain any tariffs, permits, certifications,
authorizations, licenses or similar documentation as may be required by
any governmental agency having jurisdiction over its business
("AUTHORIZATIONS"). Upon the request of a Party, which request shall be no
more frequent than once every six months (unless based on a request or an
order of a governmental agency having jurisdiction over either Party), the
other Party will provide documentation showing that the Party has complied
with applicable governmental requirements. The Parties shall conform with
applicable privacy directives, laws and regulations governing their
businesses.
14. MISCELLANEOUS
-------------
14.1 PUBLICITY. (a) Neither Party will make any public announcement of
the formation of the Alliance, or of the execution of this
Agreement, without the prior consent of the other Party, which
consent shall not be unreasonably withheld or delayed; provided that
a Party may make such announcement without such prior consent if
such an announcement is required by applicable laws or regulations
or the rules of any applicable stock exchange and it is
impracticable to obtain such prior consent.
(b) The Parties will use commercially reasonable efforts to ensure
that any press release, announcement or other public communication,
including any
-21-
issued by a controlled affiliate participating in the VGSIEN,
regarding FLAG's participation in the VGSIEN shall be consistent
with the spirit that VGSL and FTINL have formed a network alliance
with respect to the VGSIEN rather than a supplier/customer
relationship. Further, VGSL will also advise Genuity, Inc. that VGSL
and FTINL have formed a "network alliance" and request that, in the
event that Genuity, Inc. might discuss FLAG and its participation in
the VGSIEN with third parties, it do so in a manner consistent with
the spirit of the network alliance.
14.2 WAIVERS. Except as set forth in Section 4, no waiver of any term or
condition of this Agreement shall be enforceable unless it is in
writing and signed by the Party against whom it is sought to be
charged. No failure or delay by either Party in exercising any
right, power or remedy will operate as a waiver of any such right,
power or remedy, unless otherwise provided herein. The waiver by
either Party of any of the covenants, conditions or agreements to be
performed by the other or any breach thereof shall not operate or be
construed as a waiver of any subsequent breach of any such covenant,
condition or agreement.
14.3 ASSIGNMENT. Neither Party may assign or transfer its rights or
obligations under this Agreement without the other Party's written
consent. Any assignment or transfer without the required consent is
void. The foregoing notwithstanding, either Party may assign this
Agreement to an entity which is directly or indirectly wholly owned
either by such Party or by a company which directly or indirectly
wholly owns such Party without the other Party's consent.
14.4 INTEGRATION; CONSISTENCY. This Agreement and all Exhibits, schedules
and other attachments attached hereto (which Exhibits, schedules and
other attachments are hereby incorporated by reference), represent
the entire agreement between the Parties with respect to the subject
matter hereof and supersede and merge all prior agreements,
promises, understandings, statements, representations, warranties,
indemnities and inducements to the
-22-
making of this Agreement relied upon by either Party, whether
written or oral. In the event of any inconsistency between the terms
of this Agreement and the terms of any Exhibits, schedules and other
attachments incorporated herein, the terms of such Exhibits,
schedules and other attachments shall prevail.
14.5 CONSTRUCTION. The language used in this Agreement is deemed the
language chosen by the Parties to express their mutual intent. No
rule of strict construction shall be applied against either Party.
Article and Section headings are used in this Agreement for purposes
of convenience only, and shall not be deemed a part of this
Agreement nor used to interpret or construe the provisions hereof.
Any reference herein to any article, section, subsection, paragraph,
subparagraph, exhibit, schedule or attachment shall be deemed a
reference to such portion of this Agreement unless otherwise
specified.
14.6 GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the law of the state of New York, without regard to
that state's choice of law principles.
14.7 NOTICES. All notices, including but not limited to, demands,
requests and other communications required or permitted hereunder
(not including Invoices) shall be in writing and shall be deemed
given: (i) when delivered in person, (ii) 24 hours after deposit
with an overnight delivery service for next day delivery, (iii) the
same day when sent by facsimile transmission during normal business
hours, receipt confirmed by sender's equipment, or (iv) seven
Business Days after deposit in the official mail service of the
sender's jurisdiction, postage prepaid, registered or certified
mail, return receipt requested, and addressed to the recipient Party
at the address set forth below:
-23-
If to FTINL or FLAG: FLAG Telecom Ireland Network Limited
Office 000
Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
with a copy to: FLAG Telecom Limited
0 Xxxxx Xxxxxx
Xxxxxx X0X 0XX, Xxxxxx Xxxxxxx
Attn: General Counsel
Facsimile #: x00-00-0000-0000
If to VGSL: Verizon Global Solutions Inc.
