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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[X] SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM T0
COMMISSION FILE NUMBER: 0-23087
STARTEC GLOBAL COMMUNICATIONS CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
------------------
<TABLE>
<S> <C>
MARYLAND 52-1660985
-------- ----------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
10411 MOTOR CITY DRIVE, BETHESDA, MD 20817
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
</TABLE>
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(301) 365-8959
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AS OF
CLASS NOVEMBER 2, 1998
- ------------------------------ ------------------
<S> <C>
Common Stock, $.01 par value 8,964,815
</TABLE>
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<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 1998 and 1997 .......................................................... 3
Condensed Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997 .. 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1998 and 1997 ................................................ 5
Notes to Condensed Consolidated Financial Statements .................................. 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ............................................... 9
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK .......................................................................16
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS ............................................................... 16
Item 2. CHANGES IN SECURITIES ........................................................... 16
Item 3. DEFAULT UPON SENIOR SECURITIES AND USE OF PROCEEDS .............................. 16
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS ............................. 16
Item 5. OTHER INFORMATION ............................................................... 17
Item 6. EXHIBITS AND REPORTS ON FORM 8-K ................................................ 17
SIGNATURE ................................................................................ 18
EXHIBIT INDEX ............................................................................ 19
</TABLE>
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ----------------------------
1997 1998 1997 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenues ............................................ $ 25,757 $ 47,448 $ 54,593 $ 110,800
Cost of services ........................................ 22,668 41,952 47,919 96,436
--------- --------- --------- ---------
Gross margin ........................................... 3,089 5,496 6,674 14,364
General and administrative expenses ..................... 1,820 6,091 4,281 12,974
Selling and marketing expenses .......................... 391 2,068 696 3,829
Depreciation and amortization ........................... 140 619 354 1,327
--------- --------- --------- ---------
Income (loss) from operations .......................... 738 (3,282) 1,343 (3,766)
Interest expense ........................................ 326 5,130 578 7,707
Interest income ......................................... 9 2,397 15 3,700
--------- --------- --------- ---------
Income (loss) before income tax provision .............. 421 (6,015) 780 (7,773)
Income tax provision .................................... 8 -- 16 --
--------- --------- --------- ---------
Net income (loss) ...................................... $ 413 $ (6,015) $ 764 $ (7,773)
========= ========= ========= =========
Net income (loss) per common share-basic ................ $ 0.08 $ (0.67) $ 0.14 $ (0.87)
========= ========= ========= =========
Net income (loss) per common share-diluted .............. $ 0.07 $ (0.67) $ 0.14 $ (0.87)
========= ========= ========= =========
Weighted average common shares outstanding -- basic ..... 5,403 8,964 5,403 8,939
========= ========= ========= =========
Weighted average common shares outstanding-diluted ...... 5,760 8,964 5,634 8,939
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------- --------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................................................... $ 26,114 $ 108,287
Accounts receivable, net of allowance for doubtful accounts of approximately
$2,353 and $3,368 respectively .................................................... 16,980 29,748
Accounts receivable, related party .................................................. 377 710
Other current assets ................................................................ 1,743 3,588
-------- ---------
Total current assets .............................................................. 45,214 142,333
-------- ---------
PROPERTY AND EQUIPMENT:
Long distance communications equipment .............................................. 3,305 17,158
Computer and office equipment ....................................................... 1,024 4,484
Less -- Accumulated depreciation and amortization ................................... (1,240) (2,552)
-------- ---------
3,089 19,090
Construction in progress ............................................................ 2,095 3,665
-------- ---------
Total property and equipment, net ................................................. 5,184 22,755
-------- ---------
Deferred debt financing costs, net ................................................... 952 6,382
Other long term assets ............................................................... -- 150
Restricted cash and pledged securities ............................................... 180 52,597
-------- ---------
Total assets ...................................................................... $ 51,530 $ 224,217
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................................................... $ 15,420 $ 27,644
Accrued expenses .................................................................... 3,728 11,780
Capital lease obligations ........................................................... 331 391
-------- ---------
Total current liabilities ......................................................... 19,479 39,815
-------- ---------
Capital lease obligations, net of current portion .................................... 417 164
Senior notes payable ................................................................. -- 157,969
Notes payable to individuals and other, net of current portion ....................... 44 --
-------- ---------
Total liabilities ................................................................. 19,940 197,948
-------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 100,000 shares authorized; no shares issued --..... -- --
Common stock, $0.01 par value; 20,000,000 shares authorized at December 31, 1997
and September 30, 1998; 8,811,999 shares issued and outstanding at December 31,
1997; 8,964,815 shares issued and outstanding at September 30, 1998 ............... 88 90
Additional paid-in capital .......................................................... 35,528 35,832
Warrants ............................................................................ 1,693 3,800
Unearned compensation ............................................................... (241) (202)
Accumulated deficit ................................................................. (5,478) (13,251)
-------- ---------
Total stockholders' equity .......................................................... 31,590 26,269
-------- ---------
Total liabilities and stockholders' equity .......................................... $ 51,530 $ 224,217
======== =========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1997 1998
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ....................................................... $ 764 $ (7,773)
Adjustments to net income (loss)
Depreciation and amortization ......................................... 354 1,327
Compensation pursuant to stock options ................................ 37 39
Amortization of deferred debt financing costs and debt discounts ...... 118 625
Changes in operating assets and liabilities:
Accounts receivable, net ............................................. (10,006) (12,768)
Accounts receivable, related party ................................... 78 (333)
Other current assets ................................................. (272) (1,845)
Accounts payable ..................................................... 8,032 12,224
Accrued expenses ..................................................... 137 8,052
--------- ---------
Net cash used in operating activities ............................... (758) (452)
--------- ---------
INVESTING ACTIVITIES:
Other long term investment .............................................. -- (150)
Purchases of property and equipment ..................................... (1,229) (18,799)
--------- ---------
Net cash used in investing activities ............................... (1,229) (18,949)
--------- ---------
FINANCING ACTIVITIES:
Net borrowings under receivables-based credit facility .................. 4,700 --
Proceeds from Senior notes and warrants offering ........................ -- 160,000
Investments in pledged securities ....................................... -- (52,417)
Deferred debt financing costs ........................................... (555) (5,994)
Proceeds from exercise of employee stock options ........................ -- 262
Purchase and retirement of nonvoting common stock ....................... (45) --
Borrowings under notes payable to individuals and other ................. (803) --
Payments under capital lease obligations ................................ (324) (277)
--------- ---------
Net cash provided by financing activities ........................... 2,973 101,574
--------- ---------
Net increase in cash and cash equivalents ............................... 986 82,173
Cash and cash equivalents at the beginning of the period ................ 149 26,114
--------- ---------
Cash and cash equivalents at the end of the period ...................... $ 1,135 $ 108,287
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid ............................................................ $ 270 $ 80
========= =========
Income taxes paid ........................................................ $ -- $ --
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred debt financing and offering costs not paid ...................... $ 986 $ --
========= =========
Note payable to individual, converted to common stock .................... $ -- $ 44
========= =========
Equipment acquired under capital lease ................................... $ 378 $ 84
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS DESCRIPTION:
ORGANIZATION
Startec Global Communications Corporation (the "Company", formerly Startec,
Inc.), is a Maryland corporation founded in 1989 to provide long-distance
telephone services. The Company currently offers U.S.-originated long-distance
service to residential and carrier customers through a flexible network of owned
and leased transmission facilities, resale arrangements, and foreign termination
arrangements. The Company's marketing targets specific ethnic residential market
segments in the United States that are most likely to seek low-cost
international long-distance service to specific and identifiable country
markets. The Company is headquartered in Bethesda, Maryland.
REORGANIZATION
The Company's board of directors and stockholders have approved a
reorganization pursuant to which the Company's corporate structure will be
realigned to that of a publicly traded Delaware holding company. The
reorganization will consist of the transfer of substantially all of the
Company's assets into a newly incorporated Delaware subsidiary company ("New
Parent"), and the subsequent transfer of those assets to multiple subsidiaries
of the New Parent. After such transfer, the Company will be merged with and into
the New Parent. As of September 30, 1998, the New Parent and its subsidiaries
had been formed, but no transfer of assets had been made. The reorganization is
expected to be completed during the fourth quarter ending December 1998 and will
not have an impact on the consolidated financial statements of the Company.
RISKS AND OTHER IMPORTANT FACTORS
The Company is subject to various risks in connection with the operation of
its business. These risks include, but are not limited to, dependence on
operating agreements with foreign partners, significant foreign and U.S.-based
customers and suppliers, availability of transmission facilities, U.S. and
foreign regulations, international economic and political instability,
dependence on effective billing and information systems, customer attrition, and
rapid technological change. Many of the Company's competitors are significantly
larger and have substantially greater financial, technical, and marketing
resources than the Company; employ larger networks and control transmission
lines; offer a broader portfolio of services; have stronger name recognition and
loyalty; and have long-standing relationships with the Company's target
customers. In addition, many of the Company's competitors enjoy economies of
scale that can result in a lower cost structure for transmission and related
costs, which could cause significant pricing pressures within the long-distance
telecommunications industry. If the Company's competitors were to devote
significant additional resources to the provision of international long-distance
services to the Company's target customer base, the Company's business,
financial condition, and results of operations could be materially adversely
affected.
In the United States, the Federal Communications Commission ("FCC") and
relevant state Public Service Commissions have the authority to regulate
interstate and intrastate telephone service rates, respectively, ownership of
transmission facilities, and the terms and conditions under which the Company's
services are provided. Legislation that substantially revised the U.S.
Communications Act of 1934 was signed into law on February 8, 1997. This
legislation has specific guidelines under which the Regional Bell Operating
Companies ("RBOCs") can provide long-distance services, which will permit the
RBOCs to compete with the Company in providing domestic and international
long-distance services. Further, the legislation, among other things, opens
local service markets to competition from any entity (including long-distance
carriers, such as AT&T, cable television companies and utilities).
6
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Because the legislation opens the Company's markets to additional
competition, particularly from the RBOCs, the Company's ability to compete may
be adversely affected. Moreover, certain Federal and other governmental
regulations may be amended or modified, and any such amendment or modification
could have material adverse effects on the Company's business, results of
operations, and financial condition.
2. SIGNIFICANT ACCOUNTING PRINCIPLES:
GENERAL
In addition to the principles identified below, Note 2 of the Notes to
Financial Statements, as set forth in the Company's Annual Report on Form 10-K,
summarizes the Company's significant accounting principles.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. During the
three month period ended September 30, 1998, the Company recorded a net
favorable retroactive PTT rate adjustment in the amount of approximately
$727,000, consistent with its policy of recording credits when received. The
rate adjustment relates to traffic sent from April 1997 through September 1998
and is reflected as a reduction in cost of services in the accompanying
statement of operations.
REVENUE RECOGNITION
Revenues for telecommunication services provided to customers are
recognized as services are rendered, net of allowance for revenue that the
Company estimates will ultimately not be realized. Revenues for return traffic
received according to the terms of the Company's operating agreements with its
foreign partners are recognized as revenue as the return traffic is received and
processed.
PREPARATION OF INTERIM FINANCIAL INFORMATION
The financial statements included herein are unaudited and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the financial statements reflect all
adjustments (of a normal and recurring nature) which are necessary to present
fairly the financial position, results of operations and cash flows for the
interim periods. These unaudited financial statements should be read in
conjunction with the audited financial statements and notes thereto for the year
ended December 31, 1997, included in the Company's most recently filed Annual
Report on Form 10-K. The results for the nine months ended September 30, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998.
CONCENTRATIONS OF RISK
Financial instruments that potentially subject the Company to a
concentration of credit risk are accounts receivable. Residential accounts
receivable consist of individually small amounts due from geographically
dispersed customers. Carrier accounts receivable represent amounts due from
long-distance carriers. The Company's allowance for doubtful accounts is based
on current market
7
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
conditions. The Company's four largest carrier customers represented
approximately 44.0 and 44.9 percent of gross accounts receivable as of December
31, 1997, and September 30, 1998, respectively. The Company's five largest
carrier customers represented approximately 40.1 percent of net revenues for the
nine month period ended September 30, 1998. Purchases from the five largest
suppliers represented approximately 34.4 percent of cost of services for nine
month period ended September 30, 1998.
NET INCOME PER SHARE
In 1997, the Financial Accounting Standards Board released Statement No.
128, "Earnings Per Share." Statement 128 requires dual presentation of basic and
diluted earnings per share on the face of the statement of operations for all
periods presented. Basic earnings per share excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity.
Weighted average common and equivalent share amounts are derived as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1997 1998 1997 1998
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding - basic ........... 5,403 8,964 5,403 8,939
Dilutive effect of stock options and warrants ................ 357 -- 231 --
----- ----- ----- -----
Weighted average common shares outstanding - diluted ......... 5,760 8,964 5,634 8,939
===== ===== ===== =====
Per Share Amounts:
Basic ....................................................... $ 0.08 $ (0.67) $ 0.14 $ (0.87)
======= ========= ======= =========
Diluted ..................................................... $ 0.07 $ (0.67) $ 0.14 $ (0.87)
======= ========= ======= =========
</TABLE>
3. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information."
SFAS No. 130 requires "comprehensive income" and the components of "other
comprehensive income," to be reported in the financial statements and/or notes
thereto. As the Company did not have any components of "other comprehensive
income" net income is the same as "total comprehensive income" for all periods
presented.
SFAS No. 131 requires entities to disclose financial and descriptive
information about its reportable operating segments. It also establishes
standards for related disclosures about products and services, geographic areas,
and major customers. SFAS No. 131 is not required for interim financial
reporting purposes during 1998. The Company is in the process of assessing the
additional disclosures, if any, required by SFAS No. 131. However, such adoption
will not impact the Company's results of operations or financial position, since
it relates only to disclosures.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". According to SOP 98-1, costs incurred
in the preliminary stage are expensed as incurred. Only costs in the application
development stage can be capitalized. The Company adopted SOP 98-1 during the
quarter ended September 30, 1998 and capitalized $510,000 related to the
internally developed software,
8
<PAGE>
STARTEC GLOBAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
which is reflected in construction in progress on the accompanying balance sheet
as of September 30, 1998. Prior to adopting SOP 98-1, the Company expensed all
internal costs related to internally developed software as incurred.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities." SOP 98-5 requires that entities expense costs of start-up
activities as incurred. The Company adopted SOP 98-5 during the quarter ended
September 30, 1998 and expensed approximately $166,000 of start-up costs
incurred during the quarter for organizational activities associated with the
Company's facilities in the United Kingdom.
4. SENIOR NOTES AND WARRANTS OFFERING:
In May 1998, the Company completed the placement of $160 million 12% senior
notes due 2008 and warrants to purchase 200,226 shares of common stock at an
exercise price of $24.20 per share. This placement yielded net proceeds of
approximately $155 million, of which approximately $52 million was used to
purchase U.S. Government obligations which have been pledged to fund the first
six interest payments due on the senior notes, and the remainder of which will
be used to expand and develop the Company's network. The network expansion will
include the purchase of switches and compression equipment, acquisition of fiber
optic cable facilities, and investment in and acquisition of satellite earth
stations. The senior notes are recorded at a discount of $2.1 million to their
face amount to reflect the value attributed to warrants. The senior notes are
unsecured and require semiannual interest, payments beginning November 15, 1998.
The senior notes and warrants have certain registration rights.
5. RELATED PARTY TRANSACTION:
During the nine months ended September 30, 1998, the company advanced an
aggregate of approximately $1,065,000 to certain of its employees and officers.
The loans bear interest at a rate of 7.87% per year, and are due and payable on
December 31, 1998. The loans are included in other current assets in the
accompanying balance sheet.
6. COMMITMENTS AND CONTINGENCIES:
LITIGATION
Certain claims and suits have been filed or are pending against the
Company. In management's opinion, resolution of these matters will not have a
material impact on the Company's financial position or results of operations,
and adequate provision for any potential losses has been made in the
accompanying financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with the financial
statements, related notes, and other detailed information included elsewhere in
this Quarterly Report on Form 10-Q. This Quarterly Report contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward looking statements
may be identified by use of such terms as "believes", "anticipates", "intends",
or "expects". These forward-looking statements relate to plans, objectives and
expectations of the Company for future operations. In light of the risks and
uncertainties inherent in all such projected operation matters, the
9
<PAGE>
inclusion of forward-looking statements in this report should not be regarded as
a representation by the Company or any other person that the objectives or plans
of the Company will be achieved or that any of the Company's operating
expectations will be realized. The Company's revenues and results of operations
are difficult to forecast and could differ materially from those projected in
the forward-looking statements contained in this report as a result of certain
factors including, but not limited to, dependence on operating agreements with
foreign partners, significant foreign and U.S.-based customers and suppliers,
availability of transmission facilities, U.S. and foreign regulations,
international economic and political instability, dependence on effective
billing and information systems, customer attrition, and rapid technological
change. These factors should not be considered exhaustive; the Company
undertakes no obligation to release publicly the results of any future revisions
it may make to forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Results of Operations
The following table sets forth-certain financial data as a percentage of
net revenues for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues ....................................... 100.0% 100.0% 100.0% 100.0%
Cost of services ................................... 88.0 88.4 87.8 87.0
----- ----- ----- -----
Gross margin ...................................... 12.0 11.6 12.2 13.0
General and administrative expenses ................ 7.1 12.8 7.8 11.7
Selling and marketing expenses ..................... 1.5 4.4 1.3 3.5
Depreciation and amortization ...................... 0.5 1.3 0.6 1.2
----- ----- ----- -----
Income (loss) from operations ..................... 2.9 (6.9) 2.5 (3.4)
Interest expense ................................... (1.3) (10.8) (1.1) (7.0)
Interest income .................................... -- 5.1 -- 3.3
----- ----- ----- -----
Income (loss) before income tax provision ......... 1.6 (12.6) 1.4 ( 7.1)
Income tax provision ............................... -- -- -- --
----- ----- ----- -----
Net income (loss) ................................. 1.6% (12.6)% 1.4% ( 7.1)%
===== ===== ===== =====
</TABLE>
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTH PERIOD
ENDED SEPTEMBER 30, 1997
Net Revenues. Net revenues for the three months ended September 30, 1998
increased approximately $21.6 million or 83.7 percent, to approximately $47.4
million from $25.8 million for the three months ended September 30, 1997.
Residential revenue increased in comparative periods by approximately $6.4
million or 80.0 percent, to approximately $14.4 million for the three-month
period ended September 30, 1998 from approximately $8.0 million in the third
quarter of 1997. The increase in residential revenue is due to an increase in
the number of residential customers to over 113,000 as of September 1998 from
approximately 58,000 as of September 1997. Carrier revenue for the three-month
period ended September 30, 1998 increased approximately $15.2 million or 85.4
percent, to approximately $33.0 million from approximately $17.8 million for the
third quarter of 1997. The increase in carrier revenues is due to the execution
of the Company's strategy to optimize its capacity on its facilities, which has
resulted in sales to new carrier customers and increased sales to existing
carrier customers. The increase in total net revenue is primarily from US
operations and is a result of switching and network facilities deployment
10
<PAGE>
combined with the Company's increased sales and marketing efforts. Startec has
expanded its sales for overflow traffic to 46 carriers from 37 a year ago. The
Company now markets to over 35 ethnic residential communities in 20 major
metropolitan areas.
Gross Margin. Gross margin increased by approximately $2.4 million to $5.5
million for the three-month period ended September 30, 1998 from $3.1 million
for the three month period ended September 30, 1997. Gross margin as a
percentage of net revenues for the three-month period ended September 30, 1998
was 11.6 percent compared to 12.0 percent for the three-month period ended
September 30, 1997. Gross margin in the period includes favorable PTT rate
adjustments. Gross margin for the three month period ended September 30, 1998
decreased due to the Company's rapid expansion plan which necessitates carriage
of call traffic "off-net" at lower gross margin.
General and Administrative. General and administrative expenses for the
three-month period ended September 30, 1998 increased 238.9 percent to
approximately $6.1 million from $1.8 million for the three-month period ended
September 30, 1997. As a percentage of net revenues, general and administrative
expenses increased to 12.8 percent from 7.1 percent for the respective periods.
The increase was primarily due to an increase in personnel to 342 at September
30, 1998 from 111 at September 30, 1997.
Selling and Marketing. Selling and marketing expenses for the three-month
period ended September 30, 1998 increased 437.1 percent to approximately $2.1
million from approximately $391,000 for the three-month period ended September
30, 1997. As a percentage of net revenues, selling and marketing expenses
increased to 4.4 percent from 1.5 percent for the respective periods. The
increase is primarily due to the Company's efforts to market to new, and to
existing, customer groups.
Depreciation and Amortization. Depreciation and amortization expenses for
the three-month period ended September 30, 1998 increased to approximately
$619,000 from $140,000 for the three-month period ended September 30, 1997,
primarily due to increases in capital expenditures pursuant to the Company's
strategy of expanding its network infrastructure.
Interest. Interest expense for the three-month period ended September 30,
1998 increased to approximately $5.1 million from $326,000 for the three month
period ended September 30, 1997, as a result of a senior notes offering by the
Company. The Company also recorded interest income of approximately $2.4 million
for the three-month period ended September 30, 1998 as a result of investing the
offering proceeds.
Net Loss. Net loss was approximately $6.1 million for the three-month
period ended September 30, 1998 as compared to net income of approximately
$413,000 for the three-month period ended September 30, 1997.
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1997
Net Revenues. Net revenues for the nine months ended September 30, 1998
increased approximately $56.2 million or 102.9 percent, to approximately $110.8
million from $54.6 million for the nine months ended September 30, 1997.
Residential revenue increased in comparative periods by approximately $19.9
million or 107.0 percent, to approximately $38.5 million for the nine months
ended September 30, 1998 from approximately $18.6 million for the nine months
ended September 30, 1997. The increase in residential revenue is due to an
increase in the number of residential customers to over 113,000 as of September
1998 from approximately 58,000 as of September 1997. Carrier revenue for the
nine month period ended September 30, 1998 increased approximately $36.3 million
or 100.8 percent, to approximately $72.3 million from approximately $36.0
million for the nine months ended September 30, 1997. The increase in carrier
revenues is due to the execution of the Company's strategy to optimize its
capacity on its facilities, which has resulted in sales to new carrier customers
and increased sales to existing carrier customers.
11
<PAGE>
Gross Margin. Gross margin increased by approximately $7.7 million to $14.4
million for the nine month period ended September 30, 1998 from $6.7 million for
the nine month period ended September 30, 1997. Gross margin improved as a
percentage of net revenues for the nine-month period ended September 30, 1998 to
13.0 percent from 12.2 percent for the nine-month period ended September 30,
1997. Gross Margin in the period was favorably impacted by rate adjustments
which reduced termination costs. These rate adjustments occur routinely. The
Company embarked on a rapid expansion plan which necessitates carriage of call
traffic "off-net" at lower gross margins.
General and Administrative. General and administrative expenses for the
nine-month period ended September 30, 1998 increased 202.3 percent to
approximately $13.0 million from $4.3 million for the nine-month period ended
September 30, 1997. As a percentage of net revenues, general and administrative
expenses increased from 7.8 percent to 11.7 percent for the respective periods.
The increase was primarily due to an increase in personnel to 342 at September
30, 1998 from 111 at September 30, 1997.
Selling and Marketing. Selling and marketing expenses for the nine-month
period ended September 30, 1998 increased 460.3 percent to approximately $3.9
million from approximately $696,000 for the nine-month period ended September
30, 1997. As a percentage of net revenues, selling and marketing expenses
increased to 3.5 percent from 1.3 percent for the respective periods. The
increase is primarily due to the Company's efforts to market to new, and to
existing, customer groups.
Depreciation and Amortization. Depreciation and amortization expenses for
the nine month period ended September 30, 1998 increased to approximately $1.3
million from $354,000 for the nine-month period ended September 30, 1997,
primarily due to increases in capital expenditures pursuant to the Company's
strategy of expanding its network infrastructure.
Interest. Interest expense for the nine-month period ended September 30,
1998 increased to approximately $7.7 million from $578,000 for the nine-month
period ended September 30, 1997, as a result of a senior notes offering by the
Company. The Company also recorded interest income of approximately $3.7 million
for the nine-month period ended September 30, 1998 as a result of investing the
offering proceeds.
Net Loss. Net loss was approximately $7.8 million for the nine month period
ended September 30, 1998 as compared to a net income of approximately $764,000
for the nine month period ended September 30, 1997.
Liquidity and Capital Resources
The Company's liquidity requirements arise from cash used in operating
activities, purchases of network equipment, and payments on outstanding
indebtedness. Prior to the completion of its initial public offering, the
Company financed its activities through capital lease financings, notes payable
from individuals, a credit and billing arrangement with a third party company
(since terminated) and a secured revolving line of credit arrangement with a
bank. The credit facility provides for maximum borrowings of the lesser of $15
million or 85% of eligible accounts receivable, as defined, until maturity on
December 31, 1999. The Company may elect to pay quarterly interest payments at
the prime rate, plus 2%, or the adjusted LIBOR, plus 4%. The credit facility is
secured by substantially all of the Company's assets. The credit facility
recently was amended in connection with the senior notes offering and
Reorganization. The amended credit facility has certain key financial covenants
that apply only if the Company attempts to borrow. The Company is currently not
in compliance with these covenants and therefore, would be unable to borrow any
amounts under the credit facility.
The Company completed its initial public offering of 3,277,500 shares of
its common stock in October 1997, the net proceeds of which (after underwriting
discounts, commissions and other professional fees) approximated $35.0 million.
The Company used a portion of the net proceeds to acquire cable facilities and
switching, compression and related telecommunications equipment. Proceeds were
also used for marketing programs, to pay down amounts due under the credit
facility, for working capital and general corporate purposes.
12
<PAGE>
In May 1998, the Company completed the placement of $160 million 12% senior
notes due 2008 and warrants to purchase 200,226 shares of common stock at an
exercise price of $24.20 per share. This placement yielded net proceeds of
approximately $155 million, of which approximately $52 million was used to
purchase U.S. Government obligations which have been pledged to fund the first
six interest payments due on the senior notes, and the remainder of which will
be used to expand and develop the Company's network. The network expansion will
include the purchase of switches and compression equipment, acquisition of fiber
optic cable facilities, and investment in and acquisition of satellite earth
stations. The senior notes are unsecured and require semi-annual interest
payments beginning November 15, 1998. The senior notes and warrants have certain
registration rights.
The Company's cash and cash equivalents increased to approximately $108.3
million at September 30, 1998 from approximately $26.1 million at December 31,
1997. Although the Company had a net loss for the nine months ended September
30, 1998 of $7.8 million as compared to net income of $764,000 for the 1997
period, net cash used for operating activities was approximately $452,000 for
the nine month period ended September 30, 1998, as compared to net cash used by
operating activities of $758,000 for the nine month period ended September 30,
1997. The improvement in net cash used in operations despite the increase in the
net loss was primarily due to an increase in accrued expenses of $8 million in
the nine months ended September 30, 1998 as compared to an increase of $137,000
in 1997.
Net cash used in investing activities was approximately $19.0 million and
$1.2 million for the nine months ended September 30, 1998 and 1997,
respectively. Net cash used in investing activities for the nine months ended
September 30, 1998 primarily related to capital expenditures to expand the
Company's network infrastructure.
Net cash provided by financing activities was approximately $101.6 million
and $3.0 million for the nine months ended September 30, 1998 and 1997,
respectively. The cash provided by financing activities for the nine months
ended September 30, 1998 primarily resulted from the senior notes offering.
As a result of completing the senior note offering the Company expects that
it will incur negative EBITDA and significant operating losses and net losses
until late 1999, as it incurs additional costs associated with the development
and expansion of its marketing programs and its entry into new markets, the
introduction of new telecommunications services, and as a result of the interest
expense associated with its financing activities. The Company's principal cash
requirements will be for capital expenditures related to the Company's network
development plan and for interest payments on the senior notes. Approximately
$52 million of the net proceeds of the senior notes was used to purchase the
pledged securities, which will assure holders of the notes that they will
receive all scheduled cash interest payments through May 15, 2001. The Company
may be required to obtain additional financing in order to pay interest in the
senior notes after May 15, 2001 and to repay the notes at their maturity.
The Company's business strategy contemplates aggregate capital expenditures
(including capital expenditures, working capital and other general corporate
purposes) of approximately $165.8 million through December 31, 2000. Of such
amount, the Company intends to use approximately $152.8 million to fund capital
expenditures to expand and develop the Company's network (including $5.8
million, which has already been allocated to purchase the Los Angeles switch).
During 1998, the Company plans to install a new international gateway
switch in Los Angeles. In addition, the Company plans to acquire (i) six
additional switches during 1998 to be deployed during 1998 and early 1999 in
Chile, France, Germany, Japan, the Netherlands and the United Kingdom; (ii) nine
additional switches during 1999 to be deployed during 1999 and early 2000 in
Australia, Belgium, Canada (two), Hong Kong, Italy, Mexico, Switzerland and
Uganda' and (iii) four additional switches in 2000 to be deployed during 2000
and early 2001 in Argentina, Brazil, India and Singapore. The Company also
intends to invest in domestic land-based fiber optic cable facilities linking
the East Coast and West Coast of the United States, and undersea fiber optic
transmission facilities linking North America with Europe,
13
<PAGE>
the Pacific Rim, Asia and Latin America. Moreover, the Company plans to invest
in or acquire two satellite earth stations during 1998 and 1999. As the Company
executes its expansion strategy and encounters new marketing opportunities,
management may elect to relocate or redeploy certain switches, points of
presence and other network equipment to alternate locations from what is
outlined above.
In the third quarter, Startec added a new point of presence (POP) site in
Miami and expanded its capacity in three existing POPs in Dallas, Chicago, and
Los Angeles. This brings the total number of POPs to seven. POP deployment
allows the Company to increase its speed to market. The POPs have been
strategically deployed to meet demand in 20 major metropolitan areas. During the
quarter, Startec negotiated the acquisition of Trans Pacific Technology, Inc.
thereby acquiring signatory ownership in the Sea-Me-We-3 undersea fiber optic
cable. Startec also signed an agreement to purchase capacity in the Trans
Atlantic undersea cable, TAT-14. Additionally, the Company purchased DS-3
capacity on the Gemini transatlantic cable between New York and the United
Kingdom. Through these cables, Startec will have access to key cities in Europe
and Asia. Securing ownership interests at the signatory level in undersea fiber
optic cable allows the Company to manage transmission capacity as well as
transmission costs. Startec has secured 28 operating agreements. This has
increased from four one year ago. These agreements allow the Company to
terminate calls in a country or hub calls for a region. They provide a
competitive advantage and allow the Company to manage its termination costs.
After taking into account the net proceeds to the Company from the senior
notes offering and the purchase of the pledged securities together with the
Company's cash on hand and anticipated cash from operations, the Company expects
that it will need approximately $40.0 million of additional financing to
complete its capital spending plan through the end of 2000. Although the Company
believes that it should be able to obtain this required financing from
traditional sources, such as bank lenders, asset-based financiers or equipment
vendors, there can be no assurance the Company will be successful in arranging
such financing on terms its considers acceptable or at all. In the event that
the Company is unable to obtain additional financing, it will be required to
limit or curtail its expansion plans.
The Company regularly reviews opportunities to further its business
strategy through strategic alliances with, investment in, or acquisitions of
businesses that it believes are complementary to the Company's current and
planned operations. The Company's ability to consummate strategic alliances and
acquisitions, and to make investments that may be of strategic significance to
the Company, may require the Company to obtain additional debt and/or equity
financing. There can be no assurance that the Company will be successful in
arranging such financing on terms it considers acceptable or at all.
The implementation of the Company's strategic plan, including the
development and expansion of its network facilities, expansion of its marketing
programs, and funding of operating losses and working capital needs, will
require significant investment. The Company expects that the net proceeds of the
senior notes offering together with cash on hand and cash flow from operations,
will provide the company with sufficient capital to fund currently planned
capital expenditures and anticipated operating losses through the end of the
first quarter 2000. There can be no assurance that the Company will not need
additional financing sooner than currently anticipated. The need for additional
financing depends on a variety of factors, including the rate and extent of the
Company's expansion and new markets, the cost of an investment in additional
switching and transmission facilities and ownership rights in fiber optic
14
<PAGE>
cable, the incurrence of costs to support the introduction of additional or
enhanced services, and increased sales and marketing expenses. In addition, the
Company may need additional financing to fund unanticipated working capital
needs or to take advantage of unanticipated business opportunities, including
acquisitions, investments or strategic alliances. The amount of the Company's
actual future capital requirements also will depend upon many factors that are
not within the Company's control, including competitive conditions and
regulatory or other government actions. In the event that the Company's plans or
assumptions change or prove to be inaccurate or the net proceeds of this senior
notes offering, together with cash on hand and internally generated funds, prove
to be insufficient to fund the Company's growth and operations, then some or all
of the Company's development and expansion plans could be delayed or abandoned,
or the Company may be required to seek additional financing or to sell assets,
to the external permitted by the terms of the senior notes.
The Company may seek to raise such additional capital from public or
private equity or debt sources. There can be no assurance that the Company will
be able to obtain additional financing or, if obtained, that it will be able to
do so on a timely basis or on terms favorable to the Company. If the Company is
able to raise additional funds through the incurrence of debt, it would likely
become subject to additional restrictive financial covenants. In the event that
the Company is unable to obtain such additional capital or is unable to obtain
such additional capital on acceptable terms, the Company may be required to
reduce the scope of its expansion, which could adversely affect the Company's
business, financial condition and results of operations, its ability to compete
and its ability to meet its obligations under the senior notes.
Although the Company intends to implement the capital spending plan
described above, it is possible that unanticipated business opportunities may
arise which the Company's management may conclude are more favorable to the
long-term prospects of the Company than those contemplated by the current
capital spending plan.
The Company has accrued approximately $2.1 million as of September 30, 1998
for disputed vendor obligations asserted by one of the Company's foreign
carriers for minutes processed in excess of the minutes reflected on the
Company's records. If the Company prevails in its disputes, these amounts or
portions thereof would be credited to operations in the period of resolution.
Conversely, if the Company does not prevail in its disputes, these amounts or
portions thereof may be paid in cash.
The Company's management is currently in the process of assessing the
nature and extent of the potential impact of the Year 2000 issue on its systems
and applications, including its billing, credit and call tracking systems, and
intends to take steps to prevent failures in its systems and applications
relating to Year 2000. The majority of the Company's operating systems are
relatively new and have been certified to the Company as being Year 2000
compliant. Despite the fact that the majority of the Company's systems have been
certified as Year 2000 compliant, there can be no assurance that the Company's
system will not be adversely affected by the Year 2000 issue. In addition,
computers used by the Company's vendors providing services to the Company or
computers used by the Company's customers that interface with the Company's
computer systems may have Year 2000 problems, any of which may adversely affect
the ability of those vendors to provide services to the Company, or in the case
of the Company's carrier customers, to make payments to the Company. If any of
such systems fails or experiences processing errors, such failures or errors may
disrupt or corrupt the Company's systems. The Company is utilizing its current
management information systems staff to conduct its third party compliance
analysis and has sent requests to 12 of its top telephony customers and vendors
requesting a detailed written description of the status of their Year 2000
compliance efforts. Although management has not yet finalized its analysis, it
does not expect that the costs to properly address the Year 2000 issue will have
a material adverse effect on its results of operations or financial position.
Failure of any of the Company's systems or applications or the failure, or
errors in, the computer systems of its vendors or carrier customers could
materially adversely affect the Company's business, financial condition and
results of operations.
15
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This requirement is not currently applicable to the Company.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Certain claims and suits have been filed or are pending against the
Company. In management's opinion, resolution of these matters will not have a
material impact on the Company's financial position or results of operations and
adequate provision for any potential losses has been made in the accompanying
financial statements.
ITEM 2. CHANGES IN SECURITIES
On May 21, 1998, the Company issued 160,000 Units (the "Units") consisting
of $160,000,000 aggregate principal amount of 12% Senior Notes due 2008
("Notes") and warrants (the "Warrants") to purchase an aggregate of 200,226
shares of its common stock (the "Warrant Shares"). Each Unit consists of (i)
$1,000 principal amount of the Notes and (ii) a Warrant to purchase 1.25141
Warrant Shares. The Units were issued and sold by the Company to Lehman Brothers
Inc., Goldman Sachs & Co. and ING Baring (U.S.) Securities, Inc. (collectively,
the "Initial Purchasers") in a transaction exempt from registration requirements
of the Securities Act of 1933, as amended (the "Securities Act") pursuant to
Section 4 (2) thereof and subsequently resold by the Initial Purchasers pursuant
to Rule 144A and Regulation S.
Each Warrant, when exercised, will entitle the holder thereof to receive
1.25141 fully paid and non-assessable Warrant Shares at an exercise price of
$24.20 per share (the "Exercise Price"). The Exercise Price and the number of
shares of Common stock issuable upon exercise of a Warrant are both subject to
adjustment in certain circumstances. The Warrants are exercisable, on or after
November 15, 1998, to purchase an aggregate of 200,226 Warrant Shares
representing (on a fully diluted basis, assuming all options, warrants and other
stocks rights outstanding are exercised as of May 21, 1998) approximately 2.0%
of the shares of Common Stock. The Warrants expire by their term on May 15,
2008.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
At the Company's Annual Meeting of Stockholders held on July 31, 1998, the
stockholders considered and voted on the matters described below.
(a) The following individuals were elected to the Company's Board of
Directors:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR VOTES WITHELD
- ----------------------- ----------- --------------
<S> <C> <C>
Nazir G. Dossani 8,187,250 6,659
Richard K. Prinsl 8,187,250 6,659
</TABLE>
(b) Proposal to approve the Company's Amended and Restated 1997 Performance
Incentive Plan.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS BROKER NON-VOTES
- ----------------- --------------- ------------- -----------------
<S> <C> <C> <C>
5,366,091 1,140,619 10,500 1,676,699
</TABLE>
16
<PAGE>
(c) Proposal to approve reorganization of the Company into a holding
company structure.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS BROKER NON-VOTES
- ----------------- --------------- ------------- -----------------
<S> <C> <C> <C>
5,883,356 599,919 29,700 1,680,934
</TABLE>
ITEM 5. OTHER INFORMATION
Discretionary Proxy Voting Authority/Stockholder Proposals
On May 21, 1998 the Securities and Exchange Commission adopted an amendment
to Rule 14a-4, as promulgated under the Securities Exchange Act of 1934. The
amendment to Rule 14a-4(c) (1) governs the Company's use of its discretionary
proxy voting authority with respect to a stockholder proposal which the
stockholder has not sought to include in the Company's proxy statement. The new
amendment provides that if a proponent of a proposal fails to notify the Company
at least 45 days prior to the month and day of mailing of the prior year's proxy
statement, then the management proxies will be allowed to use their
discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter in the proxy statement.
With respect to the Company's 1999 Annual Meeting of Stockholders, if the
Company is not provided notice of a stockholder proposal, which the stockholder
has not previously sought to include in the Company's proxy statement by May 17,
1999, the management proxies will be allowed to use their discretionary
authority as outlined above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.30 TAT-14 Cable Network Construction and Maintenance Agreement dated as of
September 2, 1998.
10.31 SEA-ME-WE Construction and Maintenance Agreement dated as of January 1,
1997.
10.32 Amendment dated as of July 8, 1998 by and between Cable & Wireless, Inc.
and the Company to the Indefeasible Right of Use Agreement, dated as of
June 9, 1998 (Gemini Cable System).
10.33 Rack Space Agreement by and between Americatel Corporation and the
Company, dated as of July 27, 1998.
10.34 Rack Space Agreement by and between IXC Carrier Inc. and the Company,
dated as of July 6, 1998 (Los Angeles).
10.35 Rack Space Agreement by and between IXC Carrier Inc. and the Company,
dated as of August 19, 1998 (Dallas).
10.36 Co-Location Agreement by and between Espirit Telecom Benelux BV and the
Company, dated as of September 21, 1998.
10.37 Sublease Agreement by and between Information Systems & Networks, Inc.
and the Company dated as of August 11, 1998.
10.38 Master Supply Agreement by and between TTN, Inc. and the Company dated
as of September 21, 1998.
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
The Company filed Form 8-K, pursuant to item 5 of the Form, on September
14, 1998.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in Montgomery County,
State of Maryland, on the 13th day of November, 1998.