000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxx Xxxxxx 00000, XXX
Attn: Group Vice President of Carrier Sales
Facsimile #: x0-000-000-0000
with a copy to: Xxxx X. Xxxxx, Esq.
1095 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000, XXX
Facsimile #: x0-000-000-0000
14.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original, but all of
which shall constitute one and the same instrument.
14.9 NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement and
the rights and obligations created hereunder are intended for the
sole benefit of VGS and FLAG, and do not create any right, claim or
benefit on the part of any other person not a Party to this
Agreement.
14.10 SURVIVAL. Any obligations of the Parties relating to monies owed, as
well as those provisions relating to confidentiality, limitations on
liability and indemnification, shall survive termination of this
Agreement.
14.11 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement does not affect the legality or enforceability of any
other provision or portion. If any provision or portion of this
Agreement is deemed illegal or unenforceable for any reason, there
shall be deemed to be made such minimum
-24-
change in such provision or portion as is necessary to make it valid
and enforceable as so modified.
14.12 CUMULATIVE RIGHTS AND REMEDIES. Except as may otherwise be provided
herein, the assertion by a Party of any right or the obtaining of
any remedy hereunder shall not preclude such Party from asserting or
obtaining any other right or remedy, at law or in equity, hereunder.
14.13 AMENDMENTS. Any amendments or modifications to this Agreement must
be in writing and signed by a Vice President (or higher level
officer) of each of the Parties.
14.14 AUTHORITY. Each individual executing below on behalf of a Party
hereby represents and warrants to the other Party that such
individual is duly authorized to execute and deliver this Agreement.
By its signature below, each Party acknowledges and agrees that
sufficient allowance has been made for review of this Agreement by
respective counsel and that each Party has been advised by its legal
counsel as to its legal rights, duties and obligations under this
Agreement.
-25-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
FLAG TELECOM IRELAND NETWORK VERIZON GLOBAL SOLUTIONS
LIMITED HOLDINGS II LTD.
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
EXHIBIT A
---------
INITIAL FORECAST
----------------
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR
EXCLUDED BY XXX X0 XX0 XXX0 XXX-0x STM-16s WAVELENGTHS
AT FLAG
DIRECTION
--------------------------------------------------------------------
[*]
---------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR
EXCLUDED BY XXX X0 XX0 XXX0 XXX-0x STM-16s WAVELENGTHS
AT FLAG
DIRECTION
--------------------------------------------------------------------
[*]
---------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
Exhibit A-2
TOTAL TRAFFIC BY SERVICE 2001
--------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------
A-END B-END INCLUDED OR
EXCLUDED BY XXX X0 XX0 XXX0 XXX-0x STM-16s WAVELENGTHS
AT FLAG
DIRECTION
--------------------------------------------------------------------
[*]
INCLUDED
Excluded
TOTAL
---------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
Exhibit A-3
EXHIBIT B
---------
SERVICE PRICING FOR INCREMENTAL PURCHASES
-----------------------------------------
PRICING PRINCIPLES
------------------
Pricing for the Initial Purchase is contained in Exhibit D. VGSL's prices for
Incremental Purchases shall be [*] as set forth in this Exhibit. [*].
IRU PRICES
----------
The "IRU PRICE" for each Service will be [*]. Service pricing will in general
include the following cost components:
[*]
Methodology
In accordance with the above principles, the detailed methodology is as follows:
[*]
---------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
O&M CHARGES
-----------
The annual operations and maintenance charge ("O&M CHARGE") for each Service
will be [*] paid for such Service, as follows:
[*]
Any additional costs incurred due to FLAG-requested re-arrangements, service
requests, and/or FLAG requirements outside of normal industry practices will be
incremental [*].
[*]
---------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
EXHIBIT B - 1
-------------
SERVICE SCHEDULE - MANAGED BANDWIDTH SERVICES
---------------------------------------------
15. PRODUCT DEFINITION
Managed Bandwidth Service is offered on a PoP-to-PoP basis, where FLAG
interconnects to the service in a PoP location. Managed Bandwidth Services are
available in DS1/E1 or higher bandwidth rates. A PoP is defined as a Point of
Presence within the VGSIEN.
15.1 Bandwidth Rates
Managed Bandwidth Services PoP-to-PoP only:
o DS1, E1
o DS3, E3
o OC3, OC-3c, STM1
o OC-12, OC-12c STM4
o OC-48, STM16
o OC-192, STM64
The Managed Bandwidth Service is based on SONET/SDH as the underlying network
technology. Synchronous Optical Network is a family of optical transmission
rates and interface standards allowing internetworking of products from
different vendors. Base optical rate is 51.840 Mb/s. Higher rates are direct
multiples. DS1, DS3, SONET (OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c) SDH
(STM1, STM4, STM16, STM64)
Optical Carrier level 1 (OC-1): The optical signal that results from an optical
conversion of an electrical STS-1 signal (51.840 Mb/s).
o STM1/OC-3: Optical Carrier level 3 signal operating at 155.520 Mb/s.
o STM4/OC-12: Optical Carrier level 12 signal transmitting at 622.080 Mb/s.
o STM16/OC-48: Optical Carrier level 48 signal transmitting at 2488.32 Mb/s.
o STM64/OC-192 Optical Carrier level 192 signal transmitting at 9953.28 Mb/s
16. MANAGED BANDWIDTH SERVICES (POP-TO-POP) SERVICE ARRANGEMENTS
------------------------------------------------------------
16.1 VGSIEN Network Facilities with Redundant Capabilities
The VGSIEN Transport Network will be managed by VGSI's SMC operations [by
07/01/01]. PoP-to-PoP bandwidth will be offered to FLAG from DS1/E1
through STM1/64,/OC-N.
The VGSIEN PoPs are located in London, Paris, Brussels, Amsterdam,
Frankfurt and Duesseldorf.
The VGSIEN PoP locations are depicted above. Managed Bandwidth services
over the VGSIEN will be available between any of these PoP locations.
16.2 Customer Interface Specification
FLAG will interface to the Managed Bandwidth Service with direct
connections at VGSIEN PoPs. The meet-me point is an electrical or optical
interface (DS1/E1, X0/XX0, XXX0, XXX0, XXX00, STM64). The VGSIEN will
utilize the Lucent BWD network element to groom STM1 segments, Digital
Cross-connect Systems will be used to groom DS1/E1 segments and electrical
interfaces will be made available to FLAG.
LOCAL ACCESS PROVISIONING
Not included
BANDWIDTH
DS1, E1
DS3, E3
OC3, OC-3c STM1
XX-00, XX-00x XXX0
XX-00 XXX00
XX-000 STM 64
MANAGED BANDWIDTH PRESENTATION
DCS cross-connect
LGX cross-connect
Standardized 1310 nm or 1550 nm
BACKBONE TECHNOLOGY
DWDM
16.3 Reliability
o Diversely routed unprotected paths
o One spare channel per link
o Bit error rate performance per G.826
o Jitter and Wander compliant with G.813 and G.825
EXHIBIT B - 2
-------------
SERVICE SCHEDULE - WAVELENGTH BANDWIDTH SERVICES
------------------------------------------------
1. PRODUCT DEFINITION
Wavelength bandwidth capacity is provided at the 2.5Gbps (OC-48c) and 10Gbps
(OC-192c) based on DWDM (dense wave division multiplexing) technology with the
inherent capability of providing wavelength services.
VGSIEN is a WDM Optical Ring that provides transit on the 10 Gbps bandwidth.
VGSI monitors optical parameters on a PoP-to-PoP basis. Dense Wavelength
Division Multiplexing (DWDM) systems are coupled with optical amplifier
solutions to provide optical transport scalable to 1.6 terabits per second over
a single strand of fiber or can transport optical signals up to 4000 km without
electrical regeneration.
DWDM is available in all VGSIEN PoP locations depicted in the diagram below.
Wavelength services may be offered between any two VGSIEN PoP locations on the
network ring.
[GRAPHIC]
The diagram above depicts the VGSIEN North European ring. All PoPs have DWDM
capabilities.
As an example, if FLAG buys a wavelength from GSI between Amsterdam and London,
the service is sold as a linear service, and the redundant portion would be made
available at an additional cost to FLAG.
2. FEATURES
--------
o Concatenation: Multiple signals are linked together with reduced
overhead.
o Transparency: FLAG dictates the type of service received from the
OC-192/OC-48 bandwidth. Protection Switching: Protection switching
and restoration is provided by VGSL.
o Clear Channel: The VGSIEN is Clear Channel capable.
o Customized Bandwidth: The OC-192/48 bandwidth may be divided into
segments.