STARTEC GLOBAL COMMUNICATIONS
----------------------------------------
(Registrant)
/s/ Prabhav V. Maniyar
----------------------------------------
Prabhav V. Maniyar
Senior Vice President and Chief
Financial Officer
18
TAT-14 CABLE NETWORK
CONSTRUCTION AND MAINTENANCE AGREEMENT
[GRAPHIC OMITTED]
Certified to be a true and complete copy of the original document in the
custody of Deutsche Telekom
- --------------------------------------------------------------------------------
Volkmar Rompke Carmen Bornefeld
Deutsche Telekom AG, Friedrich-Ebert-Allee 140, 53113 Bonn, Germany
<PAGE>
TABLE OF CONTENTS
1 DEFINITIONS 2
2 BASIC PRINCIPLES 6
3 CONFIGURATION 6
4 PROVISION OF SEGMENTS T AND S 8
5 OWNERSHIP OF SEGMENTS AND ADDITIONAL PROPERTY 9
6 ESTABLISHMENT OF THE GENERAL COMMITTEE 9
7 ESTABLISHMENT OF MANAGING GROUP 11
8 PROCUREMENT GROUP; SUPPLY CONTRACT FOR SEGMENT S 12
9 ACQUISITION AND USE OF CAPACITY 13
10 EQUIPAGE 15
11 INCREASE OR DECREASE OF DESIGN CAPACITY 15
12 OWNERSHIP PRICING 16
13 DEFINITION OF CAPITAL COSTS OF SEGMENT S 16
14 ALLOCATION AND BILLING OF SEGMENT S CAPITAL COSTS 17
15 TRANSIT FACILITIES TO EXTEND TAT-14 CAPACITY 19
AND CONNECTION WITH INLAND SYSTEMS
16 OPERATION AND MAINTENANCE OF SEGMENTS T AND S 20
17 OPERATION AND MAINTENANCE COSTS OF SEGMENTS
-ALLOCATION AND BILLING 23
18 USE OF SEGMENTS Tl TO T7; COSTS, ALLOCATION AND
BILLING 23
19 KEEPING AND INSPECTION OF BOOKS 25
20 CURRENCY AND PLACE OF PAYMENT 26
21 DEFAULT OF PAYMENT 27
22 LIABILITY 27
23 FORCE MAJEURE 28
24 SETTLEMENT OF CLAIMS BY THE PARTIES 28
25 DURATION OF AGREEMENT AND REALIZATION OF ASSETS 29
- --------------------------------------------------------------------------------
September 2, 1998 i
<PAGE>
26 RELATIONSHIP OF THE PARTIES 30
27 OBTAINING OF LICENSES 30
28 PRIVILEGES FOR DOCUMENTS OR COMMUNICATIONS 30
29 CONFIDENTIALITY 30
30 ASSIGNMENT OF RIGHTS AND OBLIGATIONS 31
31 WAIVER 32
32 COMMUNICATIONS 32
33 PARAGRAPH HEADINGS, REFERENCES 32
34 SEVERABILITY 33
35 EXECUTION OF AGREEMENT AND AMENDMENTS 33
36 INTERPRETATION OF THE AGREEMENT AND
SETTLEMENT OF DISPUTES 33
37 SUCCESSORS BOUND 34
38 ENTIRE AGREEMENT 34
39 TESTIMONIUM 35
- --------------------------------------------------------------------------------
September 2, 1998 ii
<PAGE>
SCHEDULES
SCHEDULE A PARTIES TO THE AGREEMENT
SCHEDULE B VOTING INTERESTS, OWNERSHIP INTERESTS IN SEGMENT S
AND ALLOCATION OF CAPITAL, OPERATING AND
MAINTENANCE COSTS IN SEGMENTS T AND S
SCHEDULE C SUMMARY OF ALLOCATED CAPACITY
SCHEDULE C-1 SUMMARY OF ALLOCATED CAPACITY AS ASSIGNED AT
THE TIME OF C&MA SIGNING
ANNEXES
ANNEX 1 TERMS OF REFERENCE FOR MANAGING GROUP
ANNEX 2 TERMS OF REFERENCE FOR THE PROCUREMENT GROUP
ANNEX 3 TERMS OF REFERENCE FOR THE AR&R SUBCOMMITTEE
ANNEX 4 TERMS OF REFERENCE FOR THE F&A SUBCOMMITTEE
ANNEX 5 TERMS OF REFERENCE FOR THE CENTRAL BILLING PARTY
ANNEX 6 TERMS OF REFERENCE FOR THE NETWORK ADMINISTRATOR
ANNEX 7 SOURCE OF FINANCIAL CHARGE RATES
ANNEX 8 INITIAL OWNERSHIP PRICING MATRIX
ANNEX 9 CAPACITY STRUCTURE
ANNEX 1O ORGANIZATION STRUCTURE
ANNEX 11 CONFIGURATION DIAGRAM
- --------------------------------------------------------------------------------
September 2, 1998 iii
<PAGE>
TAT-14 CABLE NETWORK
CONSTRUCTION AND MAINTENANCE AGREEMENT
This Agreement, made and entered into this 2nd day of September 1998,
hereinafter called the Effective Date, between and among the Parties signatory
hereto (hereinafter collectively called "Parties" and individually called
"Party"), which Parties are identified in Schedule A attached hereto and made a
part hereof,
WITNESSETH:
WHEREAS, telecommunication services are being provided between and among Europe,
and North America, by means of submarine cable and satellite facilities;
and
WHEREAS, the Parties plan to supplement such facilities with an optical fibre
submarine cable system called the TAT-14 Cable Network (hereinafter called
"TAT-14") which will be used to provide telecommunication services between
points in or reached via the United States of America, the United Kingdom,
France, The Netherlands, Germany, Denmark and points beyond; and
WHEREAS, a Memorandum of Understanding was signed on the 27th of May 1997 and
amended on the 18th of November 1997 ("First Supplementary Agreement") and
amended on the 27th of January, 1998 ("First Amendatory Agreement"), and
amended on the 27th of January, 1998 ("Second Supplementary Agreement"),
and amended on the 28th of January, 1998 ("Third Supplementary Agreement"),
and amended on the 12th of May, 1998 ("Fourth Supplementary Agreement"),
and amended on the 12th of May, 1998 ("Fifth Supplementary Agreement"), and
amended on 18th of June, 1998 ("Sixth Supplementary Agreement"),
collectively hereinafter referred to as the "MOU" establishing a framework
of organization to be effective prior to the signature of this Agreement
and to be superseded by it; and
WHEREAS, the parties to the MOU invited other International Telecommunications
Entities to become Parties to this Agreement; and
WHEREAS, the Parties now desire to define the terms and conditions upon which
TAT-14 will be engineered, provided, constructed, operated and maintained
in a cost effective manner for the duration of this Agreement.
NOW, THEREFORE, the Parties, in consideration of the mutual covenants herein
expressed, covenant and agree with each other as follows:
- --------------------------------------------------------------------------------
September 2, 1998 Page 1
<PAGE>
1 DEFINITIONS
1.1 Definition of Terms
AFFILIATE
A company in which not less than either ten percent (10%) or the highest
percentage allowed by the local law, whichever is the lowest, of its
voting capital is owned directly or indirectly by a Party or a company
owning directly or indirectly not less than either ten (10%) or the
highest percentage allowed by the local law, whichever is the lowest, of
the voting capital of a Party.
AGENT
An entity acting on behalf of a Party or a Purchaser for access to a
Terminal Station which has an appropriate license to provide backhaul
and access in the respective Country.
BASIC SYSTEM MODULE (BSM)
A Basic System Module of TAT-14 shall consist of a 155,520,000 bits per
second digital line section with interfaces in accordance with ITU-T
Recommendations G.707 "Network Node Interface for the Synchronous
Digital Hierarchy" Issue 1996 (STM-1). A Basic System Module shall
contain 63 MIUs (Minimum Investment Units).
CABLE LANDING POINT
Cable Landing Point shall be the beach joint at the respective cable
landing locations or mean low watermark of ordinary spring tides line if
there is no beach joint.
CABLE STATIONS
The Cable Stations are the locations where TAT-14 is terminated and
where access to other cable systems may be provided.
- --------------------------------------------------------------------------------
September 2, 1998 Page 2
<PAGE>
CAPACITY
Capacity shall be categorized as follows:
(i) Design Capacity
The design ring capacity of Segment S of TAT-14, which is 640
Gbit/s.
(ii) Allocated Capacity
Number of Ring-MlUs distributed to Parties, based on their
financial commitments at the time of signing of this Agreement, as
shown in Schedule C.
(iii) Purchased Capacity
Capacity purchased after signing of this Agreement by a Purchase
Contract.
(iv) Sold Capacity
The sum of the Allocated Capacity and the Purchased Capacity.
(v) Common Reserve Capacity (CRC)
The difference between the Design Capacity and the Sold Capacity.
COUNTRY
Country as used in this Agreement shall mean country, territory or place,
as appropriate. For the purposes of Paragraph 15 of this Agreement the
Country associated with Telia shall mean Denmark.
INTERNATIONAL TELECOMMUNICATIONS ENTITY (ITE)
Any entity authorized or permitted under the laws of its respective
Country, or another Country in which it operates, to acquire and use
international transmission facilities for the provision of international
telecommunications services and which is in possession of any necessary
operating license to enable it to do so.
MAINTENANCE AUTHORITIES
The Maintenance Authorities in TAT-14 shall be the Terminal Parties.
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MINIMUM INVESTMENT UNIT (MIU)
One Ring-MIU
MOU PARTIES
The MOU Parties are AT&T, BT, C&W, DTAG, FT, KPN, MCII, PGE, Sprint,
Swisscom, Telia.
PRIVATE AGREEMENT
An agreement to make capacity available on conditions other than on an
ownership basis from a Party to another Party or to another assignee of
capacity in possession of any and all requisite licenses for the provision
of international telecommunications.
PURCHASER
An assignee of capacity, including a Party, obtaining TAT-14 capacity by
means of a Purchase Contract and in possession of any and all requisite
licenses for the provision of international telecommunications.
PURCHASE CONTRACT
A contract to make capacity available from the CRC on conditions other
than on an ownership basis.
READY FOR CUSTOMER SERVICE (RFCS) DATE
The Ready for Customer Service Date (hereinafter called "RFCS Date") shall
be considered as the date at which the Parties agree to place TAT-14 into
operation for customer service. The RFCS Date is planned to be by 15
December 2000.
READY FOR PROVISIONAL ACCEPTANCE (RFPA) DATE
The date on which Segment S of TAT-14 is accepted by the Procurement Group
on behalf of the Parties. The Ready for Provisional Acceptance Date
(hereinafter called "RFPA Date") is planned to be by 31 October 2000.
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RING
An electrical and/or optical loop that provides two independent
bi-directional paths between two points for the same traffic.
RING-MIU
A nominal 2 Mbps bearer, and all the additional overhead bits per second
recommended by ITU-T standards for multiplexing, in a Ring configuration
with the capability of bi-directional operation.
SUBSIDIARY
A company having at least the majority of its shares owned legally or
beneficially, directly or indirectly by its parent company.
SUPPLY CONTRACT
The contract to be placed with the Supplier for the provision of Segment S
of TAT-14.
SYSTEM INTERFACE
The System Interface shall be the nominal 155,520,000 bit/s (STM-1)
digital optical/electrical input/output ports, including STM-4, STM-16,
and/or any other higher level, on the digital distribution frame
(including the digital distribution frame itself, and any additional
access equipment as shall be deemed necessary by the Managing Group,
including any crossconnect equipment, and shall be regarded as the
interface location where TAT-14 connects with other transmission
facilities or equipment.
TERMINAL PARTIES
The Terminal Parties are AT&T, BT, Deutsche Telekom, France Telecom, KPN,
Sprint, and Telia.
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1.2 Schedules and Annexes
The Schedules and Annexes to this Agreement, and any supplementary or
amendatory agreement thereto or any Schedules and Annexes substituted
therefore, shall form part of this Agreement, and any Paragraph which
contains a reference to a Schedule or Annex shall be read as if the
Schedule or Annex was set out at length in the body of the Paragraph
itself. In the event that there is any conflict between the terms and
conditions of this Agreement and the Schedules and Annexes to this
Agreement, the terms and conditions of this Agreement shall prevail.
2 BASIC PRINCIPLES
2.1 Parties to this Agreement are ITEs and shall be entitled to participate
in the General Committee in accordance with Paragraph 6.
2.2 A Managing Group shall be established for the purpose of supervising
TAT-14. The Managing Group will consist of one representative from each
of the MOU Parties and one representative from any other Party or
Parties who, individually or collectively, represent 10% or more of the
total voting interests specified in Schedule B. The Managing Group will
take all decisions not reserved for the General Committee, which are
necessary to engineer, provide, install, bring into service, operate
and maintain, administer, bill and market TAT-14.
2.3 The acquisition of capacity on an ownership basis is not permitted
after the Effective Date of this Agreement, at which time Schedule B
will be fixed.
3 CONFIGURATION
3.1 TAT-14 is a ring system comprising two transatlantic links and
terminals in the USA (two), the UK, France, the Netherlands, Germany
and Denmark (as referenced in Annex 11). The cable contains four fibre
pairs, each initially operating at 160 Gbit/s.
3.2 In accordance with this Agreement, TAT-14 shall be regarded as
consisting of the following Segments:
Segment S: The submarine portion of TAT-14 as defined in Subparagraphs
3.3 and 3.4 of this Agreement;
Segment T1: The Sprint Cable Station at Manasquan in the United States
of America;
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Segment T2: The AT&T Cable Station at Tuckerton in the United States of
America,
Segment T3: The BT Cable Station at Widemouth, the intermediate station
at Pentewan and the duct between these stations, in the
United Kingdom;
Segment T4: The FT Cable Station at St. Valery-en-Caux in France;
Segment T5: The KPN Cable Station at Katwijk in the Netherlands;
Segment T6: The DTAG Cable Station at Norden in Germany;
Segment T7: The Telia Cable Station at Blaabjerg in Denmark.
3.3 Segments T1 to T7 shall each consist of:
(i) an appropriate share of the land and buildings at the specified
locations for the cable landing, the Cable Station and the cable
rights-of-way and ducts between a Cable Station and its
respective Cable Landing Point, and an appropriate share of
common services and equipment associated with and necessary for
Segment S;
(ii) interface equipment in each of the cable stations associated
solely and directly with TAT-14 to operate and interface at the
System Interface operating point associated solely with TAT-14;
and
(iii) an appropriate share of the test equipment (not solely associated
with TAT- 14).
3.4 Segment S shall consist of the following Subsegments:
Subsegment S: The submarine cable consisting of four fibre pairs
between Manasquan and Tuckerton;
Subsegment S2: The submarine cable consisting of four fibre pairs
between Tuckerton and Widemouth;
Subsegment S3: The submarine cable consisting of four fibre pairs
between Widemouth and St Valery-en-Caux;
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<PAGE>
Subsegment S4: The submarine cable consisting of four fibre pairs
between St Valery-en-Caux and Katwijk;
Subsegment S5: The submarine cable consisting of four fibre pairs
between Katwijk and Norden;
Subsegment S6: The submarine cable consisting of four fibre pairs
between Norden and Blaabjerg;
Subsegment S7: The submarine cable consisting of four fibre pairs
between Blaabjerg and Manasquan.
3.5 Segment S shall consist of the whole of the submarine cable between the
Cable Stations and shall include but shall not be limited to:
(i) all transmission equipment, System Interface equipment, power
feeding equipment and special test equipment directly associated
with the submersible plant, located in the respective Cable
Station;,
(ii) the power equipment provided wholly for use with the equipment
listed in (i) above;
(iii) the transmission cable equipped with appropriate amplifiers, and
joint housings between the Cable Stations including spare cable
and spare amplifiers;
(iv) the sea earth cable and electrode system or the land earth
system, or an appropriate share thereof, associated with the
terminal power feeding equipment in the respective Cable
Stations;
(v) all special test equipment, system supervisory and control
equipment solely associated with TAT-14;
(vi) the interconnection equipment which shall be used to groom all
payload virtual containers transported by TAT-14 as required,
however configured, in order to meet the internal connectivity
requirements of TAT-14;
3.6 TAT-14 will operate as a SDH submarine cable system in accordance with
ITU-T Recommendations G.707 Issue 1996 supporting VC12, VC3 and VC4
paths and higher order paths as defined in the System Interface.
4 PROVISION OF SEGMENTS T AND S
4.1 Each of the Segments T1 to T7 shall be provided by the Terminal Party
owning that segment, as shown in Subparagraph 5.1, in accordance with
the terms of Paragraph 18 of this Agreement. Segments T1 to T7 shall be
provided in sufficient time to permit TAT-14 to be placed into
operation by the RFPA Date.
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4.2 Segment S shall be provided through a Supply Contract to be placed by
the Procurement Group on behalf of the Parties in accordance with
Paragraph 8 of this Agreement.
5 OWNERSHIP OF SEGMENTS AND ADDITIONAL PROPERTY
5.1 Segments T1 to T7 of TAT-14 shall be owned as follows;
(i) Segment T1 shall be owned by Sprint; (ii) Segment T2 shall be
owned by AT&T;
(iii) Segment T3 shall be owned by BT; (iv) Segment T4 shall be owned
by FT; (v) Segment T5 shall be owned by KPN; (vi) Segment T6
shall be owned by DTAG;
(vii) Segment T7 shall be owned by Telia.
5.2 Segment S shall be owned by the Parties in common and undivided shares
in the proportions set forth in Schedule B. Ownership of Segment S and
voting interests, as shown in Schedule B to this Agreement, shall be
based upon the financial investment of each Party.
5.3 References to any Segment in this Agreement shall be deemed to include,
unless the context otherwise requires, additional property incorporated
therein by agreement of the Parties. Each Segment shall be regarded as
including its related spares and standby units and components,
including, but not limited to, submersible amplifiers, cable lengths
and terminal equipment as necessary for the operational capability of
TAT-14.
6 ESTABLISHMENT OF THE GENERAL COMMITTEE
6.1 For the purpose of monitoring the provision and continued operation of
TAT-14, of making key decisions as specified in this Agreement, the
Parties shall, upon the signing of this Agreement, form a TAT-14
General Committee (hereinafter called the "General Committee")
consisting of one representative of each of the Parties.
6.2 At each General Committee meeting a hosting Party for the next meeting
will be decided. The hosting Party for each General Committee meeting
will provide the chairperson who will retain the coordination function
until the next meeting.
6.3 To aid the General Committee in the performance of the duties assigned
to it, pursuant to this Agreement, and to ensure flexibility and
efficiency in constructing, operating, maintaining and marketing
TAT-14, the General Committee immediately after signing this Agreement,
shall establish the Managing Group, as set forth in Subparagraph 2.2
and Paragraph 7. The General Committee shall also
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September 2, 1998 Pages 9
<PAGE>
be responsible for:
(i) the overall supervision of the project;
(ii) approval of the initial budget for TAT-14;
(iii) approval of the TAT-14 annual report submitted by the Managing
Group;
(iv) approval of the administrative budget of the Managing Group;
(iv) reviewing and acting on any other reports submitted by the
Managing Group; and
(v) providing a forum for approval and execution of any amendments
to the C&MA in accordance with Subparagraph 35.1.
6.4 During the project implementation, the General Committee shall meet at
least once a year on the call of the chairperson. After the RFCS Date,
the General Committee shall meet whenever requested by the chairperson.
Furthermore, the General Committee shall meet whenever it is requested
by two or more Parties collectively representing at least 5 % of the
total voting interests as specified in Schedule B.
6.5 In calling the General Committee meetings, the chairperson shall give
at least forty-five (45) days' advance notice of each meeting together
with a copy of the draft agenda. In cases of emergency, such notice
period may be reduced if Parties representing at least one-third (1/3)
of the total voting interests as specified in Schedule B, are in
agreement.
6.6 All decisions made by the General Committee shall be subject, in the
first place, to consultation among the Parties, who shall make all
reasonable efforts to reach agreement with respect to matters to be
decided. However, in the event agreement cannot be reached, the
decision shall be carried on the basis of a vote. The vote shall be
carried by a majority (more than 50 %) of the total voting interest as
specified in Schedule B, unless otherwise stated in this Agreement. A
member of the General Committee representing more than one Party shall
separately cast the vote to which each Party he represents is entitled.
6.7 Decisions required between scheduled General Committee meetings may
also be reached by correspondence, provided :
(i) all Parties are provided with all the necessary and relevant
information regarding the decision to be taken; and
(ii) the decision taken is reduced to writing and approved by the
required majority of the total voting interest as specified in
Schedule B.
6.8 All decisions made by the General Committee shall be binding on all the
Parties. No decisions of the General Committee shall override any
provision of this Agreement.
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7 ESTABLISHMENT OF THE MANAGING GROUP
7.1 The Managing Group will consist of one representative from each MOU
Party and one representative from any other Party or Parties who
individually or collectively represent 10 % or more of the total voting
interest as specified in Schedule B.
7.2 To aid the Managing Group in the performance of the duties assigned to
it pursuant to this Agreement, the following bodies shall be formed
under the direction of the Managing Group:
(i) a Procurement Group;
(ii) a Capacity Assignment, Routing and Restoration Subcommittee
(hereinafter called "AR&R Subcommittee");
(iii) a Financial and Administrative Subcommittee (hereinafter called
"F&A Subcommittee");
(iv) a Central Billing Party (hereinafter called "CBP"), and
(v) a Network Administrator (hereinafter called "NA").
These bodies shall be responsible for their respective areas of
interest as listed in the respective Annexes 2 to 6 of this Agreement
and any other tasks designated by the Managing Group, The Managing
Group may also appoint other groups or Subcommittees to address
specific questions which may arise during the period this Agreement is
in force.
7.3 The Managing Group shall act in the interest of the TAT-14 Cable
Network. All decisions made by the Managing Group, in accordance with
its Terms of Reference contained in Annex 1, shall be binding on all
the Parties. No decisions of the Managing Group or its Subcommittees or
any other group established by the Managing Group shall override any
provision of this Agreement.
7.4 The Subcommittees shall meet at least once annually after the Effective
Date of this Agreement and more frequently if necessary, until the RFCS
Date of TAT-14 and thereafter as may be appropriate. The Chairperson
shall give reasonable advance notice of each meeting, together with a
copy of the draft agenda, insofar as possible at least forty-five (45)
days prior to the date of the proposed meeting. The Chairperson of each
Subcommittee, or a designated representative, may attend meetings of
the other Subcommittees in an advisory capacity as necessary.
7.5 After the RFCS Date of TAT-14, the Managing Group shall determine
whether any of its Subcommittees or any other group should remain in
existence. In the event that the Managing Group determines that any of
its Subcommittees, or any other group should not remain in existence,
the Managing Group has the right to determine, in accordance with its
Terms of Reference contained in Annex 1 of
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<PAGE>
this Agreement, the manner in which the Subcommittee's, or any other
group's responsibilities shall be reassigned.
8 PROCUREMENT GROUP; SUPPLY FOR SEGMENT S
8.1 The Procurement Group shall consist of AT&T, BT, C&W, DTAG, FT, KPN,
MCII, PGE, Sprint and Telia. This group shall act on a joint but not
several basis on behalf of the Parties to this Agreement and, in
accordance with its Terms of Reference contained in Annex 2, shall
negotiate the Supply Contract with the selected supplier (hereinafter
called the "Supplier") to engineer, provide and install or to cause to
be engineered, provided and installed all of Segment S of TAT-14,
except for such Segment S work as may be performed by the Terminal
Parties or their subcontractors.
8.2 The Procurement Group shall recommend a Supplier to the Managing Group
after submission and evaluation of proposals following an open
international tender. After Managing Group approval, the Procurement
Group shall execute the Supply Contract.
8.3 The Procurement Group shall ensure that the Supply Contract will
require the Supplier to engineer, provide and install Segment S in
sufficient time to permit TAT-14 to be placed into operation by the
RFCS Date. Notwithstanding that certain work of Segment S will be
performed by the Terminal Parties or their subcontractors, the Supply
Contract shall require the Supplier to guarantee that Segment S will
conform to the technical performance requirements for TAT-14 as
specified in the Supply Contract.
8.4 The Procurement Group shall ensure that the Supply Contract shall
afford its designated representatives reasonable rights of access to
examine, test and inspect the submarine cable, land cable, submarine
cable and land cable equipment, material, supplies and installation
activities. Such representatives shall provide reasonable advance
notice to the relevant Terminal Party when access to any of the
Segments T1 to T7 is required. The relevant Terminal Party shall have
the right to have its own representatives present during such
activities.
8.5 In the event that any portion of Segment S of TAT-14 fails to meet the
specifications referenced in the Supply Contract for its provision,
fails to provide the specified capacity, or is not engineered,
provided, installed and ready in sufficient time to permit Segment S to
be provisionally accepted on or before the RFPA Date, the Procurement
Group shall take such action as may be necessary to exercise the rights
and remedies under the terms and conditions of the Supply Contract. The
Procurement Group shall also take any other actions directly against
the Supplier as may be necessary to exercise any or all rights and
remedies available under the Supply Contract. Such actions by the
Procurement Group shall be subject to any direction deemed necessary by
the Managing Group.
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8.6 Neither the individual members of the Procurement Group, nor the
Parties they represent, shall be liable to any other Party for any loss
or damage sustained by reason of a Supplier's failure to perform in
accordance with the terms and conditions of its Supply Contract, or as
a result of Segment S of TAT-14 not meeting the RFPA Date as specified
in the Supply Contract, or if TAT-14 does not perform in accordance
with the technical specifications and other requirements of the Supply
Contract, or TAT-14 is not integrated or placed into operation. The
Parties recognize that the Procurement Group does not guarantee or
warrant:
(i) the performance of the Supply Contract by the Supplier;
(ii) the performance or reliability of Segment S; or
(iii) that TAT-14 shall be integrated or placed into operation.
8.7 The Managing Group shall authorize the Procurement Group to implement
contract variations provided that the cumulative total of all such
changes to the Supply Contract does not increase the value of the
Supply Contract by more than $ 50M. Any further contract variations
which increase the revised budget shall be submitted to the General
Committee for approval.
9 ACQUISITION AND USE OF CAPACITY
9.1 The Parties hereby acquire Allocated Capacity in the form of Ring-MlUs
on an ownership basis as shown in Schedule C. After the signing of this
Agreement, capacity may only be acquired through a Purchase Contract or
through a Private Agreement, in accordance with this Paragraph 9.
9.2 An assignee of capacity under a Purchase Contract or Private Agreement
must be either a Party or an entity in possession of any and all
requisite licenses authorizing it to own, operate, acquire, sell and/or
use, as appropriate, the capacity in TAT-14 for the provision of
international telecommunications.
9.3 The Parties and Purchasers shall designate the Cable Stations and the
amount of capacity to the NA that is planned to be activated, at some
period in advance of the date of the activation, Such period would be
determined by the Managing Group.
9.4 The assignment of each Party's Allocated Capacity to each Cable Station
at the time of the signing of this Agreement is shown in Schedule C-1.
A Party or Purchaser may move any portion of its capacity, from one
Cable Station, to any other Cable Station without any increase in
investment. A request for such a reassignment shall be notified to the
NA at some period in advance of the date of reassignment, such period
and reassignment shall be in accordance with procedures developed by
the NA and approved by the Managing Group.
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9.5 The CRC of TAT-14 shall be owned by the Parties in common and undivided
shares.
9.6 The Managing Group shall establish the terms and conditions including
pricing criteria for sales of capacity from the CRC. The NA shall
develop procedures for sale of capacity from the CRC and a Purchase
Contract for approval by the Managing Group. Following such approval,
the NA shall be authorized to execute any such Purchase Contract on
behalf of all the Parties. No provisions of any Purchase Contract shall
override the provisions of this Agreement. The Purchase Contract price
structure may be reviewed and amended if necessary, by the Managing
Group
9.7 Each Party shall be compensated from the sale of capacity from the CRC
under conditions set forth by the Managing Group in accordance with
Schedule C.
9.8 Any Party shall be entitled to transfer any part of its Allocated
Capacity through a Private Agreement. No provisions of a Private
Agreement shall override the provisions of this Agreement.
9.9 Each Purchase Contract or Private Agreement shall
(i) contain at least the same conditions on utilization of capacity
as specified in Subparagraphs 9.16 and 9.17; and
(ii) require that the entity acquiring the capacity may only further
transfer its capacity under the same conditions.
9.10 Notwithstanding Subparagraph 2.3, at the discretion of the Managing
Group, the distribution of capacity from the CRC may be made on a pro
rata basis, in whole Ring-MlUs, in accordance with the percentages in
Schedule C.
9.11 No later than three years after the TAT-14 RFCS the remaining CRC shall
be distributed to the Parties on a pro rata basis in accordance with
Schedule C. The Managing Group will determine the process for the sale
of capacity of those Parties that do not need their pro rata
distribution.
9.12 The Managing Group may authorize the utilization of the CRC for
restoration of other communications systems based on appropriate terms
and conditions. Parties will be refunded in accordance with Schedule B.
9.13 The Managing Group may study and negotiate the exchange or sale of a
portion of the CRC with other cable systems on such basis as is deemed
mutually beneficial to the Parties. The terms and conditions of such
exchange or sale of capacity shall be approved by the General
Committee.
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9.14 The Managing Group may authorize occasional use of the CRC, if
available, for the provision of temporary or occasional
telecommunications services, including but not limited to leases to any
Party or Purchaser and paid restoration of other systems, on terms and
conditions to be determined by the Managing Group. The revenue from
such occasional use shall be shared by the Parties in accordance with
Schedule B
9.15 TAT-14 shall be capable of at least supporting payload paths of VC12,
VC3 and VC4. The Parties shall have the right to access such payload
paths which shall require 1, 21 and 63 contiguous MIUs respectively.
Each Party will also be permitted to access its capacity ownership on
defined SDH levels of its choice at a higher order in accordance with
the System Interface.
9.16 The communications capability of any capacity may be optimized by the
Parties or Purchasers to whom such capacity is assigned by the use of
equipment which will more efficiently use such capacity, provided that
the use of such equipment does not cause an interruption of, or
interference to the use of any other capacity in TAT-14 or prevent the
use of similar equipment by other Parties or Purchasers. Such
equipment, if used, shall not constitute a part of TAT-14.
9.17 Data streams entering into and being transported by TAT-14 must be
compliant with the ITU Recommendation G.707, issue 1996, in order to
avoid any interruption, degradation or any other adverse effect on the
performance of TAT-14 or other data streams in TAT-14. Each Party
agrees that all of its capacity will comply with this obligation in
respect of all capacity which is assigned to that Party. If after
notification by the Maintenance Authorities, the Party responsible for
such capacity does not take immediate action to prevent any further
interruption, degradation or other negative influence, the Maintenance
Authorities may take any reasonable action to protect the other
capacity in TAT-14 including the disconnection of the capacity
responsible for such interruption, degradation or adverse effect.
10. EQUIPAGE
Unless otherwise decided by the Managing Group, TAT-14 shall be fully
equipped for 640 Gb/s to the System Interface level at the RFPA Date.
11 INCREASE OR DECREASE OF DESIGN CAPACITY
11.1 The Managing Group may decide to increase the Design Capacity.
Following such a decision, the Managing Group shall develop an
implementation plan for and the terms and conditions of such an
increase. The proposed implementation plan and terms and conditions
shall be submitted to the General Committee for approval.
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11.2 If subsequent to the RFCS Date, the Design Capacity is decreased
pursuant to the agreement of the Managing Group and such decrease of
the Design Capacity affects neither the routing of circuits assigned in
TAT-14 nor the Sold Capacity of TAT-14, the reduction in Design
Capacity will be subtracted from the CRC as determined by the Managing
Group.
11.3 In the event that the capacity which TAT-14, or any Segment thereof, is
capable of providing is reduced below the capacity required to support
the Sold Capacity on its existing or planned routings as a result of
physical deterioration, or for other reasons beyond the control of the
Parties, the Managing Group shall initiate a review of the capacity
routings in order to support the rerouting of such Sold Capacity. If
necessary, the Managing Group may further consider changes to capacity
assignments.
11.4 Financial adjustments shall be made among the Parties, as necessary,
under terms and conditions recommended by the Managing Group and
approved by the General Committee.
12 OWNERSHIP PRICING
12.1 The TAT-14 Initial Ownership Pricing Matrix is shown in Annex 8.
12.2 In the event that the final cost of TAT-14 is lower than the initial
budget, each Party's investment shall be reduced on a pro-rata basis in
accordance with Schedule B, with no change to its Allocated Capacity.
If the final cost of TAT-14 is higher than the initial budget each
Party's investment shall be increased on a pro-rata basis in accordance
with Schedule B. Schedule C shall not be affected.
13 DEFINITION OF CAPITAL COSTS OF SEGMENT S
13.1 Capital costs of Segment S, as used in this Agreement, refers to costs
incurred in engineering, providing, and constructing Segment S, or
causing it to be engineered, provided, and constructed, or in laying or
causing to be laid cables, amplifiers and joint housings, or in
installing or causing to be installed cable system equipment, and shall
include:
(i) the costs incurred under the terms of the TAT-14 MOU as
identified in the TAT-14 budget;
(ii) those costs payable to the Supplier under the Supply Contract,
and
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(iii) other costs incurred under the direction of the Managing Group,
or the Procurement Group, and those capital costs directly
incurred by the Terminal Parties, the CBP, the NA or any Party
authorized by the Managing Group, which shall be fair and
reasonable in amount and not included in the Supply Contract and
which have been directly and reasonably incurred for the purpose
of, or to be properly chargeable, in respect of such
engineering, provision, construction, installation and laying of
Segment S of TAT-14. Such costs shall include, but are not
limited to, the costs of engineering, design, materials,
manufacturing, procurement and inspection, installation, removal
(with appropriate reduction for salvage), cable ship and other
ship costs, route surveys, burying, testing associated with
laying or installation, customs duties, taxes (except income tax
imposed upon the net income of a Party), appropriate financial
charges attributable to other Parties' shares of costs incurred
by the Terminal Parties or any other Party authorized by the
Managing Group, at the rate at which such Party generally
incurred such financial charges, supervision, billing
activities, overheads and insurance or a reasonable allowance in
lieu of insurance, if such Party elects to carry a risk itself,
being a risk against which insurance is usual or recognized or
would have been reasonable. Such costs shall include costs
incurred by the Parties in the holding of the Data Gathering and
the General Committee meetings but excluding attendance by the
Parties' representatives at such meetings. Such costs shall also
include costs incurred by the Parties in holding the meetings of
the Managing Group, the Procurement Group and its Working Groups
and the preparation and attendance by the Parties'
representatives at such meetings.
13.2 Capital costs shall exclude costs incurred by the Parties holding
meetings of the AR&R Subcommittee and F&A Subcommittee established
pursuant to Subparagraph 7.2 of this Agreement or the attendance by the
Parties' representatives at such meetings.
13.3 Any amounts received by, or credited to, a Party or the CBP as a
consequence of letters of guarantee, liquidated damages, or other
similar amounts resulting from the failure of the Supplier to fully
perform any provision of the Supply Contract, shall accrue to the
benefit of all the Parties in accordance with Schedule B.
13.4 The cost of repair or replacement of any part of TAT-14 in the event of
damage or loss arising during construction, laying, burying, installing
and the bringing into operation of TAT-14, which is attributable under
the Supply Contract to the Parties, shall be regarded as part of the
capital costs for the purpose of Subparagraph 13.1. Any of the Parties
may at its own expense insure against such risks so far as its own
share of costs is concerned. Should the Managing Group agree to jointly
insure against such risks, the cost of such insurance will form part of
the capital costs referred to in Subparagraph 13.1.
14 ALLOCATION AND BILLING OF SEGMENTS CAPITAL COSTS
14.1 The capital costs of Segment S of TAT-14, as defined in Paragraph 13,
including any additional work or property incorporated subsequent to
the RFPA Date
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by agreement of the Parties, shall be borne by the Parties in the
proportions set forth in Schedule B.
14.2 The CBP will receive invoices from the Supplier for the costs due and
included in the Supply Contract. The Parties shall promptly render
invoices to the CBP for the cost of items directly incurred by them in
accordance with Subparagraph 13.1. The CBP shall promptly render bills
to each of the Parties for such Party's pro rata share of costs due and
included in the invoices it has received in accordance with Schedule B.
Such bills shall contain a reasonable amount of detail to substantiate
them. On the basis of such bills, each Party shall pay to the CBP the
amount owed within forty-five (45) days from the date the bill was
rendered by the CBP in the currency shown on the respective bill.
14.3 For the purpose of this Agreement, financial charges shall be computed,
as appropriate, at a rate equal to the lowest publicly announced prime
rate or minimum commercial lending rate, however described, for
ninety-day loans on the 1st working day of each month of the period to
be considered in the Country and in the currency in which the bill is
rendered. With respect to the Parties rendering invoices under this
Agreement, Annex 7 specifies those rates. If the Managing Group should
authorize a Party in a Country other than those Parties listed in Annex
7 to render invoices, the Managing Group shall specify the applicable
rates.
14.4 For the purposes of this Agreement, "paid" shall mean that the funds
are available for immediate use by the recipient.
14.5 Bills not paid when due shall accrue extended payment charges from the
day following the date on which payment was due in accordance with
Subparagraph 14.2 until the day on which it is paid. For the purposes
of this Agreement, extended payment charges shall be computed at a rate
equal to 150 % of the appropriate financial charges as indicated in
Subparagraph 14.3 on the day following the date payment of the bill was
due. In the event that applicable law allows the imposition of extended
payment interest charges only at a rate less than that established in
accordance with this Subparagraph, extended payment charges shall be at
the highest rate permitted by such applicable law. In this case,
appropriate documents to demonstrate the applicability of such law
shall be provided by the concerned Party.
14.6 Extended payment charges recovered by the CBP, in excess of the amounts
paid or due, excluding interest paid by whichever Party or Parties have
covered the deficit in the intervening period, shall accrue to the
benefit of all the Parties in accordance with Schedule B.
14.7 Procedures for rendering credits for refunds of appropriate financial
charges and bills for extended payment charges will be developed by the
CBP in conjunction with the F&A Subcommittee.
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14.8 As soon as practicable after the RFPA Date, the amount of each Party's
share of the costs of Segment S shall be computed by the CBP which will
make appropriate adjustments and render any necessary bills or arrange
for any necessary refunds by way of final settlement in order that each
Party may bear its appropriate share of the costs as provided in
Subparagraph 14.1.
14.9 A bill shall be deemed to have been accepted by the Party to whom it is
rendered if that Party does not present a written objection to the CBP
on or before fifteen (15) days prior to the date when payment is due.
If such objection is made, the Parties concerned shall make every
reasonable effort to settle promptly the dispute concerning the bill in
question. If the objection is sustained and the billed Party has paid
the disputed bill, the agreed upon overpayment shall be refunded
promptly to the objecting Party by the billing Party together with any
financial charges calculated thereon at a rate determined in accordance
with Subparagraph 14.3 of this Agreement from the date of payment of
the bill to the date on which the refund is transmitted to the
objecting Party. If the objection is not sustained and the billed Party
has not paid the disputed bill, said Party will pay such bill promptly
together with any extended payment charges calculated thereon at a rate
determined in accordance with Subparagraph 14.5 of this Agreement from
the day following the date on which payment of the bill was due until
paid. Nothing in this Subparagraph shall relieve a Party from paying
those parts of a bill that are not in dispute. The provisions of this
Subparagraph shall be without prejudice to the rights of any Party
pursuant to Paragraph 21 of this Agreement.
15 TRANSIT FACILITIES TO EXTEND TAT-14 CAPACITY AND CONNECTION WITH INLAND
SYSTEMS
15.1 The Terminal Parties shall use all reasonable efforts to furnish and
maintain, or cause to be furnished and maintained, in working order for
the other Parties and for the Purchasers in TAT-14, for the duration of
this Agreement, the necessary facilities in their respective Countries
as may be reasonably required for extending capacity in TAT-14 assigned
to such Parties or Purchasers for the purpose of handling
communications transiting the Country involved. No Party shall be
required under this Agreement to furnish such transit facilities in its
Country to other Parties or Purchasers of its own Country.
15.2 Such facilities referred to in Subparagraph 15.1 shall be suitable for
extending capacity in TAT-14 and shall be furnished and maintained on
terms and conditions which shall be no less favorable than those
granted to other ITEs for transmission facilities of similar type and
quantity transiting the Country. Such terms and conditions shall not
override any applicable governmental laws and regulations in the
Country in which the facilities are located.
15.3 Each Terminal Party shall provide, within the Country of its Cable
Station, connection to TAT-14 at the SDH Interface Equipment levels,
VC12, VC3 or VC4 levels, to Parties and Purchasers on terms and
conditions to be agreed by the Terminal Party and the other Party or
Purchaser under a separate agreement.
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15.4 The Terminal Parties shall, at its own expense, on or before the RFPA
Date do or cause to be done, all such acts and things as may be
necessary within its operating territory to provide and maintain
throughout the period of this Agreement suitable connection of capacity
in, or connected with capacity in TAT-14 with appropriate inland
communications facilities in its operating Country.
15.5 Upon request, each Terminal Party in its Country shall make all
reasonable efforts to provide to other Parties or Purchasers, or Agents
of the Parties or Purchasers from such Terminal Party's Country, access
to TAT-14 in the vicinity of its Cable Station (not necessarily
co-located) at the level of a Basic System Module or multiples thereof,
given that the requesting Party or Purchaser has the appropriate
capacity assigned to it. Such facilities shall be provided in a timely
manner and for the duration of this Agreement under the terms and
conditions to be negotiated and agreed between the Parties or
Purchasers concerned under a separate agreement.
15.6 As U.S. Terminal Parties, AT&T and SPRINT shall provide to other U.S.
Parties, upon request, suitable space and connection with TAT-14 for
operating and technical control purposes relating to capacity assigned,
or to be assigned, to them in TAT-14. AT&T and SPRINT shall provide
such space in a building separate, but adjacent to its cable station
and located on the land which forms a part of Segments T1 and T2. These
U.S. Parties shall have the right to provide their own personnel and
equipment in such space. Such U.S. Parties shall reimburse AT&T and
SPRINT for the reasonable costs incurred by AT&T and SPRINT in
providing such space and connection pursuant to this Paragraph 15,
including but not limited to, the costs of any additional building that
may be reasonably required
15.7 The Managing Group is responsible for determining and setting service
level objectives for access and activation intervals jointly with the
Terminal Parties.
16 OPERATION AND MAINTENANCE OF SEGMENTS T AND S
16.1 The Terminal Parties, on behalf of the Parties and Purchasers, are
responsible for operation and maintenance as follows:
(i) Sprint shall be responsible for Segment T1;
(ii) AT&T shall be responsible for Segment T2;
(iii) BT shall be responsible for Segment T3;
(iv) FT shall be responsible for Segment T4;
(v) KPN shall be responsible for Segment T5;
(vi) DTAG shall be responsible for Segment T6;
(vii) Telia shall be responsible for Segment T7;
16.2 Each Terminal Party shall also be responsible for the operation and
maintenance of that portion of Segment S beginning at its respective
Cable Landing Point and
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extending to its respective Segment T, on behalf of the Parties and the
Purchasers.
16.3 All Terminal Parties as the Maintenance Authorities, acting on behalf
of the Parties and Purchasers, shall be jointly responsible for the
operation and maintenance of Segment S from the respective Cable
Landing Points and extending seaward, and shall undertake such
activities necessary for the continued operation of TAT-14.
16.4 Sixty (60) days before the RFPA Date the Maintenance Authorities shall
submit for review by the Procurement Group and approval by the Managing
Group appropriate practices and procedures for the continued operation
and maintenance of Segment S. The Maintenance Authorities shall each
provide information to the Procurement Group regarding the practices
and procedures for the continued operation and maintenance of their
respective Segments. The Maintenance Authorities shall also each
develop and furnish such budgetary estimates of the cost of such
operation and maintenance of TAT-14 as the Managing Group may
reasonably request and provide this information to the F&A
Subcommittee. Following the RFPA Date, the Maintenance Authorities
shall each provide the Managing Group with such reports as it may
reasonably require on the operation and maintenance of TAT-14 including
any proposals for planned repair or improvement work, together with
appropriately revised budgetary estimates relating to the operation and
maintenance of TAT-14 and the inclusion of TAT-14 in any cable
maintenance agreements. The Procurement Group may review and amend the
practices and procedures for the operation and maintenance of Segment
S, subject to the approval of the Managing Group. The Managing Group
may revise the allocation of responsibility for the operation and
maintenance of Segment S.
16.5 The Maintenance Authorities, individually or collectively as
appropriate, shall each use all reasonable efforts to maintain, or
cause to be maintained, economically the Segments for which each is
responsible, in efficient working order. Each Maintenance Authority
shall discharge its responsibility in a manner consistent with
applicable international submarine cable maintenance practices and with
an objective of achieving effective and timely repairs when necessary.
16.6 The Maintenance Authorities shall have the right to temporarily
de-activate Segment S, or any part thereof, in order to perform their
duties as Maintenance Authorities. Prior to such de-activation,
reasonable notice shall be given to and coordination shall be made with
the other Parties. To the extent possible, sixty (60) days prior to
initiating action, the Maintenance Authority(ies) shall advise the
other Parties in writing of the timing, scope, and costs of significant
planned maintenance operations, of significant changes to existing
operation and maintenance methods, and of contractual arrangements for
cable ships that will or may have a significant impact on operation or
maintenance costs. Should one or more Parties representing at least 5 %
of the total voting interests specified in Schedule B wish to review
such an operation or change prior to its occurrence, such Party or
Parties shall notify the Maintenance Authorities involved and the
Managing Group chairperson in writing within thirty (30) days of such
advice. Upon such notification, the Managing Group shall initiate
action to convene an ad hoc meeting for such review.
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16.7 Each Maintenance Authority shall have prompt access to all system
maintenance information, necessary to the performance of its duties,
appropriate to those parts of TAT-14 not covered by its authority.
16.8 No Party shall be liable to any other Party or Purchaser for any loss
or damage sustained by reason of any delay in provision, failure in or
breakdown of the facilities constituting TAT-14 or any interruption of
service, whatsoever shall be the cause of such failure, breakdown or
interruption, and however long it shall last.
16.9 In the event of a failure or breakdown of any of such facilities, if
the responsible Maintenance Authority fails to restore those facilities
to efficient working order and operation within a reasonable time after
having been called upon to do so by any Party or Purchaser, the
Managing Group may, to the extent that it is practical to do so, place
or cause to be placed, such facilities in efficient working order and
operation and charge the Parties their proportionate shares of the cost
reasonably incurred in doing it.
16.10 Each Party, at its own expense, and upon reasonable advance notice to
the relevant Maintenance Authorities, shall have the right to inspect
from time to time the operation and maintenance of any part of TAT-14
and to obtain copies of the maintenance records. For this purpose, each
Maintenance Authority shall retain significant records, including
recorder charts, for a period of not less than five (5) years from the
date of the record. If these records are destroyed at the end of this
period, a summary of important items shall be retained for the life of
TAT-14.
16.11 Each Maintenance Authority shall be authorized to pursue claims in its
own name, on behalf of the Parties, in the event of any damage or loss
to TAT-14 and may file appropriate lawsuits or other proceedings on
behalf of the Parties. Subject to obtaining the prior concurrence of
the Managing Group, a Maintenance Authority may settle or compromise
any claims and execute releases and settlement agreements on behalf of
the Parties as necessary to effect a settlement or compromise. Any
money ordered by the tribunal or under a settlement approved by the
Managing Group shall be shared among all Parties in accordance with
Schedule B.
16.12 The Maintenance Authorities shall be entitled to enter into agreements
in respect of the crossing of Segment S with undersea plant (including,
but not limited to, pipelines) with the owners of such plant. The
Maintenance Authorities may sign such agreements on behalf of all the
Parties after agreement by the Managing Group and shall provide the
Parties with copies of such agreements on request.
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17 OPERATION AND MAINTENANCE COSTS OF SEGMENT S - ALLOCATION AND BILLING
17.1 The operation and maintenance costs for Segment S shall be shared by
the Parties in the relevant proportions specified in Schedule B. The
Managing Group shall be responsible for determining the method and
procedure for the charging of O&M costs to Purchasers and the
distribution of any credit to the Parties in accordance with Schedule
B.
17.2 The operation and maintenance costs to which Subparagraph 17.1 refers
are the costs reasonably incurred in operating and maintaining the
facilities involved, including, but not limited to, the cost of
attendance, testing, adjustments, repairs (including repairs at sea)
and replacements, cable ships (including standby costs), re-burial and
the replacement of plant, cable depots, maintenance and repair devices
that are or may hereafter become available, customs duties, taxes
(except income tax imposed upon the income of a Party) paid in respect
of such facilities, billing activities, appropriate financial charges
attributable to other Parties' shares of costs incurred by a
Maintenance Authority at the rate at which the appropriate Maintenance
Authority generally incurred such financial charges, supervision,
overheads and costs and expenses reasonably incurred on account of
claims made by or against other persons in respect of such facilities
or any part thereof and damages or compensation payable by the Parties
concerned on account of such claims and costs for the Managing Group
and the NA costs, General Committee meeting costs, expenses and damages
or compensation payable to the Parties on account of such claims shall
be shared by them in the same proportions as they share the operation
and maintenance costs of the relevant Segment S under Subparagraph
17.1.
17.3 The Managing Group may authorize the provision of special tools and
test equipment for use on board cable ships which are required for the
maintenance and repair of TAT-14. The related costs may include, but
not be limited to, the costs, or an appropriate share thereof, for the
provision, storage and maintenance of this equipment.
17.4 The Maintenance Authorities individually, the Terminal Parties or the
CBP, as appropriate, shall bill the Parties in accordance with this
Paragraph 17. Bills shall not be rendered more frequently than once a
quarter and shall be paid by the end of the month following the month
in which the bills were rendered. The billing procedures specified in
Subparagraphs 14.3, 14.4, 14.5, and 14.9 shall be applicable to all
bills rendered pursuant to this Paragraph 17.
18 USE OF SEGMENTS T1 TO T7; COSTS, ALLOCATION AND BILLING
18.1 The owners of Segments T1 to T7, respectively, as defined in Paragraph
5, hereby grant the Parties, commencing on the RFPA Date or the date a
Party places any of its capacity into operation, whichever occurs
first, and continuing for the term of this Agreement, the right to use
such Segments for the purpose of using its Allocated Capacity and
carrying on the related activities, in accordance with this Agreement
as provided in this Paragraph 18 at no additional cost unless
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otherwise identified in this Paragraph 18 (hereinafter referred to as
"Cable Station Right of Use").
18.2 For the use of Segments T1 to T7, the respective Terminal Party shall
identify the charge to cover capital costs and cost of maintenance,
supervision and operation of that Segment.
18.3 The Procurement Group is responsible for submitting all the detailed
costs of the Cable Stations to the Managing Group for review and
approval.
18.4 The capital costs associated with Segments T1 to T7 will be borne by
the Parties in accordance with Schedule B.
18.5 The operation and maintenance costs associated with Segments T1 to T7
will be borne by the Parties in accordance with Schedule B. The
Managing Group shall be responsible for determining the method and
procedure for the charging of O&M costs to Purchasers and the
distribution of any credit to the Parties in accordance with Schedule
B.
18.6 In determining the charge of the Cable Station Right of Use, the
Terminal Parties have taken into account the estimated cost of the
provision and construction of each of the Cable Stations, or causing
them to be provided and constructed, and installing or causing to be
installed Cable Station equipment, in accordance with the accounting
practices of each Terminal Party. This includes all such expenditure
reasonably incurred and includes but is not limited to, the purchase
costs of land, building costs, access road, cable rights of way,
amounts incurred for development, engineering, design, materials,
manufacturing, procurement and inspection, installation, removing (with
appropriate reduction for salvage), testing associated with
installation, customs duties, taxes (except income tax imposed upon the
net income of a Party), appropriate financial charges, supervision,
overheads and insurance or a reasonable allowance in lieu thereof, or
losses against which insurance was not provided, or for which an
allowance in lieu thereof was not provided. Such charges shall be borne
by the Parties in the proportions specified in Schedule B.
18.7 In determining the operation and maintenance cost of the Cable Station
Right of Use, the Terminal Parties shall take into account an estimate
of costs reasonably incurred in operating and maintaining the
facilities involved, including, but not limited to, the cost of
attendance, testing, adjustments, repairs and replacements, customs
duties, taxes (except income tax as imposed upon the net income of a
Party) paid in respect of such facilities, billing activities,
administrative costs, appropriate financial charges, and costs and
expenses reasonably incurred on account of claims made by or against
other persons in respect of such facilities or any part thereof, and
damages or compensation payable by the Terminal Party on account of
such claims, costs, expenses, damages, or compensation payable to or by
the Terminal Party on account of claims made against other persons.
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18.8 Where the use of a Cable Station or of certain equipment situated
therein, such as power supply or testing and maintenance equipment, is
shared by TAT-14 and other communications systems terminating at that
Cable Station, the Cable Station Right of Use capital and operating and
maintenance charges shall reflect the pro-rata share of the common
costs attributable to TAT-14.
18.9 If any of the Cable Stations are not available for the landing and
termination of TAT-14 for any reason, the relevant Terminal Party, in
agreement with the other Parties, shall take all necessary measures to
ensure that another suitable Cable Station will be available for TAT-14
on fair and equitable terms for the duration of this Agreement.
18.10 Nothing contained in this Agreement shall be deemed to vest in any
Party, other than the owner of the relevant Segment, any salvage rights
in Segments T1 to T7 or in the respective Cable Station or in any Cable
Station substituted for any of them.
18.11 Payments due under this Paragraph 18 shall be made in accordance with
the following principles:
(i) On the RFPA Date, or as soon after as practicable but no later
than one (1) year after RFPA, the Terminal Parties will submit
invoices to the CBP for their capital cost of the Cable Stations
Right of Use. In the event a Terminal Party incurs additional
capital costs related to TAT-14 after the RFPA Date, these
invoices shall also be submitted to the CBP as soon as
practicable;
(ii) by the 1st of April of each year, the Terminal Parties will
submit invoices to the CBP for their O&M charges incurred for
the Cable Stations Right of Use for the previous calendar year;
(iii) the Parties shall be billed individually by the CBP for the
Cable Station Right of Use operation and maintenance costs
shared in the proportions specified in Schedule 13;
(iv) the billed Party shall pay such bills to the CBP, by the end of
the month following the month in which the bills were rendered.
A bill shall be payable in the currency in which it is rendered;
(v) the Terminal Parties will be reimbursed by the CBP;
(vi) the billing procedures specified in Subparagraphs 14.3, 14.4,
14.5, and 14.9 of this Agreement shall be applicable to all
bills rendered pursuant to this Paragraph 18.
18.12 Each Terminal Party agrees to grant a Cable Station Right of Use to
TAT-14 Purchasers pursuant to the terms and conditions of the Purchase
Contract.
19 KEEPING AND INSPECTION OF BOOKS
19.1 For the items specified in the Supply Contract, the Procurement Group
shall ensure that the Supply Contract requires the Supplier to keep and
maintain such books, records, vouchers and accounts of all the incurred
costs with respect to
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the engineering, provision and installation of facilities in Segment S
of TAT-14 for a period of five (5) years from the RFPA Date.
19.2 The Procurement Group shall ensure that the Supply Contract requires
the Supplier to obtain from its contractors and subcontractors such
supporting records as are specified in Subparagraph 19.1 of this
Agreement and to maintain such records for a period of five (5) years
from the RFPA Date.
19.3 The Procurement Group shall ensure that the Supply Contract shall
afford the representatives designated by the Managing Group the right
to review the books, records, vouchers and accounts required to be
kept, maintained and obtained pursuant to Subparagraphs 19.1 and 19.2
of this Agreement.
19.4 Each Terminal Party and any other Party having properly incurred costs
for implementation of TAT-14 as authorized by the Managing Group shall
each keep and maintain such books, records, vouchers and accounts of
all Segment S costs as defined in Paragraph 14 of this Agreement and
Segments T1 to T7 costs, which they incur and are not included in the
Supply Contract for a period of five (5) years from the RFPA Date or
the date the work is completed, whichever is later.
19.5 The CBP shall keep and maintain such books, records, vouchers and
accounts with respect to its billing of costs incurred by the Terminal
Parties and any other Party having incurred costs for implementation of
TAT-14 as authorized by the Managing Group and costs billable under the
Supply Contract for a period of five (5) years from the RFPA Date or
the date on which the work is completed, whichever is later.
19.6 With respect to operation and maintenance costs of Segment S and
Segments T1 to TT such books, records, vouchers and accounts of costs
as are relevant shall be kept and maintained by the Maintenance
Authorities for a period of five (5) years from the date on which the
corresponding bills were rendered to the Parties.
19.7 Any Party keeping and maintaining books, records, vouchers and accounts
of costs pursuant to Subparagraphs 19.4, 19.5 and 19.6 of this
Agreement shall afford the Parties the right to review at their own
expense said books, records, vouchers and accounts of costs in
accordance with the audit procedures established by the F&A
Subcommittee.
20 CURRENCY AND PLACE OF PAYMENT
Amounts due under this Agreement shall be payable in US dollars. The
Managing Group may vary these procedures at its discretion. Bills shall
be payable to the designated office or account of the payee.
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21 DEFAULT OF PAYMENT
21.1 If any Party fails to make any payment required by this Agreement on
the date when it is due and such default continues for a period of at
least two (2) months after the date when payment is due, the CBP or
billing Party shall notify the billed Party in writing of its intent to
notify the Managing Group of the status of the matter and to request
the reclamation of capacity, as provided for in this Paragraph 21, if
full payment is not received within four (4) months of such
notification to the billed Party. If full payment is not received
within such specific period, the billing Party or CBP may notify the
Managing Group of the status of the matter and request that the
Managing Group reclaim the capacity in TAT-14 assigned to the
defaulting Party.
21.2 The Managing Group shall have the option of reclaiming the capacity
assigned to a Party that is in default with any payment required by
this Agreement or is in default with any other material obligation
under this Agreement, if such default has existed for a period of six
(6) months. The Managing Group shall consider any extenuating
circumstances not within the specific control of the defaulting Party
and the interests of any Party or Parties that have jointly assigned
capacity with the defaulting Party in determining whether or not to
reclaim the capacity assigned to such defaulting Party. Prior to
reclaiming the capacity the Managing Group will notify the Party in
writing that it is in default and of the intent to reclaim the capacity
after one (1) month. The Managing Group shall determine arrangements
for disposition of any reclaimed capacity. The remaining Parties shall
not be obliged to make any payment to a defaulting Party for the
reclaimed capacity. Except for the rights and obligations as specified
in Paragraphs 25 and 29 the rights and obligations under this Agreement
of a defaulting Party shall terminate at the time the Managing Group
reclaims all of the capacity previously assigned to a defaulting Party.
This Agreement shall be appropriately amended to reflect the default of
a Party and the reallocation of interests pursuant to arrangements
determined by the Managing Group.
22 LIABILITY
22.1 No Party excludes or restricts its liability for death or personal
injury resulting from its own negligence. Subject to the preceding
sentence, no Party shall be liable to any other Party in contract, tort
or otherwise including any liability for negligence for any indirect or
consequential loss or damage including, without limitation, corruption
or loss of data, loss of profit, loss of anticipated savings all in
connection with this Agreement, caused by its own acts or those of any
of its auxiliaries, such as employees, servants or agents. Furthermore,
no Party shall be liable to any other Party in contract, tort or
otherwise for any direct damage unless and to the extent it is based on
intent or gross negligence. In no event shall any employee, servant or
agent of a Party be liable to another Party for any negligence or
intent in connection with this Agreement.
22.2 No Party shall be liable to any other Party for any matter resulting
from planned interruptions of TAT-14 including but not limited to final
acceptance tests.
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23 FORCE MAJEURE
If any Party cannot fulfill its obligations in this Agreement due to an
event beyond its reasonable control, including, but not limited to
flood, exceptionally severe weather, hurricane, explosion, civil
disorder, war or military operations, national or local emergency,
action or inaction of government or other competent authority, it shall
not be liable to the other Parties for such delay in performing or
failure to perform and shall give notice to the other Parties as soon
as reasonably practicable after the event has occurred.
24 SETTLEMENT OF CLAIMS BY THE PARTIES
24.1 Each Party shall indemnify and hold harmless the other Parties and each
of their employees, servants and agents to the extent hereinafter
agreed, from and against all claims, demands, actions, suits,
proceedings, writs, judgment, orders and decrees brought, made or
rendered against them or any of them by third parties and all damages,
losses and expenses suffered or incurred by them or any of them
howsoever arising out of or related to any respect of providing,
constructing and maintaining TAT-14.
24.2 If any Party is obliged by a final judgment of a competent tribunal or
under a settlement approved by the Managing Group, to discharge any
claim, including all reasonable costs and expenses associated
therewith, resulting from the implementation of this Agreement, the
Party which has discharged the claim shall be entitled to receive from
the other Parties reimbursement in the proportions as set out in
Schedule B.
24.3 If any claim is brought against one or more Parties it shall, as a
condition of reimbursement under Subparagraph 24.2, give written notice
thereof to the Managing Group as soon as practicable and shall not
admit liability nor settle, adjust or compromise the claim without the
approval of the Managing Group.
24.4 Before any Party brings a claim against any third party in respect of
loss or damage to any part of TAT-14, it shall first consult with the
Managing Group and shall not settle, adjust or compromise such a claim
without its consent. Any money received by the claimant Party as a
result of an award by a competent tribunal or under a settlement
approved by the Managing Group shall be shared among the Parties in the
proportions of their respective ownership shares in accordance with
Schedule B.
24.5 In the case where a claim is brought against one of the Terminal
Parties, in its capacity as a Maintenance Authority for TAT-14 in
respect of a sacrificed anchor and/or loss of, or damage to fishing
gear, then such Terminal Party may settle such a claim for an amount
not greater than $ 25,000 on each occasion or such an amount as agreed
by the Managing Group from time to time, and obtain reimbursement under
Subparagraph 24.2.
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25 DURATION OF AGREEMENT AND REALIZATION OF ASSETS
25.1 This Agreement shall become effective on the Effective Date and shall
continue in operation for at least a period of twenty-five (25) years
(hereinafter called "Initial Period") after the RFCS Date and shall be
terminable thereafter by agreement of the Parties. However, any Party
may terminate its participation in this Agreement at the end of the
Initial Period or at any time thereafter by giving at least one year's
prior notice, in writing, to the other remaining Parties. Upon the
effective date of termination of participation of a Party, the
Schedules of this Agreement shall be appropriately modified. The
remaining Parties shall assume the capital, operation, and maintenance
interests of the Party terminating its participation in proportion to
their interests assigned immediately preceding such effective date of
termination, except for the continuing rights and obligations of the
terminating Party as specified in Subparagraphs 25.4, 25.5 and of this
Agreement. No credit for capital costs will be made to a Party that
terminates its participation in accordance with this Subparagraph 25.1.
Termination of this Agreement or termination of the participation of
any Party herein shall not terminate Subparagraphs 25.4, 25.5 of this
Agreement or prejudice the operation or effect thereof or affect or
diminish any other right or obligation of any Party hereto accrued or
incurred prior to such termination.
25.2 This Agreement may be terminated at any time during the Initial Period
by unanimous written agreement of the Parties. If unanimous agreement
cannot be reached between all the Parties for the retirement of TAT-14
during its intended lifetime, this matter will be referred to the
General Committee for resolution in accordance with Subparagraph 6.6
but in this case requiring a 85 % majority of the total voting
interests as specified in Schedule B.
25.3 If a Terminal Party terminates its participation in this Agreement
after the Initial Period, pursuant to Subparagraph 25.1 of this
Agreement, the Managing Group and said Terminal Party will negotiate a
reasonable agreement in order to ensure the continuous operation of
that Cable Station after the Initial Period.
25.4 The interests of a Party in Segment S which come to an end by reason of
the termination of its participation in this Agreement, or of the
termination of this Agreement, shall be deemed to continue for as long
as is necessary for effectuating the purposes of Subparagraph 25.5.
25.5 Notwithstanding Subparagraph 25.1 upon termination of this Agreement
pursuant to this Paragraph 25 the Parties shall not be relieved from
any liabilities, costs, damages or obligations which may arise pursuant
to Paragraph 17 and/or in connection with costs or claims made by
persons with respect to TAT-14 or any part thereof, or which may arise
in relation to TAT-14 due to any law, order or regulation made by any
government or international legal authority pursuant to any
international convention, treaty or agreement. Any such liabilities,
costs, damages or obligations shall be divided among the Parties in the
proportions of their respective ownership shares in accordance with
Schedule B.
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September 2, 1998 Page 29
<PAGE>
26 RELATIONSHIP OF THE PARTIES
The relationship between or among the Parties hereto shall not be that
of partners or joint ventures and nothing herein contained shall be
deemed to constitute a partnership between them. In relation to third
parties, the Parties will not act as partners, or as any kind of joint
legal entity. Any co-operation among the Parties in Committees, Groups
or Subcommittees is only to facilitate the performance of this
Agreement.
27 OBTAINING OF LICENSES
27.1 The Parties shall at all times hold the governmental and regulatory
approvals necessary to operate as an ITE. The Parties shall make all
reasonable efforts to obtain the appropriate consents, governmental
authorizations, licenses and permits necessary to carry out their
duties under this Agreement.
27.2 The Terminal Parties will use all reasonable efforts, in their
respective Country, to obtain and to have continued in effect all
governmental approvals, consents, authorizations, licenses, and permits
for the construction and operation of TAT-14 in the respective
Countries.
27.3 In the event that any Terminal Party fails, or is likely to fail, to
obtain such approvals, consents, authorizations, licenses or permits,
that Terminal Party shall give immediate notice to the Managing Group
for it to take appropriate action pursuant to this Agreement.
28 PRIVILEGES FOR DOCUMENTS OR COMMUNICATIONS
Each Party hereto specifically reserves, and is granted by each of the
other Parties, in any action, arbitration or other proceeding between
or among the Parties or any of them in a Country other than that
Party's own Country, the right of privilege, in accordance with the
laws of that Party's own Country, with respect to any documents or
communications which are material and pertinent to the subject matter
of the action, arbitration or proceeding as respects which privilege
could be claimed or asserted by that Party in accordance with those
laws, and such privilege, whatever may be its nature and whenever it be
claimed or asserted, shall be allowed to that Party as it would be
allowed if the action, arbitration or other proceeding had been brought
in a court of, or before an arbitrator in, the Party's own Country.
29 CONFIDENTIALITY
29.1 All data and information that is acquired or received by any Party in
anticipation of or under this Agreement shall be confidential and shall
not be divulged in any
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September 2, 1998 Page 30
<PAGE>
way to any third party, without the prior written approval of the other
Parties, nor shall it be used for any purpose beyond the scope of this
Agreement. Any Party may, without such approval, disclose such data and
information to:
(i) the employees of that Party; or
(ii) the extent required by any applicable laws, or the requirement
of any recognized stock exchange in compliance with its rules
and regulations or in the case if a party wholly owned by a
sovereign government, by the rules of governance of the Party,
or
(iii) any government agency or regulatory authority lawfully
requesting such information or to which such information needs
to be submitted in order to obtain any necessary consent or
approval', or
(iv) any Court of competent jurisdiction acting in pursuance of its
powers; or
(v) professional advisors, auditors and bankers or any bona fide
intending assignee upon obtaining a similar undertaking of
confidentiality; or
(vi) the extent that such data and/or information is generally
available to the public.
Any Party may disclose such data and information to such persons as may
be necessary in connection with the conduct of operations of TAT-14
upon obtaining a similar undertaking of confidentiality from such
persons.
29.2 Each Party shall remain bound by the provisions of this Paragraph 29
during the period of this Agreement and for the period of five years
following termination of this Agreement.
30 ASSIGNMENT OF RIGHTS AND OBLIGATIONS
30.1 No Party may assign, sell, transfer or dispose of part or parts of its
rights or obligations under this Agreement except as otherwise provided
for in Paragraph 9.
30.2 A Party may assign the whole of its rights under this Agreement to a
successor by law, Subsidiary or Affiliate of such Party, or a
corporation or an entity jointly controlling or under the same common
control as such Party, provided that the assigning Party shall remain
jointly and severally liable with the assignee for the performance of
this Agreement for the duration of the Agreement. The Managing Group
may decide that the assigning Party will not remain jointly and
severally liable with the assignee for the performance of this
Agreement for the duration of the Agreement provided that the assigning
Party will give notice to the other Parties in a timely manner, and
provided that the assignee agrees in writing to be bound by the
provisions of this Agreement.
30.3 Except in accordance with Subparagraph 30.2, no Party may assign the
whole of its rights under this Agreement without the written consent of
all the other Parties, such consent shall not be unreasonably withheld.
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September 2, 1998 Page 3l
<PAGE>
30.4 If a governmental or other regulatory approval is required lawfully to
effect the proposed assignment, the assigning Party shall be
responsible, at its own expense, for preparing and pursuing the
application for such approval. Such approval shall be obtained in
advance of the assignment unless the relevant governmental or
regulatory authority has formally indicated in writing that the
transfer may proceed in advance of the receipt of the formal approval.
30.5 In each such case of assignment written notice shall be given to the
other Parties in a timely manner by the Party making said assignment.
31 WAIVER
Silence, lateness to invoke or the waiver by any Party of a breach of,
or a default under, any of the provisions of this Agreement, or the
failure of any Party, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or privilege
hereunder, shall not thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of any
such provision, right, or privilege hereunder.
32 COMMUNICATIONS
Any notice under this Agreement shall be delivered by hand, first class
mail with postage prepaid, facsimile or e-mail and shall be deemed to
have been given:
(i) when delivered if delivered by hand, facsimile or e-mail (with
receipt acknowledged); or;
(ii) at the expiration of ten (10) days (or thirty (30) days, if a
notice of termination of this Agreement) from the date of
dispatch if delivered by mail.
33 PARAGRAPH HEADINGS, REFERENCES
Headings are inserted for convenience only and shall not affect the
interpretation of this Agreement, References to recitals, clauses, and
attachments are to recitals and clauses of and Schedules to this
Agreement. Unless the context otherwise requires, words importing the
singular number shall include the plural and vice versa. Unless the
context otherwise requires, references to a person include an
individual, firm, body, corporation, unincorporated association, and
government or governmental, semi-governmental or local authority or
agency. Reference to the male shall include the female.
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September 2, 1998 Page 32
<PAGE>
34 SEVERABILITY
If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate
or render unenforceable the entire Agreement, but rather the entire
Agreement shall be construed as if not containing the particular
invalid or unenforceable provision or provisions, and the rights and
obligations of the Parties shall be construed and enforced accordingly.
35 EXECUTION OF AGREEMENT AND AMENDMENTS
35.1 Except for revisions to the relevant Schedules, in accordance with
Paragraphs 9, 11 and 21 of this Agreement, the provisions of this
Agreement may be amended or supplemented only by unanimous consent of
all the Parties to this Agreement through an Amendatory Agreement. Such
an Amendatory Agreement shall be signed by a duly authorized
representative of each and every Party or by certain Parties on behalf
of all the Parties, as decided by the General Committee.
35.2 This Agreement and any Amendatory Agreement thereof shall be executed
in three counterparts in English. The NA, one Eastern Terminal Party
and one Western Terminal Party shall receive originals. The NA shall be
the official custodian of the Agreement and shall accord access to such
Agreement and any Amendatory Agreement. The Parties to this Agreement
shall be provided a certified photocopy of any counterpart and any
revised Schedules.
35.3 For revision to the relevant Schedules, in accordance with Paragraphs
9, 11 and 21 of this Agreement, the agreement in writing of the Parties
having their ownership percentages increased or their capacity
assignment changed will be required to formalize the revised Schedules,
which will be considered as part of this Agreement, in substitution for
the preceding version of those Schedules.
36 INTERPRETATION OF THE AGREEMENT AND SETTLEMENT OF DISPUTES
36.1 The construction, interpretation and performance of this Agreement
shall be governed by the laws of Switzerland, except for its conflicts
of law principles.
36.2 Any dispute relating to this Agreement or its subject matter, including
disputes as to validity, performance, breach, or termination, which
cannot be settled by mutual agreement between the Parties, shall be
submitted to binding arbitration under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce as in force on the
date of the commencement of the arbitration and as modified by this
arbitration clause. The appointing and administering body shall be the
International Chamber of Commerce. There shall be only one arbitrator.
The arbitration shall take place in Geneva, Switzerland, and the
proceedings shall be conducted in the English language. The award shall
be final and binding and the Parties hereby waive all means of recourse
to the courts of
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September 2, 1998 Page 33
<PAGE>
Switzerland or any other Country. Jucgment on the award may be entered
in any court of competent Jurisdiction.
37 SUCCESSORS BOUND
This Agreement shall be binding on the Parties, their successors and
permitted assigns.
38 ENTIRE AGREEMENT
38.1 This Agreement represents the entire understanding and agreement
between the Parties in relation to the matters dealt with herein, and
supersedes all previous representations, understandings and agreements,
whether oral or written, relating thereto.
38.2 It includes the following documents which are attached hereto and
incorporated herein by reference
SCHEDULES
SCHEDULE A PARTIES TO THE AGREEMENT
SCHEDULE B VOTING INTERESTS, OWNERSHIP INTERESTS IN SEGMENTS AND ALLOCATION
OF CAPITAL, OPERATING AND MAINTENANCE COSTS IN SEGMENTS S AND T.
SCHEDULE C SUMMARY OF ALLOCATED CAPACITY
SCHEDULE C-1 SUMMARY OF ALLOCATED CAPACITY AS ASSIGNED AT THE TIME OF C&MA
SIGNING
ANNEXES
ANNEX 1 TERMS OF REFERENCE FOR MANAGING GROUP
ANNEX 2 TERMS OF REFERENCE FOR THE PROCUREMENT GROUP
ANNEX 3 TERMS OF REFERENCE FOR THE AR&R SUBCOMMITTEE
ANNEX 4 TERMS OF REFERENCE FOR THE F&A SUBCOMMITTEE
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September 2, 1998 Paqe 34
<PAGE>
ANNEX 5 TERMS OF REFERENCE FOR THE CENTRAL BILLING PARTY
ANNEX 6 TERMS OF REFERENCE FOR THE NETWORK ADMINISTRATOR
ANNEX 7 SOURCE OF FINANCIAL CHARGE RATES
ANNEX 8 INITIAL OWNERSHIP PRICING MATRIX
ANNEX 9 CAPACITY STRUCTURE
ANNEX 10 ORGANIZATION STRUCTURE
ANNEX 11 CONFIGURATION DIAGRAM
39 TESTIMONIUM
IN WITNESS WHEREOF the Parties have severally subscribed these presents or
caused them to be subscribed in their names and on their behalf by their
respective officers thereunto duly authorized.
For and on behalf of
ABS Telecom plc
---------------------------
For and on behalf of
AT&T Corp.
---------------------------
For and on behalf of
BARAK I.T.C
---------------------------
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<PAGE>
For and on behalf of
BC TEL
---------------------------
For and on behalf of
Belgacom S.A.
---------------------------
For and on behalf of
BellSouth International, Inc.
---------------------------
For and on behalf of
British Telecommunications pIc
---------------------------
For and on behalf of
Cable & Wireless Global Network Organisation Limited
---------------------------
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September 2, 1998 Paqe 36
<PAGE>
For and on behalf of
Cable & Wireless, Inc.
---------------------------
For and on behalf of
Carrier 1 AG
---------------------------
For and on behalf of
COMPANHIA PORTUGUESA RADIO MARCONI, SA.
---------------------------
For and on behalf of
Com Tech International Corporation
---------------------------
For and on behalf of
CYPRUS TELECOMMUNICATIONS AUTHORITY
---------------------------
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September 2, 1998 Page 37
<PAGE>
For and on behalf of
Deutsche Telekom AG
---------------------------
For and on behalf of
Energis Communications Limited
---------------------------
For and on behalf of
Emirates Telecommunications Corporation - ETISALAT
---------------------------
For and on behalf of
France Telecom
---------------------------
For and on behalf of
GTE Intelligent Network Services Incorporated
---------------------------
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September 2, 1998 Page38
<PAGE>
For and on behalf of
Hellenic Telecommunications Organisation S.A.
---------------------------
For and on behalf of IXC Communications, Inc.
For and on behalf of
---------------------------
IXNET Limited
---------------------------
For and on behalf of
Japan Telecom Co., Ltd.
---------------------------
For and on behalf of
Kokusai Denshin Denwa Americas Inc.
---------------------------
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September 2, 1998 Page 39
<PAGE>
For and on behalf of
KPN Telecom B.V
---------------------------
For and on behalf of
MCI International Inc.
---------------------------
For and on behalf of
NTT Worldwide Network Corporation
---------------------------
For and on behalf of
OY FINNET International AB
---------------------------
For and on behalf of
Pacific Gateway Exchange
---------------------------
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September 2, 1998 Page 40
<PAGE>
For and on behalf of
Pacific Gateway Exchange Inc.
---------------------------
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September 2, 1998 Page 40a
<PAGE>
For and on behalf of
Rostelecom
---------------------------
For and on behalf of
RSL Communications Limited
---------------------------
For and on behalf of
Singapore Telecommunications Limited
---------------------------
For and on behalf of
Slovenske Telecomunicatie s.e.
---------------------------
For and on behalf of
Sonera Ltd.
---------------------------
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September 2, 1998 Page 41
<PAGE>
For and on behalf of
Sprint Communications Company L.P.
---------------------------
For and on behalf of
STAR Telecommunications Inc.
---------------------------
For and on behalf of
StarHub
---------------------------
For and on behalf of
STARTEC GLOBAL COMMUNICATIONS CORPORATION
---------------------------
For and on behalf of
Swisscom Ltd
---------------------------
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<PAGE>
For and on behalf of
Swisscom North America Inc.
---------------------------
For and on behalf of
Tele 2 AB
---------------------------
For and on behalf of
TeleBermuda International Limited
---------------------------
For and on behalf of
Tele Danmark A/S
---------------------------
For and on behalf of
Telef6nica de Espana, S.A.
---------------------------
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<PAGE>
For and on behalf of
Teleglobe USA
---------------------------
For and on behalf of
Telenor Global Services AS
---------------------------
For and on behalf of
Telesur
---------------------------
For and on behalf of
TELIA AB (publ)
---------------------------
For and on behalf of
Telia North America Inc.
---------------------------
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September 2, 1998 Page 44
<PAGE>
For and on behalf of
Transoceanic Communications Incorporated
---------------------------
For and on behalf of
Turk Telekomunikasyon A.S.
---------------------------
For and on behalf of
Ultrallne (Bermuda) Limited
---------------------------
For and on behalf of
VIATEL
---------------------------
For and on behalf of
Videsh Sanchar Nigam Limited
---------------------------
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September 2, 1998 Page 45
EXHIBIT 10.31
SEA-ME-WE 3
CONSTRUCTION AND MAINTENANCE
AGREEMENT
SIGNING ISSUE: 16 DECEMBER 1996
<PAGE>
TABLE OF CONTENTS
PARAGRAPH PAGE
1. Definitions and Interpretations 6
2. SEA-ME-WE 3 Configuration 9
3. Management Committee and Subcommittees 10
4. Procurement Group 12
5. SEA-ME-WE 3 Segments 12
6. Provision, Construction and Ownership of Segments T and S 16
7. Use of Segment S7 -- Egyptian I and Segment 18
8. Use of Segment T 18
9. Definition of Segment S Capital Costs 20
10. Allocation and Billing of Segment S Capital Costs 21
11. Duties and Rights as to Operation and Maintenance of Segments 23
12. Allocation and Billing of Operation and Maintenance Costs of
Segment S 24
13. Keeping and Inspection of Books 25
14. Assignment and Use of Capacity 26
15. Expansion of Allocated Capacity 30
16. Capacity Routing 30
17. Increase or Decrease of Design Capacity 31
18. Obligation to Provide Transiting Facilities to Extend SEA-ME-WE 3
Capacity 32
19. Obligation to Connect SEA-ME-WE 3 with Inland Systems 32
20. Obtaining of Approval 32
21. Assignment of Rights and Obligations 33
<PAGE>
PARAGRAPH PAGE
22. Default 33
23. Settlement of Claims by the Parties 34
24. Relationship and Liability of the Parties 34
25. Privileges for Documents or Communications 35
26. Confidentiality 35
27. Duration of Agreement and Realisation of Assets 36
28. Currency and Place of Payment 38
29. Waiver 38
30. Force Majeure 38
31. Settlement of Disputes and Interpretation of Agreement 38
32. Execution of Agreement 39
33. Alterations and Additions 39
34. Successors Bound 39
35. Severability 39
36. Compliance with Law 40
37. Notices 40
Testimonium 40
Annexes
Schedules
<PAGE>
ANNEXES AND SCHEDULES
ANNEXES
Annex 1 -- SEA-ME-WE 3 Network Distances
Annex 2 -- SEA-ME-WE 3 Configuration
Annex 3 -- Progressive Incentive Pricing Scheme (PIPS)
Annex 4 -- Terms of Reference for Subcommittees, Procurement Group, Network
Administrator and the Central Billing Party
Annex 5 -- Source of Rates for Financial Charges
Annex 6 -- Integration of Tagide-2 into SEA-ME-WE 3
Annex 7 -- Segment S3 Arrangements
SCHEDULES
Schedule A -- Parties to the Agreement
Schedule B -- Voting Interests, Ownership of Segment S, Allocation of Capital
and Operation and Maintenance Costs of Segment S
Schedule C -- Interests in the Common Reserve Capacity
Schedule D -- Allocation of Capital, Operation and Maintenance Costs of
Segment T
Schedule E -- Summary of all Parties' MIU*km Capacity Allocation
Schedule F -- Parties' Allocated Capacity and Assigned Capacity in MIU's
Schedule G -- Initial Parties' Interests
Schedule H -- Summary of Pool Capacity
Schedule I -- Summary of Source of IRU Capacity
Schedule J -- Summary of IRU Purchasers' Capacity
Schedule K -- IRU Purchasers' Capacity in MIUs
<PAGE>
SEA-ME-WE 3
CONSTRUCTION AND MAINTENANCE AGREEMENT
This Agreement is made and entered into on this 15th of January 1997, between
and among the Parties signatory hereto (hereinafter collectively called
"Parties" and individually called "Party"), which Parties are identified at
Schedule A attached hereto.
WITNESSETH
WHEREAS:
A. The Parties intend to co-operate to provide and maintain an optical fibre
cable system linking the Far East, South East Asia, the Indian
Subcontinent, the Middle East and Western Europe, (hereinafter called
"SEA-ME-WE 3"); and
B. KDD, TM, SINGTEL, INDOSAT, CAT, SLT, VSNL, ETISALAT, OPT, MOPTT, ARENTO,
TELECOM ITALIA, FT/FCR, BT, DTAG, AT&T and TOCI, have signed on the 13th of
December 1994 a "Memorandum of Understanding" (hereinafter called "MOU")
for carrying out a joint study for the implementation of a high capacity
fibre optic submarine cable system linking South East Asia, the Indian
Subcontinent, the Middle East and Western Europe; and
C. By the "First Supplement to the Memorandum of Understanding" effective on
the 3rd of November 1995, MARCONI, PTCL and TURK TELEKOM were admitted as
parties to the MOU; and
D. By the "Second Supplement to the Memorandum of Understanding" effective on
the 1st of March 1996, OTE was admitted as a party to the MOU; and
E. By the "Third Supplement to the Memorandum of Understanding" effective on
the 28th of May 1996, TELSTRA was admitted as a party to the MOU; and
F. By the "Fourth Supplement to the Memorandum of Understanding" effective on
the 26th of July 1996, GTO was admitted as a party to the MOU; and
G. KDD, KT, CT, ITDC, HKTI, CTM, PLDT, VNPT JTB, TM, SINGTEL, and MPT have
signed on the 11th of November 1996 a "Memorandum of Understanding No. 1 on
the Implementation of the SEA-ME-WE 3 Extension" (hereinafter called the
"MOU 1"), for carrying out the implementation of a high capacity fibre
optic submarine cable system linking their respective countries,
territories, or places as appropriate; and
H. By the "Fifth Supplement to the Memorandum of Understanding" effective on
the 26th of November 1996, ONPT was admitted as a Party to the MOU, and
SLTL was recognised as the legal successor to SLT; and
I. By the "Sixth Supplement to the Memorandum of Understanding" effective on
the 27th of November 1996. Belgacom was admitted as a Party to the MOU; and
<PAGE>
J. By the "Additional Memorandum of Understanding" effective on the 27th of
November 1996, CYTA were admitted as a Party to the MOU; and
K. By the "Memorandum of Understanding on the Integration of the SEA-ME-WE 3
Cable and the SEA-ME-WE 3 Extension", effective on the 27th of November
1996, the parties to the MOU and the parties to the MOU-1 agreed to
integrate their respective cable projects into a single cable project.
L. The Parties now desire to define the terms and conditions upon which
SEA-ME-WE 3 shall be engineered, provided, constructed, operated and
maintained;
Now therefore, it is hereby agreed by and between the Parties as follows:
1. DEFINITIONS AND INTERPRETATIONS
1.1 The following definitions shall apply to certain terms used in this
Agreement:
Accounting Practice:
An accounting practice which meets international standards or requirements
laid down by applicable laws and professional organisations appropriate to
a Party.
Agreement:
This SEA-ME-WE 3 Construction and Maintenance Agreement.
Basic System Payload Module:
A Virtual Container 4 (VC4) in accordance with ITU-T Recommendation G.707.
Bit Sequence Independence:
The property of a binary transmission channel, telecommunications circuit
or connection, that permits all sequences of binary signal elements to be
conveyed over it at its specified bit rate, without change to the value of
any signal elements, in accordance with ITU-T Recommendation G.701,
Paragraph 2.
Branching Unit:
Equipment that permits interconnection between 3 cable sections and
provides the optical fibre and power conductor between 3 cable sections.
Cable Landing Point:
The beach joint, or the mean low water mark of ordinary spring tides if
there is no beach joint.
Cable System Interface:
The nominal STM-1 digital optical or electrical input/output ports on the
digital/optical distribution frame (excluding the digital/optical or
electrical distribution frame itself) where the Basic System Payload Module
connects with other transmission facilities or equipment.
Capacity:
Capacity shall be categorised as follows, (with items (ii), (iii), (iv),
(v) and (vi) expressed in terms of MIU*kilometre)
<PAGE>
(i) Design Capacity: The capacity of Segment S of SEA-ME-WE 3 provided
under the Supply Contract.
(ii) Allocated Capacity: Capacity which is allocated to a Party in return
for its financial investment, and which comprises the Assigned
Capacity, Reserve Capacity and Pool Capacity.
(iii)Assigned Capacity: Capacity which is assigned to a Party in specific
Paths of SEA-ME-WE 3.
(iv) Reserve Capacity: Capacity acquired by a Party on an unmatched basis
for its intended future assignments.
(v) Pool Capacity: Capacity acquired by a Party on an unmatched basis for
transfer on an Indefeasible Right of Use (IRU) basis, and the
collective sum of such capacity acquired by each Party.
(vi) Priority Pool Capacity: Pool Capacity which has priority in meeting
SEA-ME-WE 3 IRU sales between Sesimbra and Penmarch until the 31st of
December 2000, as detailed in Annex 6.
(vii)Common Reserve Capacity (CRC): Capacity in excess of the Allocated
Capacity, which is not allocated to any specific Party.
(viii) Restoration Capacity: Capacity within the Common Reserve Capacity
made available for in-system restoration and the restoration of other
systems.
(ix) SEA-ME-WE 3 IRU: Capacity purchased in SEA-ME-WE 3 on an Indefeasible
Right of Use (IRU) basis.
Carriers:
All of the Parties to this Agreement, except TOCI, and international
telecommunications entities not Parties hereto authorised or permitted
under the laws of its respective country, territory or place to acquire and
use cable capacity on an IRU basis pursuant to Paragraph 14.
Existing Carriers:
International telecommunications entities which were authorised or
permitted under the laws of their respective countries, territories or
places on or before the 1st of September 1996 to acquire and use capacity
on an IRU basis.
Initial Parties:
Means KDD, KT, CT, ITDC, HKTI, CTM, PLDT, VNPT, JTB, TM, SINGTEL, INDOSAT,
TELSTRA, CAT, MPT, SLTL, VSNL, PTCL, GTO, ETISALAT, OPT, MOPTT, ARENTO,
CYTA, TURK TELEKOM, OTE, TELECOM ITALIA, ONPT, MARCONI, FT/FCR, BT,
BELGACOM, DTAG, AT&T, and TOCI.
Interconnection Equipment:
The equipment in each terminal station interconnecting Segments S1, S2, S3,
S4, S5, S6, S7, S8, S9, and S10, one with another, as appropriate, and to
the Cable System Interface.
<PAGE>
MIU: A unit of capacity mapped onto a VC12 with effective usage of 2.048 Mbit/s
in each direction. A maximum of 63 MIU may be carried in one (1) Basic
System Payload Module.
MIU*kilometre or MIU*km
A unit of capacity in SEA-ME-WE 3 which shall consist of two one-half
interests in a MIU multiplied by one (1) kilometre of the Network Distance.
Network Distance:
The virtual distance of each Path of SEA-ME-WE 3 in kilometres, which is
specified in Annex 1 of this Agreement.