3. INTERFACE SPECIFICATIONS
------------------------
FLAG will interface to the VGSIEN Wavelength bandwidth service with direct
optical connections on the LGX bay which interconnects the VGSIEN DWDM
equipment in the VGSIEN PoPs. The meet-me point is an optical interface on
the Light Guide Crossconnect system (OC-48, OC-192).
LOCAL ACCESS PROVISIONING
Not included
BANDWIDTH
2.5 Gbps/10 Gbps
BANDWIDTH PRESENTATION
Standardized G.957
WAVELENGTH FREQUENCIES
Standardized 1310 nm or 1550 nm
BACKBONE TECHNOLOGY
Dense Wave Division Multiplexing
2.1 Reliability
o Diversely routed unprotected paths
o One spare channel per link
o Bit error rate performance per G.826
o Jitter and Wander compliant with G.813 and G.825
EXHIBIT B - 3
-------------
SERVICE LEVEL AGREEMENTS
------------------------
1. SLA MEASUREMENT
---------------
Each SLA is outlined below and will be measured each month for each Service.
2. SERVICE PROVISIONING
--------------------
o VGSL will respond within [*] hours to a request for Service Feasibility
for those Services included in FLAG's Initial Purchase which do not entail
any special design requirements.
o VGSL will deliver Services in five business days from receipt of a Service
Order. This timeframe shall apply only to Services included in a FLAG
Purchase Commitment which do not entail any special design requirements
and to orders in excess of the Purchase Commitment (but still within the
associated Forecast) with respect to which VGSL has provided an
affirmative response to FLAG's request for Service Feasibility.
The Service Feasibility and Provisioning SLAs will not apply if more than [*] of
the Services included in a quarterly forecast is requested in a contiguous [*]
day period. In such cases, VGSL will nevertheless use commercially reasonable
efforts to meet such standards.
3. SERVICE AVAILABILITY
--------------------
The Service Availability percentage will be calculated and measured as
follows:
Service Availability % P = A X 100
---------
B
A is the number of hours for which the circuit was available in the
relevant month. This is based on VGS OSS reporting tools.
B is the total number of hours in the month for which the availability is
being calculated.
P is the resulting Service Availability percentage.
Service will not be deemed to be unavailable, for the purposes of the
calculation above, if the unavailability arises from or is otherwise
caused by:
o FLAG requesting VGSL to test a particular circuit although no fault
has been detected or reported by VGS;
-------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
o A Service being physically modified or altered in any way at FLAG's
request in accordance with this Agreement (i.e., not record changes)
unless VGS has not performed the re-arrangement properly;
o Any suspension of the Service in accordance with the terms of this
Agreement;
o Any failure or fault arising pursuant to a Force Majeure event;
o FLAG failing to operate the Service in accordance with the terms of
this Agreement.
The period of unavailability of any Managed Bandwidth Service including
Wavelength Services (an "Outage") will be measured from the time the
unavailability is reported to the VGS Service Management Center by FLAG in
accordance with this Agreement
4. PLANNED WORK NOTIFICATION
-------------------------
If Service affecting, VGSL will notify FTINL of planned work [*] before the work
commences
If not Service-affecting, VGSL will endeavor to notify FTINL of planned work [*]
before the work commences
5. MEAN TIME TO REPAIR (SERVICE RESTORATION TIME)
----------------------------------------------
Mean Time to Repair (MTR) will be not more than [*] hours for X0x/XX0x,
X0x/XX0x, XX0x, XX0x, XX00x,XX00x, OC-192. SDH: XXX-0, XXX-0, XXX-00, xxx
XXX-00.
VGS's Customer Care Center is available 24 hours a day, 7 days a week.
6. CIRCUIT PERFORMANCE
-------------------
Circuit performance is measured using two parameters: Availability and
Error-Free Seconds.
AVAILABILITY is a measure of the relative amount of time during which the
circuit is available for use. Unavailability begins when the Bit Error Ratio
(BER) in each second is worse than 1.0 E-3 for a period of 10 consecutive
seconds in conformance with ITU Standard G.826.
ERROR-FREE SECONDS (EFS) and ERRORED SECONDS (ES) are the primary measure of
error performance. An Error-Free Second is defined as any second in which no bit
errors are received. An Errored Second is any second in which one or more bit
errors are received.