Paid
Meaning that the funds referred to are available for immediate use by the
recipient, or the Central Billing Party as appropriate.
Path:The connectivity in SEA-ME-WE 3 between any two Cable System Interfaces,
independent of the actual physical links used to connect these Cable System
Interfaces.
Path Assignment:
An allocation of capacity to a Party or two Parties on a specific Path in
SEA-ME-WE 3.
Ready for Service Date:
The Ready For Service Date, hereinafter called "RFS Date", shall be
considered as the date at which the Parties agree to place the entire
SEA-ME-WE 3 into operation for customer service and shall be on or before
the 30th of March 1999, or such other date as may be agreed by the
Management Committee.
Ready For Provisional Acceptance Date:
The date on which Segment S of SEA-ME-WE 3 is accepted by the Procurement
Group on behalf of the Parties. The Ready for Provisional Acceptance Date
(hereinafter called "RFPA Date") shall be on or before 1st of December 1998
with the exception of Segment S1 and S2, which shall be on or before 1st of
March 1999 and Segment S7 which shall be on or before 1st of July 1998) or
such other dates as may be agreed upon by the Management Committee.
Segment Ready For Service Date:
The Segment Ready For Service Date, hereinafter called the "Segment RFS
Date", shall be on or before 31st of December 1998 for Segments S3 - S10,
and on or before 30th March 1999 for Segments S1 and S2 or such other date
as may be agreed upon by the Management Committee.
Supply Contract
The contracts placed by the Procurement Group on behalf of the Parties for
the supply of Segment S of SEA-ME-WE 3.
<PAGE>
Tagide-2 Parties:
Means PTA, BELGACOM, TELEGLOBE, TD, FINNET, TFIN, FT/FCR, DTAG, OTF, BTE,
LPTT, TELENOR, MARCONI, ROSTEL, TSA, TELIA, SWISST, MCL, AT&T, TOCI, SPRINT
and MCII.
Terminal Parties:
Means KDD, KT, CT, ITDC, HKTI, CTM, PLDT, VNPT, JTB, TM, SINGTEL, INDOSAT,
TELSTRA, CAT, MPT, SLTL, VSNL, PTCL, GTO, ETISALAT, OPT, MOPTT, ARENTO,
CYTA, TURK TELEKOM, OTE, TELECOM ITALIA, ONPT, MARCONI, FT/FCR, BT,
BELGACOM and DTAG.
1.2 Schedules and Annexes
The Schedules and Annexes to this Agreement, and any written amendments
thereto or any Schedules or Annexes substituted therefore, shall form part
of this Agreement, and any Paragraph which contains a reference to a
Schedule or Annex shall be read as if the Schedule or Annex was set out at
length in the body of the Paragraph itself. In the event that there is any
conflict between the terms and conditions of this Agreement and the
Schedules and Annexes to this Agreement, the terms and conditions of this
Agreement shall prevail.
1.3 Headings
The headings in this Agreement are inserted for convenience only and shall
be ignored in construing this Agreement.
1.4 Entire Agreement
This Agreement represents the entire understanding and agreement between
the Parties in relation to the matters dealt with herein, and supersedes
all previous representations, understandings and agreements, whether oral
or written, relating thereto.
1.5 Interpretation
Where the sense requires, words denoting the singular only shall also
include the plural and vice versa. References to persons shall include
firms and companies and vice versa. Reference to the male shall include the
female.
2. SEA-ME-WE 3 CONFIGURATION
2.1 The configuration of SEA-ME-WE 3 shall be as shown in Annex 2.
2.2 The planning and development of SEA-ME-WE 3 shall be suitable for
implementation of SEA-ME-WE 3 at the RFS Date defined in Paragraph 1, using
the appropriate transmission rate in the synchronous digital hierarchy to
meet the capacity requirements of the Parties.
2.3 In accordance with the arrangements contained in Annex 6, the Tagide-2 and
SEA-ME-WE 3 Parties agree to integrate the Tagide-2 cable system into
SEA-ME-WE 3.
<PAGE>
3. MANAGEMENT COMMITTEE AND SUBCOMMITTEES
3.1 The Parties shall hereby establish a committee (hereinafter called the
"Management Committee"), for the purpose of directing the progress of the
engineering, provision, installation, bringing into service and continued
operation of SEA-ME-WE 3. Except as otherwise stated in this Agreement,
(which exception shall include decisions on procurement which shall be made
by the Procurement Group in accordance with their Terms of Reference as
contained in Annex 4 hereto), the Management Committee shall make all
decisions necessary on behalf of the Parties to effectuate the purposes of
this Agreement -- shall provide the Chairman of the Management Committee.
3.2 The Management Committee shall consist of a Chairman and one representative
from each of the Parties to this Agreement. The Chairman may appoint one
secretary to assist him. Two or more Parties may designate the same person
to serve as their representative at specific meetings of the Management
Committee and its subcommittees (established pursuant to Paragraph 3.10 of
this Agreement). The Management Committee shall meet on the call of the
Chairman or whenever requested by one or more Parties together representing
at least five per cent (5%) of the total voting interests specified in
Schedule B. The Chairman shall give the Parties at least thirty (30) days'
advance notice of each meeting, together with a copy of the draft agenda.
Such notice period may be reduced if Parties representing at least
seventy-five per cent (75%) of the total voting interests are in agreement.
Documents for discussion at the meeting should be made available to the
Parties at least fourteen (14) days before the meeting, but the Management
Committee may agree to discuss papers distributed on less than fourteen
(14) days' notice, with the consent of all the Parties.
3.3 Meetings of the Management Committee shall be considered to have a quorum
if the sum of the votes which the attending Parties hold or represent is
equal to at least sixty six per cent (66%) of the total voting interests,
as specified in Schedule B.
3.4 All decisions made by the Management Committee shall be subject, in the
first place, to consultation among the Parties, which shall make every
reasonable effort to reach agreement with respect to matters to be decided.
However, in the event agreement cannot be reached, the decision shall be
carried on the basis of a vote. The vote shall be carried by a majority
(more than 50%) of the total percentage voting interest specified in
Schedule B unless otherwise stated in this Agreement. A member of the
Management Committee representing more than one Party shall separately cast
the vote to which each Party he represents is entitled.
3.5 Any Party not represented at a Management Committee meeting, but entitled
to vote, may vote on any matter on the agenda of such a meeting by either
appointing a proxy in writing or giving notice of such vote to the Chairman
prior to the submission of such matters for vote at such meetings.
3.6 If, following the call for a Management Committee meeting, the Chairman has
not received confirmation of attendance by the Parties such that a quorum
for a Management Committee shall be achieved, he shall, within ten (10)
days after the scheduled meeting, send out invitations to all Parties for a
new meeting with the same working agenda, indicating the circumstances for
re-scheduling the meeting. In such cases, no quorum shall be required and,
notwithstanding paragraph 3.4, any vote shall be carried by a majority
(more than 50%) of the voting interests cast
<PAGE>
3.7 If the Management Committee Chairman deems it appropriate, he may require
the Parties to determine by correspondence any proposal received from one
of the Parties which could validly be determined at a meeting of the
Management Committee if duly held for that purpose. If such procedure is
required as aforesaid, or if at any time the Parties agree to adopt such
procedure, each Party entitled to vote shall cast its vote within fourteen
(14) days after the proposal is issued by the Management Committee
Chairman. In the case where the Parties are required to vote on and
determine any proposal where the matter presented for consideration by its
nature requires determination in less than fourteen (14) days, and such
fact and lesser period are so stated in the notice submitting the proposal,
the Parties shall cast their votes by letter, facsimile or telex within
such lesser period, which shall not be less than five (5) days after the
proposal is issued.
3.8 The Management Committee Chairman shall give prompt notice of the results
of any such voting to the Parties and any decision so taken shall be
binding on the Parties.
3.9 No decision of the Management Committee, its subcommittees, or any other
groups established by the Management Committee shall override any
provisions of this Agreement or in any way diminish the rights of, or
prejudice the interests granted to, any Party under this Agreement.
3.10 To aid the Management Committee in the performance of its duties, the
following subcommittees shall be formed. These subcommittees shall comprise
a representative of each Party, under the direction of the Management
Committee, and shall be responsible for their respective areas of interest
listed in Annex 4 and any other areas of interest designated by the
Management Committee.
(i) Capacity Assignment, Routing and Restoration Subcommittee (hereinafter
called "AR&RSC"),** shall provide the Chairman of the AR&RSC.
(ii) Operation and Maintenance Subcommittee (hereinafter called "O&MSC"),**
shall provide the Chairman of the O&MSC.
(iii)Financial and Administrative Subcommittee (hereinafter called
"F&ASC"),** shall provide the Chairman of the F&ASC.
Each of the above subcommittees may, at their discretion, establish other
subordinate groups, who will report directly to the relevant subcommittee,
to assist them in the performance of their responsibilities.
3.11 The Management Committee may establish such other subcommittees or groups
as it shall determine at its discretion to provide assistance in the
performance of its responsibilities. The Chairman of such subcommittees
shall be provided from the Terminal Parties.
3.12 The subcommittees shall meet as required, and at least once annually
between the effective date of this Agreement and the RES Date. Meetings of
a subcommittee may be called to consider specific questions at the
discretion of its Chairman, or whenever requested by one or more Parties
representing at least five per cent (5%) of the total voting interests
specified in Schedule B. The respective Chairman of each subcommittee, or a
designated representative of each subcommittee, shall attend the
<PAGE>
Management Committee meetings and meetings of each other subcommittee in an
advisory capacity as necessary. After the RFS Date, the Management
Committee shall determine whether any of its subcommittees should remain in
existence. If the Management Committee determines that one or more of its
subcommittees shall not remain in existence, the responsibilities assigned
to a subcommittee whose existence has been terminated shall revert to the
Management Committee.
4. PROCUREMENT GROUP
4.1 A Procurement Group shall also be established under the direction of the
Management Committee, comprising representatives from the Terminal Parties.
This group shall act as an agent for the Parties and be solely responsible,
on a joint but not several basis, for all actions as may be required by the
Management Committee to execute the Supply Contract(s) with the supplier to
provide Segment S of SEA-ME-WE 3. The Procurement Group may, at its
discretion, establish other sub-ordinate groups, who will report directly
to the Procurement Group, to assist it in the performance of its
responsibilities.
4.2 Notwithstanding Paragraph 4.1, the MOU signatories shall continue to be
responsible, until the signing of the Supply Contract for Segments S3 - S10
of SEA-ME-WE 3, for the adjudication of tenders and the contract
negotiations leading to the execution of the Supply Contract for Segments
S3 - S10 of SEA-ME-WE 3.
4.3 Notwithstanding Paragraph 4.1, the MOU-1 signatories shall continue to be
responsible, until the signing of the Supply Contract for Segments S1 and
S2 of SEA-ME-WE 3, for the adjudication of tenders and the contract
negotiations leading to the execution of the Supply Contract for Segments
S1 and S2 of SEA-ME-WE 3.
4.4 In the performance of the activities referred to in Paragraphs 4.2 and 4.3,
the signatories of the MOU and MOU-1 will liaise closely with the
Procurement Group established under this Agreement to ensure the effective
integration of Segments S3 - S10 with Segments S1 and S2.
4.5 The Procurement Group shall have terms of reference contained in Annex 4.
4.6 The Procurement Group shall undertake the ongoing tasks of co-ordinating
and managing the overall project during the engineering, provision and
construction of SEA-ME-WE 3.
4.7 The Procurement Group shall continue to function until the Supply Contract
is complete, unless otherwise determined by the Management Committee.
4.8 The Chairman of the Procurement Group shall attend Management Committee
meetings and subcommittee meetings in an advisory capacity as necessary.
5. SEA-ME-WE 3 SEGMENTS
5.1 In accordance with the arrangements contained in this Agreement, SEA-ME-WE
3 shall be engineered, provided, constructed, maintained and operated
between a terminal station at Okinawa, a terminal station at Keoje,
<PAGE>
terminal stations at Shanghai and Shantou, terminal stations at Toucheng
and Fangshan, a terminal station at Deep Water Bay, a terminal station at
Taipa, a terminal station at Batangas, a terminal station at Danang, a
terminal station at Tungku, a terminal station at Mersing, a terminal
station at Tuas, a terminal station at Jakarta, a terminal station at
Perth, a terminal station at Medan, a terminal station at Penang, a
terminal station at Satun, a terminal station at Pyapon, a terminal station
at Mount Lavinia, terminal stations at Cochin and Mumbai, a terminal
station at Karachi, a terminal station at Muscat, a terminal station at
Fujairah, a terminal station at Djibouti, a terminal station at Jeddah,
terminal stations at Suez and Alexandria, a terminal station at Yeroskipos,
a terminal station at Marmaris, a terminal station at Chania, a terminal
station at Mazara Del Vallo, a terminal station at Tetuan, a terminal
station at Sosimbra, a terminal station at Penmarch, a terminal station at
Goonhilly, a terminal station at Oostende and a terminal station at Norden.
For the purposes of this Agreement, SEA-ME-WE 3 shall be regarded as
consisting of Segments T and 9.
5.2 Segment T shall comprise the following segments:
SEGMENT T1: The terrestial segment at Okinawa (KDD),
SEGMENT T2: The terrestial segment at Keoje (KT),
SEGMENT T3: The terrestial segment at Shanghai (CT),
SEGMENT T4: The terrestial segment at Toucheng (ITDC),
SEGMENT T5: The terrestial segment at Fangshan (ITDC),
SEGMENT T6: The terrestial segment at Shantou (CT),
SEGMENT T7: The terrestial segment at Deep Water Bay (HKTI),
SEGMENT T8: The terrestial segment at Taipa (CTM),
SEGMENT T9: The terrestial segment at Batangas (PLDT),
SEGMENT T10: The terrestial segment at Danang (VNPT),
SEGMENT T11: The terrestial segment at Tungku (JTB),
SEGMENT T12: The terrestial segment at Mersing (TM),
SEGMENT T13: The terrestial segment at Tuas (SINGTEL),
SEGMENT T14: The terrestial segment at Jakarta (INDOSAT),
SEGMENT T15: The terrestial segment at Perth (TELSTRA),
SEGMENT T16: The terrestial segment at Medan (INDOSAT),
SEGMENT T17: The terrestial segment at Penang (TM),
SEGMENT T18: The terrestial segment at Satun (CAT),
SEGMENT T19: The terrestial segment at Pyapon (MPT),
SEGMENT T20: The terrestial segment at Mount Lavinia (SLTL),
SEGMENT T21: The terrestial segment at Cochin (VNSL),
SEGMENT T22: The terrestial segment at Mumbai (VNSL),
SEGMENT T23: The terrestial segment at Karachi (PTCL),
SEGMENT T24: The terrestial segment at Muscat (GTO),
SEGMENT T25: The terrestial segment at Fujairah (ETISALAT),
SEGMENT T26: The terrestial segment at Djibouti (OPT),
SEGMENT T27: The terrestial segment at Jeddah (MOPTT),
SEGMENT T28: The terrestial segment at Suez (ARENTO),
SEGMENT T29: The terrestial segment at Alexandria (ARENTO),
SEGMENT T30: The terrestial segment at Yeroskipos (CYTA),
SEGMENT T31: The terrestial segment at Marmaris (TURK TELEKOM),
SEGMENT T32: The terrestial segment at Chania (OTE),
SEGMENT T33: The terrestial segment at Mazara Del Vallo (TELECOM ITALIA),
SEGMENT T34: The terrestial segment at Tetuan (ONPT),
<PAGE>
SEGMENT T35: The terrestial segment at Sesimbra (MARCONI),
SEGMENT T36: The terrestial segment at Penmarch (FT),
SEGMENT T37: The terrestial segment at Goonhilly (BT),
SEGMENT T38: The terrestial segment at Oostende (BELGACOM),
SEGMENT T39: The terrestial segment at Norden (DTAG),
Segments T1, T2, T3, T4, T5, T6, T7, T8, T9. T10, T11, T12, T13, T14, T15,
T16, T17, T18, T9, T20, T21, T22, T23, T24, T25, T26, T27, T28, T29, T30,
T31, T32, T33, T34, T35, T36, T37, T38 and T39 shall each consist of an
appropriate share of the land, civil works and buildings at the specified
locations for the cable landing, the terminal station and the cable
rights-of-way and ducts between between a terminal station and its
respective Cable Landing Point, and an appropriate share of common services
and equipment, including any multiplex equipment necessary to operate and
interface between the SEA-ME-WE 3 Cable System Interface and the nominal
2Mbit/s operating point, solely and directly associated with Assigned
Capacity connecting with SEA-ME-WE 3.
5.3 Segment S shall consist of the whole of the submarine cable system provided
between the Cable System Interfaces at the terminal stations at Okinawa,
Keoje, Shanghai, Toucheng, Fangshan, Shantou, Deep Water Bay, Taipa,
Batangas, Danang, Tungku, Mersing, Tuas, Jakarta, Perth, Medan, Penang,
Satun, Pyapon, Mount Lavinia, Cochin, Mumbai, Karachi, Muscat, Fujairah,
Djibouti, Jeddah, Suez, Alexandria, Yeroskipos, Marmaris, Chania, Mazara
Del Vallo, Tetuan, Sesimbra, Penmarch, Goonhilly, Oostende and Norden. All
cable links within Segment S shall contain at least two fibre pairs.
SEA-ME-WE 3 can be considered as a main trunk linking Germany, the UK,
France, Portugal, Egypt, Djibouti, India, Singapore, Australia and Japan,
with connection to the other terminal stations being achieved through
Branching Units which exploit the wavelength division multiplexing
capability of the system. The main trunk shall contain at least 2 fibre
pairs and each fibre pair shall be capable of operating at a minimum of
10Gbit/s, providing a minimum of 64 Basic System Payload Modules in each
fibre pair. For the purposes of this Agreement, Segment S shall be regarded
as consisting of the following Segments;
SEGMENT S1
That part of Segment S between the Cable System Interfaces in terminal
stations at Okinawa, Keoje, Shanghai, Toucheng, Fangshan, and Shantou.
SEGMENT S2
That part of Segment S between the Cable System Interfaces in terminal
stations at Shantou, Deep Water Bay, Taipa, Batangas, Danang, Tungku,
Mersing and Tuas.
SEGMENT S3
That part of Segment S between Tuas, Jakarta and Perth.
SEGMENT S4
That part of Segment S between Tuas, Medan, Ponang, Satun, Pyapon,
Mount Lavinia, Cochin and Mumbai.
SEGMENT S5
That part of Segment S between the Cable System Interfaces in the
terminal stations at Mumbai, Karachi, Muscat, Fjairah, and Djibouti.
<PAGE>
SEGMENT S6
That part of Segment S between the Cable System Interfaces in the
terminal stations at Djibouti, Jeddah and Suez.
SEGMENT S7
That part of Segment S between the Cable System Interfaces in Suez and
Alexandria. Segment S7 shall consist of dedicated fibre pairs in two
different buried terrestrial cables laid across Egypt on two different
and separate routes, each providing sufficient capacity to accommodate
the whole system capacity required between Suez and Alexandria.
Segment S7 shall include:
(i) two diverse transmission cables equipped with appropriate repeaters,
route switching equipment, joint housings and, if required, any
intermediate transmission and power equipment between Suez terminal
station and Alexandria terminal station.
(ii) any interconnection Equipment which shall groom all payload virtual
containers within SEA-ME-WE 3 as required and approved by the
Management Committee, in order to meet the internal connectivity
requirements of SEA-ME-WE 3.
SEGMENT S8
That part of Segment S between the Cable System Interfaces in the
terminal stations at Alexandria, Yeroskipos, Marmaris, Chania, Mazara
Del Vallo, Tetuan and Sosimbra.
SEGMENT S9
That part of Segment S between the Cable System Interfaces in the
terminal stations at Sesimbra and Penmarch.
SEGMENT S10
That part of Segment S between the Cable System Interfaces in the
terminal stations at Penmarch, Goonhilly, Oostende and Norden.
5.4 Segments S1, S2, S3, S4, S5, S6, S8, S9 and S10 shall each include:
(i) all transmission, power feeding, system management and special test
equipment directly associated with the submersible plant, located in
their respective terminal stations, and including the Cable System
Interfaces;
(ii) the transmission cable equipped with appropriate repeaters, Branching
Units and joint housings between a terminal station and another
terminal station.
(iii)the sea earth cable and electrode system or the land earth system, or
an appropriate share thereof, associated with the terminal power
feeding equipment at the respective terminal station.
(iv) the Interconnection Equipment which shall groom all payload virtual
containers within SEA-MI-WE 3 as required and approved by the ???
<PAGE>
Committee in order to meet the internal connectivity requirements of
SEA-ME-WE 3.
6. PROVISION, CONSTRUCTION AND OWNERSHIP OF SEGMENTS AND S
6.1 The following Parties shall own, provide and agree to act as the Terminal
party for the following Segments;
<TABLE>
<CAPTION>
SEGMENT PARTY
<S> <C>
T1 KDD
T2 KT
T3 CT
T4 and T5 ITDC
T6 CT
T7 HKTI
T8 CTM
T9 PLDT
T10 VNPT
T11 JTB
T12 and T17 TM
T13 SINGTEL
T14 and T16 INDOSAT
T15 TELSTRA
T18 CAT
T19 MPT
T20 SLTL
T21 and T22 VSNL
T23 PTCL
T24 GTO
T25 ETISALAT
T26 OPT
T27 MOPTT
T28 and T29 ARENTO
T30 CYTA
T31 TURK
TELEKOM
T32 OTE
T33 TELECOM
ITALIA
T34 ONPT
T35 MARCONI
T36 FT
T37 BT
T38 BELGACOM
T39 DTAG
</TABLE>
6.2 The Terminal Parties shall make available to the other Parties hereto any
reasonable information requested by any Party relating to the engineering,
provision,
<PAGE>
construction, or installation of Segment T. The various Segments of Segment
T shall be provided in sufficient time to permit SEA-ME-WE 3 to be placed
into operation by the Segment RFS Date of the Segment S to which it
connects.
6.3 Ownership of Segment S and voting interests shall be based upon the
financial investment of each Party, as shown in Schedule B to this
Agreement, and in accordance with Annex 7. Segment S of SEA-ME-WE 3 shall
be owned by the Parties in common and undivided shares, apart from Segment
S7, which shall be owned solely by Arento, and Segment S3, which shall be
owned in accordance with Annex 7.
6.4 The provision of Segment S shall be through a Supply Contract to be placed
by the Procurement Group with suppliers, subject to approval by the
Management Committee. The provision of Segment S9 shall be as detailed at
Annex 6.
6.5 Each of the Parties shall be entitled, on request and at its own expense,
to receive from the Procurement Group a copy of the Supply Contract,
subject to the acceptance by each such Party of any reasonable conditions
of confidentiality imposed by the Supply Contract.
6.6 The Procurement Group shall ensure that the Supply Contract specifies that
Segment S is to be provided by the required RFPA Date.
6.7 The Procurement Group shall ensure that the Supply Contract shall afford
them, or their designated representatives, reasonable rights of access to
examine, test, and inspect the SEA-ME-WE 3 cable equipment, material,
supplies and installation activities.
6.8 In the event that Segment S fails to meet the specifications referred to in
the Supply Contract for its provision, fails to provide the specified
capacity, or is not engineered, provided, installed and ready in sufficient
time to meet the RFPA Date as specified in the Supply Contract, or if the
supplier is otherwise in material breach of the Supply Contract, the
Procurement Group, as an agent of the Parties to this Agreement, may,
pursuant to this Paragraph 6 and in accordance with the Supply Contract,
take such actions as may be necessary to exercise the rights and remedies
available under the terms and conditions of the Supply Contract. Such
actions by the Procurement Group shall be subject to any direction deemed
necessary by the Management Committee.
6.9 The members of the Procurement Group shall not be liable to any other Party
for any loss or damage sustained by reason of a supplier's failure to
perform in accordance with the terms and conditions of its Supply Contract,
or as a result of SEA-ME-WE 3 not meeting the RFPA Date as specified in the
Supply contract, or if SEA-ME-WE 3 does not perform in accordance with the
technical specifications and other requirements of the Supply Contract, or
if SEA-ME-WE 3 is not integrated or placed into operation. The Parties
recognise that the Procurement Group does not guarantee or warrant;
(i) the performance of the Supply Contract by the supplier,
(ii) the performance or reliability of Segment S, or
(iii) that SEA-ME-WE 3 shall be integrated or placed into operation
<PAGE>
8.4 In determining the operation and maintenance cost or the Terminal Station
Right on Use, the Terminal Parties have taken into account an estimate of
costs reasonably incurred in operating and maintaining the facilities
involved, including, but not limitedto, the cost of attendance, testing,
adjustments, repairs and replacements, customs duties, taxes (except income
tax as imposed upon the net income of a Party) paid in respect of such
facilities, billing activities, administrative costs, appropriate financial
charges, and costs and expenses reasonably incurred on account of claims
made by or
Page 18 of 40
<PAGE>
against other persons in respect of such facilities or any part thereof,
and damages or compensation payable by the terminal station owner on
account of such claims, costs, expenses, damages, or compensation payable
to or by the terminal station owner on account of claims made against other
persons.
8.5 Where the use of a terminal station or of certain equipment situated
therein, such as power supply or testing and maintenance equipment, is
shared by SEA-ME-WE 3 and other communications systems terminating at that
terminal station, the Terminal Station Right of Use capital and operating
and maintenance charges shall reflect such sharing arrangements.
8.6 In the event that an agreement for another cable system utilising any
terminal station of SEA-ME-WE 3 is terminated prior to the termination of
this Agreement, the owner of the terminal station in question shall ensure
that the terminal station shall be available for SEA-ME-WE 3 for the
duration of this Agreement on fair and equitable terms. If the terminal
station in question is not available for the landing and terminating of
SEA-ME-WE 3 for any reason, the relevant owner, with the agreement of the
Patrics hereto, shall take all necessary measures to ensure that another
appropriate terminal station in the country of that owner shall be
available for SEA-ME-WE 3 for the duration of this Agreement on terms and
conditions similar to those contained in this Agreement.
8.7 The F&ASC shall establish, for approval by the Management Committee, the
billing and payment procedures for payments due in accordance with this
Paragraph 8. Such procedures shall specifically establish the billing and
payment procedures to reflect changes to Parties' categorisation of
capacity and any associated modification to Schedule D. Such procedures
shall ensure that financial adjustments required due to a modification of
Schedule D shall take place no more frequently than once a year.
8.8 Payments due under this Paragraph 8 shall be made in accordance with the
following principles:
(i) On the RFPA Date, or as soon after as practicable, the Terminal
Parties bill the Parties for the capital cost of the Terminal Station
Right of Use.
(ii) The Parties shall be billed individually by the Terminal Parties, as
appropriate, for the Terminal Station Right of Use operation and
maintenance costs.
(iii)The billed Party shall pay such bills to the Terminal Party within
forty-five (45) days from the date on which the bills were rendered.
Bills shall be payable in the currency in which the bill is rendered.
8.9 For any part of Segment T, nothing contained in this Agreement shall vest
or be deemed to vest in any Party, other than the relevant Terminal Party,
any salvage rights in that Segment, in the respective terminal station or
any terminal station substituted thereof.
8.10 Notwithstanding Paragraph 8.1 of this Agreement, a Party thereby granted a
Terminal Station Right of Use interest in Segment T may, prior to the
commencement of that Terminal Station Right of Use interest, elect to
renounce its Terminal Station Right of Use entitlement and to instead have
use of any Segment T for the duration of this Agreement on such terms and
conditions as are agreed between that Party and the
<PAGE>
relevant Terminal Party, and in such event the provisions of Paragraphs
8.1-8.8 of this Agreement shall apply in relation to such use except
insofar as they may be modified by such agreements.
8.11 The Terminal Parties agree to grant a Terminal Station Right of Use to
SEA-ME-WE 3 IRU purchasers.
9. DEFINITION OF SEGMENT S CAPITAL COSTS
9.1 Segment S capital costs, (hereinafter referred to as "Segment S Capital
Costs"), are the costs incurred in connection with the engineering,
provision, construction, and installation of Segment S, or causing it to be
engineered, provided constructed and installed, and shall include:
(i) appropriate costs, including appropriate financial charges, incurred
under the MOU and the MOU-1 in respect of specific activities such as
desk top surveys and marine surveys;
(ii) those costs payable to the supplier under the Supply Contract
attributable to Segment S;
(iii)those costs directly incurred by the Terminal Parties, which shall be
fair and reasonable in amount and not included in the Supply Contract,
and which have been directly and reasonably incurred for the purpose
of, or to be properly chargeable in respect of, such engineering,
provision, construction, installation and laying of Segment S,
including, but not limited to, the costs of engineering, design,
materials, manufacturing, procurement and inspection, installation,
removing (with appropriate reduction for salvage), cable ship and
other ship costs, route survey, burying, testing associated with
laying or installation, customs duties, taxes (except income tax
imposed on the net income of a Party), appropriate financial charges,
supervision, billing activities, overheads and insurance or a
reasonable allowance in lieu of insurance if such Party elects to
carry a risk itself, being a risk which is similar to one against
which a supplier has insured or against which insurance is usual or
recognised or would have been reasonable.
(iv) those costs and expenses incurred by the Central Billing Party to be
appointed pursuant to Paragraph 10.2, up to the RFS Date, in
fulfilling its responsibilities as set forth in Annex 4;
(v) those costs and expenses incurred by the Network Administrator up to
the RFS Date in fulfilling its responsibilities as set forth in Annex
4.
9.2 The Segment S Capital Costs shall include Procurement Group costs but
exclude costs incurred by the Parties hereto in the holding of Management
Committee meetings, and meetings of its subcommittees or groups established
pursuant to Paragraphs 3.10 and 3.11.
9.3 For the purpose of this Agreement, the cost of the repair or replacement of
any part of SEA-ME-WE 3 in the event of damage or loss arising during
construction, laying, ???, which is
<PAGE>
10. ALLOCATION AND BILLING OF SEGMENT S CAPITAL COSTS
10.1 The Segment S Capital Costs as defined in Paragraph 9, including any
additional work or property incorporated into Segment S subsequent to the
RFPA Date by agreement of the Management Committee, shall be borne by the
Parties in the proportions set forth in Schedule B. Notwithstanding the
above, the Segment S Capital Costs attributable to Segment S3 shall be
borne in accordance with Annex 7.
10.2 The Management Committee shall appoint a Central Billing Party (CBP) from
among the Terminal Parties. The terms of reference for the CBP are as set
forth in Annex 4.
10.3 Unless the Management Committee authorises changes to the procedures for
the rendering of bills for Segment S Capital Costs, the CBP shall promptly
render bills to each of the Parties for their pro rata share of the costs
due and included in the Supply Contract, in accordance with Schedule B and
the billing and payment procedures established by the F&ASC and approved by
the Management Committee. The Terminal Parties shall each render bills to
the CBP for such Party's costs incurred in accordance with Paragraph 9, for
non supply contract activities (including appropriate financial charges),
but not more frequently than once a quarter. All bills shall contain a
reasonable amount of detail to substantiate the bills. On the basis of such
bills, the Parties concerned shall make payments to the CBP or to such
entities as the CBP may designate, in accordance with billing and payment
procedures approved by the Management Committee. Each Party shall pay the
CBP the amount it owes within forty-five (45) days from the date on which
the bills were rendered by the CBP. Bills shall be payable in the currency
in which the bill is rendered.
10.4 As soon as practicable after the RFS Date, the amount of each Party's share
of Segment S Capital Costs shall be computed by the CBP as appropriate and
it shall make appropriate adjustments and render any necessary bills or
arrange any necessary refunds by way of final settlement, in order that
each Party may bear its proper share of costs, in accordance with the
percentage shares detailed at Schedule B.
10.5 For the purposes of this Agreement, financial charges shall be computed as
applicable on a daily basis from the date the cost is incurred until the
date payment is due, at a rate equal to the lowest publicly announced prime
rate or minimum commercial lending rate, however described, for 90 day
loans in the currencies of the Terminal Parties or the currency of billing,
as applicable, charged by established commercial banks in the countries
concerned on the fifteenth day of the month in which the costs were
incurred by the billing parties. If such a day is not a business day, the
rate prevailing on the next business day shall be used. The source of the
rate of such financial charges shall be as shown at Annex 5. The
application of financial charges relating to costs incurred for Segment S
shall be limited to a maximum of 180 days, unless otherwise approved by the
Management Committee.
<PAGE>
10.6 Amounts billed and not Paid when due shall accrue extended payment charges
from the day following the date on which payment was due until Paid. If
the due date is not a business day, the due date shall be postponed to the
next business day. For the purposes of this Agreement, extended payment
charges shall be computed at 125% of the rate described in Paragraph 10.5
on the day following the date payment of the bill was due.
10.7 In the event that applicable law only allows the imposition of financial
charges and extended payment charges at the rate below that established in
accordance with this Paragraph 10, financial charges and extended payment
charges shall be at the highest rate permitted by applicable law.
10.8 No refund of financial charges and no extended payment charges shall be
made or imposed by the Central Billing Party or the billing Parties if the
amount of charges involved is less than one hundred ($100) US Dollars or
its equivalent in the billing currency.
10.9 In the case of bills containing costs billed on a preliminary billing
basis, appropriate adjustments shall be made in subsequent bills after the
actual costs involved are determined.
10.10 A bill shall be deemed to have accepted by the Party to whom it is
rendered if that Party does not present written objection on or before the
date when payment is due. If such objection is made, the CBP shall make
every reasonable effort to settle promptly the dispute concerning the bill
in question. If the objection is sustained and the billed Party has paid
the disputed bill, the agreed overpayment shall be refunded to the billed
Party by the CBP or the billing Party, as appropriate, promptly, together
with any financial charges calculated thereon, at a rate determined in
accordance with Paragraph 10.5 of this Agreement from the date of payment
of the bill to the date on which the refund is transmitted to the billed
Party. If the objection is not sustained and the billed Party has not paid
the disputed bill, the said Party shall pay such bill promptly together
with any extended payment charges calculated thereon at a rate determined
in accordance with Paragraph 10.6 of this Agreement, from the day
following the date on which payment was due until Paid. Nothing in this
Paragraph 10.10 shall relieve a Party from paying those parts of a bill
that are not in dispute, and, in the event of failure by a Party to do so,
that Party shall pay thereon extended payment charges in accordance with
Paragraph 10.6.
10.11 In the event that the actual cost of SEA-ME-WE 3 is lower than the budget,
each Party's cost shall be reduced on a pro-rata basis in accordance with
Schedule B, with no change to their Allocated Capacity. Where the actual
cost is higher than the budget each Party's cost shall be increased on a
pro-rata basis in accordance with Schedule B. In such an event, the
Parties shall receive additional Allocated Capacity in return for the
increased cost, as if the investment was made at the signing of this
Agreement and the benefits of the progression incentive pricing scheme
were applied.
11. DUTIES AND RIGHTS AS TO OPERATION AND MAINTENANCE OF SEGMENTS
11.1 Each Terminal Party shall be solely responsible for the operation and
maintenance of the Segment T identified in Paragraph 6.1 and that portion
of Segment S between the
<PAGE>
Cable System Interface at the terminal station and its respective Cable
Landing Point. Each Terminal Party shall use all reasonable efforts to
operate and maintain, or cause to be operated and maintained, Segment T and
the said portion of Segment S, economically and in efficient working order.
11.2 The Terminal Parties (for the purpose of Paragraph 11, collectively called
the "Maintenance Authorities" and each individually called a "Maintenance
Authority"), individually or collectively as appropriate shall use all
reasonable efforts to maintain economically Segment S in efficient working
order and with an objective of achieving effective and timely repairs when
necessary.
11.3 Prior to the RFS Date, the Maintenance Authorities shall submit, for review
by the O&MSC and approval by the Management Committee, appropriate
practices and procedures for the continued operation and maintenance of
Segment S. The Maintenance Authorities shall each provide information to
the O&MSC regarding the practices and procedures for the continued
operation and maintenance of their respective Segments. The Maintenance
Authorities shall also furnish such budgetary estimates of the cost of such
operation and maintenance of SEA-ME-WE 3 as the Management Committee may
reasonably request. Following the RFS Date, the Maintenance Authorities
shall provide the O&MSC and the Management Committee with such reports as
it may reasonably require on the operation of SEA-ME-WE 3, including any
proposals for planned repair or improvement work, together with
appropriately revised budgetary estimates relating to the operation and
maintenance of SEA-ME-WE 3. The O&MSC may review and amend the practices
and procedures for the operation and maintenance of Segment S, subject to
the approval of the Management Committee. The Management Committee may
revise the allocation of responsibility for the operation and maintenance
of Segment S.
11.4 The Maintenance Authorities shall have the right to deactivate Segment S,
or any part thereof, in order to perform their duties. Prior to such
deactivation, reasonable notice shall be given, and co-ordination shall be
established with the other Parties. To the extent possible, sixty (60) days
prior to initiating such action, the Maintenance Authorities involved shall
advise the other Parties in writing of the timing, scope, and costs of
significant planned maintenance operations, of significant changes to
existing operations and maintenance methods and of contractual arrangements
for cable ships or other maintenance facilities or devices that shall have
a significant impact on operation or maintenance costs. Should one or more
Parties representing at least five per cent (5%) of the total voting
interests in SEA-ME-WE 3 specified in Schedule B wish to review such
operation, change or arrangement prior to its occurrence, such Party or
Parties shall notify the appropriate Maintenance Authorities and the O&MSC
Chairman in writing within thirty (30) days of such advice. Upon such
notification, the O&MSC shall initiate action to convene an ad hoc meeting
for such a review.
11.5 Each Party that has designed or procured equipment used in SEA-ME-WE 3
shall give necessary information relating to the operation and maintenance
of the equipment to the Maintenance Authority responsible for the operation
and maintenance of the equipment to the Maintenance Authority responsible
for the operation and maintenance of such equipment. Each Maintenance
Authority with responsibility for the maintenance of any segment of
SEA-ME-WE 3 shall grant to each other Maintenance Authority prompt access
to information necessary for the performance of duties.
11.6 Each Maintenance Authority with respect to SEA-ME-WE 3 shall be authorised
to pursue claims in its own name, on behalf of the Parties, in the event of
any damage or
<PAGE>
loss to SEA-ME-WE 3, or any part thereto, and may file appropriate lawsuits
or other proceedings on behalf of the Parties in accordance with Paragraph
23.3.
11.7 Under no circumstances shall any Party be liable to any other Party for any
loss or damage sustained by reason of any failure in, or breakdown of, the
facilities constituting SEA-ME- WE 3, or any interruption of service,
whatsoever shall be the cause of such failure, breakdown, or interruption,
and however long it shall last. If the Maintenance Authority responsible
for operating and maintaining such facilities involved as specified in this
Paragraph 11 fails to restore those facilities to efficient working order
and operation within a reasonable time after having been called upon to do
so by any other Party to whom capacity is assigned by this Agreement, the
Management Committee may, to the extent that it is practical to do so,
place or cause to be placed such facilities in efficient working order and
operation, and charge the Parties their proportionate share of the costs
reasonably incurred in doing so.
11.8 Each Party to this Agreement, at its own expense, shall have the right to
inspect from time to time the operation and maintenance of any portion of
SEA-ME-WE 3 and to obtain copies of the maintenance records. For this
purpose, each Maintenance Authority responsible for maintaining any Segment
of SEA-ME-WE 3 shall retain significant records, in accordance with
Paragraph 13.7.
11.9 The Maintenance Authorities shall be entitled to establish the necessary
agreements in respect of the crossings by Segment S of other undersea
plant, including, but not limited to, pipelines, and may sign these
agreements on behalf of the Parties after approval by the Management
Committee, and shall provide the Parties with appropriate copies of these
agreements on request.
12. ALLOCATION AND BILLING OF OPERATION AND MAINTENANCE COSTS OF SEGMENT S
12.1 The costs of operating and maintaining Segment S of SEA-ME-WE 3 shall be
shared by the Parties in the relevant proportions specified in Schedule B.
Notwithstanding the above, the costs of operating and maintaining Segment
S3 shall be borne in accordance with Annex 7.
12.2 The F&ASC shall be establish billing procedures for the operation and
maintenance costs of Segment S, for approval by the Management Committee.
12.3 The operation and maintenance costs to which Paragraph 12.1 refers shall be
the costs reasonably incurred in operating and maintaining the facilities
involved after the RFPA Date, including, but not limited to, the costs of
attendance, testing, adjustments, storage of plans and equipment, repairs
(including repairs at sea) and replacements, cable ships (including an
appropriate share of standby costs), cable depots, reburial and the
replacement of plans, tools and test equipment, system restoration costs,
customs duties, taxes (except income tax imposed upon the net income of a
Party) paid in respect of such facilities, billing activities, the Network
Administrator's and CBP's costs incurred after the RPS Date (on the basis
of a budget approved by the Management Committee), appropriate financial
charges, supervision, overheads and costs, and expenses reasonably incurred
on account of claims made by or against other persons in respect of such
facilities, or any part thereof, and damages or compensation payable by the
Parties concerned on account of such claims. Costs, expenses,
<PAGE>
damages, or compensation payable to the Parties on account of claims made
against other persons shall be shared by the Parties in the proportions
specified in Schedule B.
12.4 Each Maintenance Authority shall render bills to the CBP for the
expenditures herein referred to not more frequently than quarterly, in
accordance with the procedures established by the F&ASC. Each Maintenance
Authority shall also furnish such further details of such bills as the
other Parties may reasonably require. On the basis of such bills, each
Party shall pay within forty-five (45) days from the date on which the
bills are rendered by the CBP. Bills shall be payable in the currency in
which the bill is rendered.
12.5 Amounts billed and not Paid when due shall accrue extended payment charges
from the day following the date on which payment was due until Paid, and
such charges are to be computed and applied in accordance with Paragraph
10.6 of this Agreement. If the due date is not a business day, the payment
shall be postponed to the next business day.
13. KEEPING AND INSPECTION OF BOOKS
13.1 For those portions of Segment S, if any, specified in the Supply Contract
as cost incurred items, the Procurement Group shall ensure that the Supply
Contract requires the supplier to keep and maintain such books, records,
vouchers and accounts of all such costs with respect to the engineering,
provision and installation of those items for a period a five (5) years
from the RFPA Date of Segment S, as specified in the Supply Contract.
13.2 For those portions of Segment S specified in the Supply Contract as fixed
cost items, the Procurement Group shall ensure that the Supply Contract
requires the supplier to keep and maintain records with respect to its
respective billing of those items for a period of five (5) years from the
RFPA Date of Segment S, as specified in the Supply Contract.
13.3 The Procurement Group shall ensure that the Supply Contract requires the
supplier to obtain from its contractors and subcontractors such supporting
records, for other than the cost of fixed cost items, as may be reasonably
required by Paragraph 13.1 and to keep and maintain such records for a
period of five (5) years from RFPA Date of Segment S, as specified in the
Supply Contract.
13.4 The Procurement Group shall ensure that the Supply Contract shall afford
the Parties to this Agreement the right to review the books, records,
vouchers, and accounts required to be kept, maintained, and obtained
pursuant to Paragraphs 13.1, 13.2 and 13.3.
13.5 With respect to costs incurred for the provision of Segment S by a Party,
comparable records to those specified in Paragraphs 13.1, 13.2 and 13.3 as
appropriate, shall be maintained by the party for a period of five (5)
years from the date that such costs were incurred.
13.6 The Procurement Group and the Terminal Parties shall each keep and maintain
such books, records, vouchers, and accounts of all costs that are incurred
in the engineering, provision and installation of Segments S and T and not
included in the Supply
<PAGE>
Contract, which they incur directly, for a period of five (5) years from
the RFS Date or the date the work is completed, whichever is later. The CBP
shall keep and maintain such books, records, vouchers and accounts with
respect to its billing of costs incurred by the Terminal Parties, and any
other Party having incurred costs for implementation of SEA-ME-WE 3 as
authorised by the Management Committee, and costs billed under the Supply
Contract for a period of five (5) years from the System RFS Date or the
date on which the work is completed, whichever is later.
13.7 With respect to the operation and maintenance costs of Segments T and S,
such books, records, vouchers, and accounts of costs, as are relevant,
shall be kept and maintained by the Terminal Parties, according to
Accounting Practice, for a period of five (5) years from the date on which
the corresponding bills are rendered to the Parties. If a Terminal Party
does not retain these records beyond this period, a summary of important
items should be retained for the life of SEA-ME-WE 3.
13.8 Any Party, shall have the right to review or audit the relevant books,
records, vouchers, and accounts of costs pursuant to this Paragraph 13. In
affording the right to review or audit, any such Party whose records are
being reviewed or audited shall be permitted to recover, from the Party or
Parties requesting the review or audit, the entire costs reasonably
incurred in complying with the review or audit. In the case of an audit
initiated by the Management Committee and exercised by the F&ASC, the
audited Party or Parties shall be permitted to recover the entire costs of
the review or audit from the Parties in the proportions specified in
Schedule B.
13.9 Any rights of review and audit pursuant to this Paragraph 13 shall only be
exercisable through the F&ASC in accordance with the F&ASC's audit
procedures.
14. ASSIGNMENT AND USE OF CAPACITY
ALLOCATED CAPACITY
14.1 Parties shall obtain Allocated Capacity in return for their financial
investment in SEA-ME- WE 3 in accordance with Schedule F. Allocated
Capacity shall comprise Assigned Capacity, Reserve Capacity and Pool
Capacity.
ASSIGNED CAPACITY
14.2 The Assigned Capacity shall be assigned in specific Paths of SEA-ME-WE-3 in
accordance with Schedule F. Assigned Capacity shall be utilised to
establish Path Assignments as follows:
(i) Jointly assigned MIUs in a Path Assignment shall be considered as
consisting of two half-interests in MIU, with one half-interest
assigned to a Party, which together with the corresponding half
interest, shall be used for the provision of international
telecommunications services between such a Party and another Party or
a SEA-ME-WE 3 IRU purchaser.
(ii) Wholly-assigned MIUs in a Path Assignment shall be considered as
consisting of two-half interests in a MIU assigned to one Party. Such
wholly-assigned MIUs may only be assigned to the indicated Party for
provision of its "within country" traffic, subject to the approval of
the Management Committee.
<PAGE>
14.3 Each Party shall designate its remaining Allocated Capacity to either
Reserve Capacity or Pool Capacity, or allocate a portion to each category.
RESERVE CAPACITY
14.4 Any Party having Reserve Capacity may, at times approved by the Management
Committee, have such capacity, or a portion thereof redesignated to its
Assigned Capacity. In the event that such a redesignation of capacity will
result in a Segment or fibre in SEA-ME-WE 3 exceeding a threshold level
which may cause a bottleneck in SEA- ME-WE 3, the Management Committee's
approval for such a redesignation of capacity shall be required. The
AR&RSC will recommend to the Management Committee for their approval such
an appropriate threshold level.
14.5 A Party may only transfer capacity from Reserve Capacity to Pool Capacity
following the approval of the Management Committee.
14.6 Any Party having Reserve Capacity may utilise such capacity for its own
half-interest in the provision of temporary or occasional
telecommunications services.
POOL CAPACITY
14.7 Pool Capacity shall comprise that capacity available for the sale of
SEA-ME-WE 3 IRUs in accordance with this Paragraph 14.
14.8 A Party may transfer capacity from Pool Capacity to Reserve Capacity as
follows:
(i) once a year after the effective date of this Agreement, a Party may
convert all, or a portion of such capacity to Reserve Capacity, in
accordance with procedures developed by the Network Administrator.
(ii) notwithstanding Paragraphs 14.8(i), any Party may transfer capacity
from its Pool Capacity to Reserve Capacity on other occasions,
subject to the approval of the Management Committee.
14.9 Except with the approval of the Management Committee, no Party may
reassign any of the Path Assignments of its Assigned Capacity prior to the
depletion of the Pool Capacity.
14.10 Except as provided in Paragraph 14.21, no Party may make available any of
its Assigned Capacity or Reserve Capacity, on any basis whatsoever, to
another Carrier, except with the approval of the Management Committee.
14.11 Schedules D, E and F shall be modified, as appropriate, to reflect any
changes in the categorisation of capacity.
IRU SALES
14.12 Except as provided in Paragraph 15, any capacity acquired after the
signing of this Agreement shall be by the purchase of a SEA-ME-WE 3 IRU.
<PAGE>
SEA-ME-WE 3 IRUs shall be acquired in specific Paths of SEA-ME-WE 3 in
accordance with Schedule K. SEA-ME-WE 3 IRUs shall be utilised to
establish Path Assignments as follows;
(i) jointly-acquired SEA-ME-WE 3 IRUs shall be considered as consisting
of two half-interests in a MIU, with one half-interest acquired by
the SEA-ME-WE 3 IRU purchaser, which, together with the
corresponding half-interest, will be used for the provision of
international telecommunications services between such a SEA- ME-WE
3 IRU purchaser and a Party or another SEA-ME-WE 3 IRU purchaser.
(ii) wholly-acquired SEA-ME-WE 3 IRUs shall be considered as consisting
of two half-interests in a MIU acquired by one SEA-ME-WE 3 IRU
purchaser. Such MIUs may only be acquired by the SEA-ME-WE 3 IRU
purchaser for provision of its "within country" traffic, subject to
the approval of the Management Committee.
14.13 The Initial Parties shall establish the SEA-ME-WE 3 IRU sales procedure
and SEA-ME- WE 3 IRU agreement (which shall include the price of the
SEA-ME-WE 3 IRU, the use of capacity and the terms and conditions under
which the said capacity is maintained and operated), for approval by the
Management Committee. The IRU price shall not be lower than the ownership
price, unless otherwise agreed by the Management Committee. Following such
approval, the Network Administrator shall be authorised to execute such
IRU Agreements with Carriers on behalf of the Parties to this Agreement.
No provisions of the IRU Agreement shall override the provisions of this
Agreement.
14.14 Where a Carrier requesting a SEA-ME-WE 3 IRU is not a Party, such sale
shall be approved by the Management Committee.
14.15 Capacity required for a SEA-ME-WE 3 IRU prior to the depletion of the Pool
Capacity shall be taken from such Pool Capacity.
14.16 Capacity for the SEA-ME-WE 3 IRU shall be taken from each Party's Pool
Capacity in proportion to its contribution to the Pool Capacity. Funds
from such sales of SEA-ME- WE 3 IRU capacity shall be reimbursed to the
Parties concerned in proportion to their contribution of MIU *km to the
Pool Capacity, as defined in Schedule 11. The Network Administrator shall
amend the relevant Schedules to reflect such capacity transactions.
14.17 After the Pool Capacity has been disposed of, subsequent sales of
SEA-ME-WE 3 IRU shall be from the Common Reserve Capacity. Funds from such
sales of SEA-ME-WE 3 IRU shall be reimbursed to all of the Parties in
accordance with Schedule C.
14.18 The funds from Operation and Maintenance charges of Segment S as specified
in Paragraph 12, which are payable by the SEA-ME-WE 3 IRU purchasers will
be distributed to the Parties in accordance with Schedule 1.
Notwithstanding Paragraphs 14.15 - 14.18, the provision of IRU capacity
and the distribution of funds resulting from the sale of Segment S3
Southern Capacity (as defined in Annex 7), shall be in accordance with
Annex 7.
<PAGE>
14.19 The funds from Terminal Station Right of Use charges as specified in
Paragraph 8, which are payable by the SEA-ME-WE 3 IRU purchasers, will be
distributed to the Parties in proportion to the Parties' allocation of the
specific Segment T costs, in accordance with Schedule D.
14.20 The conditions in Paragraphs 14.15, 14.18 and 14.19 will not be applicable
with respect to the SEA-ME-WE 3 IRU purchases described in Paragraphs
14.21 (II).
14.21 Notwithstanding the above, where the SEA-ME-WE 3 IRU purchaser is located
in the same country as an Initial Party, the Initial Party shall have
first priority in providing the capacity for the SEA-ME-WE 3 IRU from
either;
(i) its Pool Capacity. Such priority shall not be applicable to meeting
the SEA-ME- WE 3 IRU requirements of Existing Carriers before 31st
of December 2000. In the event that an Initial Party's Pool Capacity
is insufficient to meet the full requirements for the SEA-ME-WE 3
IRU, the additional capacity shall be deducted from the Pool
Capacity in accordance with Paragraph 14.16, or
(ii) its Assigned Capacity, subject to the approval of the Party with
which the capacity is jointly held. Such priority shall not be
applicable to meeting the requirements of the Existing Carriers.
The Network Administrator shall be authorised to execute such IUR
Agreements in accordance with the terms and conditions established through
Paragraph 14.13 following written approval by the appropriate Initial
Party. In such instances, all the funds from the SEA-ME-WE 3 IRU shall be
reimbursed to the said Initial Party.
14.22 Notwithstanding Paragraphs 14.16 and 14.21, Parties owning Priority Pool
Capacity shall have priority of sale of such capacity, as detailed in
Annex 6.
COMMON RESERVE CAPACITY
14.23 The Common Reserve Capacity of SEA-ME-WE 3 shall be held by the Parties in
common and undivided shares in the proportions set forth in Schedule C.
14.24 The Management Committee may authorise the utilisation of the Common
Reserve Capacity for in-system restoration arrangements and mutual-aid
restoration for other cable systems on terms and conditions to be
determined by the Management Committee.
14.25 The Management Committee may authorise the allocation and exchange or sale
of a portion of the Common Reserve Capacity with other cable systems on
such basis as is doomed mutually beneficial to the Parties. The terms and
conditions of such allocation and exchange or sale of capacity shall be
agreed by the Management Committee.
14.26 The Initial Parties shall be authorised to allow the occasional commercial
use (hereinafter referred to as "Occasional Commercial Use") of the Common
Reserve Capacity, if available, when the Initial Parties deem that such
use shall not adversely affect SEA-ME- WE 3 IRU sales, for the
provisioning of temporary or occasional telecommunications services,
including but not limited to, leases to any Party or SEA-ME-WE 3 IRU
purchaser and paid restoration services, on terms and conditions to be
<PAGE>
determined by the Initial Parties. The revenue from such Occasional
Commercial Use shall be reimbursed to the Initial Parties in accordance
with Schedule G.
GENERAL
14.27 The communication capability of any Allocated Capacity may be optimised by
the Parties to whom such capacity is assigned by the use equipment which
shall more efficiently use such capacity, provided that the use of such
equipment does not cause an interruption of, or interference, impairment,
or degradation to, the use of any other capacity in SEA-ME- WE 3, or
prevent the use of similar equipment by other Parties. Such equipment, if
used, shall not constitute a part of SEA-ME-WE 3.
14.28 SEA-ME-WE 3 shall be capable of supporting payload paths of VC12, VC3 and
VC4. Parties have the right to access such payload paths which shall
require 1, 21 and 63 MIUs respectively. Such requirements shall be
reflected in Schedules F and/or J as appropriate.
15. EXPANSION OF ALLOCATED CAPACITY
In the event that the Initial Parties consider that it is beneficial to
increase the Allocated Capacity after the signing of this Agreement, a
proposal shall be submitted to the Management Committee for its approval.
To approve such a proposal a majority of sixty-six per cent (66%) of the
total voting interests specified in Schedule B is required. Following such
an expansion, each Party shall obtain its pro-rata share of the increase
in Allocated Capacity in accordance with Schedule C. Parties shall specify
the portion of their expanded Allocated Capacity that they wish to
categorise as Assigned Capacity (with the agreement of the Party with whom
the capacity shall be jointly assigned) and Reserve Capacity. All the
remaining expanded Allocated Capacity shall be defined as Pool Capacity.
16. CAPACITY ROUTING
16.1 At times to be determined by the Management Committee, the capacity
routing of all Carriers shall be reviewed and established in such a way as
is necessary to allocate the capacity in SEA-ME-WE 3 to achieve the most
efficient utilisation of the entire SEA-ME- WE 3. Such routing shall be as
determined by the AR&RSC pursuant to the Terms of Reference as set forth
in Annex 4 of this Agreement, and shall be based on principles of capacity
routing which shall be established by the AR&RSC and approved by the
Management Committee.
16.2 The Network Administrator shall in addition administer the routing of
capacity associated with sales of capacity in SEA-ME-WE 3 and the
Occasional Commercial Use of Common Reserve Capacity. Such routing shall
be as determined by the Network Administrator pursuant to the Terms of
Reference as set forth in Annex 4 of this Agreement and shall be based on
principles of capacity routing which shall be approved by the Management
Committee.
16.3 One or more assigned MIUs shall be initially arranged, as such initial
arrangement may be agreed by the AR&RSC, to ensure complete fascicles of
63 MIUs in the smallest number of such fascicles practicable, as such
Parties with capacity assignments in a
<PAGE>
Basic System Payload Module may desire. In addition, one or more Parties
assigned such capacity in the aggregate of more than one MIU in a Basic
System Payload Module may, by agreement with the Parties to whom such MIUs
are jointly assigned, combine their MIUs to avail themselves of the right
afforded in this Paragraph 16 with respect to the initial arrangement of
MIUs.
16.4 Subsequent to the initial arrangement of MIUs as provided in Paragraph 16.3
of this Agreement, MIUs assigned to one or more Parties may be rearranged,
if so requested by such Parties, so far as reasonably possible, provided
that:
(i) the agreement of the relevant Terminal Party is obtained; and
(ii) the agreement of other Parties with assigned MIUs that would be
affected by the proposed rearrangement is obtained; and
(iii)all costs arising from the proposed rearrangement are paid by the
Parties requesting it.
17. INCREASE OR DECREASE OF DESIGN CAPACITY
17.1 In the event that the Initial Parties consider that it is beneficial to
increase the Design Capacity of SEA-ME-WE 3, a Design Capacity expansion
proposal shall be submitted to the Management Committee. To carry such a
proposal, a seventy-five per cent (75%) majority of the total voting
interests specified in Schedule B is required.
17.2 If, subsequent to the RFS Date, the Design Capacity of SEA-ME-WE 3 or any
Segment thereof is increased or decreased pursuant to the agreement of the
Parties or otherwise, and such increase or decrease of the Design Capacity
affects neither the routing of circuits assigned in SEA-ME-WE 3 nor the
Allocated Capacity of SEA-ME-WE 3, the additional or reduced Design
Capacity shall be added to or subtracted from the Common Reserve Capacity,
as appropriate, with no change to the Schedules of this Agreement.
17.3 In the event that the capacity which SEA-ME-WE 3 or any Segment thereof is
capable of providing is reduced below the capacity required to support the
Assigned Capacity on its existing or planned routings as a result of
physical deterioration, or for other reasons beyond the control of the
Parties, the Management Committee shall initiate a review of the capacity
routings in accordance with Paragraph 16.1, in order to support the
rerouting of such Assigned Capacity.
17.4 In the event that the capacity which SEA-ME-WE 3 or any Segment thereof is
capable of providing is lower than the capacity needed to support the
routing of circuits assigned in SEA-ME-WE 3, the Path Assignments of the
Parties in Schedule F may be reduced or changed as necessary and agreed by
the Parties affected, and financial adjustments shall be made among the
Parties, as necessary, on the terms and conditions to be agreed by the
Management Committee. The Schedules shall be modified, as appropriate, to
reflect the revised Path Assignments associated with such decrease of the
Design Capacity.
<PAGE>
with respect to such interests at the first time any Party terminates its
participation in this Agreement, upon the appropriate trusts by the Parties
who are the owners thereof.
27.6 Upon termination of this Agreement, the Parties shall use all reasonable
efforts to liquidate Segment S of SEA-ME-WE 3 within a reasonable time (one
year) by sale or other disposition between the Parties or any of them or by
sale to other entities or persons, but no sale or disposition shall be
effected except by agreement between or among the Parties who have
interests in the subject thereof at the time this Agreement is terminated.
In the event agreement cannot be reached, the decision shall be carried on
the basis of a majority (more than 50%) of all the voting interests as
specified in Schedule B. The costs or net proceeds of interests of every
sale or other disposition shall be divided between or among the Parties who
have or were deemed to have interests in the subject thereof at the time
this Agreement is terminated, in the proportions specified in Schedule B
immediately prior to the first time any Party terminates its participation
in this Agreement or this Agreement is terminated pursuant to Paragraph
27.1, whichever occurs first. The Parties shall execute such documents and
take such action as may be necessary to effect any sale or other
disposition made pursuant to this Paragraph 27.
27.7 A Party's termination of its participation in this Agreement or the
termination of this Agreement pursuant to Paragraph 27.1 shall not relieve
that Party or Parties from any liabilities, costs, damages or obligations
which may arise in connection with claims made by third parties with
respect to SEA-ME-WE 3, the facilities that comprise SEA-ME-WE 3 or any
part or portion thereof, or which may arise in relation to SEA-ME-WE 3 due
to any law, order, or regulation made by any government or supranational
legal authority pursuant to any international convention, treaty or
agreement. Any such liabilities, costs, damages, or obligations shall be
divided among the Parties in the proportions in which such Parties
allocation of costs is specified in Schedule B immediately prior to the
first time any Party terminates its participation in this Agreement or this
Agreement is terminated pursuant to Paragraph 27.1, whichever occurs first.
27.8 When the Management Committee considers the abandonment of SEA-ME-WE 3, the
Management Committee shall, based on proposals submitted by each Terminal
Party, produce an abandonment programme and budget (hereinafter called the
"Abandonment Programme and budget") based on the anticipated costs of
abandonment of SEA-ME-WE 3 at the date when such abandonment is anticipated
to take place. The Abandonment Programme and Budget shall address all
relevant matters, to include but not be limited to, if necessary, removal
of structures and cables and alternative uses for the abandoned portion of
SEA-ME-WE 3.
27.9 Except to the extent otherwise provided in this Agreement, abandonment
costs as included in the Abandonment Programme and Budget or as varied by
the agreement of the Management Committee shall be shared by the Parties in
accordance with Schedule B, as it existed immediately prior to the first
time any Party terminated its participation or when this Agreement was
terminated whichever occurs first.
28. CURRENCY AND PLACE OF PAYMENT
Bills rendered under this Agreement shall be rendered in the currency of
the billing Party, or the currency in which the cost was incurred provided
that such currency is a
<PAGE>
currency of a Terminal Party, or as specified in the Supply Contract. Bills
shall be payable in the currency in which the bill is rendered, or as
designated by the Management Committee, to the designated office or account
of the payee.
29. WAIVER
No delay, neglect or forbearance on the part of any Party in enforcing any
term or condition of this Agreement shall be deemed to be a waiver or in
any way prejudice the rights of other Parties under this Agreement.
30. FORCE MAJEURE
If any Party cannot fulfil its obligations in this Agreement due to an
event beyond its reasonable control, including, but not limited to
lightning, flood, exceptionally severe weather, typhoon, fire or explosion,
civil disorder, war or military operations, national or local emergency,
anything done by government or other competent authority, it shall not be
liable to the other Parties for such delay in performance or failure to
perform and shall give notice to the other Parties as soon as reasonably
practical after the event has occurred.
31. SETTLEMENT OF DISPUTES AND INTERPRETATION OF AGREEMENT
31.1 If a dispute should arise under this Agreement between or among the
Parties, they shall make every reasonable effort to resolve such dispute.
However, in the event that they are unable to resolve such dispute the
matter shall be referred to the Management Committee which shall either
resolve the matter or determine the method by which the matter should be
resolved (including arbitration if appropriate). This procedure shall be
the sole and exclusive remedy for any dispute which may arise under this
Agreement between or among the Parties. The performance of this Agreement
by the Parties shall continue during the resolution of any dispute.
31.2 If any difference shall arise between or among the Parties or any of them
in respect of the interpretation or effect of this Agreement or any part or
provision thereof or their rights and obligations thereunder, and by
reasons thereof there shall arise the need to decide the question by what
municipal or national law this Agreement or such part or provision thereof
is governed, the following facts shall be excluded from consideration,
namely that this Agreement was made in a particular country and that it may
appear by reason of its form, style, language or otherwise to have been
drawn preponderantly with reference to a particular system of municipal or
national law; the intention of the Parties being that such facts shall be
regarded by the Parties and in all courts and tribunals wherever situated
as irrelevant to the question aforesaid and to the decision thereof.
32. EXECUTION OF AGREEMENT
This Agreement and any Supplementary Agreements hereto shall be executed in
one (1) original in the English language. Identical counterparts may be
executed and when
<PAGE>
well as separately, constitute one and the same instrument. FT shall be the
custodian of the original and shall provide certified photocopies to
Parties to this Agreement.
33. ALTERATIONS AND ADDITIONS
33.1 Subject to Paragraph 33.4, this Agreement and any of the provisions hereof
may be altered or added to only by another agreement in writing signed by a
duly authorised person on behalf of each and every Party to this Agreement.
Only one (1) original of such Supplementary Agreement shall be executed.
33.2 FT shall be responsible for the prompt distribution of certified
photocopies of any amendment or Supplementary Agreements hereto all other
Parties and shall retain such signed original amendments or supplementary
agreements. Such Party shall accord access to such documents to a
requesting Party upon reasonable notice.
33.3 In the case of a Party changing the categorisation of its capacity, the
modified Schedules shall be certified by the Network Administrator on
behalf of the Parties. The Network Administrator shall require in such
instances written instructions by Parties wishing to reassign capacity and
shall obtain the Management Committee's approval, which can be by
correspondence. The Network Administrator shall be responsible for issuing
such modified Schedules.
33.4 Paragraph 33.1 shall not apply to any Schedule modified in accordance with
any other provision of this Agreement and any Schedule so modified shall be
deemed to be a part of this Agreement in substitution for the immediately
preceding version of that Schedule.
34. SUCCESSORS BOUND
This Agreement shall be binding on the Parties, their successors, and
permitted assigns.
35. SEVERABILITY
If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Agreement, but rather the entire Agreement
shall be construed as if not containing the particular invalid or
unenforceable provision, and the rights and obligations of the Parties
shall be construed and enforced accordingly.
36. COMPLIANCE WITH LAW
The Parties shall comply with all applicable laws of all countries,
territories and places having jurisdiction over the activities performed
under or contemplated by this Agreement.
<PAGE>
37. NOTICES
Any notice or other communication given or made under this Agreement shall
be in writing and shall be delivered by hand or sent by express mail or by
facsimile as appropriate.
TESTIMONIUM
IN WITNESS WHEREOF, the Parties hereto have signed.
<PAGE>
For and on behalf of
COMPANHIA PORTUGUESA RADIO MARCONI SA
By:
-----------------------------------------
For and on behalf of
FRANCE TELECOM
By:
-----------------------------------------
For and on behalf of
BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY
By:
-----------------------------------------
For and on behalf of
BELAGACOM S.A.
By:
-----------------------------------------
For and on behalf of
DEUTSCHE TELEKOM AG
By:
-----------------------------------------
For and on behalf of
AAPT TELECOMMUNICATIONS PTY LIMITED
By:
-----------------------------------------
For and on behalf of
ABS-CBN TELECOM NORTH AMERICA INC
By:
-----------------------------------------
For and on behalf of
AT&T CORP
By:
-----------------------------------------
For and on behalf of
BAHRAIN TELECOMMUNICATIONS COMPANY BSC
By:
-----------------------------------------
For and on behalf of
BEZEQ - ISRAEL TELECOM CORPORATION LIMITED
By:
-----------------------------------------
For and on behalf of
BULGARIAN TELECOMMUNICATIONS COMPANY LIMITED
By:
-----------------------------------------
For and on behalf of
CAPITOL WIRELESS INC
By:
-----------------------------------------
For and on behalf of
CELLULAR COMMUNICATIONS NETWORK (M) SDN BHD
By:
-----------------------------------------
For and on behalf of
DACOM CORPORATION
By:
-----------------------------------------
<PAGE>
For and on behalf of
DIGITAL TELECOMMUNICATIONS PHILS, INC.
By:
-----------------------------------------
For and on behalf of
DSTCOM BRUNEI
By:
-----------------------------------------
For and on behalf of
EASTERN TELECOMMUNICATIONS PHILLIPPINES INC
By:
-----------------------------------------
For and on behalf of
EMPRESA BRASILEIRA DE TELECOMUNICACOBS INC
By:
-----------------------------------------
For and on behalf of
ENTERPRISE DBS POSTES ET TELECOMMUNICATIONS DU LUXEMBOURG
By:
-----------------------------------------
For and on behalf of
GLOBE TELECOM
By:
-----------------------------------------
For and on behalf of
GTE HAWAIIAN TEL.
By:
-----------------------------------------
For and on behalf of
HPT
By:
-----------------------------------------
For and on behalf of
HUNGARIAN TELECOMMUNICATIONS COMPANY LTD.
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL DIGITAL COMMUNICATIONS, INC.
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL TELECOM JAPAN INC.
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
MCI INTERNATIONAL INC
By:
-----------------------------------------
For and on behalf of
MERCURY COMMUNICATIONS LIMITED
By:
-----------------------------------------
<PAGE>
For and on behalf of
KOKUSAI DENSHIN DENWA CO. LTD.
By:
-----------------------------------------
For and on behalf of
KOREA TELECOM
By:
-----------------------------------------
For and on behalf of
CHINA TELECOM
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL TELECOMMUNICATION DEVELOPMENT CORPORATION
By:
-----------------------------------------
For and on behalf of
HONG KONG TELECOM INTERNATIONAL LIMITED
By:
-----------------------------------------
For and on behalf of
COMPANHIA DE TELECOMUNICACOBS DE MACAU S.A.R.L.
By:
-----------------------------------------
For and on behalf of
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY
By:
-----------------------------------------
For and on behalf of
VIETNAM POSTS AND TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
JABATAN TELBKOM OF BRUNEI DARUSSALAM
By:
-----------------------------------------
For and on behalf of
TELEKOM MALAYSIA BERHAD (128740-P)
By:
-----------------------------------------
For and on behalf of
SINGAPORE TELECOMMUNICATIONS LIMITED
By:
-----------------------------------------
For and on behalf of
PT (PERSERO) INDONESIA SATELLITE CORPORATION
By:
-----------------------------------------
For and on behalf of
TELSTRA CORPORATION LIMITED
By:
-----------------------------------------
For and on behalf of
THE COMMUNICATIONS AUTHORITY OF THAILAND
By:
-----------------------------------------
<PAGE>
For and on behalf of
MYANMA POSTS & TELECOMMUNICATIOS
By:
-----------------------------------------
For and on behalf of
SRI LANKA TELECOM LTD
By:
-----------------------------------------
For and on behalf of
VIDESH SANCHAR NIGAM LIMITED
By:
-----------------------------------------
For and on behalf of
PAKISTAN TELECOMMUNICATION COMPANY LIMITED
By:
-----------------------------------------
For and on behalf of
GENERAL TELECOMMUNICATIONS ORGANIZATION OF OMAN
By:
-----------------------------------------
For and on behalf of
EMIRATES TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
OFFICE DES POSTES BT TELECOMMUNICATIONS DB LA REPUBLIQUE DE DIBOUTI
By:
-----------------------------------------
For and on behalf of
MINISTRY OF POSTS, TELEGRAPHS AND TELEPHONES
By:
-----------------------------------------
For and on behalf of
ARAB REPUBLIC OF EGYPT NATIONAL TELECOMMUNICATIONS ORGANISATION
By:
-----------------------------------------
For and on behalf of
CYPRUS TELECOMMUNICATIONS AUTHORITY
By:
-----------------------------------------
For and on behalf of
TURK TELEKOMINIKASYON A.S.
By:
-----------------------------------------
For and on behalf of
THE HELLENIC TELECOMMUNICATIONS ORGANISATION
By:
-----------------------------------------
For and on behalf of
TELECOM ITALIA S.p.A.
By:
-----------------------------------------
For and on behalf of
OFFICE NATIONAL DES POSTES ET DES TELECOMMUNICATIONS
By:
-----------------------------------------
<PAGE>
For and on behalf of
COMPANHIA PORTUGUBSA RADIO MARCONI SA
By:
-----------------------------------------
For and on behalf of
FRANCE TELECOM
By:
-----------------------------------------
For and on behalf of
BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY
By:
-----------------------------------------
For and on behalf of
BELGACOM S.A.
By:
-----------------------------------------
For and on behalf of
DEUTSCHE TELEKOM AG
By:
-----------------------------------------
For and on behalf of
AAPT TELECOMMUNICATIONS PTY LIMITED
By:
-----------------------------------------
For and on behalf of
ABS-CBN TELECOM NORTH AMERICA INC
By:
-----------------------------------------
For and on behalf of
AT&T CORP
By:
-----------------------------------------
For and on behalf of
BAHRAIN TELECOMMUNICATIONS COMPANY BSC
By:
-----------------------------------------
For and on behalf of
BBZBQ - ISRAEL TELECOM CORPORATION LIMITED
By:
-----------------------------------------
For and on behalf of
BULGARIAN TELECOMMUNICATIONS COMPANY LIMITED
By:
-----------------------------------------
For and on behalf of
CAPITOL WIRELESS INC
By:
-----------------------------------------
For and on behalf of
CELLULAR COMMUNICATIONS N ETWORK (M) SDN BHD
By:
-----------------------------------------
For and on behalf of
DACOM CORPORATION
By:
-----------------------------------------
<PAGE>
For and on behalf of
KOKUSAI DENSHIN DENWA CO. LTD.
By:
-----------------------------------------
For and on behalf of
KOREA TELECOM
By:
-----------------------------------------
For and on behalf of
CHINA TELECOM
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL TELECOMMUNICATION DEVELOPMENT CORPORATION
By:
-----------------------------------------
For and on behalf of
HONG KONG TELECOM INTERNATIONAL LIMITED
By:
-----------------------------------------
For and on behalf of
COMPANHIA DE TELECOMUNICACOBS DE MACAU S.A.R.L.
By:
-----------------------------------------
For and on behalf of
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY
By:
-----------------------------------------
For and on behalf of
VIETNAM POSTS AND TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
JABATAN TELEKOM OF BRUNEI DARUSSALAM
By:
-----------------------------------------
For and on behalf of
TELEKOM MALAYSIA BERHAD (128740-P)
By:
-----------------------------------------
For and on behalf of
SINGAPORE TELECOMMUNICATIONS LIMITED
By:
-----------------------------------------
For and on behalf of
PT (PERSERO) INDONESIA SATELLITE CORPORATION
By:
-----------------------------------------
For and on behalf of
TELSTRA CORPORATION LIMITED
By:
-----------------------------------------
For and on behalf of
THE COMMUNICATIONS AUTHORITY OF THAILAND
By:
-----------------------------------------
<PAGE>
For and on behalf of
DIGITAL TELECOMMUNICATIONS PHILS, INC.
By:
-----------------------------------------
For and on behalf of
DSTCOM BRUNEI
By:
-----------------------------------------
For and on behalf of
EASTERN TELECOMMUNICATIONS PHILIPPINES INC.
By:
-----------------------------------------
For and on behalf of
EMPRESA BRASILEIRA DE TELECOMUNICACOBS INC
By:
-----------------------------------------
For and on behalf of
ENTERPRISE DES POSTES BT TELECOMMUNICATIONS DU LUXEMBOURG
By:
-----------------------------------------
For and on behalf of
GLOBE TELECOM
By:
-----------------------------------------
For and on behalf of
GTE HAWAIIAN TEL
By:
-----------------------------------------
For and on behalf of
HPT
By:
-----------------------------------------
For and on behalf of
HUNGARIAN TELECOMMUNICATIONS COMPANY LTD.
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL DIGITAL COMMUNICATIONS INC.
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL TELECOM JAPAN INC.
By:
-----------------------------------------
For and on behalf of
INTERNATIONAL TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
MCI INTERNATIONAL INC.
By:
-----------------------------------------
For and on behalf of
MERCURY COMMUNICATIONS LIMITED
By:
-----------------------------------------
<PAGE>
For and on behalf of
MP8 INTERNATIONAL INC
By:
-----------------------------------------
For and on behalf of
MINISTERE DBS POSTES ET TELECOMMUNICATIONS DU LIBAN
By:
-----------------------------------------
For and on behalf of
MINISTRY OF TELECOMMUNICATIONS OF KUWAIT
By:
-----------------------------------------
For and on behalf of
MUTIARA TELECOMMUNICATIONS SDN BHD
By:
-----------------------------------------
For and on behalf of
ONSE TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
OPTUS NETWORKS PTY LIMITED
By:
-----------------------------------------
For and on behalf of
OY FINNET INTERNATIONAL AB
By:
-----------------------------------------
For and on behalf of
PACIFIC GATEWAY EXCHANGE
By:
-----------------------------------------
For and on behalf of
PHILIPPINE GLOBAL COMMUNICATIONS INC.
By:
-----------------------------------------
For and on behalf of
POST UND TELEKOM AUSTRIA AKTIBNGESELLSCHAFT
By:
-----------------------------------------
For and on behalf of
PT SATBLIT PALAPA INDONESIA
By:
-----------------------------------------
For and on behalf of
PTT TELECOM BV
By:
-----------------------------------------
For and on behalf of
QATAR PUBLIC TELECOMMUNICATIONS CORPORATION
By:
-----------------------------------------
For and on behalf of
ROSTELCOM JOINT STOCK COMPANY
By:
-----------------------------------------
<PAGE>
For and on behalf of
SMART COMMUNICATIONS INC.
By:
-----------------------------------------
For and on behalf of
SOCIETE NATIONALE DES TELECOMMUNICATIONS DU SENRGAL
By:
-----------------------------------------
For and on behalf of
SPRINT COMMUNICATIONS COMPANY L.P.
By:
-----------------------------------------
For and on behalf of
SPT TELECOM A.S.
By:
-----------------------------------------
For and on behalf of
SWISS TELEKOM PTT
By:
-----------------------------------------
For and on behalf of
SYRIAN TELECOMMUNICATIONS ESTABLISHMENT
By:
-----------------------------------------
For and on behalf of
TELE DANMARK A/S
By:
-----------------------------------------
For and on behalf of
TELECOM FINLAND LIMITED
By:
-----------------------------------------
For and on behalf of
TELECOM IRELAND
By:
-----------------------------------------
For and on behalf of
TELECOM NEW ZEALAND LIMITED
By:
-----------------------------------------
For and on behalf of
TELECOMMUNICATIONS COMPANY OF IRAN
By:
-----------------------------------------
For and on behalf of
TELECOMMUNICATIONES INTERNACIONALES DE ARGENTINA
By:
-----------------------------------------
For and on behalf of
TELEFONICA DE ESPANA, SA.
By:
-----------------------------------------
For and on behalf of
TELEGLOBE CANADA INC.
By:
-----------------------------------------
<PAGE>
For and on behalf of
TELEKOMUNIKACIA POLSKA S.A.
By:
-----------------------------------------
For and on behalf of
TELENOR CARRIER SERVICES AS
By:
-----------------------------------------
For and on behalf of
TELIA
By:
-----------------------------------------
For and on behalf of
TELKOM SA LIMITED
By:
-----------------------------------------
For and on behalf of
TIME TELECOMMUNICATIONS SDN BHD
By:
-----------------------------------------
For and on behalf of
TRANSOCEANIC COMMUNICATIONS INC
By:
-----------------------------------------
For and on behalf of
TRANSPACIFIC TECH INC
By:
-----------------------------------------
For and on behalf of
TUNISIE TELECOM
By:
-----------------------------------------
For and on behalf of
UKRAINIAN PUBLIC COMPANY OF INTERNATIONAL AND LONG DISTANCE
TELECOMMUNICATIONS
By:
-----------------------------------------
For and on behalf of
VIBAKOM GMBH
By:
-----------------------------------------
[CABLE & WIRELESS, INC. LOGO APPEARS HERE]
July 6, 1996
Mr. Fabrice Maquignon
Senior Manager, Europe
Startec Global Communications, Inc.
10411 Motor City Drive
Suite 301
Bethesda, Maryland 20817
Dear Mr. Maquignon:
Cable & Wireless, Inc. ("C&W USA") is pleased that Startec Global
Communications, Inc. ("STARTEC") has elected to purchase, on an IRU basis, a
DS-3 of capacity on the Gemini cable system from C&W USA as indicated by
Startec's signature of the Indefeasible Right of Use Agreement ("AGREEMENT").
In order for the Agreement to be processed, C&W USA needs to ensure that C&W USA
and Startec are in complete agreement regarding their understanding of the
following issue related to the Agreement.
Annual O&M Charges: With respect to the "Annual O&M Charges" section of
Schedule 2 of the Agreement, the three and one-half percent (3.5%)
increase shall commence as of January 1, 1999; not as of January 1,
2000. Accordingly, the Annual O&M Charge for 1999 will be $132,480
($128,000 annual charge for 1998 plus 3.5% increase added thereon).
If Startec agrees that this letter should be an amendment to the Agreement upon
full execution and delivery of the Agreement, you are requested to sign in the
space provided below and return a signed copy of this letter to my attention.
Upon receipt of a signed copy of this letter, C&W USA will continue processing
the Agreement.
Should you have any questions regarding this letter, please call Susan Ludwig at
(703) 760-3607.
Again, C&W USA is pleased to have been selected to provide capacity for Startec,
and we look forward to working with you on this project.
Sincerely,
/s/ RICHARD A. BERMAN
- -----------------------------------------
Richard A. Berman
Director, Contract Management
AGREED TO BY: STARTEC GLOBAL COMMUNICATIONS, INC.
-------------------------------------------------
Signature: /s/ SUBHASH PAI
-------------------------------------------------
Printed Name: SUBHASH PAI
-------------------------------------------------
Title: VPS CONTROLLER
-------------------------------------------------
Date: 7/8/`98
-------------------------------------------------
AGREEMENT
THIS AGREEMENT ("Agreement") is made this 27th day of July, 1998, between
Americatel Corporation, 4045 NW 97 Avenue, Miami, Florida 33178 (hereinafter
"Americatel") and Startec Global Communications, 10411 Motor City Drive, Suite
301, Bethesda, Maryland 20817 (hereinafter "Startec") (or also "Party" or
"Parties") as to the following facts:
1. SERVICES AND CHARGES.
a) Arnericatel shall permit Startec to utilize one-half of the capacity
of the DS-3 facility connecting Americatel Corporation, 60 Hudson
Street, 13th Floor, Suite 1305, New York, New York 10013 and
Americatel Corporation at 4045 NW 97th Avenue, Miami, Florida 33178 as
described in this Agreement. (hereinafter "Service" or "Services")
b) For this use, Americatel shall charge Startec $19,750.50 per month as
a Monthly Recurring Charge (MRC) and a One-Time Charge (OTC) of $1,500
payable as indicated in this Agreement.
c) In the initial configuration, Startec shall be allotted 10 T l's and 3
E 1's. Startec shall be permitted to request a modification of the
initial configuration subject to the limitations of the equipment
configuration and subject to Americatel's approval.
d) Americatel shall also provide to Startec Ml 3 Mux Services at each end
of the DS-3. (also included in "Services")
e) Americatel shall charge Startec an additional charge of $1,378.83 per
month as an MRC for the for the M13 Mux Services, including the
operation and maintenance of the equipment, which sum shall be payable
as indicated in this Agreement.
f) The terms and conditions relating to any collocation of Startec's
telecommunications equipment on Americatel's premises shall be the
subject of an annex to this agreement and said terms and conditions
shall be determined at that time.
2. EFFECTIVE DATE; TERM; INSTALLATION DATE.
The Effective Date of this Agreement is the date it is signed by both
parties. The initial term of service (the "Initial Term") shall be for the
period of one year, calculated from the Effective Date of this Agreement.
Billing charges shall begin to accrue on the date the DS-3 is delivered and
accepted by Americatel. After the Initial Term, this Agreement will
continue on a month-to-month basis. After the Initial Term, this Agreement
may be canceled (and service terminated) by either party subject to at
least thirty (30) days prior written notice and subject to the provisions
in Section 6 of
1
<PAGE>
this Agreement.
3. RESPONSIBILITIES.
(a) Americatel shall in all cases, make reasonable efforts to facilitate
the timely installation of all necessary facilities and the
implementation of Services; provided however, that Americatel shall in
no manner whatsoever, be held responsible for any liability or alleged
liability, arising from a delay or other malfunction of any Services
or the initiation thereof, to the extent such delay or malfunction is
the result of the acts, omissions, fault, or negligence of any person
or entity other than Americatel, its employees and authorized agents
and representatives. The limitations specified in the preceding
sentence shall include without limitation, delays caused by failure or
delay in obtaining any authorizations from or agreements with any
third party telecommunications providers, which authorization or
agreement is required in order to install equipment or initiate
services.
(b) Startec shall be responsible for any facilities required to reach
Americatel's demarcation points in New York and Miami as specified in
Section l(a) of this Agreement and these shall be completed by Startec
at Startec's expense.
(c) Americatel shall be responsible for the completion of the following
tasks:
(i) M13 Muxes Maintenance. Americatel shall provide aintenance
service for Ml 3 Muxes at the Site on a twentyfour hour,
seven-day per week basis.
(ii) New Service Installation. Startec shall coordinate with
Americatel a schedule for the installation of new services and
such installation shall be performed during normal business
hours.
4. PAYMENT.
(a) Initial Payment. All One-Time Charges and one full month's Monthly
Recurring Charge (MRC) are due within five (5) business days from the
date this Agreement is signed.
(b) Monthly Payments. Payment of the MRC shall be invoiced separately and
shall be due in advance on or before the first calendar day of each
month. For the first and last month of this Agreement where it is in
force on a fractional basis, MRCs shall be pro-rated based on a
thirty-(30) day month.
2
<PAGE>
(c) Late Payment Charge. Payments not received when due will be assessed a
late charge of one-and-one-half percent (1 1/2%) per month of the
amount due (pro-rated for the days outstanding), or the maximum
permitted by law if less.
(d) Currency/Method of Payment. All payments by Startec to Americatel
hereunder shall be made in U.S. dollars. Payment shall be deemed made
only upon receipt by Americatel of collected funds and shall be made
via bank wire transfer to such bank account as Americatel may
designate by notice to Startec.
5. TAXES AND OTHER CHARGES.
One-half (that is, Startec's share) of any use, excise, sales or privilege
taxes, duties, value-added taxes, fees, assessments or similar liabilities
however denominated which may now or hereafter be levied on the Services or
equipment which are the subject of this Agreement or payments made under
this Agreement, chargeable to or against Americatel by any applicable
government authority, shall be passed through to and be payable by Startec
in addition to the other charges under this Agreement. Should Americatel be
required to pay or pays these taxes, fees or assessments or similar
liabilities on behalf of Startec, Startec shall promptly reimburse
Americatel for such payments upon receipt of an invoice from Americatel.