-------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
GENERAL PERFORMANCE OBJECTIVES:
Network Availability for "on net" (PoP-to-PoP) Wavelength and Managed Bandwidth
Services:
o [*]% for Linear Network
o [*]% for SONET/SDH Ring Network (when available)
AUTO-RESTORAL TIME (SONET/SDH BASED SERVICES) (DETERMINED BY SWITCHING PROTOCOL)
--------------------------------------------------------------------------------
[*]
LATENCY
-------
[*]
Scheduled maintenance is excluded from the performance objectives stated above.
SERVICE OUTAGES / TESTING AND CONFIRMATION PROCEDURES
A Service shall be deemed to be in an "Outage" condition if, following the
Service's In Service Date, while VGS is actually using or attempting to use such
circuit, the circuit loses continuity and becomes unavailable as defined above
or the MTR exceeds [*].
Service Outages do not include:
(a) Outage periods when FLAG has released the Service to VGS for
maintenance purposes or to make rearrangements or FLAG requested changes
in the Service;
(b) Non-Service affecting failures of VGS applications, equipment or
facilities;
(c) Acts or omissions of FLAG or any user of the Service authorized by
FLAG; or
(d) Outages resulting from Force Majeure.
* * *
Service Availability and Circuit Performance for all circuits between PoPs will
be determined on a rolling [*]. The Parties will work together to keep this
determination period in pace with changing market standards.
-------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
7. CONTACTS
--------
In order to provide a standard communication and escalation channel, VGS will
provide contact and escalation names and numbers, which correspond to the FLAG
contacts, for each of the key functions identified below. FLAG and VGS will
jointly create a single point of contact for Service Provisioning and a separate
single point of contact for Fault Management.
--------------------------------------------------------------------------------------------------------------------
REQUIREMENT FLAG GROUP RESPONSIBLE VGS GROUP RESPONSIBLE
--------------------------------------------------------------------------------------------------------------------
Service Feasibility and Quotation Customer Provisioning Centre (CPC) Customer Support Center (CSC)
Service Ordering CPC CSC
Service Provisioning and Activation CPC CSC
Service Hand-over CPC CSC
Service Operations/Fault Mgmt Network Operations Centre (NOC) Service Management Center (SMC)
Planned Work Customer Care Carrier Relations
Escalation Carrier Relations Carrier Relations
---------------------------------------- -------------------------------------- --------------------------------------
FLAG GROUP CONTACT INFORMATION:
--------------------------------------------------------------------------------------------------------------------
GROUP CONTACT PHONE E-MAIL
--------------------------------------------------------------------------------------------------------------------
CPC Xxxx Xxxxx
NOC Xxxxx Xxxxx
Customer Care Customer Rep
Carrier Relations Director-Carrier Relations
--------------------------------------------------------------------------------------------------------------------
VGS GROUP CONTACT INFORMATION:
--------------------------------------------------------------------------------------------------------------------
GROUP CONTACT PHONE E-MAIL
--------------------------------------------------------------------------------------------------------------------
CSC Xxxxx Xxxxxx 000-000-0000
NOC Xxxxxxx Xxxxxx 000-000-0000
Customer Care Customer Rep
Carrier Relations Xxxxxx Xxxxx 000-000-0000
--------------------------------------------------------------------------------------------------------------------
8. CREDITS
-------
Credits will be applied for failure to meet commitments detailed in the SLAs as
set forth in the tables below. Credits for failures to meet SLA commitments will
be capped at $[*] over any [*] period. All cost and credit amounts in the tables
below are in US$.