Taxes chargeable against the income or gross receipts of Startec shall be
paid by Startec,
6. TERMINATION.
This Agreement may be terminated:
(a) By Americatel, if Startec falls to make payment of any amount due
hereunder, and such amount remains unpaid more than twenty (20) days
after Startec receives from Americatel, a notice of such nonpayment.
In addition, Americatel reserves the right to terminate this Agreement
if Startec or its customer or user breaches any provision(s) hereof
and fails to cure the breach within thirty (30) days of receipt of
written notice thereof;
(b) By Americatel, effective immediately in the event of, (a) 2 violation
of an applicable law or regulation; (b) to protect against loss or
degradation of any communication services, property damages, or
personal injury; or (c) failure of Startec to protect Confidential and
Proprietary Information (as defined in Section 11 below) entrusted to
it.
(c) By Startec, at any time after the Effective Date, pursuant to 30 days
advance written notice to Americatel, and for any reason whatsoever.
Should, Startec terminate this Agreement prior to the
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expiration of the Initial Term, Startec shall pay Americatel an early
termination charge which charge shall equal the full amount of the
monthly recurring charges (MRC) for one year calculated at the rates
stated in this Agreement less 1/12th thereof for each month received
and paid for by Startec prior to the date of termination.
(d) Upon the occurrence of any of the events identified in Section 6(a)
and (b) above, the Americatel may in its sole discretion, take any or
all of the following actions:
(i) temporarily suspend Services to Startec (in whole or in part in
its sole discretion) without terminating the Agreement until
Startec cures the default, during which suspension Startec shall
continue to remain liable for the payment of all amounts payable
in accordance with the terms hereof;
(ii) terminate the Agreement, and require Startec to immediately pay
to Americatel all amounts then due by Startec under this
Agreement, in addition to the termination charges outlined in
Sections 6(c) and (@ herein, and all other costs and expenses of
collection, including reasonable attorneys' fees and costs;
(iii)proceed by appropriate court action to recover damages for
breach of the Agreement together with costs and expenses in
connection with enforcing the Agreement, including reasonable
attorney's fees and costs; and
(iv) pursue any other remedies available at law or in equity.
(e) Additionally, If this Agreement is terminated in accordance with
Sections 6(a) - (c) and in addition to all of Americatel's other
remedies at law or in equity, Americatel shall have the option to
provide access to the DS-3 to whomever else Americatel sees fit.
Startec shall not be entitled to any equitable relief with respect to
such use or for any refund of amounts paid to Americatel hereunder.
(f) In addition to the foregoing, and in the event of termination. under
either of Sections 6(a) - (c), Startec agrees to be responsible for
any costs of early termination rightfully assessed against either
Startec or Americatel by any third party or parties (including any
local, national, governmental or quasi-governmental telecommunications
entities and any other entities involved in the provision of the
services at DS-3, whether by contract, tariff or otherwise). Startec
shall reimburse Americatel for any such costs
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paid by Americatel.
(g) Startec acknowledges that the foregoing rights of Americatel are
reasonable; constitute liquidated damages for the loss of the bargain
contemplated hereunder and do not constitute a penalty. The
termination of this Agreement for any reason shall extinguish all of
Americatel's obligations to provide, and Startec's obligations to
accept, service relating to the DS-3, but shall not relieve either
party of any obligation that may have arisen prior to such
termination.
7. LIMITATION OF LIABILITY, GENERAL INDEMNITY.
(a) Americatel shall not be liable to Startec or to any third party for
any loss or damage incurred by reason of, or incidental to, any delay,
interruption or failure of Service however long it shall last, or for
any failure in or breakdown of facilities associated with the Service,
or for any mistakes, omissions, delays, errors, or defects in
transmission occurring in the course of furnishing Service, whatsoever
shall be the case of any of the foregoing and whether negligent or
otherwise.
(b) In addition to the foregoing Americatel shall not be liable to Startec
or to the customers or users of Startec for:
(i) Libel, slander, or infringement of copyrights arising from or in
connection with the transmission of communications via the
facilities and Services of Americatel.
(ii) Infringement of patents or trade secrets arising from the
combination, or use of the facilities or Services provided by
Americatel with Startec's facilities or services or its
customers' or users' facilities or services;
(iii)Any claim arising out of any act or omission of Startec's, it's
customers, users or any third party;
(iv) Unlawful or unauthorized use of Americatel's facilities and
Services;
(v) Any claim arising out of a breach in the privacy or security of
communications transmitted over Americatel's facilities.
(vi) Any claim arising out of or with respect to any facilities or
services provided by any third party.
(vii)Changes in any of the facilities, operations or procedures of
Americatel that render any facilities or Services provided
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thereby obsolete, require modification or alteration of such
facilities or Services, or otherwise affect their use or
performance. Americatel will endeavor to advise the other on a
timely basis of any such changes; or
(viii)Thenature or content of the material, signals or programming
transmitted or received via facilities and Services.
(c) Startec shall indemnify and save Americatel harmless from all
liability arising out of or in connection with the provision of
services by Startec, and shall protect and defend Americatel from any
suits or claims alleging such liability, and shall pay all expenses,
including Americatel's own attorney's fees if any are incurred, and
satisfy all judgments which may be incurred by or rendered against
Americatel in connection therewith, Americatel shall notify Startec of
any such suit or claim against Americatel.
(d) Americatel assumes no responsibility for the availability or
performance of the facilities or services under the control of any
other facilities or services supplier and which are used for service
to Startec, its customer or user. Such facilities hereunder are
provided subject to such degree of protection or nonpreemptibility as
may be provided by such other facilities or services supplier. When
the facilities or services of any other facilities or services
supplier are used in establishing connections with Americatel's
facilities at the connecting location, Americatel shall not be liable
for any act or omission of the other supplier.
(e) It is expressly agreed that Startec's sole and exclusive remedies for
any cause whatsoever arising out of or relating to this agreement are
limited to those set forth herein, and all other remedies Of any kind
are expressly excluded and disclaimed.
(f) In no event shall Americatel be liable for any incidental or
consequential damages or loss of revenues of Startec or any third
party, whether foreseeable or not, occasioned by any defect in any
facility provided or arranged for Startec, or arising from the
provision of Service, or from any other cause whatsoever, and
regardless of whether prior notice of the possibility of such damages
to Americatel has been given.
(g) Americatel hereby expressly excludes and disclaims any express and
implied warranties with respect to any facility or Service provided or
arranged for Startec by Americatel, including with respect to the
compatibility of any such service or facility with any
Startec-provided
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software, hardware or facility.
(h) Without limiting the generality of the foregoing, Startec acknowledges
and agrees that it shall otherwise have no right of recovery for the
satisfaction of any cause whatsoever, arising out of or relating to
the provision of Service and use of the DS-3 or of any related
equipment, against Americatel.
8. FORCE MAJEURE.
Each party will be excused from performance to the extent that it is
prevented from so performing, in whole or in part, as a result of delays
caused by the other or any act of God, war, civil disturbance, court order,
labor dispute, third party non-performance, or other cause beyond its
reasonable control, including but not limited to failures, fluctuations or
nonavailability of electrical power, heat, light, air conditioning or
telecommunications equipment. Such nonperformance will not be a default or
a ground for termination as long as reasonable means are taken to
expeditiously remedy the problem causing such non-performance. This
provision shall not, however, relieve Startec from making any accrued
payment under this Agreement when due.
9. ASSIGNMENT.
Neither this Agreement, nor the rights and obligations of Startec arising
hereunder, nor any part thereof, may be assigned by Startec except with the
express written approval of Americatel. This Agreement shall be binding on
and shall inure to the benefit of any successors and assigns of the
parties, provided that no assignment shall relieve either party of its
obligations to the other party. Any purported assignment by either party
not in compliance with these terms and conditions shall be null and void
and of no force and effect. Any assignment of any right and/or interests of
either party shall require at least ninety-(90) days written notice to the
other party.
10. TITLE TO EQUIPMENT.
This is a service agreement and no property interest is created hereby, nor
does it grant or convey any rights in Startec to assert any right,
interest, lien or encumbrance of any kind as to the M13 Muxes or other
equipment which is the subject of this Agreement. Title to the M13 Muxes
shall remain with Americatel at all times and shall be kept free and clear
of all claims, liens and encumbrances of Startec, its agents, employees,
representatives, creditors or any persons claiming through Startec, Startec
shall, at its expense, protect and defend Americatel's title from any such
claims, liens and encumbrances. Any such equipment is and shall remain
Americatel's personal property irrespective of their use or manner of
attachment to real property, and Startec shall secure all necessary
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waivers and do such other acts; as may be reasonably required by property
owners or requested by Americatel to ensure the same.
11. CONFIDENTIALITY.
(a) Startec agrees that all confidential and/or proprietary information
communicated to it by Americatel, whether before or after the date
written below, will be received in strict confidence, will be used
only for purposes intended by the disclosing party, and except as
otherwise provided below, will not be disclosed by Startec, its
agents, subcontractors or employees without the prior written consent
of the disclosing party as follows:
(i) Startec may disclose the Confidential and Proprietary information
and Materials of Americatel only to those employees, agents,
attorneys and advisors of Startec who have a "need to know" such
Confidential and Proprietary Information and Materials in order
for Startec to make use effectively of same for the permitted
uses. Startec shall be responsible for any unauthorized
disclosure or use of disclosing Party's Confidential and
Proprietary Information and Materials by such employees, agents,
attorneys or advisors. A permitted person shall be considered to
have a need to know" if such person's employment or retention is
essential to either Party's performance of its obligations
hereunder, or in order to comply with applicable law or reporting
requirement.
(ii) Startec shall protect and maintain the confidentiality of the
Confidential and Proprietary Information and Materials of
Americatel using at least the same level of care (but no less
than reasonable care) that Startec uses to protect and maintain
the confidentiality of its own Confidential and Proprietary
Information and Materials.
(iii)Disclosure of Confidential and Proprietary information conveys
no copyrights, trademarks, service marks, or any rights to
Americatel's trade secrets, know-how or any other intellectual
property rights.
(iv) At the request of Americatel upon termination of this Agreement
or at any time or from time to time thereafter, Startec shall as
promptly as practicable and in all cases within five (5) days of
such request deliver to Americatel all Confidential and
Proprietary Information and Materials of Americatel then in
Startec's possession or under Startec's control or, in lieu
thereof, Startec may destroy all of Startec's.
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copies of such Confidential and Proprietary Information and
Materials and certify to Americatel in writing that such
destruction has been accomplished.
12. APPLICABLE LAW.
The provision of this Agreement and any documents delivered pursuant
hereto, shall be governed by and construed in accordance with the laws of
the State of Florida. Each party hereto irrevocably submits to the
jurisdiction of the State and Federal courts of the State of Florida, Dade
County, in any action or proceeding arising out of or relating to the
Service Order, and each party hereby irrevocably agrees that all claims in
respect of any such action or proceeding must be brought and/or defended in
such courts; provided however, that matters which are under the exclusive
jurisdiction of the Federal courts shall be brought in the Federal District
Court for the Southern District of Florida. Each party hereto consents to
service of process by any means authorized by the applicable law of the
forum in any action brought under or arising out of this Agreement and the
service relating to the DS-3 described herein by Americatel, and each party
irrevocably waives, to the fullest extent each may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
13. HEADINGS.
The headings and section titles in these terms and conditions are inserted
for convenience only and shall not affect the meaning or interpretation of
any article or provision hereof.
14. NOTICES; BILLING AND WIRE ADDRESSES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by prepaid first class
mail, or by facsimile. Any such notice or other communication, if mailed by
prepaid first class mail at any time other than during a general
discontinuance of postal service due to strike, lockout or otherwise, shall
be deemed to have been received on the fourth business day after the date
post-marked; or if sent by facsimile, shall be deemed to have been received
on the business day following the sending, provided that a hard copy is
immediately sent by prepaid first class mail as aforesaid; or if delivered
by hand, shall be deemed to have been received at the time it is delivered
to the applicable address noted below either to the individual designated
below or to an individual at such address having apparent to accept
delivered on behalf of the addressee. The addresses below may be changed by
either Party with at least 5 business days written notice to the other.
Notices and other communications shall be addressed as follows:
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In the case of Americatel: In the case of Startec
- ------------------------- ----------------------
Americatel Corporation Startec Global Holding Corporation
4045 N.W. 97th Avenue 10411 Motor City Drive
Miami, Florida 33178 Bethesda, MD 20817
Phone: (305)717-0200 Phone: (301) 365-8959
Fax: (305)599-6222 Fax: (301) 365-8787
Att'n: VP Corp. & Legal Affairs Att'n: VP Accounting & Legal Affairs
Billing Addresses:
- ------------------
Same address Same address
Att'n: Director of Accounting Att'n: Director of Accounting
Bank Wire Addresses:
Account#: 2090001358277 Account#:
ABA#: 063000021 ABA#:
First Union N.B. ------------------------------
8201 NW 36th Street ------------------------------
Miami, Florida 33166 ------------------------------
15. NON-EXCLUSIVITY. INDEPENDENT CONTRACTOR
This Agreement is non-exclusive. Nothing in this Agreement shall obligate
either party to enter into or shall create a partnership or joint venture
between the parties or result In a joint communications service offering to
third parties, nor shall be deemed to prevent either party from entering
into an agreement or negotiation of any kind or nature with third parties.
Each party will act as an independent contractor under the terms of this
Agreement and not as an agent or legal representative of the other party
for any purposes and neither party has any right or authority to assume or
create any obligation of any kind, express or implied, on behalf of the
other or on behalf of any customers of the other or to any other person.
All persons employed by either party in connection with the Services
provided under this Agreement shall be considered employees or agents of
such party only, and shall in no way, either directly or indirectly, be
considered employees or agents of the other party.
16. SERVICE MARKS
Neither Party shall use, directly or indirectly, in whole or in part, in
connection with the such Party's business hereunder or otherwise, or as
part of the Party's corporate, business or personal name, any signature,
monogram, logo, service mark or trade name (a "Mark") that is now or may
hereafter be owned, licensed or used by the other Party except in the
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manner and to the extent approved in writing by the other Party prior to
any such use, which approval may be withheld in the Mark owner's sole
discretion. Any permitted use of a Mark shall be immediately discontinued
upon the termination or expiration of this Agreement. Each Party hereby
expressly disclaims any and all right, title and interest in and to any
Mark owned by the other Party whether or not used by the Mark owner. The
covenants and disclaimers of this Section 16 shall survive the termination
or expiration of this Agreement.
17. COMPLIANCE WITH GOVERNMENT AUTHORITIES
Each Party shall comply with any restrictions or conditions imposed by
applicable government authorities on such Party's receipt or use of the
Services in any country in which the Party uses the Services, and the
Party's use of the Services in, between, or among any countries. Neither
Party shall use the Services in violation of any applicable law, rule or
regulation. Startec shall indemnify defend and hold Americatel harmless
from and against any liability or alledged liability resulting from any act
or omission by the Startec, its agents, employees or representatives which
is contrary (or allegedly contrary) to applicable law, rule or regulation.
18. MISCELLANEOUS
(a) Additional Actions and Documents. Each of the Parties hereby agrees to
take or cause to be taken such further actions, to execute, deliver,
and file such further documents and instruments, and to use its best
efforts to obtain such consents or approvals as may be reasonably
requested in order to fully effectuate the purposes of this Agreement.
(b) Waiver. Any waiver or consent by either Party to any variation from
any provision of this Agreement shall be valid only in the specific
instance in which it is given, and no such waiver or consent shall be
construed as a waiver of any other provision of this Agreement or with
respect to any similar instance or circumstance.
(c) Binding Effect. Subject to the provisions hereof restricting
assignment, this Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and
permitted assigns.
(d) Amendment. This Agreement may not be amended, altered, or modified
except by an instrument in writing, duly executed by both Parties.
(e) Limitation on Benefits of this Agreement. It is the explicit intention
of the Parties that no person or entity other than the Parties is or
shall be entitled to bring any action to enforce any provision of this
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Agreement against either of the Parties, and that the covenants,
undertakings, and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the
Parties and their respective successors and permitted assigns.
(f) Entire Agreement. This Agreement contains the entire agreement between
the Parties with respect to the subject matter hereof and supersedes
all prior or contemporaneous oral or written agreements, commitments,
statements or understandings with respect to the matters provided for
herein.
(g) Construction. The Parties hereby acknowledge that they each
participated equally in the negotiation and drafting of this Agreement
and that, accordingly, no court construing this Agreement shall
construe it more stringently against one Party than against the other.
(h) Execution. To facilitate execution, this Agreement may be executed in
one or more counterparts, and it shall be sufficient that the
signature of each Party appear on one or more of the counterparts, All
counterparts shall collectively constitute a single agreement.
(i) Authority. The Parties represent that they each have duly authorized,
executed and delivered this Agreement.
19. ATTORNEY'S FEES.
In the event Americatel brings a lawsuit or other legal action against
Startec to enforce its rights pursuant to this Agreement, and Americatel
prevails in such suit or action, it shall be entitled to recover from
Startec, its reasonable attorney's fees, costs and expenses, including
without limitation all such costs associated with appeals.
20. SEVERABILITY.
Nothing contained in this Agreement shall be construed so as to require the
commission of any act contrary to law. If any provision herein shall be
declared invalid or unenforceable, said provision shall be curtailed and
limited only to the extent necessary to permit compliance with the minimum
legal requirement.
21. INTEGRATION.
This Agreement and any schedules, annexes or addenda attached hereto
contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior oral or written agreements,
commitments, or understandings with respect to the matters provided for
herein.
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22. PRIORITY; AMENDMENT; WAIVER.
The provisions of the each document will be so construed as to give effect
to the applicable provisions of such document to the fullest extent
possible. This Agreement may not be amended or modified in any way, and
none of the provisions hereof may be waived, except by a prior writing
signed by an authorized officer of each party.
For Americatel Corporation: For Startec Global Communication:
/s/ Jorge Asecio /s/ Subhash Pai
- -------------------------------------- ---------------------------------------
Print Name: JORGE ASECIO Print Name: SUBHASH PAI
Address: Address:
4045 NW 97 Avenue 10411 Motor City Drive, Suite 301
Miami, Florida 33178 Bethesda, Maryland 20817
Telephone: (305) 717-0200 Telephone:
Fax: (305) Fax: (301) 365-8939
13
RACK SPACE AGREEMENT
This Rack Space Agreement (this "Agreement") is made as of the 6th day of
July 1998, by and between IXC CARRIER, INC., a Nevada corporation ("Lessor"),
and STARTEC GLOBAL COMMUNICATIONS CORPORATION, a Maryland corporation
("Lessee").
BACKGROUND
A. Lessee desires to install and keep certain telecommunications
equipment on the premises of Lessor.
B. Lessor and Lessee desire to set forth the terms and conditions upon
which Lessor shall provide space to Lessee at Lessor's facilities for such
equipment.
TERMS OF AGREEMENT
Accordingly, in consideration of the mutual promises set forth below, the
parties hereby agree as follows:
1. RACK SPACE. Lessor hereby leases to lessee one (1) standard rack (24 5/16 W
x 15 D x 7 H) space for the purpose of installing electronic equipment to permit
Lessee to receive and deliver communications traffic to and from Lessor's
telecommunications network. Such rack space shall be located within the Customer
Interface ("CIF") Room at Lessor's building site (the "Premises") at the address
shown below. Delivery of such communications traffic shall be to the Lessor's
point of demarcation in the Lessor's equipment room. The point of demarcation
shall be a DSX1 or DSX3 as applicable. Signals received at this demarcation
shall meet the then current DSX signal specification. Material and installation
to the demarcation interconnect shall meet IXC approved technical standards and
shall be at the Lessee's expense. Any voice grade facilities (two wire copper)
are not typically available and are excluded from installation under this
agreement. The equipment installed by the Customer must meet IXC installation
standards, as well as all National Electrical Codes (NEC), any local fire and
safety codes and any other applicable safety standards and is subject to
inspection by IXC personnel. Deficiencies or code violations must be corrected
within thirty (30) days of notification or Lessee will be considered in breach
of this Agreement. (A copy of IXC Installation Standards will be available upon
request).
624 South Grand Avenue, Suite 1615
Los Angeles, California
Lessor shall provide (i) twenty (20) amps non-UPS AC power at the above site and
provide access to an AC outlet for test equipment and occasional use; (ii)
lighting; (iii) heating; and (iv) air conditioning for the Premises
(collectively, the "Services").
<PAGE>
2. MONTHLY LEASE PAYMENTS. Lessee agrees to pay in advance to Lessor each
month during the term of this Agreement the payment (a "Monthly Lease Payment")
set forth in Exhibit B hereto. The Monthly Lease Payments shall be adjusted upon
the second anniversary of this Agreement and on each second anniversary
thereafter in connection with increases in the Consumer Price Index as set forth
in Exhibit B. Lessor's invoices for amounts payable hereunder shall be due upon
receipt by Lessee. In the event that any Monthly Lease Payment remains unpaid
after thirty (30) days following the date of the first Lessor invoice for such
payment, such payment shall be subject to a late payment charge equal to the
lesser of (i) one and one-half percent of the unpaid balance per month or (ii)
the maximum rate allowed under applicable state law. Lessor shall send invoices
to lessee at the address listed herein. Monthly rental payments shall commence
upon completion of Lessor equipment installation.
3. MAINTENANCE, USE AND ALTERATION OF THE PREMISES.
a. Lessor agrees to use reasonable care in maintaining the Premises.
Lessee may make minor alterations at Lessee's expense to the Premises with the
prior written consent of Lessor. Any alteration performed by Lessee shall be
done using reasonable care and shall become the property of Lessor upon the
termination of the Agreement.
b. Lessor shall provide Lessee with a key to the Customer Interface
("CIF") Room located on the Premises. Lessee may access the CIF room at all
times, in accordance with the building security procedures generally applicable
to the Premises, for the purpose of installing, inspecting, maintaining and
removing Lessee's Property. Lessee shall return to Lessor the key to the CIF
room upon termination of the Agreement.
4. PROVISION OF ADDITIONAL SERVICES. Lessee may occasionally request and
Lessor, at its, shall provide additional services as set forth in Exhibit C
hereto.
5. EFFECTIVENESS AND TERMINATION.
a. TERM. This Agreement is effective as of the date hereof and shall
remain in force and effect for a minimum of one year, ("Initial Term") unless
earlier terminated pursuant to its terms. Thereafter, this Agreement shall
automatically renew for a successive one (1) year term ("Renewal Terms") unless
terminated by either party (i) by sending written notice at least 90 days before
the date of the expiration of the Initial Term; and (ii) if such terms and
conditions are mutually agreeable to the parties.
b. TERMINATION. Either party may terminate this Agreement upon 30 days
written notice to the other party after the failure of such other party to cure
with performance any default in the performance of any obligation within 30 days
of written notice of such default. The cure period shall be the period ending 30
days after such notice of default by Lessor is given.
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c. EFFECT OF TERMINATION. Upon the expiration or termination of this
Agreement and except as specifically set forth herein, this Agreement shall no
longer have any force or effect and neither party shall have any further
obligation hereunder. No such expiration or termination shall affect Lessee's
obligation to make the Monthly Lease Payments until the date that the then
current term of the Agreement would have expired (the "Current Term Date")
provided, however, that Lessee shall be entitled to a credit (net of any
expenses incurred by Lessor) in the event that Lessor leases the Premises to
another party prior to the Current Term Date. Upon the expiration or termination
of this Agreement, Lessee shall have 60 days to remove all of Lessee's furniture
and equipment at the premises ("Lessee's Property"). In the event Lessee fails
to remove Lessee's Property, then Lessor shall have the right to remove Lessee's
Property and Lessee shall pay any cost in connection with such removal.
d. LIMITS OF LIABILITY. Lessor shall use reasonable care in
maintaining the Premises and providing the Services. Notwithstanding the
foregoing, in no event shall Lessor be liable for any special, incidental,
indirect, punitive, reliance or consequential damages, whether foreseeable or
not, including but not limited to, damage or loss of property or equipment, loss
of profits or revenue, cost of capital, cost of replacement services, or claims
for service interruptions or transmission problems, occasioned by any defect in
the Premises or the Services, delay in available of the Premises or the Services
or any other cause whatsoever with respect to the Premises, the Services or this
Agreement. Lessor shall not be liable for any defect with respect to the
Premises, the Services or this Agreement. Lessor shall not be liable for any
defect with respect to the Premises or the Services from causes outside its
control, including accidents, cable cuts, fires, floods, emergencies, government
regulation, wares, or acts of God. LESSOR DISCLAIMS ALL EXPRESS AND IMPLIED
WARRANTIES RELATING TO THE PREMISES OR THE SERVICES, INCLUDING BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
However, other than occurrences which are beyond Lessor's control, Lessor shall
be liable for any equipment damage resulting from power or air conditioning
failure in the space.
6. INDEMNIFICATION.
A. BY LESSEE. Lessee shall indemnify, defend, release and hold
harmless Lessor and all of its affiliates, agents, clients, consultants,
customers, employees, subcontractors, invitees or licensees from and against any
action, claim, court cost, damage, demand, expense, liability, loss, penalty,
proceeding or suit, (collectively, together with related attorneys' fees,
including costs and disbursements, "Claims") imposed upon Lessor by reason of
damages to property or injuries, including death, as a result of an act (whether
intentional, negligent or otherwise) or omission on the part of Lessee or any of
its affiliates, agents, clients, consultants, customers, employees,
subcontractors, invitees or licensees in connection with the Premises.
B. NOTICE BY LESSOR. In the event any action shall be brought against
Lessor, Lessor shall immediately notify Lessee in writing, and Lessee, upon the
request of Lessor, shall assume the defense thereof on behalf of Lessor and its
affiliates and shall pay all expenses and satisfy all judgments which may be
incurred by or rendered against Lessor or its affiliates in
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connection therewith, provided that Lessor shall not be liable for any
settlement of any such action effected without its written consent.
7. SURVIVAL. Notwithstanding the termination of this Agreement for any
reason, this Section 7. Indemnification shall survive such termination.
8. INSURANCE. Throughout the term of this Agreement and any extension
thereof, Lessee shall maintain, and, upon written request, shall provide to
Lessor of comprehensive general liability insurance with a limit of not less
than $2,000,000 per occurrence for bodily injury liability and property damage
liability, including coverage extensions for blanket contractual liability,
personal injury liability and products and completed operations liability.
9. ASSIGNMENT. Upon notice to and with the consent of Lessor, Lessee may
make any assignment of rights or interests or delegation of its obligations with
respect to this Agreement. Such consent shall not be unreasonably withheld or
delayed. Lessor may make any assignment of its rights or interests or delegation
of its obligations with respect to this Agreement upon written notice to Lessee.
10. BINDING ARBITRATION. Upon notice to the other party, each party must
refer any dispute or claim arising out of or relating to this Agreement to
arbitration in Austin, Texas in accordance with the commercial arbitration rules
of the American Arbitration Association then prevailing and, in such event
neither party may commence any action based on such dispute of claim, and, if
any action has been commenced it shall be stayed, pending the outcome of such
arbitration proceeding. Each party shall select one independent arbitrator
within then days of such notice and the two arbitrators shall then select a
third arbitrator within an additional ten days to form a three-person panel of
arbitrators. The panel of arbitrators shall have the power to order specific
performance if requested. Any award, order, or judgment pursuant to such
arbitration shall be deemed final and binding and may be enforced in any court
of competent jurisdiction. All such arbitration proceedings shall be conducted
on a confidential basis. The panel of arbitrators may, as part of the
arbitration award, permit the substantially prevailing party to recover all or
part of its attorney's fees and other out-of-pocket costs incurred in connection
with such arbitration.
11. WAIVERS AND CONSENTS. No delay in taking, or failure to take, action
with respect to any breach of this Agreement shall constitute a waiver of any
right to take action with respect to such breach or with respect to any
subsequent breach. No waiver of a party's right to take action with respect to,
no consent to, and no acceptance of, any late payment, late or imperfect
performance, or failure to perform on one occasion shall constitute a waiver of
such party's rights to take action with respect to any delay in making, or
failure to make, acceptance performance upon any other occasion. No waiver of,
or delay in taking or failure to take action with respect to, any right, power
or privilege hereunder on occasion shall constitute a waiver thereof on any
other occasion. No waiver of a party's rights to take action with respect to any
breach of a provision of this Agreement, or of any right, power or privilege
hereunder, and on consent by a
4
<PAGE>
party to any breach of a provision of this Agreement, shall be effective unless
set forth in writing and signed by such party.
12. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the validity and performance hereof, shall be governed by
the laws of the State of Texas without regard to its principles of choice of
law.
13. NOTICES. Each notice relating to this Agreement shall be in writing and
shall be: (i) given in person; (ii) sent by registered or certified mail (return
receipt requested) or by courier; or (iii) transmitted by facsimile machine,
with a copy of such transmission delivered by one of the foregoing methods. Each
properly given notice shall be deemed to have been given as of the earlier of
(i) delivery, (ii) four days after the date of mailing, or (iii) the date of
facsimile transmission (receipt of which is orally confirmed or which date if
indicated by the facsimile machine of any party). Notices shall be made to the
following persons at the following addresses and facsimile telephone numbers
(which may be changed only by properly given notice):
If to Lessor: IXC Carrier, Inc.
5000 Plaza on the Lake, Suite 200
Austin, Texas 78746-1050
Attention: Contract Administration
Facsimile: (512) 238-7902
If to Lessee: Startec Global Communications Corporation
10411 Motor City Drive, Suite 301
Bethesda, Maryland 20817
Attention: Gustavo Pereira
Telephone: (301) 365-8959
Facsimile: (301) 365-8939
14. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and all other documents
specifically referred to herein constitute the entire and final agreement and
understanding between the parties with respect tot he subject matter hereof and
supersedes all prior agreements relating to the subject matter hereof, which are
of no further force or effect. The Exhibits referred to herein are integral
parts hereof and are hereby made a part of this Agreement. This Agreement may
only be modified or supplemented by an instrument in writing executed by a duly
authorized representative of each party.
5
<PAGE>
In confirmation of their consent hereto and intention to be legally bound
hereby, the parties have executed this Agreement below:
IXC CARRIER, INC. STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By:/s/ Michael Guess By:/s/ Gustavo Pereira
---------------------------------- ----------------------------------
(Signature) (Signature)
Michael Guess Gustavo Pereira
- ---------------------------------- ----------------------------------
Vice President, Engineering VP Eng/Ops
- ---------------------------------- ----------------------------------
6
<PAGE>
EXHIBIT B
Subject to the terms of the Agreement and upon installation of equipment,
Lessee shall pay Five Hundred ($500.00) for one (1) rack space (the "Rental
Payment") and Two Hundred Ten ($210.00) for twenty (20) amps of non-UPS AC
power. The total monthly lease payment including normal power usage will be
Seven Hundred and Ten ($710.00). The foregoing payments are collectively
referred to as the "Monthly Lease payments".
In addition, a one time installation charge of Four Thousand ($4,000.00)
for the one (1) rack shall be paid by Lessee to Lessor.
Upon the second anniversary of this Agreement and on each second
anniversary thereafter, the Rental Payment shall be increased by a percentage
equal to rise in the national Consumer Price Index (the "Consumer Price Index")
for the preceding twelve months. If the Consumer price Index ceases to be
published or is converted into a different standard reference base or otherwise
revised, such other index as the parties shall agree upon in writing shall be
substituted for the Consumer Price Index; if the parties are unable to agree as
to such substituted index, such matter shall be submitted to arbitration.
7
<PAGE>
EXHIBIT C
CUSTOMER MAINTENANCE SUPPORT
IXC Carrier, Inc.'s (hereinafter referred to as IXC) standard fees for
customer maintenance support services are as follows (unless set by precedence
in a service contract):
Maintenance services shall be defined as all work performed by IXC on
equipment provided by or on behalf of the Customer, or supervision of the
Customer's work within IXC's terminate facilities. Maintenance Service charges
are not billed for troubles found within that portion of a circuit provided by
IXC. The following billing rates apply for these services.
1. $75 per hour (4 hour minimum-if dispatch is required) Monday through Friday
during the business hours of 8:00 a.m.-5:00 p.m. local time, exclusive of the
following holidays.
New Years Day
President's Day
Memorial Day
Independence Day
Labor Day
Thanksgiving Day and the day after Thanksgiving
Christmas Day
2. $95 per hour (4 hour minimum for overtime work done after business hours
(defined above) and/or on holidays (defined above) and/or all day on Saturdays
and Sundays.
3. As requests for maintenance services are typically made via telephone, IXC
must be advised, in writing as to the person(s) who are authorized to request
service. It is the Customer's responsibility to keep IXC apprised of any changes
to its list of representative(s).
4. To request technical assistance and help under the maintenance services, a
call must be made to our Network Control Center at 1-800-526-2488. This number
should be used for IXC technical assistance, troubleshooting or testing of
circuits, not for service impairment or outages. The person calling in must be
on the authorized list in order to commit for charges for this technical
assistance. If that person is not on the list, the request cannot be
accommodated.
a) The Network Control Center personnel will take the call, record the
caller's name and phone number along with facts concerning the
assistance and support needed. The caller will then be given the
number of the "Assistance Ticket."
b) Upon completion of work, this "Assistance Ticket" will be given to
IXC's Accounting Department, and the customer will subsequently be
billed based upon the information on that ticket. A copy will be
attached to the invoice.
5. Except for emergencies, IXC technicians cannot be dispatched unless
requests are made in accordance with the above call-out procedure.
<PAGE>
ANCILLARY PRICING SCHEDULE FOR ON-NET SERVICE
<TABLE>
<CAPTION>
NON-RECURRING CHARGES (NRC) DS-1 DS-3
- ------------------------------------------------ ------------------ -----------------
<S> <C> <C>
New Order Installation (On-Net) $ 600.00 $ 2,000.00
New Order Installation (Off-Net) ICB ICB
DS-1 Ramp-Up per DS-O $ 50.00 N/A
Order Change (less than 5 business days) $ 50.00 $ 50.00
Order Cancellation (less than 5 business days) $ 250.00 $ 250.00
ASR (new or disconnect) (Special Access Only) $ 250.00 $ 250.00
ASR Supplement $ 50.00 $ 50.00
Order Expedite $ 250.00 $ 250.00
Reconfiguration Same as install Same as install
</TABLE>
<TABLE>
<CAPTION>
MONTHLY RECURRING CHARGES (MRC) DS-1 DS-3
- ------------------------------------------------ ------- ---------
<S> <C> <C>
Minimum circuit charge (IXC portion) $300.00 $2,000.00
Cross-connect charge $ 50.00 MRC $ 200.00 MRC
Other Interexchange Carrier to Lessor local
access or bypass facility (Lessor long haul
not involved) $250.00 NRC $ 500.00 NRC
Local bypass charge $200.00 MRC $ 500.00 MRC
Lessor POP to Lessor POP in same city, with no
Lessor long haul attached at either Lessor
POP $250.00 NRC $ 500.00 NRC
</TABLE>
<TABLE>
<CAPTION>
MISCELLANEOUS RECURRING NON-RECURRING
- ---------------------------------- ---------- -------------
<S> <C> <C>
M13 1 yr Term $ 875/mo $ 0.00
2+ yr Term $ 600/mo $ 0.00
3+ yr Term $ 475/mo $ 0.00
ECHO CANCELLER (PER CIRCUIT END) $ 250/mo $ 500.00
SECOND END LOOP (EX: FOR ADPCM) $ 50/mo $ 50.00
DEMAND MAINTENANCE $75/hr 8 a.m.-5 p.m. M-F. 4 hour
minimum if dispatch is required; $95/hr
after hours with 4 hour minimum.
RACK SPACE ICB-subject to availability.
SHELF SPACE $100/ea/mo ICB install
DC POWER $12.50/amp/mo (5 amp minimum;
5 amp increments)
CIF AC/DC POWER ICB
ALL OTHER SERVICES See Note (2)
</TABLE>
- ----------
(1) All of the above charges are subject to change with a 30-day notice.
(2) Services not described above will be considered special handling and
charges will be assessed on an individual basis.
<PAGE>
DS0 ANCILLARY PRICING
New Order Installation 150.00
Order Cancellation Prior to Turn up 200.00
Order Expedite 200.00
Reconfiguration
(City Pairs the Same) 200.00
DACS Charge
(Switching Only) 35.00
DS0 DACS Port Charge
(Bell access at DACS) 25.00
DS1 DACS Port 125.00
Minimum charge per DS-0 75.00
Notes:
1. All of the above charges are subject to change with a 30 day notice.
2. Services not described above will be considered special handling and charges
will be assessed on an individual basis.
RACK SPACE AGREEMENT
This Rack Space Agreement (this "Agreement") is made as of the 19th day of
August 1998, by and between IXC CARRIER, INC., a Nevada corporation ("Lessor"),
and STARTEC GLOBAL COMMUNICATIONS CORPORATION, a Maryland corporation,
("Lessee").
BACKGROUND
A.Lessee desires to install and keep certain telecommunications
equipment on the premises of Lessor.
B. Lessor and Lessee desire to set forth the terms and conditions upon
which Lessor shall provide space to Lessee at Lessor's facilities for such
equipment.
TERMS OF AGREEMENT
Accordingly, in consideration of the mutual promises set forth below, the
parties hereby agree as follows:
1. RACK SPACE. Lessor hereby leases to Lessee one (1) standard rack (24 5/16 w
x 15 D x 7 H) spaces for the purpose of installing electronic equipment to
permit Lessee to receive and deliver communications traffic to and from Lessor's
telecommunications network. Such rack space shall be located within the Customer
Interface ("CIF") Room at Lessor's building site (the "Premises") at the address
shown below. Delivery of such communications traffic shall be to the Lessor's
point of demarcation in the Lessor's equipment room. The point of demarcation
shall be a DSX1 or DSX3 as applicable. Signals received at this demarcation
shall meet the then current DSX signal specification. Material and installation
to the demarcation interconnect shall meet IXC approved technical standards and
shall be at the Lessee's expense. Any voice grade facilities (two wire copper)
are not typically available and are excluded from installation under this
agreement. The equipment installed by the Customer must meet IXC installation
standards, as well as all National Electrical Codes (NEC), any local fire and
safety codes and any other applicable safety standards and is subject to
inspection by IXC personnel. Deficiencies or code violations must be corrected
within thirty (30) days of notification or Lessee will be considered in breach
of this Agreement. (A copy of IXC Installation Standards will be available upon
request).
2223 North Houston Street
Dallas, Texas
Lessor shall provide (i) twenty (20) amps DC power and twenty (20) amps non-UPS
AC power at the above site and provide access to an AC outlet for test equipment
and occasional use; (ii) lighting; (iii) heating; and (iv) air conditioning for
the Premises (collectively, the "Services").
<PAGE>
2. MONTHLY LEASE PAYMENTS. Lessee agrees to pay in advance to Lessor each
month during the term of this Agreement the payment (a "Monthly Lease Payment")
set forth in Exhibit B hereto. The Monthly Lease Payments shall be adjusted upon
the second anniversary of this Agreement and on each second anniversary
thereafter in connection with increases in the Consumer Price Index as set forth
in Exhibit B. Lessor's invoices for amounts payable hereunder shall be due upon
receipt by Lessee. In the event that any Monthly Lease Payment remains unpaid
after thirty (30) days following the date of the first Lessor invoice for such
payment, such payment shall be subject to a late payment charge equal to the
lesser of (i) one and one-half percent of the unpaid balance per month or (ii)
the maximum rate allowed under applicable state law. Lessor shall send invoices
to Lessee at the address listed herein. Monthly rental payments shall commence
upon completion of Lessor equipment installation.
3. MAINTENANCE, USE AND ALTERATION OF THE PREMISES.
a. Lessor agrees to use reasonable care in maintaining the Premises.
Lessee may make minor alterations at Lessee's expense to the Premises with the
prior written consent of Lessor. Any alteration performed by Lessee shall be
done using reasonable care and shall become the property of Lessor upon the
termination of the Agreement.
b. Lessor shall provide Lessee with a key to the Customer Interface
("CIF") Room located on the Premises. Lessee may access the CIF room at all
times, in accordance with the building security procedures generally applicable
to the Premises, for the purpose of installing, inspecting, maintaining and
removing Lessee's Property. Lessee shall return to Lessor the key to the CIF
room upon termination of the Agreement.
4. PROVISION OF ADDITIONAL Services. Lessee may occasionally request and
Lessor, at its option, shall provide additional services as set forth in Exhibit
C hereto.
5. EFFECTIVENESS AND TERMINATION.
a. TERM. This Agreement is effective as of the date hereof and shall
remain in force and effect for a minimum of two years, ("Initial Term") unless
earlier terminated pursuant to its terms. Thereafter, this Agreement shall
automatically renew for a successive one (1) year term ("Renewal Terms") unless
terminated by either party (i) by sending written notice at least 90 days before
the date of the expiration of the Initial Term; and (ii) if such terms and
conditions are mutually agreeable to the parties.
b. TERMINATION. Either party may terminate this Agreement upon 30 days
written notice to the other party after the failure of such other party to cure
with performance any default in the performance of any obligation within 30 days
of written notice of such default. The cure period shall be the period ending 30
days after such notice of default by Lessor is given.
2
<PAGE>
c. EFFECT OF TERMINATION. Upon the expiration or termination of this
Agreement and except as specifically set forth herein, this Agreement shall no
longer have any force or effect and neither party shall have any further
obligation hereunder. No such expiration or termination shall affect Lessee's
obligation to make the Monthly Lease Payments until the date that the then
current term of the Agreement would have expired (the "Current Term Date")
provided, however, that Lessee shall be entitled to a credit (net of any
expenses incurred by Lessor) in the event that Lessor leases the Premises to
another party prior to the Current Term Date. Upon the expiration or termination
of this Agreement, Lessee shall have 60 days to remove all of Lessee's furniture
and equipment at the Premises ("Lessee's Property"). In the event Lessee fails
to remove Lessee's Property, then Lessor shall have the night to remove Lessee's
Property and Lessee shall pay any cost in connection with such removal.
d. LIMITS OF LIABILITY. Lessor shall use reasonable care in
maintaining the Premises and providing the Services. Notwithstanding the
foregoing, IN no event shall Lessor be liable for any special, incidental,
indirect, punitive, reliance or consequential damages, whether foreseeable or
not, including but not limited to, damage or loss of property or equipment, loss
of profits or revenue, cost of capital, cost of replacement services, or claims
for service interruptions or transmission problems, occasioned by any defect in
the Premises or the Services, delay in availability of the Premises or the
Services or any other cause whatsoever with respect to the Premises, the
Services or this Agreement. Lessor shall not beg liable for any defect with
respect to the Premises or the Services from causes outside its control,
including accidents, cable cuts, floods, emergencies, government regulation,
wars, or acts of God. LESSOR DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES
RELATING TO THE PREMISES OR THE SERVICES, INCLUDING BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. However,
other than occurrences which are beyond Lessor's control, Lessor shall be liable
for any equipment damage resulting from power or air conditioning failure in the
space.