----------------------------------------------------------------------------------------------------------------------------
PROVISIONING CREDIT CALCULATION
----------------------------------------------------------------------------------------------------------------------------
DAYS BEYOND ISD
----------------------------------------------------------------------------------------------------------------------------
SERVICE MONTHLY ANNUAL UP TO 3 BETWEEN [*] BETWEEN [*] OVER [*]
SERVICE COST SERVICE COST DAYS DAYS DAYS DAYS
----------------------------------------------------------------------------------------------------------------------------
[*]% [*]% [*]% [*]%
----------------------------------------------------------------------------------------------------------------------------
CREDIT
----------------------------------------------------------------------------------------------------------------------------
E1 [*] [*] [*] [*] [*] [*]
DS3 [*] [*] [*] [*] [*] [*]
STM-1 [*] [*] [*] [*] [*] [*]
STM-4 [*] [*] [*] [*] [*] [*]
Wavelength [*] [*] [*] [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
CIRCUIT PERFORMANCE CALCULATION NETWORK AVAILABILITY
-------------------------------------------------------------------------------------------------------------------------------
NOT TO
MONTHLY EXCEED
SERVICE ANNUAL [*]% OR LESS THAN (PER
COST SERVICE COST GREATER [*]% [*]% [*]% [*]% ANNUM)
-------------------------------------------------------------------------------------------------------------------------------
CREDIT
-------------------------------------------------------------------------------------------------------------------------------
[*]% [*]% [*]% [*]% [*]%
-------------------------------------------------------------------------------------------------------------------------------
E1 [*] [*] [*] [*] [*] [*] [*] [*]
DS3 [*] [*] [*] [*] [*] [*] [*] [*]
STM-1 [*] [*] [*] [*] [*] [*] [*] [*]
STM-4 [*] [*] [*] [*] [*] [*] [*] [*]
Wave-length [*] [*] [*] [*] [*] [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
-------------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
-----------------------------------------------------------------------------------------------------
MEAN TIME REPAIR CREDIT CALCULATION
(Pertains only to service unavailability of [*] or more)
-----------------------------------------------------------------------------------------------------
MONTHLY SERVICE ANNUAL SERVICE [*]% OF ANNUAL MAXIMUM CREDIT
COST COST AMOUNT
-----------------------------------------------------------------------------------------------------
E1 [*] [*] [*] [*]
DS3 [*] [*] [*] [*]
STM-1 [*] [*] [*] [*]
STM-4 [*] [*] [*] [*]
Wavelength [*] [*] [*] [*]
-----------------------------------------------------------------------------------------------------
--------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
EXHIBIT C
---------
NETWORK DESCRIPTION; ROLES AND RESPONSIBILITIES
-----------------------------------------------
[NORTH EUROPEAN NETWORK GRAPHIC]
VGSL and FTINL agree that through the Alliance, VGSL will provide and manage all
network elements and facilities used by the Alliance on the PoP to PoP VGSIEN
network. External to the VGSIEN, FLAG will provide and manage the elements and
systems directly related to FLAG's IP layer and space for FLAG customer
equipment.
VGSL supplied elements:
o Fiber
o Physical location space (not including any co-location space for
co-locating FLAG's customers' equipment)
o WDM and SDH equipment
o DCN and OSS related to the above
FLAG supplied elements
o FLAG routers (Juniper)
o Edge routers
o All associated FLAG IP OSS systems
o Co-location space for FLAG's customers' equipment
NETWORK DEMARCATION
-------------------
[VGS - FLAG Interconnect Point Graphic]
o A demarcation point will be supplied in each co-location point from which
point the following relationship will govern FLAG's IP layer equipment
resident within that location.
o VGSL will work with FLAG to determine the feasibility and requirements of
providing "test points" at the very edge of the VGSIEN network at some
point in the future. FLAG will have access to these "test points" through
the test systems reporting facilities managed by VGSL. In the interim,
VGSL will perform manual tests to meet FLAG requirements on a VGSIEN PoP
to PoP basis.
VGSL RESPONSIBILITIES
o Provide EFI, operations and maintenance on all VGSIEN network elements and
facilities. This does not include FLAG's IP layer equipment, network
systems, and any other FLAG systems.
o Design of the network, this converts the Service requirements into VGSL's
network planning and implementation. This includes, without limitation,
the choice of supplier and suppliers equipment.
Exhibit C-2
o Procure all equipment and fiber including ancillary equipment such as
power plants, air conditioning, clock distribution circuits.
o Manage the installation of all the equipment through the supplier(s).
o Negotiate with the landlords for all required equipment and NOC space.
o Manage the non-FLAG IP supplier's developmental activities for any
interfaces between surveillance systems procured under this agreement with
existing FLAG provided systems.
o Authorization of payment of relevant suppliers.
o Provision all VGSIEN network elements between the FLAG IP layer
demarcation points established at each POP.
o Provide a basic level of maintenance for FLAG's IP layer equipment as may
be mutually agreed between the Parties. This will include:
o Card replacement
o Basic wiring
o Surveillance of all VGSIEN equipment, except the FLAG IP equipment.
o Assignment of all transport Services.
o Implementation of all FLAG requested Services in a timely manner as
specified in the Service Level Agreements.
o Maintenance of all equipment and building space. (One exception would be
the FLAG IP equipment which VGSL would maintain as described above.)
o Negotiate with suppliers for maintenance support.
o Manage the performance of all relevant suppliers (equipment, fiber,
landlords)
o Preparation of a monthly review of performance and presenting according to
FLAG's reasonable requirements the same to FTINL for its review.
o VGSL will provide agreed to network views to FLAG via remote
terminal-based surveillance devices.
FLAG RESPONSIBILITIES
o FLAG will EFI FLAG's IP layer equipment and associated DCN equipment.
o FLAG will provide advanced maintenance and administration of FLAG's IP
layer equipment and associated DCN including:
Exhibit C-3
o Troubleshooting
o Local and remote configuration
o Hardware and software upgrades and augmentation etc.
o Manage the IP supplier's developmental activities for any interfaces
between surveillance systems procured under this Agreement.
o FLAG will perform the surveillance and control function on the Juniper
routers.
JOINT VGSL-FLAG RESPONSIBILITIES
o In order to ensure the realization of a targeted, timely network
implementation, VGSL and FLAG commit to do ongoing, detailed discussions
of network topology and capacity requirements.
o VGSL and FLAG will jointly establish escalation contacts, procedures and
time intervals. The target model is to provide a single point of contact
that can perform both logging and low level troubleshooting. VGSL and FLAG
will also establish bureau to bureau, NOC to NOC and cross-departmental
relationships to handle troubles of differing complexity in an expedient
and efficient manner.
o Provisioned and Ordered records will be held by both organizations and
updated simultaneously as circuits are provided and ceased.
o Periodic exercises to compare and correct any variations that exist
between the two sets of records will be carried out. Development of
mutually agreed automated interfaces between relevant OSS systems to
maintain these records within a year of executing this Agreement.
o VGSL and FLAG will co-operate on achieving a means of aligning or
cross-referencing order references, circuit identification designations
etc. to enable unambiguous identification of these entities.
SYSTEMS AND OPERATIONS INTERACTIONS
o VGSL will provide fault, capacity and performance monitoring services
throughout the VGSIEN network for all elements except FLAG's IP layer
elements and their associated DCN.
o VGSL will provide FLAG with a mutually agreed upon "read-only" view of the
following parameters associated with FLAG's bandwidth on the VGSIEN:
o Fault alarms
o Pertinent performance indicators
Exhibit C-4
o FLAG will provide pertinent status information regarding FLAG's IP layer
network elements to VGSL to aid in fault isolation and testing.
o Mutually agreed interfaces will be developed within a year of executing
this Agreement to allow for the automated transfer of trouble tickets and
service orders generated by the FLAG systems into the VGS systems.
o VGSL will provide Service order confirmations for FLAG's use in order to
build and maintain a database of orders active circuit information.
o The following general principles will apply with respect to the BSS and
OSS systems used by VGS and FLAG:
o OSS shall provide maximum amount of flow through for service
orders and changes
o OSS shall recognize various operational alarms
o OSS shall provide customer care work flow and status
o OSS shall provide information for customer SLA reports
o All information is confidential and cannot be used for
competitive purposes
o Mutually agreed interfaces to FLAG's Workflow Management and Inventory
systems will be developed in parallel, with mutually agreed automation of
interfaces being achieved within a year of executing this Agreement.
o Reporting requirements from systems to enable the generation of update
information, performance reporting and SLA management to be specified.
o Ongoing discussions will be conducted to keep both parties informed of the
timing of various evolutionary milestones in each company's systems
development/implementation.
o The
Network Alliance agreement covers VGSIEN PoP-to-PoP services and
therefore any performance measurements and SLAs would only apply to that
section of an end-to-end circuit. However, both parties agree that they
will work together in support of the commitments that had been made to
FLAG's end customers.
o By the VGSIEN Ready for Service date, the following processes will be
established between FLAG and VGSL:
o Order flow
o End to end testing process and responsibilities
o Customer acceptance
o VGSL and FLAG will establish bureau to bureau, NOC to NOC and
cross-departmental relationships to handle the various
troubles that will need to be addressed
Exhibit C-5
EXHIBIT D
---------
PRICING FOR INITIAL PURCHASE COMMITMENT
---------------------------------------
The purchase price for the Initial Forecast is US$[*] on a [*] year IRU Basis
plus annual O&M Charges as noted below. Accordingly, the purchase price for the
Initial Purchase is US$[*] (plus annual O&M Charges).
[*]
--------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions.