6. INDEMNIFICATION.
A. BY LESSEE. Lessee shall indemnify, defend, release and hold
harmless Lessor arid all of its affiliates, agents, clients, consultants,
customers, employees, subcontractors, invitees or licensees from and against any
action, claim, court cost, damage, demand, expense, liability, loss, penalty,
proceeding or suit, (collectively, together with related attorneys' fees,
including costs and disbursements, "Claims") imposed upon Lessor by reason of
damages to property or injuries, including death, as a result of an act (whether
intentional, negligent or otherwise) or omission on the part of Lessee or any of
its affiliates, agents, clients, consultants, customers, employees,
subcontractors, invitees or licensees in connection with the Premises.
B. NOTICE BY LESSOR. In the event my action shall be brought against
Lessor, Lessor shall immediately notify Lessee in writing, and Lessee, upon the
request of Lessor, shall assume the defense thereof on behalf of Lessor, and its
affiliates and shall pay all expenses and
3
<PAGE>
satisfy all judgments which may be incurred by or rendered against Lessor or its
affiliates in connection therewith, provided that Lessor shall not be liable for
any settlement of any such action effected without its written consent.
7. SURVIVAL. Notwithstanding the termination of this Agreement for any
reason, this Section 6. Indemnification shall survive such termination.
8. INSURANCE. Throughout the term of this Agreement and any extension
thereof, Lessee shall maintain, and, upon written request, shall provide to
Lessor proof of comprehensive general liability insurance with a limit of not
less than $2,000,000 per occurrence for bodily injury liability and property
damage liability, including coverage extensions for blanket contractual
liability, personal injury liability and products and completed operations
liability.
9. ASSIGNMENT. Upon notice to and with the consent of Lessor, Lessee may
make any assignment of rights or interests or delegation of its obligations with
respect to this Agreement. Such consent shall not be unreasonably withheld or
delayed. Lessor may make any assignment of its rights or interests or delegation
of its obligations with respect to this Agreement upon written notice to Lessee.
10. BINDING ARBITRATION. Upon notice to the other party, each party must
refer any dispute or claim arising out of or relating to this Agreement to
arbitration in Austin, Texas, in accordance with the commercial arbitration
rules of the American Arbitration Association then prevailing and, in such event
neither party may commence any action based on such dispute or claim, and, if
any action has been commenced it shall be stayed, pending the outcome of such
arbitration proceeding. Each party shall select one independent arbitrator
within ten days of such notice and the two arbitrators shall then select a third
arbitrator within an additional ten days to form a three-person panel of
arbitrators. The panel of arbitrators shall have the power to order specific
performance if requested. Any award, order, or judgment pursuant specific to
such arbitration shall be deemed final and binding and may be enforced in ally
court of competent jurisdiction. All such arbitration proceedings shall be
conducted on a confidential basis. The panel of arbitrators may, as part of the
arbitration award, permit the substantially prevailing party to recover all or
part of its attorney's fees and other out-of-pocket costs incurred in connection
with such arbitration.
11. WAIVERS AND CONSENTS, No delay in taking, or failure to take, action
with respect to any breach of this Agreement shall constitute a waiver of any
right to take action with respect to such breach or with respect to any
subsequent breach, No waiver of a party's right to take action with respect to,
no consent to, and no acceptance of, any late payment, late or imperfect
performance, or failure to perform on one occasion shall constitute a ,waiver.
of such party's rights to take action with respect to any delay in making, or
failure to make, acceptable performance upon any other occasion. No waiver of,
or delay in taking or failure to take action with respect to, any right, power
or privilege hereunder on one occasion shall constitute a waiver thereof on any
other occasion. No waiver of a party's rights to tike action with respect to any
breach of a
4
<PAGE>
provision of this Agreement, or of any right, power or privilege hereunder, and
no consent by a party to any breach of a provision of this Agreement, shall be
effective unless set forth in writing and signed by such party.
12. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the validity and performance HEREOF, shall be governed by
the laws of the State of Texas without regard to its principles of choice of
law.
13. NOTICES. Each notice relating to this Agreement shall be in writing and
shall be: (i) given in person; (ii) sent by registered or certified mail (return
receipt requested) or by courier; or (iii) transmitted by facsimile machine,
with a copy of such transmission delivered by one of the foregoing methods. Each
properly given notice shall be deemed to have been given as of the earlier of
(i) delivery, (ii) four days after the date of mailing, or (iii) the date of
facsimile transmission (receipt of which is orally confirmed or which date is
indicated by the facsimile machine of any party). Notices shall be made to the
following persons at the following addresses and facsimile telephone numbers
(which may be changed only by properly given notice):
If to Lessor: IXC Carrier, Inc.
5000 Plaza on the Lake, Suite 200
Austin, Texas 78746-1050
Attention: Contract Administration
Facsimile: (512) 328-7902
If to Lessee: Startec Global Communications Corporation
10411 Motor City Drive, Suite 301
Bethesda, Maryland 20817
Attention: Teresa Dennis
Telephone: (301) 365-8959
Facsimile: (301) 365-8939
14. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and all other documents
specifically referred to herein constitute the entire and final agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements relating to the subject matter hereof, which are
of no further force or effect. The Exhibits referred to herein are integral
parts hereof and are hereby made a part of this Agreement. This Agreement may
only be modified or supplemented by an instrument in writing executed by a duly
authorized representative of each party.
5
<PAGE>
In confirmation of their consent hereto and intention to be legally bound
hereby, the parties have executed this Agreement below:
IXC CARRIER, INC. STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By: /s/ Michael Guess By: /s/ Dewey Yen
--------------------------------- ---------------------------
(Signature) (Signature)
Michael Guess Dewey Yen
--------------------------------- ---------------------------
Vice President, Engineering Dir. of Eng.
--------------------------------- ---------------------------
6
<PAGE>
EXHIBIT B
Subject to the terms of the Agreement and upon installation of equipment,
Lessee shall pay Four Hundred ($400.00) for the one (1) rack space (the "Rental
Payment") and Two Hundred Fifty ($250.00) for twenty (20) amps of DC power and
Two Hundred Ten ($210.00) for twenty (20) amps of non- UPS AC power. The total
monthly lease payment including normal power usage will be Eight Hundred Sixty
($860.00) The foregoing payments are collectively referred to as the "Monthly
Lease Payments".
In addition, a one time installation charge of Four Thousand ($4,000.00)
for the one (1) rack shall be paid by Lessee to Lessor.
Upon the second anniversary of this Agreement and on each second
anniversary thereafter, the Rental Payment shall be increased by a percentage
equal to the rise in the national Consumer Price Index (the "Consumer Price
Index") for the preceding twelve months. If the Consumer Price Index ceases to
be published or is converted into a different standard reference base or
otherwise revised, such other index as the parties shall agree upon in writing
shall be substituted for the Consumer Price Index; if the parties are unable to
agree as to such substituted index, such matter shall be submitted to
arbitration.
7
<PAGE>
EXHIBIT C
CUSTOMER MAINTENANCE SUPPORT
IXC Carrier, Inc.'s (hereinafter referred to as IXC) standard fees for
customer maintenance support services are as follows (unless set by precedence
in a service contract):
Maintenance services shall be defined as all work per-formed by IXC on
equipment provided by or on behalf of the Customer, or supervision of the
Customer's work within IXC's terminate facilities. Maintenance Service charges
are not billed for troubles found within that portion of a circuit provided by
IXC. The following billing rates apply for these services:
1. $75 per hour (4 hour minimum-if dispatch is required) Monday through Friday
during the business hours of 8:00 a.m. - 5:00 p.m. local time, exclusive of the
following holidays:
New Years Day
President's Day
Memorial Day
Independence Day
Labor Day
Thanksgiving Day and the day after Thanksgiving
Christmas Day
2. $95 per hour (4 hour minimum) for overtime work done after business hours
(defined above) and/or on holidays (defined above) and/or all day on Saturdays
and Sundays.
3. As requests for maintenance services are typically made via telephone, IXC
must be advised, in writing as to the person(s) who are authorized to request
service. It is the Customer's responsibility to keep IXC apprised of any changes
to its list of representative(s),
4. To request technical assistance and help under the maintenance services, a
call must be made to our Network Control Center at 1-800-526-2488. This number
should be used for IXC technical assistance, troubleshooting or testing of
circuits, not for service impairment or outages. The person calling in must be
on the authorized list in order to commit for charges for this technical
assistance. If that person is not on the list, the request cannot be
accommodated.
a. The Network Control Center personnel will take the call, record
the caller's name and phone number along with facts concerning the
assistance and support needed. The caller will then be given the
number of the "Assistance Ticket."
b. Upon completion of work, this "Assistance Ticket" will be given
to IXC's Accounting, Department, and the customer will subsequently be
billed based upon the information on that ticket. A copy will be
attached to the invoice.
5. Except for emergencies, IXC technicians cannot be dispatched unless
requests are made in accordance with the above call-out procedure.
<PAGE>
ANCILLARY PRICING SCHEDULE FOR ON-NET SERVICE
<TABLE>
<CAPTION>
NON-RECURRING DS-1 DS-3
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
New Order Installation (On-Net) $600.00 $2000.00
New Order Installation (Off-Net) ICB ICB
DS-1 Ramp-Up per DS-0 $ 50.00 N/A
Order Change (less than 5 business days) $ 50.00 $ 50.00
Order Cancellation (less than 5 business days) $250.00 $ 250.00
ASR (new or disconnect) (Special Access Only) $250.00 $ 250.00
ASR Supplement $ 50.00 $ 50.00
Order Expedite $250.00 $ 250.00
Reconfiguration Same as install Same as install
</TABLE>
<TABLE>
<CAPTION>
MONTHLY RECURRING CHARGES (MRC) DS-1 DS-3
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Minimum circuit charge (IXC portion) $300.00 $2,000.00
Cross-connect charge $ 50.00 MRC $ 200.00 MRC
Other Interexchange Carrier to Lessor local access or bypass facility $250.00 NRC $ 500.00 NRC
(Lessor Iona haul not involved)
Local bypass charge $200.00 $ 500.00 MRC
Lessor POP to Lessor POP in same city, with no Lessor long haul $250.00 NRC $ 500.00 NRC
attached at either Lessor POP.
</TABLE>
<TABLE>
<CAPTION>
MISCELLANEOUS RECURRING NON-RECURRING
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
M13 1 yr Term $875/mo $ 0.00
2+ yr Term $600/mo $ 0.00
3+ yr Term $475/mo $ 0.00
ECHO CANCELLER (per CIRCUIT end) $250/mo $500.00
SECOND END LOOP (Ex: for ADPCM) $ 50/mo $ 50.00
DEMAND MAINTENANCE $75/hr 8 a.m.- 5 p.m. M-F. 4
hour minimum if
dispatch is required; $95/hr after hours
with 4 hour minimum.
RACK SPACE ICB - subject to availability.
SHELF SPACE $ 100/ea/mo ICB install
DC POWER $12.50/amp/mo (5 amp minimum; 5 amp
increments)
CIF AC/DC POWER ICB
ALL OTHER SERVICES See Note (2)
</TABLE>
(1) All of the above charges are subject to change with a 30--day notice.
(2) Service not described above will be considered special handling and charges
will be assessed on an individual basis.
<PAGE>
DS0 ANCILLARY PRICING
<TABLE>
<S> <C>
New Order Installation 150.00
Order Cancellation Prior to
Turn up 200.00
Order Expedite 200.00
Reconfirmation 200.00
(City Pairs the Same)
DACS Charge 35.00
(Switching Only)
DS0 DACS Port Charge 25.00
(Bell access at DACS)
DS1 DACS Port 125.00
Minimum Charge per DS-0 75.00
</TABLE>
Notes:
1. All of the above charges are subject to change with a 30 day notice.
2. Services not described above will be considered special handling and
charges will be assessed on an individual basis.
Co-location agreement Startec and Esprit Telecom Benelux
ESPRIT TELECOM CO-LOCATION AGREEMENT
Terms and Conditions
BETWEEN:
ESPRIT TELECOM BENELUX BV, a company incorporated under the laws of The
Netherlands and registered under number 33288194 having its registered offices
at Amsterdam (hereinafter referred to as "ESPRIT")
AND,
STARTEC, a company incorporated under the laws of The Netherlands and registered
under number 33305390 having its registered offices at Official 1, 2nd Floor De
Doelalann 7, 1083 HJ Amsterdam, P.O. Box 7144, 1008 DE Amsterdam (hereinafter
referred to as "the CUSTOMER")
hereinafter "the Parties" and, separately, "the Party".
IT IS AGREED AND ACCEPTED AS FOLLOWS:
1. DEFINITIONS
In this Agreement the following terms shall (unless the context otherwise
requires) have the following meanings:
"ADDITIONAL SERVICES" means the services to be provided by ESPRIT as which are
described in Annex 1 to this Agreement.
"AFFILIATE" means any holding company or subsidiary or any subsidiary of such
holding company.
"AGREEMENT" means this Agreement and the annexes attached hereto, including any
Service Level Agreement(s). In the event of conflict between the provisions of
any annex and the standard terms and conditions of this Agreement, the terms and
conditions of this Agreement shall prevail.
"ANNUAL ESPRIT SERVICE FEE" means the yearly amount stated in the CUSTOMER
Service Order Form attached under Annex 2 subject to any adjustment made under
Clause 5.1(d) and Clause 9(d) to be paid in advance for the provision of the
Services.
"BUILDING" means any building as designated by ESPRIT form time to time prior
and/or after the signature of this Agreement and approved by the CUSTOMER.
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"CHARGES" means all sums payable by CUSTOMER to ESPRIT in exchange for the
Services and Additional Services received under this Agreement and specified in
Annex 1 and/or the Invoice if applicable.
"CONFIDENTIAL INFORMATION" means all know-how, techniques, ideas, principles and
concepts which underlie any of the Services and business or commercial
information and all other information in whatever form obtained by either Party
directly or indirectly from the other Party pursuant to this Agreement or prior
to and in contemplation of it.
"CONNECTION FEE" means the amount agreed between ESPRIT and the CUSTOMER for the
connection of a power supply to CUSTOMER Equipment in the Serviced Room, as a
result of the qoutation issued by ESPRIT, accepted by the CUSTOMER and specified
in the CUSTOMER Service Order Form.
"CUSTOMER EQUIPMENT" means the equipment, as may be specified in the Service
Order Form, owned or leased by the CUSTOMER to be installed in the Serviced Room
pursuant to this Agreement.
"ESPRIT EQUIPMENT" means any telecommunications equipment as may be specified in
the Service Order Form, which is supplied by ESPRIT for the provision of the
Services to the CUSTOMER.
"FORCE MAJEURE" means in relation to either Party an event or set of
circumstances which is beyond its reasonable control including but not limited
to: any default or delay in the performance of the respective obligations of the
Parties under this Agreement caused by fire, strike, riot, insurrection or civil
disorder, war, national or local emergency, act of God, government or other
competent authority or of any other telecommunications operator, or complete or
partial shut down of plant or the ESPRIT telecommunications network by reason of
power failure or technical failure of any equipment operated by any other
telecommunications operator.
"HOURLY FEES" means ESPRIT's then current standard hourly charge applying from
time to time plus expenses as specified in the relevant Service Order Form.
These Hourly Fees correspond to any services ancillary to the Additional
Services and to the Services as described in Annex 1.
"INVOICE" means the periodic statement sent by ESPRIT to the CUSTOMER setting
forth the charges incurred by the CUSTOMER for the use of the Services and the
Additional Services.
"LICENCE FEE" means the yearly amount stated in the Service Order Form, subject
to any adjustment made under Clause 5.1(d), and Clause 9, to be paid in advance
by the CUSTOMER for the grant of the Licence by ESPRIT.
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"SERVICES" means the services provided by ESPRIT allowing the CUSTOMER to place
and connect its telecommunications equipment in an environment designed
specifically for the purpose as more specifically defined in Annex 1.
"SERVICE COMMENCEMENT DATE" means the date agreed between the Parties for the
delivery of the Services and specified in the Service Order Form.
"SERVICE ORDER FORM" means the form attached under Annex 2 CUSTOMER must fill in
and send to ESPRIT pursuant to the Service Order Procedure described in Annex 3.
"SERVICE PERIOD" means the 12 month period commencing on the date of signature
of this Agreement.
"SERVICED ROOM" means such part of the Building as shall have been designated by
ESPRIT prior to the signature of this Agreement for the installation of CUSTOMER
Equipment, as the same may be changed under Clause 6.
"TERM" is the period of validity of this Agreement as set forth in Clause 4.
"UNDERLYING CUSTOMER CONSENTS" means any and all permissions, consents,
approvals, easements, wayleaves, and permits in legally acceptable form as are
necessary to enable the CUSTOMER and its employees, agents, or sub-contractors
to operate the telecommunications systems of the CUSTOMER and to enable the
CUSTOMER to use the Services to be provided under this Agreement.
"UNDERLYING NETWORK CONSENTS" means any and all permissions, consents,
approvals, easements, wayleaves, rights, authorisations, supplier agreements or
any other underlying requirement as are necessary to enable ESPRIT and its
employees, agents or sub-contractors to construct, operate and maintain the
ESPRIT's telecommunications network and provide the Services and Additional
Services herein described.
2. SCOPE OF AGREEMENT
Subject to the terms and conditions of this Agreement, ESPRIT hereby agrees to:
(a) install and connect the power supply to CUSTOMER Equipment at the Serviced
Room;
(b) grant the CUSTOMER the Licence described in Clause 3 relating to
installation of and access to CUSTOMER Equipment;
(c) provide the Services and Additional Services.
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3. GRANT OF LICENCE
3.1 ESPRIT hereby grants to the CUSTOMER with effect as of the date hereof a
non-exclusive non-transferrable right ("the Licence"), without prejudice to
Clause 18 ("Assignment") hereunder, during the Term of this Agreement:
<PAGE>
a) to retain CUSTOMER Equipment in the Serviced Room as a licensee of
ESPRIT.
b) from time to time during the Term for those employees and third party
telecommunication carrier and maintenance representatives of the
CUSTOMER previously notified to ESPRIT to enter the Building for the
purposes, on behalf of the CUSTOMER in its capacity as licensee, of
inspecting CUSTOMER Equipment and repairing or maintaining the same if
the Services and/or Additional services to be provided by ESPRIT do
not include the particular item of repair or maintenance then
required.
3.2 The CUSTOMER acknowledges and agrees that the Serviced Room will contain
equipment of other ESPRIT's customers as well as CUSTOMER Equipment and that the
use of the Serviced Room will be shared with other customers.
3.3 ESPRIT warrants that it has the right to grant the Licence.
3.4 As part of its security procedures ESPRIT reserves the right to refuse any
person entry to the Building or the Serviced Room or access to CUSTOMER
Equipment, including any employee in respect of whom the CUSTOMER has failed to
request rights of access from ESPRIT as well as any third party
telecommunication carrier or maintenance representative in respect of whom the
CUSTOMER fails to give ESPRIT prior notice of the name of such representative,
and the date and time for which access of CUSTOMER Equipment is required. ESPRIT
will not be responsible for the consequences of any such refusal or failure or
delay by the CUSTOMER in notifying ESPRIT of its access requirements.
4. TERM
This Agreement shall commence on the date hereof and subject to the provisions
for earlier termination contained herein shall continue for the Service Period
and thereafter unless and until terminated by either Party pursuant to Clause 14
or to Clause 16 hereunder or giving to the other not less than three (3) months
prior written notice to expire on the last day of any calendar month thereafter.
5. EQUIPMENT
5.1 Subject to this Clause the CUSTOMER shall be responsible at its own expense
for supplying and installing CUSTOMER Equipment at the Serviced Room in
accordance with an installation plan and timetable agreed in advance with
ESPRIT:
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a) ESPRIT will be responsible for the supply and installation of racking
and cabling of the quantities and at the prices separately agreed
between ESPRIT and the CUSTOMER and such supply and installation shall
be subject to the terms of ESPRIT's then current standard conditions
for the supply and/or installation of the equipment.
b) Additional equipment to that listed in the Service Order Form may be
installed in the Building subject to ESPRIT confirming in writing that
there is sufficient space available in the Building and subject to c)
hereunder, and the Service Order Form shall be amended accordingly.
c) If additional equipment requiring additional floor space is installed
under b) hereabove ESPRIT has the right to charge an additional
Connection Fee for every such installation and to increase the Annual
ESPRIT Service Fee and Licence Fee by such amount as notified by
ESPRIT.
5.2 The CUSTOMER shall at all times throughout the Term:-
a) Maintain an up-to-date, complete and accurate inventory of CUSTOMER
Equipment and provide ESPRIT with a copy on request;
b) Ensure that CUSTOMER Equipment is clearly identified as belonging to
the CUSTOMER;
c) ensure that the CUSTOMER Equipment conforms at all times with the
environmental and operating requirements specified by ESPRIT from time
to time and make all necessary adjustments;
d) Guarantee that its personnel and its authorized person shall access
only the Serviced Room.
5.3 Title to equipment, apparatus or property held, owned, or otherwise
possessed or attributed to either Party shall not pass to the other Party under
this Agreement, unless specifically provided for under this Agreement.
Furthermore, neither Party shall remove, tamper with or obliterate any
identification mark(s) affixed to any such equipment, apparatus or property or
to any part thereof belonging to or attributed to the other Party.
5.4 The CUSTOMER agrees that ESPRIT may temporarily disconnect the power supply
to the CUSTOMER Equipment or any part for the purposes of investigating and
rectifying any reported problems or carrying out maintenance relating to the
CUSTOMER Equipment, ESPRIT Equipment, the Serviced Room, the Building or other
equipment in the Building. Wherever possible (emergencies excluded) ESPRIT will
give advance notice of such disconnection and use all reasonable endeavors to
cause minimum disruption to the operation of the CUSTOMER Equipment by
endeavoring to
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make the disconnection outside ESPRIT's standard working hours 0900 to 1700
Monday to Friday excluding public holidays.
5.5 The CUSTOMER shall be responsible at its own expense for all communication
costs and expenses arising in connection with access to and use of CUSTOMER
Equipment, including installation, connection and rental charges.
6. RE-LOCATION OF THE EQUIPMENT
6.1. ESPRIT shall have the right, subject to giving not less, save in case
of emergency, than 90 days prior written notice to the CUSTOMER, from
time to time during the Term to require all or some of CUSTOMER
Equipment to be moved from the Serviced Room or any other part of the
Building where CUSTOMER Equipment is then located and to be installed
in some other part of the Building. All reasonable costs and expenses
arising in connection with such relocation of CUSTOMER Equipment shall
be borne by ESPRIT.
6.2 ESPRIT agrees that in specifying the time-scale for any relocation of
CUSTOMER Equipment ESPRIT shall, where reasonably practicable, consult
with the CUSTOMER about any relocation of CUSTOMER Equipment and use
all reasonable endeavors to specify a time-scale that causes minimum
disruption to the operation of CUSTOMER Equipment.
7. CUSTOMER'S OBLIGATIONS
7.1 The CUSTOMER hereby agrees with ESPRIT to pay all fees and charges due to
ESPRIT and without limitation:
a) to pay the Connection Fee on or before the commencement of the
installation of CUSTOMER Equipment or at such other time agreed by
ESPRIT.
b) to pay the Licence Fee and the Annual ESPRIT Service Fee by equal
monthly instalments in advance on the first days of each month each
year, the first instalments to be a proportionate amout calculated
from the date hereof and payable upon the CUSTOMER's signature of this
Agreement.
c) to pay the Hourly Fees, which will be invoiced monthly in arrears,
within 30 days after the date of ESPRIT's Invoice.
d) to pay value added tax and any other sales taxes (if applicable) at
the then prevailing rate.
e) to pay any bank charges which may arise if the CUSTOMER pays by bank
transfer to ESPRIT.
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7.2 The CUSTOMER is soley responsible for ordering from and paying direct to
any public telecommunications carrier or supplier all communication
circuits for use in connection with CUSTOMER'S Equipment.
7.3 The CUSTOMER hereby agrees to strictly respect the security procedures of
ESPRIT, and such other security procedures and/or requirements that may be
otherwise applicable
7.4 The CUSTOMER agrees upon expiry of the Agreement to dismantle and
disconnect CUSTOMER Equipment and return the Serviced Room in its original
state, subject to damages caused by normal wear and tear.
8. ESPRIT'S OBLIGATIONS
ESPRIT hereby agrees to:
(a) secure the required authorizations for the installation of CUSTOMER
Equipment from its landlords if any;
(b) allow the CUSTOMER to modify or upgrade CUSTOMER Equipment upon at least 60
days prior written notice to ESPRIT if such reasonably required and if such
modification or upgrade does not materially change the scope of this
Agreement. If such modification or upgrade change the basis of this
Agreement the Parties shall amend this Agreement accordingly;
(c) provide reasonable notice if any interference occurs between CUSTOMER
Equipment and the equipment of a third party and such interference shall be
resolved by ESPRIT together with the CUSTOMER in such manner as ESPRIT
directs to which the CUSTOMER shall comply;
(d) make the Services and the Additional Services available for use by the
CUSTOMER during the Service Period unless the Services are suspended
pursuant to Clause 14 and/or Clause 15, or this Agreement is terminated
pursuant to Clause 16;
(e) operate the Services and Additional Services with reasonable care and kill,
but ESPRIT does not warrant or undertake the Services and Additional
Services will cause CUSTOMER Equipment to operate without fault or
interruption.
9. CHARGES
(a) The CUSTOMER shall pay all Charges due as may be specified between the
Parties and in any Invoice without set off or counterclaim.
(b) If applicable, ESPRIT shall invoice CUSTOMER monthly in advance. Invoices
shall be due within thirty (30) days of the date of invoicing without
prejudice to ESPRIT's rights to treat a default-in-payment as a breach of
the Agreement.
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(c) All charges payable under this Agreement shall be calculated in accordance
with this Agreement and made in the currency specified in the CUSTOMER
Service Order Form and are expressed exclusive of VAT or any other similar
sales tax, and shall be charged in accordance with the relevant regulations
in force in the home of the supply and shall be paid by the CUSTOMER.
(d) ESPRIT reserves the right to vary the Charges from time to time during the
Service Period upon giving the CUSTOMER at least thirty (30) days prior
written notice of such variation.
(e) If either Party is required to pay a tax under or as a result of this
Agreement, such Party shall pay such tax and any other amounts as are
necessary to ensure that the net amounts received by the other Party equal
the amounts to which the other Party is otherwise entitled under this
Agreement.
(f) The timely payment of all sums due to ESPRIT under Agreement is of the
essence of this Agreement.
(g) Any overdue amounts shall accrue interest, to the extent permited by
applicable laws, at a fixed rate per annum equal to three (3) per cent
above the LIBOR in effect on the day following the date payment of the
Invoice was due.
(h) In the event that the CUSTOMER disputes an Invoice, and the amount disputed
is greater than five per cent (5%) of the value of the relevant Invoice
(excluding VAT), then the CUSTOMER shall issue ESPRIT a notice in writing
within seven (7) dyas of the receipt of the relevant Invoice specifying the
nature of the dispute. The Parties shall then use their best endeavours to
resolve the dispute within fifteen (15) days of the receipt of the relevant
Invoice, failing which the dispute shall be escalated to the respective
Finance Directors for resolution.
(i) If notwithstanding provision (g) the Parties fail to resolve the dispute
then the Parties may agree to have the dispute settled by such person (or
persons) nominated by the President of the Institute of Chartered
Accountants ("Nivra") in the Netherlands (or other similar professional
association) to act as expert(s) and not as arbitrator(s) and whose
decision, in the absence of manifest error, shall be final and binding. The
parties shall pay the costs of such expert(s) in such proportion as shall
be determined by the expert(s) themselves taking into account the
applicable circumstances and based on the principles of fairness and
equity.
10. DEPOSITS
ESPRIT may require payment from the CUSTOMER of a deposit upon execution of this
Agreement of such amount ESPRIT reasonably requires as security for the payment
of any Charges payable under this Agreement. ESPRIT may at its sole discretion
apply the whole or any part of such deposit on or torwards payment of any sums
due to ESPRIT
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under this Agreement and may require the CUSTOMER to pay a further deposit to
ESPRIT in replacement of any amounts so applicable.
11. LIMITATION OF LIABILITY
(a) This clause 11 sets out each Party's entire liability in respect of any
obligation, duty, or liability whatsoever to the other Party (including
liability, if any, or the acts or omissions of its employees, agents or
subcontractors) in connection with this Agreement, including (without
limitation) any liability for negligence howsoever arising.
(b) Nothing in this Agreement shall exclude or restrict either Party's
liability for death or personal injury resulting from negligence by it or
by its employees while acting in the course of their employment. ESPRIT's
entire liability in this respect shall be limited to five thousand (5,000)
Dutch Guilders per person with a maximum of two million (2,000,000) Dutch
Guilders per series of event in any year (a year being twelve months from
the date of this Agreement and from each anniversary thereof).
(c) Neither Party shall have any liability to the other in respect of this
Agreement including (without limitation) any liability: (i) for any loss or
revenue, business, contracts, anticipated savings or profits; or (ii) any
indirect, special or consequential loss.
(d) ESPRIT's entire liability including (without limitation) any liability for
negligence howsoever arising in connection with this Agreement shall be
limited to two million Dutch Guilders (Dfl2,000,000) in aggregate in
respect of any one or more incidents in any year ( a year being twelve
months from the date of this Agreement and from each anniversary thereof).
(e) The CUSTOMER shall subscribe with a recognised insurance company a special
insurance policy covering its liability against ESPRIT for an amount of at
least two million Pounds ((pound)2,000,000). Upon request from ESPRIT the
CUSTOMER shall provide ESPRIT with a copy of the corresponding insurance
certificates.
(f) The provisions of this Article shall survive the expiry or termination of
this Agreement.
12. CONFIDENTIALITY
Each Party shall at all times use their best endeavours to keep confidential
(and to ensure that its employees and agents shall keep confidential): (a) the
terms of this Agreement: and, (b) shall not use or disclose (save in the
performance of its obligations under this Agreement) any Confidential
Information which it may acquire in relation to the business or affairs of the
other Party (even after termination or expiry of the Agreement and for a period
of two years thereafter) save for any information:
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a) Which is publicly available or becomes publicly available through no act of
the first receiving Party or which it is compelled by a competent court or
authority to disclose;
b) Which was in the possession of the receiving Party prior to its disclosure;
or
c) Which is disclosed to that Party by a third party who did not acquire that
information under an obligation of confidentiality.
13. INTELLECTUAL PROPERTY
(a) Nothing in this Agreement shall be deemed to confer on either Party any
rights or licences in respect of intellectual property of the other.
(b) The CUSTOMER will indemnify ESPRIT and hold ESPRIT harmless against
(without limitation) all costs, claims, losses, damages, expenses and
liabilities howsoever arising suffered or incurred by ESPRIT in connection
with any claim that the use or possession of CUSTOMER Equipment or any
CUSTOMER materials infringes the copyright, mask works, design, or any
other intellectual property rights of any third party.
14. FORCE MAJEURE
(a) If either Party is affected by Force Majeure, it shall promptly notify the
other Party of the nature and extent of the circumstances in question.
(b) Notwithstanding any provision of this Agreement, neither Party shall be
deemed to be in breach of this Agreement, or otherwise be liable to the
other (except for the payment of charges due or provision of other
consideration due), for any delay in performance or other non-performance
of any of its obligations under the Agreement to the extent that such delay
or non-performance is due to Force Majeure of which it has notified the
other Party, and the time for performance of that obligation shall be
extended accordingly.
(c) If an event of Force Majeure lasts for more than thirty (30) consecutive
days which prevents either Party from fulfilling any of its obligations
under this Agreement, either Party shall be entitled to terminate this
Agreement by giving not less than fourteen (14) days written notice to the
other immediately upon the expiry of 30-day period, provided that such
notice will be no effect if the party prevented from fulfilling its
obligations notifies the other in writing before the expiry of the 14-day
notice period that it is no longer affected by Force Majeure.
15. SUSPENSION OF SERVICES
(a) ESPRIT may, at it sole discretion, suspend the provision of the Services
and/or the Additional Services until further notice (i) if ESPRIT has a
right to terminate this
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Agreement pursuant to Clause 16 hereunder; or (ii) If ESPRIT needs to carry out
emergency works on the ESPRIT's telecommunications Ions network, on the Building
and/or on the Serviced Room: or (iii) if ESPRIT is required to comply with a
government, administrative or judicial order, decision or other such requirement
that would prevent ESPRIT from providing the Services and/or Additional
Services.
(b) In the event that ESPRIT exercises its right to suspend the Services and/or
the Additional Services it shall provide advance notice to the CUSTOMER
where it is reasonably practicable to do so, or as soon as reasonably
practicable following suspension.
(C) ESPRIT shall not be liable for any loss, damage or inconvenience suffered
by the CUSTOMER as a result of any suspension made pursuant to Section 15
(a).
16. TERMINATION OF AGREEMENT
Either Party shall he entitled forthwith to terminate this Agreement if the
Party against whom termination is sought:
(a) commits a breach of any provision of this Agreement (save for any beach
which iscaused by the Party seeking to rely on it) and, in the case of a
breach which is capable of remedy, fails to remedy the same within thirty
(30) days after receipt of written notice giving full particulars of the
breach and requiring the breach to be remedied:
(b) fails to pay any sum due under this Agreement;
(C) becomes subject to in administration order;
(d) commences winding up (except for purposes of an amalgamation,
reconstruction or other reorganization and in such manner that the Party or
its successor resulting from the reorganization effectively agrees to be
bound by or to assume the obligations imposed and is able to do so on that
other Party under this Agreement);
(e) ceases, or threatens to cease, to carry on business; or
(f) is subject to an encumbrancer taking possession or a receiver being
appointed over any of the property or assets of that Party; or
(g) CUSTOMER ceasing to possess or hold the requisite Underlying CUSTOMER
Consents; or
(h) ESPRIT ceasing to possess or hold the requisite Underlying CUSTOMER
Consents; or
Notwithstanding the foregoing, ESPRIT may terminate this Agreement by written
notice to CUSTOMER at any time upon expiration or termination for any reason of'
the lease agreement of the Building signed by ESPRIT with its landlord if any.
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Upon the termination of this Agreement for any reason, subject as otherwise
provided in this Agreement and to any rights and/or obligations which have
accrued prior to termination, neither Party shall have any further obligation to
the other under this Agreement, except as to those obligations of a continuing
nature.
17. NOTICES
(a) All notices given under this Agreement must be in writing and may be sent
by facsimile with a copy by post to the following contacts:
ESPRIT: Mr. G.M. de Groot
Strawinskylaan 929, 1077 XX Amsterdam
Fax: +31 20 5711738
With a copy to the General Counsel: +44-118-951-4006
(fax)
CUSTOMER: Mr. Lee LeMaire
10411 Motor City Drive Suite
Suite 301
Bethesda, MD 20817 USA
Fax: + 1 301 365-2895
With a copy to the General Counsel: +1 301 365 8787
(Fax)
(b) Any Party may change contact information by giving the other Party prior
written notice.
18. ASSIGNMENT
(a) This Agreement is personal to the CUSTOMER and it shall not be assigned,
delegated, transferred or otherwise disposed of without the prior written
consent of ESPRIT, such consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, ESPRIT shall have the right to use
subcontractors to perform some of the duties and/or obligations hereunder.
(b) For the avoidance of doubt, either Party may assign the benefit of this
Agreement to any Affiliate (for so long as they remain an Affiliate and are
legally and materially able to comply with the obligations set forth in
this Agreement).
19. NO PARTNERSHIP
Nothing in this Agreement shall create, or be deemed to have created, a
partnership between the Parties.
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20. NO WAIVER
Any waiver by either Party of a breach of any provision of this Agreement shall
not be considered as a waiver of any subsequent breach of the same or any other
provision.
21. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the Parties with respect to
its subject matter, and supersedes all previous agreements and understandings
between the Parties, and may not be modified except by an instrument in writing
signed by the duly authorised representatives of the Parties.
22. NO WARRANTY
Each Party acknowledges that, in entering into this Agreement, it does not do so
on the basis of or rely on any representation, warranty or other provision
except as expressly provided in this Agreement, and accordingly, all conditions,
warranties or other terms implied by statute or common law are hereby excluded
to the fullest extent permitted by law.
23. SEVERABILITY
If any provision of this Agreement is held by any court or other competent
authority to be void or unenforceable in whole or part, the other provisions
shall continue to be valid, unless either Party decides in its absolute
discretion to treat this Agreement as terminated.
24. STATUTORY INTERPRETATION
References to statutory provisions shall, except when the context requires
otherwise, be construed as references to those provisions as respectively
amended or re-enacted or as their application is modified by other provisions
(whether before or after the date hereof) from tirne to time.
25. HEADINGS
Headings are inserted for convenience only and shall not affect the construction
of the Agreement.
26. PUBLICITY
Neither party shall issue a public notice or news release concerning this
Agreement and the transactions contemplated hereby without the prior approval of
the other, which approval shall not be unreasonably withheld or delayed.
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27. GOVERNING I~AW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with Dutch Law
and both Parties irrevocably submit to the exclusive jurisdiction of the Dutch
Courts.
28. MISCELLANEOUS
(a) If this Agreement has already been signed by ESPRIT, it shall not be open
for acceptance and signature by the Customer after thirty (30) days
following the date of signature by ESPRIT.
This Agreement has been made at Esprit Telecom on this day 21st of September
1998
Signed for and on behalf of: Signed for and on behalf of,
ESPRIT TELECOM STARTEC
21/9/95
Name: /s/ GUY DE GROOT Name: /s/ LEE LEMAIRE 9/21/98
----------------------------- ----------------------------
Guy de Groot Lee LeMaire
Title: Manager Carrier Services Title: Director, Operations
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SERVICES - ADDITIONAL SERVICES ANNEX I
- --------------------------------------------------------------------------------
1. STANDARD SERVICES
o FLOOR SPACE in Serviced Roorns built on ESPRIT's switch room
premises
Rooms are air-conditioned, fed with uninterruptible power (48V,
two hour full load power failure capacity);
Raised computer flooring with access for power and
telecommunications cabling:
Power for test equipment and tools;
Lighting.
o EQUIPMENT INSTALLATION AND COMMISSIONING
The customer has the right to install and commission the equipment
covered under this Agreement in the Serviced Room.
o REMOTE ACCESS TELEPHONE LINE for equipment
Equipment Monitoring via a separate channel for reliability.
o ACCESS during standard working daytime for installation and
commissioning
2. ADDITIONAL SERVICES (SUBJECT TO AGREEMENT AND THE PAYMENT OF ADDITIONAL
CHARGES)
o OPTIONAL network management and alarm monitoring
Subject to specific requirements and negotiation, ESPRIT may take
on local management responsibilities, maximising the managed
services offer.
o ESCORTED access available 24/7/365
Escort is chargeable per hour.
o RACKING suitable for the installation of telecommunications
equipment;
15
<PAGE>
Co-location agreement Startec and Esprit Telecom Benelux
o LIAISING with the CUSTOMER over equipment installations by
suppliers or public telecommunications carriers, or maintenance
visits by any authorised maintainer.
o FIRST LINE MAINTENANCE of CUSTOMER Equipment subject to an
additional Service Level Agreement;
o EQUIPMENT COMMISSIONING on behalf of the customer subject to an
additional Service Level Agreement
o HIGHER POWER CAPACITY
16
<PAGE>
Co-location agreement Startec and Esprit Telecom Benelux
SERVICE ORDER FROM ANNEX II
- --------------------------------------------------------------------------------
1. CUSTOMER
Order Id.
Startec Global Communications
10411 Motor City Drive, Suite 301
Bethesda, MD 20817
USA
Lee LeMaire
Director Operations
1 301 767 1439
1 301 365 2895
2. CO-LOCATION ADDRESS
Esprit Telecom will make provision for co-location of CUSTOMER Equipment at:
Strawinskylaan 929
1077 XX Amsterdam
The Netherlands
Guy de Groot
Manager Carrier Services
+ 31 20 5711711
+ 31 20 5711 722
3. CO-LOCATION SERVICE DETAILS
The following Services will be made available at the hereabove specified
address:
Strawinskylaan 929, 1077 XX Amsterdam. C tower, 9th floor.
o Floor space required in standard footprints: 2 (1 for rack, 2 x 0.5 for
moving space)
o 2 x 19" Racking to be provided, as described, as described in Annex 4 in
this document.
o Additional services
17
<PAGE>
Co-location agreement Startec and Esprit Telecom Benelux
Services Commencement Date - Requested 21 September 1998 - Agreed LL
----------------- ----
Details of CUSTOMER Equipment to be installed:
DSC CTC-421 (4:1) Compression equipment, which will connected to 2 Mbps between
Amsterdam and London
And connected to 2Mbps between Amsterdam and a 0800 IN platform of Esprit
Telecom/IMS
4. PAYMENT DETAILS(1)
<TABLE>
<CAPTION>
CONTRACT TERM BILLING PERIOD CURRENCY VAT RATE
- --------------- ---------------- ---------- ---------
<S> <C> <C> <C>
1 year Monthly Dfl 17.5%
</TABLE>
Standard services covered under this agreement:
<TABLE>
<CAPTION>
CONNECTION FEE HOURLY FEE LICENCE FEE ANNUAL ESPRIT SERVICE FEE
- ---------------- ------------ ------------- --------------------------
<S> <C> <C> <C>
DFl 833.19,- Dfl 250,-* Dfl 0 Dfl 14.400
</TABLE>
Additional Services covered under this agreement:
<TABLE>
<CAPTION>
NON-RECURRING CHARGES ANNUAL SERVICE FEE OTHER OTHER
- ----------------------- ------------------------ ------- ------
<S> <C> <C> <C>
Dfl 7463.01 Dfl 14.400
(Annex 4)
Dfl 833.19,- (Dfl 600 per footprint
(Annex 5) per month)
</TABLE>
Additional Services to be charged on usage at agreed rates during the Agreement:
<TABLE>
<CAPTION>
Emergency off hours Cabeling Other Other
- ---------------------- ----------------- ------- ------
<S> <C> <C> <C>
Dfl 250,-per hour Dfl 65,-per hour
</TABLE>
Deposit Terms (if applicable): Non-recurring Charges payable in 30 days
Additional Terms (if applicable)
- ----------------------------
1 Further details of the elements indicated "other" and "if applicable" may be
attached on additional pages.
18
<PAGE>
5. CUSTOMER CONTACT DETAILS
<TABLE>
<S> <C> <C>
Commercial Billing
Startec Company Startec
10411 Motor City Drive Address 10411 Motor City Drive
Suite 301 Suite 301
Bethesda MD Bethesda MD
20817 Post code 20817
USA Country USA
Lee LeMaire Contact Person Le LeMaire
+ 1 301 767 1439 Phone no. + 1 301 767 1439 +
+ 1 301 365 2895 Fax no. + 1 301 365 2895
VAT Number -----------------------------
</TABLE>
6. ESPRIT CONTACT DETAILS
<TABLE>
<S> <C>
Commercial Billing
Esprit Telecom Benelux BV Esprit Telecom Benelux BV
Strawinskylaan 929 Strawinskylaan 929
1077 XX Amsterdam 1077 XX Amsterdam
Guy de Groot Ben Flootman
+31 20 5711 711
+31 20 5711 738
</TABLE>
19
<PAGE>
Co-location agreement Startec and Esprit Telecom Benelux
SERVICE ORDER PROCEDURE ANNEX III
- --------------------------------------------------------------------------------
1. PLACING AN ORDER
(a) CUSTOMER shall place a service order by using the CUSTOMER Service Order
Form designed for the Co-location Services.
(b) ESPRIT will acknowledge receipt of the service order within one working day.
(c) On receipt of the service order, ESPRIT will verify the service requested,
determine whether the Service Commencement Date requested is feasible, and
confirm or review the date with the CUSTOMER.
2. CONFIRMING AN ORDER
(a) Upon completion of verification procedures by ESPRIT, the Parties shall then
sign the CUSTOMER Service Order Form. In order for the service order to
remain valid, the Parties shall sign it within one week of agreement of the
Service Commencement Date.
(b) If the service order details (including Service Commencement Date) cannot be
verified within one week of order receipt, then ESPRIT Telecom will keep the
CUSTOMER informed of progress on a weekly basis during verification.
20
<PAGE>
Co-location agreement Startec and Esprit Telecom Benelux
RACKING TO BE PROVIDED ANNEX IV
- --------------------------------------------------------------------------------
Esprit Telecom Carrier Services has purchased 2 x 19" racking for Startec
according the following specifications.
Esprit Telecom will provide a separate invoice for this equipment.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
DESCRIPTION AMOUNT IN DFL.
- ------------------------------------------------- ---------------
<S> <C>
2 x 19" racks for Paris and Amsterdam
2 E.II.45.6.6. Enclosure C/W cowl top, 19" rack 2,272.38
2 E.II.GD.45.6/901 Smoked glazed front door 783.32
2 E.II SD.45.6 Steel rear door 391.28
2 E.II RU.45.6 Rear 19" racking 279.84
2 E.II.FP.6.6 Fan Plate 123.40
2 AC.FK.4 4 Fans Fully wired 578.60
2 AC.CAS.MD Castors 175.20
2 AC.SSVS.5 5 horizontal socket strip 331.76
2 Paint charge 145.20
TOTAL 2 x 19" rack 5,081.00
Delivery cost Netherlands 961.95
Delivery cost France 308.55
SUBTOTAL 6,351.50
B.T.W. / V.A.T. 17.5% 1,111.51
---------------
Total charge f 7,463.01
- -----------------------------------------------------------------
</TABLE>
21
<PAGE>
Co-location agreement Startec and Esprit Telecom Benelux
CONNECTION 2 X 2MBPS TO CO-LOCATION ANNEX V
- --------------------------------------------------------------------------------
Esprit Telecom will connect 2 x 2mpbs to co-location room.
Esprit Telecom will provide a separate invoice for this connection.
<TABLE>
<CAPTION>
- --------------------------------------------------------
DESCRIPTION AMOUNT IN DFL.
- -------------------------------------- ---------------
<S> <C>
Connection Fee, 2 Mbps to Co-location
Coax cable (160 meters) 197.60
BNC connectors (16) 84.00
U links (16) 180.00
247.50
TOTAL CONNECTION 709.10
B.T.W. / V.A.T. 17.5% 124.09
-------------
Total charge f 833.19
- -----------------------------------------------------
</TABLE>
24
SUBLEASE
THIS SUBLEASE ("this Sublease") is entered into this 11 day of August,
1998, by and between INFORMATION SYSTEMS & NETWORKS CORPORATION, tenant of The
Vaswani Place Corporation ("the Sublessor"), and STARTEC GLOBAL COMMUNICATIONS
CORPORATION (the "Tenant" and/or "Sublessee").
W I T N E S S E T H:
WHEREAS, pursuant to that certain lease dated October 27, 1997, The Vaswani
Place Corporation leased to Tenant certain space consisting of 27,711 Rentable
Square Feet of office space ("the Lease") on the third and fourth floors of
Vaswani's office building located at 10411 Motor City Drive, Bethesda, Maryland
("the Building"); and
WHEREAS, pursuant to the First Amendment to Lease dated May 11, 1998,
Landlord leased to Tenant additional space consisting of Nine Thousand Seven
Hundred Forty-Three (9,743) Rentable Square Feet in the Building; and
WHEREAS, Tenant wishes to lease additional space from Sublessor consisting
of Nine Thousand (9,000) Rentable Square Feet located on the fifth floor of the
Building as depicted on the existing floor plan attached hereto as Exhibit A;
and
WHEREAS, Sublessor is currently leasing the requested office space from
Vaswani and is desirous of entering into a sublease with Tenant for the new
space on the terms and conditions set forth herein and in the Lease; and
WHEREAS, the parties hereto are mutually desirous of amending, and
modifying the Lease to govern the additional space to be leased to the Tenant;
and
<PAGE>
2
WHEREAS, unless otherwise provided herein, all terms used in this Sublease
that were defined in the Lease shall have the meanings provided for in the
Lease.
NOW, THEREFORE, for and in consideration of the above premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Recitals: The foregoing recitals are intended to be a material part of
this Sublease and are incorporated herein by this reference.
2. Demised Premises: Paragraph 1 of the Lease shall be amended to include
an additional Nine Thousand (9,000) Rentable Square Feet so that total Rentable
Square Feet being leased to Tenant, whether pursuant to the Lease, First
Amendment to Lease, shall total Forty-Six Thousand Four Hundred Fifty-Four
(46,454) Rental Square Feet (hereinafter known as "the Demised Premises"). The
new space being leased pursuant to this Sublease of Nine Thousand (9,000)
Rentable Square Feet shall be known as the "New Subleased Space."
3. Term: The term of this Sublease for the New Subleased Space shall be one
(1) year commencing on September 1, 1998 and expiring on August 31, 1999 unless
extended by agreement of the parties. The term of this Sublease covering 3,000
feet of the New Subleased Space shall commence August 7, 1998.
4. Rent For New Subleased Space. The parties agree that Tenant shall pay to
Sublessor the sum of $23.50 a square foot for the New Subleased Space or Two
Hundred Eleven Thousand Five Hundred Dollars ($211,500.00) for the one-year
period. Rent shall be paid in advance in equal monthly installments of Seventeen
<PAGE>
3
Thousand Six Hundred Twenty-Five Dollars ($17,625.00). Tenant agrees to pay rent
in August, 1998 of Four Thousand Five Hundred Forty-Eight Dollars ($4,548.00)
for the 3,000 square feet of the New Subleased Space which will be occupied by
Tenant beginning August 7, 1998.
5. Additional Rent. From and after the commencement of this Sublease,
paragraph 5(A)(3) of the Lease shall be amended to increase the percentage
therein so as to reflect the percentage which the square footage of the Demised
Premises bears to the square footage of the Building.
6. Additional Parking. Tenant currently is being provided one hundred (100)
reserved parking spaces of which fifteen (15) of such reserved parking spaces
are underground in Vaswani's ground floor of the Building. It is agreed that
Tenant shall be provided at no cost an additional ten (10) reserved parking
spaces.
7. Condition of Subleased Space. Sub-landlord shall lease to Tenant the
Subleased Space in its "AS IS" condition, subject to the removal by Sublessor of
its property in such space. Any alteration or build-out or improvement of such
space by Tenant shall be at its expense, subject to approval of the Sublessor
which shall not be unreasonably withheld.
8. Continuation of Lease and First Amendment to Lease. Except as otherwise
provided herein, all of the terms and conditions of the Lease and its First
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the respective parties have hereunto set their hands
and seals or caused their presence to be duly signed on their behalf the day and
year first above appearing.
<PAGE>
4
SUBLESSOR:
WITNESS: INFORMATION SYSTEMS & NETWORKS
CORPORATION
By:
- ------------------------------------- -----------------------------
Roma Malkani, President & CEO
TENANT:
WITNESS: STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By: By: /s/Ram Makunda*
--------------------------------- -----------------------------
Title: Ram Makunda, President & CEO
------------------------------ 8/11/98
(*valid for 48 hours)
MASTER SUPPLY AGREEMENT BETWEEN STARTEC AND TTN INC.
----------------------------------------------------
FOR THE PURCHASE OF TADIRAN DIGITAL CROSS-CONNECT SYSTEMS AND SERVICES
----------------------------------------------------------------------
This master supply agreement (the "Agreement"), is entered into this 21st day of
September, 1998 (the "Effective Date"), by and between StarTec Global
Communications, a corporation with its principle place of business at 10411
Motor City Drive, Bethesda, MD 20817 and TTN, Inc., a wholly-owned subsidiary of
Tadiran Telecommunications, Ltd. ("TTN"), a Delaware corporation with its
principal place of business at 6021 142nd Ave. N., Clearwater, FL 33760.
WITNESSETH:
WHEREAS, StarTec desires to secure product and services from TTN
for its digital cross-connect systems and
WHEREAS, TTN desires to provide such products and per-form such services, and
provide StarTec with its professional expertise in these areas.
NOW THEREFORE, the parties agree as follows:
1. StarTec agrees to purchase all digital cross-connect systems from TTN. This
exclusive contract is subject to acceptable performance by TTN to the terms
and conditions stated within this agreement.
2. The T::DAX cross-connects will be installed no later than December 31, 2001
at which time this contract expires unless an extension is agreed to by
both parties.
3. In recognition of this exclusive commitment, TTN will supply the T::DAX
equipment per the attached price list Tab 2. All hardware and software
purchases with requested delivery dates prior to December 31, 2001 will be
credited towards the contract value.
4. All EF&I for equipment purchased will be performed by TTN and will be
credited towards the contract value. For information on the scope of work
for typical installations, see Tab 4.
5. Both parties, with their written pre-approval of the release, which shall
not be unreasonably withheld, will allow press releases regarding this
venture.
6. Hardware Warranty is for two (2) years and Software if for one (1) year.
These warranties start 30 days after equipment shipment or completion of
installation, whichever comes first.
7. Four (4) training seats at TTN's Clearwater, FL facility will provided to
StarTec at no charge, with each system purchased and shipped during the
contract period.
8. All T::DAX equipment will be F.O.B. Clearwater, FL.
9. TTN's Standard Terms and Conditions of Sale Tab 5 shall apply to all sales
under this Agreement.
<PAGE>
STARTEC GLOBAL COMMUNICATION TTN, INC.
10411 MOTOR CITY DRIVE 6021 142nd AVE. N.
BETHESDA, MD 20817 CLEARWATER, FL 33760
Subhash Pai Mark A. Vida
- -------------------------------- --------------------------------
(Authorized Signature) (Authorized Signature)
Subhash Pai
VP, Asst. Secretary & Controller
Mark A Vida
- -------------------------------- ---------------------------------
(Print or Type Name of Signature) (Print or Type Name of Signature)
Vice President & General Manager
- -------------------------------- ---------------------------------
(Title) (Title)
10/14/98 10/14/98
- -------------------------------- ---------------------------------
(Execution Date) (Execution Date)
<PAGE>
TTN, INC.
STANDARD TERMS AND CONDITIONS OF SALE
1. SCOPE
The terms and conditions of sale contained herein shall apply to all quotations
and offers made and purchase orders accepted by TTN. The sales contract or
Master Supply Agreement incorporating these terms and conditions becomes a
binding contract on the terms set forth herein when it accepted by commencement
or performance. This contract can be accepted only on the exact terms set forth
(including the modes of acceptance specified in the proceeding sentence) and no
other terms which are in any manner whatsoever additional to or different from
those set forth herein shall become part of or in any way alter this contract
without the express written consent of an authorized representative of TTN.
TTN'S failure to object to provisions contained in any communication from Buyer
shall not be deemed a waiver of the provisions herein. All orders, offers, and
contracts must be approved by TTN'S office in Clearwater, Florida.
2. PRICE
a. The pricing for products represented by this agreement are listed in Tab 2
b. All prices are exclusive of sales, use, excise or any other taxes
applicable to the sale, use or delivery of Products, or any charges for
shipping, insurance or fees or commissions. Such taxes when applicable
shall be paid by Buyer or in lieu thereof TTN shall be provided by a proper
tax exemption certificate.
3. SALES TERMS
All sales under this Agreement are F.O.B. TTN'S Clearwater facility in Florida
unless stated otherwise by TTN. Unless otherwise agreed in writing, loading,
lighterage, wharfage, freight, landing charges, dues, duties or any other
charges are not included in quotations or indicated in any price list.
4. TERM OF PAYMENT
Where the Buyer has established credit, terms of payment shall be net Forty-Five
days (45) days from date of the invoice. The date of invoice will occur on the
date the equipment is shipped. INTEREST WILL BE CHARGED AT THE RATE OF 1.5
PERCENT PER MONTH OR THF MAXIMUM LEGAL RATE: WHICHEVER IS LESS ON THE PAST DUE
ACCOUNTS AFTER (45) DAYS FROM THE DATE OF INVOICE. To insure customer
satisfaction with the operation of the equipment the EF&I services will be
billed 30 days after the service work is completed. Once this Invoice is
generated Terms of payment shall be net thirty (30) days.
<PAGE>
5. TITLE AND DELIVERY
Sales are F.O.B. TTN'S Clearwater facility, Florida. Buyer assumes the risk of
loss or damages immediately upon delivery to customer premise. Notwithstanding
the foregoing title to any Products shall not pass to the Buyer until payment in
full is received by TTN. The time for delivery given is approximate and is
established from the date of receipt of the order. Partial deliveries shall be
permitted. TTN will use its best efforts to ship by the method specified by
Buyer. All costs of shipping products to buyer including without limitation
freight insurance and special packing or handling shall be in addition to the
stated price and shall be paid by Buyer. If a delivery is delayed as a result of
any action or inaction of buyer, TTN may invoice Buyer for the products as of
the scheduled delivery date and may charge buyer for storage and other expenses
incurred because of the delay.
6. ACCEPTANCE
Buyer shall accept or reject Products within thirty (30) days of completion of
installation. Failure to notify TTN in writing of nonconforming products within
such period shall be deemed an unqualified acceptance.
7. LIMITED WARRANTY
A. (I) TTN WARRANTS THAT ANY PRODUCTS SOLD BY IT TO BUYER (EXCLUDING PRODUCTS
NOT MANUFACTURED BY TTN, AND NOT AN INTEGRAL PART OF A TTN PRODUCT) WILL BE FREE
FROM DEFECTS IN MATERIAL AND WORKMANSHIP FOR A PERIOD OF TWENTY FOUR (24) MONTHS
FOR HARDWARE AND ONE (1) YEAR FOR SOFTWARE BEGINNING 30 DAYS AFTER PRODUCT
SHIPMENT OR COMPLETION OF INSTALLATION WHICHEVER COMES FIRST. NO OTHER
REPRESENTATION OR WARRANTY, INCLUDING MERCHANTABILITY, FITNESS FOR PARTICULAR
PURPOSE OR WARRANTY AGAINST PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT SHALL BE
IMPLIED.
(II) TTN WILL REPAIR OR REPLACE ANY PARTS OF THE PRODUCTS SUPPLIED BY IT SHOWING
INHERENT DEFECTS (OTHER THAN PRODUCTS NOT MANUFACTURED BY TTN AND NOT AN
INTEGRAL PART OF A TTN PRODUCT) WHICH ARE RETURNTED BY BUYER TO TTN FOR
INSPECTION (TRANSPORATION CHARGES PAID BY STARTEC FOR TRANSPORT TO TTN FACILITY,
TTN TO PAY FOR RETURN TRANSPORTATION) DURING THE WARRANTY TERM SET FORTH IN
SECTION(A)(I)PROVIDED SUCH INSPECTION DISCLOSES TO TTN CLOSES SATISFACTION THAT
ANY SUCH DEFECTS ARE IN FACT DEFECTS INHERENT IN THE PRODUCT ISSUE.
<PAGE>
(111) ITEMS REPAIRED OR REPLACED AS PROVIDED IN SECTION (A)(11) WILL BE SUBJECT
TO THE LIMITED WARRANTIES OF SECTION (A)(1) FOR THE REMAINDER OF THE INITIAL
WARRANTY TERM OR SIX MONTHS AFTER DATE OF SHIPMENT FOLLOWING REPAIR OR
REPLACEMENT, WHICHEVER SHALL LAST EXPIRE.
(IV) ITEMS FURNISHED OR MANUFACTURED BY OTHER VENDORS AND NOT INCORPORATED AS AN
INTEGRAL PART OF PRODUCTS SHALL HAVE ONLY THE VENDOR'S WARRANTY WHICH SHALL BE
PASSED ON THE BUYER OR ITS CUSTOMERS TO THE EXTENT PERMITTED THEREBY, BUT SUCH
PRODUCTS WILL NOT BE SUBJECT OF THE WARRANTIES PROVIDED BY TTN PURSUANT TO THE
LIMITED WARRANTY SET FORTH HEREIN.
(V) NO WARRANTY OF ANY KIND IS MADE WITH RESPECT TO FUSES AND LAMPS.
B. THE LIMITED WARRANTIES STATED HEREIN ARE IN LIEU OF ALL OTHER OBLIGATIONS,
WARRANTIES, AND LIABILITIES ON THE PART OF TTN AND TTN NEITHER ASSUMES NOR
AUTHORIZES ANY OTHER PERSON TO ASSUME FOR IT ANY OTHER LIABILITIES. IN NO EVENT
SHALL TTN BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY NATURE.
C. NO WRITTEN OR ORAL STATEMENT MADE ABOUT ANY PRODUCT BY AN EMPLOYEE OR AGENT
OF TTN WILL BE EFFECTIVE TO EXPAND THE WARRANTY PROVISIONS HEREir4, UNLESS SUCH
STATEMENTS APPEAR IN A WRITTEN INSTRUMENT SIGNED BY TWO DULY AUTHORIZED OFFICERS
OF TTN AND SPECIFICALLY DIRECTED AT THE PROVISIONS HEREIN.
D. THIS LIMITED WARRANTY SHALL BE VOIDED AND OF NO FORCE OR EFFECT IF: THE
PRODUCT HAS NOT BEEN INSTALLED, TRANSFERRED, STORED, MAINTAINED, OR UTILIZED IN
ACCORDANCE WITH TTN'S PRODUCT INSTRUCTIONS AND IN ACCORDANCE WITH GENERALLY
ACCEPTED PROCEDURES FOR USE AND INSTALLATION WITHIN THE TELECOMMUNICATIONS
INDUSTRY; OR THE FAILURE TO PERFORM AS SPECIFIED IS THE RESULT OF NEGLIGENCE,
MISUSE OR ABUSE OF THE PRODUCT; OR AS A RESULT OF ANY ALTERATION, MODIFICATION
OR UNAUTHORIZED REPAIR.
8. CONFIDENTIAL INFORMATION
No information shall be deemed to be given or received in confidence by either
party unless and to the extent it is covered by a separate wriften agreement.
<PAGE>
9. FORCE MAJEURE
TTN will exercise all reasonable efforts to meet delivery schedules established
by it. However, TTN shall not be liable to buyer or its customers for any loss,
expense or damage due to delays in delivery of TTN products caused by or
resulting from any act of God, riot, fire, explosion, accident, flood, sabotage,
war, embargo, receipt by TTN of orders from all sources exceeding TTN's
then-scheduled delivery or production capacity, or governmental laws,
regulations, or orders, lockouts, strike or labor trouble, actions, or inactions
of the buyer or any customer thereof, or any cause of occurrence which is beyond
the reasonable control of TTN. If there is any delay in TTN's ability to deliver
TTN products pursuant to any agreed upon schedule, from any cause listed in this
section, the scheduled delivery dates shall be extended for a period of equal to
the period during which such cause occurs.
10. CANCELLATION BY TTN
TTN shall have the right to cancel any unfilled order without liability to buyer
in the event buyer becomes insolvent, is adjudicated bankrupt, petitions for or
consents to any relief under any bankruptcy reorganization statute$, becomes
unable to meets its financial obligations in the normal course of business,
discontinues its business, or sells the bulk of its assets other than in the
usual course of business. Wriften notice of order cancellation will be provided
to Startec General Counsel.
11. GOVERNMENT AUTHORIZATION
Buyer will be responsible for the timely obtaining required authorizations,
including export or import licenses, exchange permits and all other governmental
authorizations even though such authorizations may be applied by TTN. To
facilitate this authorization buyer and seller will agree to use best efforts
based on a forecast of what countries require product shipment- This forecast
shall be provided by the buyer.
12. APPLICABLE LAW
The terms and conditions contained herein shall be governed by and
construed under the laws of the State of Florida.
13. SEVERABILITY
<PAGE>
Any term or provision of this Agreement which is held to be invalid, void,
unenforceable or illegal will In no way effect, impair or invalidate the
remaining terms or provisions, which will remain in full force and effect,
consistent with the original intent of the Parties. However, is such provisions
is an essential element of the Agreement, the Parties shall promptly attempt to
negotiate a substitute therefore.
14. ENTIRE AGREEMENT
Terms and conditions and all attachments, and amendments shall constitute
the entire Agreement between the Parties. Any preprinted terms and conditions on
Orders, acknowledgement forms, or other forms or documents shall not apply.
15. LIQUIDATED DAMAGES
TTN and StarTec agree that it may be difficult, if not impossible, to
accurately determine the amount of damages that StarTec may incur if TTN
falls to achieve each delivery and acceptance date in a timely manner as
scheduled. Accordingly, if delivery or acceptance have not occurred in a
timely manner, it is agreed that StarTec shall be entitled to a daily
liquidated damages in a specified and predetermined amount of the greater
of .5 percent of System hardware and software price per day or $2,500 per
day, up to a maximum of 1 0% of System hardware and software price. "System
hardware and software price" means the price of the System hardware and
software which was not timely delivered and/or accepted. The liquidated
damages shall be calculated through the date each of the Products and
System were delivered or have achieved Acceptance, as the case may be.
Damages may not be assessed if StarTec has not met its requirements as
defined in the site survey scope of work. Appropriate delivery and
installation time frames are contained in "Scope of EF&I Services".
<PAGE>
STARTEC GLOBAL COMMUNICATION TTN, INC.
10411 MOTOR CITY DRIVE 6021 142ND AVE. N.
BETHESDA, MD 20817 CLEARWATER, FL 33760
/s/ SUBHASH PAI
- ---------------------------------- ---------------------------------
(Authorized Signature) (Authorized Signature)
Subhash Pai Mark A. Vida
- ---------------------------------- ---------------------------------
Print or Type Name of Signature) (Print or Type Name of Signature)
VP - Controller Vice President & General Manager
- ---------------------------------- --------------------------------
(Title) (Title)
10/14/'98 November 18, 1997
- ---------------------------------- -------------------------------
(Execution Date) (Execution Date)
<PAGE>
TTN, INC.
6021 142nd Avenue North
Clearwater, FL 33760-2822 T::DAX
Phone: (813) 523-0000 QUOTATION
Fax: (813) 523-0000
TTN
- ---
A Subsidiary of Tadiran
Telecommunication, Ltd.
CUSTOMER: STARTEC DATE: 10/6/98
--------------- -----------------
SITE: REF:
--------------- -----------------
ISSUED BY: Mike Lyons PHONE:
--------------- -----------------
NOTES:
-------------------------------------------------
Equipment to be Provided:
-------------------------
<TABLE>
<CAPTION>
DSU=1 E1 TNBU ENBU PAMX AAMX EAMX UAMX OC-3/STM1
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wired with common 224 224 224
-------------------------------------------------------------------------------------------
Wired only no common 672
-------------------------------------------------------------------------------------------
Equipped ports 224 32 56
-------------------------------------------------------------------------------------------
HAMX DAMX CAMX IAMX TAMX SAMX BAMX STM1(E)
-------------------------------------------------------------------------------------------
Wired with common 16
-------------------------------------------------------------------------------------------
Wired only no common 48
-------------------------------------------------------------------------------------------
Equipped ports 16
-------------------------------------------------------------------------------------------
<CAPTION>
HARDWARE PRICE LIST
-------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3584 (Double) Common Equipment 46,125 1 $43,125
- ---------------------------------------------------------------------------------------------------------------
Interface Bay 2,697 4 $10,788
- ---------------------------------------------------------------------------------------------------------------
Sync. Package (2xACDUs/ECDUs + S/W) 3,450 1 $3,450
- ---------------------------------------------------------------------------------------------------------------
Narrowband Shelf with commons 18,400 1 $18,400
- ---------------------------------------------------------------------------------------------------------------
DS1 Narrowband Module (includes 28 DS1s, max 8 per shelf) 4,428 2 $8,856
- ---------------------------------------------------------------------------------------------------------------
DS1/E1 Shelf with common modules 11,219 2 $22,438
- ---------------------------------------------------------------------------------------------------------------
DS1/E1 Shelf wired only 8,995 3 $26,985
- ---------------------------------------------------------------------------------------------------------------
DS1 Port (LDS1) 101 224 $22,624
- ---------------------------------------------------------------------------------------------------------------
E1 Port (PE1) 159 32 $5,088
- ---------------------------------------------------------------------------------------------------------------
DS3 (DAMX) Shelf with common modules 15,575 2 $31,150
- ---------------------------------------------------------------------------------------------------------------
DS3 (DAMX) Shelf wired only 6,874 6 $41,244
- ---------------------------------------------------------------------------------------------------------------
DS3 Port (DAMX) 4,306 16 $68,896
- ---------------------------------------------------------------------------------------------------------------
HARDWARE TOTAL: $303,044
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SOFTWARE PRICE LIST
-------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
128 Port (Double) S/W for interfaces DS1, DS3 (PAMX, HAMX) STS1, E1, E3 (EAM) 31,625 1 $31,625
----------------------------
Narrowband Shelf S/W Delta per shelf 8,625 1 $8,625
----------------------------
DAMX S/W Delta per shelf 863 8 $6,904
- ---------------------------------------------------------------------------------------------------------------
SOFTWARE TOTAL: $47,154
- ---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
TOTAL SYSTEM PRICE: $350,198
--------------------------------------------------------------------------------------------------
EF&I ESTIMATE*: $40,000
-------------------------------------------------------------------------------------------------
TOTAL SYSTEM PRICE INCLUDING EF&I: $390,198
-------------------------------------------------------------------------------------------------
</TABLE>
Each system comes with a two (2) year hardware warranty, one (1) year software
warranty, and 4 training seats at no charge.
*EF&I charges are based on scope of services in Tab 4. Any changes to scope will
be addressed via a change order
*Shelf S/W upgrade for previously installed shelfs to support optics at no
charge.
31
<PAGE>
<TABLE>
<CAPTION>
STARTEC EQUIPMENT PRICE LIST
----------------------------
- -------------------------------------------------------------------------------------------------------------------------
ITEM PRICE
- -------------------------------------------------------------------------------------------------------------------------
HARDWARE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
3584 (Double) Common Equipment 43,125
- -------------------------------------------------------------------------------------------------------------------------
Delta Common Equipment from 3584 to 7168 46,000
- -------------------------------------------------------------------------------------------------------------------------
Quad TSU upgrade set (per shelf) 2,684
- -------------------------------------------------------------------------------------------------------------------------
Interface Bay 2,697
- -------------------------------------------------------------------------------------------------------------------------
Sync. Package (2xACDUs/ECDUs + S/W) 3,450
- -------------------------------------------------------------------------------------------------------------------------
Narrowband Shelf with commons 18,400
- -------------------------------------------------------------------------------------------------------------------------
DS1 Narrowband Module (includes 28 DS1s, max 8 per shelf) 4,428
- -------------------------------------------------------------------------------------------------------------------------
DS1/E1 Shelf with common modules 11,219
- -------------------------------------------------------------------------------------------------------------------------
DS1/E1 Shelf wired only 8,995
- -------------------------------------------------------------------------------------------------------------------------
DS1 Port (LDS1) 101
- -------------------------------------------------------------------------------------------------------------------------
E1 Port (PE1) 159
- -------------------------------------------------------------------------------------------------------------------------
DS3 (DAMX) Shelf with common modules 15,575
- -------------------------------------------------------------------------------------------------------------------------
DS3 (DAMX) Shelf wired only 6,874
- -------------------------------------------------------------------------------------------------------------------------
DS3 Port (DAMX) 4,306
- -------------------------------------------------------------------------------------------------------------------------
E3 Port (DAMX) 3,555
- -------------------------------------------------------------------------------------------------------------------------
OC3/STM1 Shelf with comon modules 20,355
- -------------------------------------------------------------------------------------------------------------------------
OC3/STM1 Shelf wired only 7,188
- -------------------------------------------------------------------------------------------------------------------------
OC-3/STM-1 (OHR) Optical Port 4,560
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
SOFTWARE
- -------------------------------------------------------------------------------------------------------------------------
128 Port (Double) S/W for interfaces DS1, DS3 (PAMX, HAMX STS1, E1, E3 (EAM) 31,625
- -------------------------------------------------------------------------------------------------------------------------
Delta S/W from 1128 Port to 256 Port 38,813
- -------------------------------------------------------------------------------------------------------------------------
Optical OC2/STM1 S/W Delta 5,750
- -------------------------------------------------------------------------------------------------------------------------
Narrowband Shelf S/W Delta per shelf 8,625
- -------------------------------------------------------------------------------------------------------------------------
DAMX S/W Delta per shelf 863
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
SOFTWARE MAINTENANCE
- -------------------------------------------------------------------------------------------------------------------------
Basic 5,000
- -------------------------------------------------------------------------------------------------------------------------
Double 10,000
- -------------------------------------------------------------------------------------------------------------------------
Quad 20,000
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
HARDWARE & SOFTWARE MAINTENANCE
- -------------------------------------------------------------------------------------------------------------------------
Basic 14,000
- -------------------------------------------------------------------------------------------------------------------------
Double 28,000
- -------------------------------------------------------------------------------------------------------------------------
Quad 56,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
All products listed on price list are manufactured
by Tadiran Telecommunications, Limited (TTL).
<PAGE>
"EXTENDED MAINTENANCE PROGRAM"
TTN realizes that in order to insure that StarTec network is as reliable and
feature-rich as possible a support program needs to be put in place. To
addresses this need, TTN is pleased to present our "Extended Maintenance
Program". To activate this plan StarTec needs to notify TTN 3 three months prior
to the expiration of the software or hardware warranty.
The highlights of this attached plan are as follows:
1. Lifetime Warranty for all systems covered under this plan. This includes
hardware and software.
2. Upgrade to the latest software release which includes all maintenance fixes
and enhancements.
3. A upgrade to the "Year 2000" feature package which addresses the Year- 2000
compatibility issue.
4. 7 x 24 telephone support for any system inquiries.
5. An Emergency Loaner Program which provides for modules for up to 30 days.
Our Extended Maintenance Program is an all-inclusive program that ensures worry
free operation for our customers and provides a way to budget for your
maintenance activities. This is an all exclusive program that includes both
hardware and software support. Once the initial warranties expire, this program
is your assurance of having worry free operations. This program includes:
1. TELEPHONE SUPPORT (both hardware and software) Coverage time: 7 days a
week, 24 hours a day (7,x 24)
2. TELEPHONE RESPONSE TIMES:
<TABLE>
<CAPTION>
<S> <C> <C>
Level 1 - Service affecting: 1 hours (24 hours fix or work around provided)
Level 2 - Performance affecting: 2 hours (72 hours fix or work around provided)
Level 3 - Nuisance to operations: 24 hours (fix in next release, or module revision)
</TABLE>
NOTE: Any telephone support call falsely identified to obtain expedited
support will be invoiced at the then current per hour rate with a
minimum of 1 hour charge (Table 3 - Price Annex).
3. MODULE REPAIR:
A. Repair turn around time is 15 days from time of receipt to time of
return shipment.
B. Expedited repair is available turn around time is 5 days. The charge
for the expedited service is based on 15% of the module price (minimum
charge $150) plus actual overnight shipping cost.
C. Optical devices are not covered under this extended warranty program.
D. Repair warranty period is 180 days or duration of the extended
warranty program, which ever is longer,
E. No trouble found (NTF) modules will be at no cost for the first 2
modules of eachextended warranty year. After, that the charge will be
a 5% of the module price (minimum charge $150) Plus shipping cost.
F. TTN reserves the option to repair or replace module at its sole
discretion.
<PAGE>
4. EMERGENCY MODULE LOANER PROGRAM:
This service is available when you have a degraded system and your spare
modules are in for repair. It is not designed to replace your inventory or
to replace any spare for that may be in for repair.
A. Any module that is loaned must be returned within 30 days after your
repaired module has been shipped brick to you,
B. After 30 days, an invoice will be issued at 100% of the module price.
C. If the loaner module is returned after 30 days, but not more than 90
days, credit will be given for the price of the module minus a
restocking, charge of 25%.
5. ON SITE VISITS:
A. On site visits are available in situations deemed necessary by the
Customer and TTN Technical Staff.
B. Any trips made to support a hardware or software situation will be
based on the following:
(1) For the first 2 trips or 4 days, which ever occurs first, there
will be no labor charge. Customer will pay Travel and Subsistence
Costs.
(2) After the 2nd trip or 4th day, which ever occurs first, the
current per hour charge (Table 3 - Price Annex) will apply, less
any applicable discount plus Travel and Subsistence Costs.
(3) Minimum labor charge is 8 hours.
(4) If TTN product problem requires a visit/trip, this visit/trip
will not apply to the "NON-LABOR" trips referred to in section 5,
A, (1).
C. Emergency trips will be based on next available flight or mode
of transportation.
D. For all trips made to Customer location, a trip report will be
submitted to the customer by TTN within 10 business days. This report
will include, but not limited to, reason for trip, who authorized the
trip, location, and equipment affected, time spent on site, resolution
of problem, any follow up actions needed and list of charges.
6. HARDWARE OPERATIONAL CAPABILITIES:
A. Each system included in an extended warranty program must be fully
operational. At the discretion of TTN a site visit will be scheduled
to accomplish the following:
(1) Inventory of each piece of equipment included in the extended
warranty program.
(2) Issue a written verification of operational capabilities of
system.
B. Any discrepancies found during the on-site Visit Must be cleared/fixed
prior to the Extended Maintenance Agreement being activated. All
exceptions must be mutually agreed Lo by the Customer and TTN.
C. If Customer elects to clear and/or fix all discrepancies identified,
TTN will return to the site and complete the on site verification at
Customer expense.
D. If Customer elects to have TTN correct discrepancies, a quote will be
provided which will include system operational verification.
7. SOFTWARE: TTN will support the current release arid the prior relcise
ofqottwirc. @j@ maintenance Fixes or enhancements issued between feature
releases will also be supported , ETN will use reasonable efforts to
support older versions of soft-vvare.
A. MAINTENANCE FIXES: Maintenarice fixes are scheduled for release a
minimum of twice a year. The exception to this is when a service affecting
failure occurs, which may require a release scheduled.
<PAGE>
(1) Notification will be given to customers by a Product Change
Notice (PCN).
(2) The fix may be installed by the customer or by TTN. All fixes
will be provided with adequate documentation so that the customer
could accomplish the install. If the customer requests TTN to do
the install, a charge must be made for travel expenses and
minimum labor charge.
B. Enhancements: Enhancements are software releases that improve the
current software operation and functionality. Enhancement are
scheduled for release a minimum of once a year.
(1) Notification will be by a Product Change Notice (PCN),
(2) The fix may be installed by the customer or by TTN. All fixes
will be provided with adequate documentation so that the customer
could accomplish the install. If the customer requests TTN to do
the install, a charge must be made for travel expenses and
minimum labor charge.
(3) Any hardware changes required to implement the enhancement
release are not included in any enhancement releases.
C. Features Releases: Feature releases will be made available to all
Customers, however, any Customer with a maintenance contract will have
the option to purchase with a discount and receive these New Features
before tioti-i- maintenance Customers.
(1) Adequate documentation will be made available to allow Customers
to install any new features without assistance from TTN. However,
there may be times when TTN's telephone support is required. If
this occurs, Customers will be billed at the then current labor
rate, less any applicable discount.
(2) Customer can request TTN to install any new features. If a
Customer requests TTN to install the software upgrade then the
Customer will be responsible for Time, Travel and Subsistence
cost.
(3) Any new software feature price does not include any associated
hardware upgrades.
8. SPECIAL SERVICES REQUEST:
A. Customers having a maintenance contract will be given priority for any
Special Services requested.
B. Each request will be quoted on a case by case basis,
C. EF&I services are priced separately.
9. CUSTOMER REPORTS.
In order to assist our Customers to better manage their resources and
assist them in identifying training needs, TTN will issue a quarterly
report consisting, at a minimum, the following information:
A. Number of modules repaired for the prior period.
B. Repair turn-around for each type of module repaired for the prior
period.
C. Number of service calls received by our Technical Support group.
D. Type of calls received (software, hardware)
E. Technician(s) who called
F. Resolution of calls
G. Any action items pending
In addition, at the customer's request, TTN will provide a dial-up analysis of
StarTec's System identifying any minor major critical system problems.
GLOSSARY OF TERMS
<PAGE>
TERM DEFINITION
Emergencies Determined by mutual agreement between
customer and TTN.
Expedited Repair When a customer wants to have a
module repaired and returned to you in a
shorter time that is normal for repair
and return.
Falsely Identified Trouble When the initial call
is made to TTN and the severity of the
problem is erroneously stated to obtain
faster support
Hardware Enhancements Any physical replacement of
a module or component on a module that
improves the current system operation.
Software Enhancements Any software released that
improves the operations of the current
software release being used.
Features Releases Any software release that causes the
equipment to perform differently or has
additional capabilities
Non-emergency The system is functioning normal and
service is not degraded in any way.
No Trouble Found This is when a module is tested
according to manufacture standard
testing procedures and no problems are
identified or no repair or adjustment is
performed.
Optical Devices This is the actual optical (light
emitting) device and all components
associated with controlling the proper
operation and power of the laser.
Special Services Any service, either on site or at TTN's
location that is requested by the
customer that is within the capabilities
of TTN.
Syster DeGraded but operational Exists when there has been an equipment
failure within the system and now the
system is operating in the protection
mode or monitoring system is
inoperative.
System Inoperative The system is completely inoperative and
does not have the capabilities to cirry
any traffic.
Travel and Subsistence Cost Cost incurred while visitine, a customer
location including travel to and from,
includes 5% administrative fee.
<PAGE>
PRICE ANNEX
For new systems purchased, the standard Two-Year Hardware Warranty and 1-year
Software Warranty would include 7x24 telephone support. But, to keep STARTEC
network current with the latest software releases (covering bug fixes, and
enhancements), the following annual charge would apply after expiration of the
1year Software Warranty:
TABLE 1
- --------------------------------------------------------------------------------
SYSTEM SIZE BASIC DOUBLE QUAD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual "Software-Only"
Maintenance Charge $5.0K $1.0K $20K
- --------------------------------------------------------------------------------
As these systems exceed the 2-year hardware warranty period, then the annual
charges contained within Table 2 would apply.
TABLE 2
- --------------------------------------------------------------------------------
SYSTEM SIZE BASIC DOUBLE QUAD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annual Maintenance
Agreement Charge $14K $28K $56K
- --------------------------------------------------------------------------------
TABLE 3
- --------------------------------------------------------------------------------
Extended Maintenance Hourly Support Rate $125 per hour
- --------------------------------------------------------------------------------
Training Rate Per Person Per Day Location $300 - 6 student minimum,
(at TTN's Florida) 12 student maximum
- --------------------------------------------------------------------------------
<PAGE>
SCOPE OF EF&I SERVICES FOR THE T::DAX
- -------------------------------------
- - Site survey
- - Ordering of needed ancillary installation equipment according to the site
survey including:
o DS1, DS3 and Fiber Optic cables and connectors. Price includes cable
distance up to fifty (50) feet.
o Power cables and connectors. Price includes cable distance up to fifty
(50) feet
o Equipment ground cables and connectors.
o Floor Mounting H/W (anchors, threaded rods, washers, isolation pads
etc.).
- - Labeling of all bays and shelves
- - Coordinate delivery of installation materials.
- - Coordinate Sub Contractors.
- - Installation of T::DAX equipment at the site (anchoring bays to floor,
securing bays to each other, leveling bays).
- - Installation of the cables from the T::DAX to the DSX (dressing,
wire-wrapping, install BNOs on DS3 cables).
- - Installation to the A&B power inputs to the T::DAX. Installation of the
ground cable.
- - Installation of all the T::DAX interbay and intershelf cables (TSU cables,
JAB line, PCU bus cable).
- - Installation of the fan assemblies.
- - Turn up and testing of the equipment includes:
o Load and test proper S/W release.
o Configure shelf numbering in S[W.
o Provision all plug-in modules.
o Diagnose all plug-in components.
o Test for proper operation of protection paths and equipment.
o Test every DS1 and DS3 wired ports.
o Backup program and Data Base to tape.
Customer responsibilities:
Supply needed Power supply.
Building construction to be complete including security doors and air
conditioning.
Phone line for communications to TTN crew on site and one modem
access.
Cable racking for DS1,DS3, Fiber Optic, power, return and ground
cables external to the T::DAX and/or access for cable running under
computer floor. DS1/DS3 and Fiber Optic interface equipment (i.e. DSX,
meetme panel, etc) to be installed prior to the arrival of TTN
installation team to the site.
For every additional 1O' of cabling required over 50', up to 100',
there is an
<PAGE>
Re: Year 2000 (Y2K) Compliance
--------------------------
Dear Customer/Distributor,
Tadiran Telecommunications Ltd. (TTL) is committed to Year 2000 compliance for
all systems and products manufactured and/or sold by TTL.
TTL is intensively pursuing a program to ascertain the following, compliance and
to determine which current products and systems are Year 2000 compliant, which
products and systems can be adapted by TTL to be Year 2000 compliant - within
the framework of maintenance and support contracts and per specific customer
request, and which outdated or obsolete products and systems will not be
evaluated to ascertain Year 2000 compliance.
While this program has not yet been completed, an interim status report listing
the specific compliance status of the various existing products and systems
which are relevant, are listed below.
The following product software versions are certified to be Year 2000 compliant:
o T::DAX Version 6.41 and up
o T::DAX Version 5.53 and up
o T::NMS Version 5.5 and up
o T::DAX 100 Version 3.05A and up
o T::DAX 100 Version 3.05E and up
o T::DAX 100 Version 3.03H and up
o T::DAX 100 Version 3.O1S and up
o T::DAX 100 Version 3.01D and up
o T::MUX all versions
All new systems that were shipped after July 15, 1998 are loaded with software
that is year 2000 compliant.
Sincerely,
Ilan Miller
Vice President of Engineering
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001043310
<NAME> STARTEC GLOBAL COMMUNICATIONS CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> SEP-30-1997 SEP-30-1998
<EXCHANGE-RATE> 1 1
<CASH> 1,135 108,287
<SECURITIES> 0 0
<RECEIVABLES> 15,340 33,826
<ALLOWANCES> 1,904 3,368
<INVENTORY> 0 0
<CURRENT-ASSETS> 16,958 142,333
<PP&E> 3,477 25,307
<DEPRECIATION> 1,143 2,552
<TOTAL-ASSETS> 21,272 224,217
<CURRENT-LIABILITIES> 26,101 39,815
<BONDS> 0 157,969
0 0
0 0
<COMMON> 54 89
<OTHER-SE> (5,333) 26,269
<TOTAL-LIABILITY-AND-EQUITY> 21,272 224,217
<SALES> 54,593 110,800
<TOTAL-REVENUES> 0 0
<CGS> 49,919 96,436
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 578 7,707
<INCOME-PRETAX> 780 (7,773)
<INCOME-TAX> 16 0
<INCOME-CONTINUING> 764 (7,773)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 764 (7,773)
<EPS-PRIMARY> 0.14 (0.87)
<EPS-DILUTED> 0.14 (0.87)
</TABLE>
