<PAGE>
As filed with the Securities and Exchange Commission on March 23, 2000
Registration No. 333-94449
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GLOBAL CROSSING LTD. GLOBAL CROSSING HOLDINGS LTD.
(Exact name of Registrants as specified in their charters)
Bermuda 4813 Bermuda
(State or other (Primary Standard Industrial (State or other
jurisdiction of Classification Code Number) jurisdiction of
incorporation or incorporation or
organization) organization)
98-0186828
(I.R.S. Employer
98-0189783 Identification No.)
(I.R.S. Employer
Identification No.)
---------------
Wessex House
45 Reid Street
Hamilton HM12 Bermuda
(441) 296-8600
(Address and telephone number of Registrants' principal executive offices)
CT Corporation System
1633 Broadway
New York, New York 10019
(212) 479-8200
(Name, address, including zip code, and telephone number of agent for service)
---------------
with copies to:
D. Rhett Brandon, Esq. James C. Gorton, Esq.
Simpson Thacher & Bartlett Global Crossing Holdings Ltd.
425 Lexington Avenue 360 N. Crescent Drive
New York, New York 10017 Beverly Hills, California 90210
(212) 455-2000 (310) 385-5200
---------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which shall specifically state that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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<PAGE>
Please note that, in this pre-effective amendment no. 1, we are only filing
Part II of this registration statement, including the exhibits indicated in
item 16 of this document. You may find a copy of the prospectus that is a part
of this registration statement in our filing of this registration statement
dated January 11, 2000.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Bye-laws of the Registrants provide for indemnification of the
Registrants' officers and directors against all liabilities, loss, damage or
expense incurred or suffered by such party as an officer or director of the
Registrants; provided that such indemnification shall not extend to any matter
which would render it void pursuant to the Companies Act of 1981 as in effect
from time to time in Bermuda.
The Companies Act provides that a Bermuda company may indemnify its
directors in respect of any loss arising or liability attaching to them as a
result of any negligence, default, breach of duty or breach of trust of which
they may be guilty. However, the Companies Act also provides that any
provision, whether contained in the company's bye-laws or in a contract or
arrangement between the company and the director, indemnifying a director
against any liability which would attach to him in respect of his fraud or
dishonesty will be void.
The directors and officers of the Registrants are covered by directors' and
officers' insurance policies maintained by the Registrants.
Item 21. Exhibits and Financial Statement Schedules.
The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 16, 1999 (the
"Frontier Merger Agreement"), among Global Crossing Ltd., Frontier
Corporation and GCF Acquisition Corp. (incorporated by reference to
Exhibit 2 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on March 19, 1999 (the "March 19, 1999 8-K")).
2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as
of May 16, 1999, among Global Crossing Ltd., GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to Global
Crossing Ltd.'s Current Report on Form 8-K filed on May 18, 1999 (the
"May 18, 1999 8-K")).
2.3 Amendment No. 2 to the Frontier Merger Agreement, dated as of
September 2, 1999, among Global Crossing Ltd., GCF Acquisition Corp.
and Frontier Corporation (incorporated by reference to Exhibit 2 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on September
3, 1999 (the "September 3, 1999 8-K")).
2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable
& Wireless plc and Global Crossing Ltd. (incorporated by reference to
Exhibit 2.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on July 16, 1999 (the "July 16, 1999 8-K")).
2.5 Amendment to the Sale and Purchase Agreement, dated as of June 25,
1999, between Cable & Wireless plc and Global Crossing Ltd.
(incorporated by reference to Exhibit 2.2 to the July 16, 1999 8-K).
2.6 Agreement and Plan of Merger, dated as of May 16, 1999, between Global
Crossing Ltd. and U S WEST, Inc. (incorporated by reference to Exhibit
2 to Global Crossing Ltd.'s Current Report on Form 8-K filed on May
21, 1999 (the "May 21, 1999 8-K")).
2.7 Letter Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and U S WEST, Inc. (incorporated by reference to Exhibit 99 to
the May 21, 1999 8-K).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.8 Termination Agreement, dated as of July 18, 1999, between Global
Crossing Ltd. and U S WEST, Inc. (incorporated by reference to Exhibit
10.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed on
July 20, 1999 (the "July 20, 1999 8-K")).
3.1 Memorandum of Association of Global Crossing Ltd. (incorporated by
reference to Exhibit 3.1 to Global Crossing Ltd.'s Registration
Statement on Form S-1/A filed on July 2, 1998 (the "July 2, 1998 S-
1/A")).
3.2 Certificate of Incorporation of Change of Name of Global Crossing Ltd.
dated April 30, 1998 (incorporated by reference to Exhibit 3.3 to
Global Crossing Ltd.'s Registration Statement on Form S-1/A filed on
July 23, 1998 (the "July 23, 1998 S-1/A")).
3.3 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
July 9, 1998 (incorporated by reference to Exhibit 3.4 to the July 23,
1998 S-1/A).
3.4 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
September 27, 1999 (incorporated by reference to Exhibit 3.1 to Global
Crossing Ltd.'s Quarterly Report on Form 10-Q filed on November 15,
1999 (the "November 15, 1999 10-Q")).
3.5 Bye-laws of Global Crossing Ltd. as in effect on October 14, 1999
(incorporated by reference to Exhibit 3.2 to the November 15, 1999 10-
Q).
3.6 Certificate of Designations of 6 3/8% Cumulative Convertible Preferred
Stock of Global Crossing Ltd. dated November 5, 1999 (incorporated by
reference to Exhibit 3.3 to the November 15, 1999 10-Q).
3.7 Memorandum of Association of Global Crossing Holdings Ltd.
(incorporated by reference to Exhibit 3.1 of Global Crossing Holdings
Ltd.'s Registration Statement on Form S-4 (File No. 333-61457)).
3.8 Bye-laws of Global Crossing Holdings Ltd. (incorporated by reference
to Exhibit 3.2 of Global Crossing Holdings Ltd.'s Registration
Statement on Form S-4 (File No. 333-61457)).
3.9 Certificate of Designations of 7% Cumulative Convertible Preferred
Stock of Global Crossing Ltd., dated December 15, 1999 (previously
filed with this Registration Statement).
4.1 Certificate of Designations of 10 1/2% Senior Exchangeable Preferred
Stock Due 2008 of Global Crossing Holdings Ltd. dated December 1, 1998
(incorporated by reference to Schedule A to Exhibit 3.2 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on
December 22, 1998.)
4.2 Indenture, dated as of May 18, 1998, between Global Crossing Holdings
Ltd. and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on December 22,
1998).
4.3 Supplemental Indenture, dated as of June 25, 1999, between Global
Crossing Holdings Ltd. and United States Trust Company of New York, to
the Indenture dated as of May 18, 1998 (incorporated by reference to
Exhibit 4.4 to Global Crossing Ltd.'s Registration Statement on Form
S-4 filed on July 12, 1999).
4.4 Credit Agreement, dated as of July 2, 1999, among Global Crossing
Ltd., Global Crossing Holdings Ltd., the Lenders party thereto and The
Chase Manhattan Bank as Administrative Agent (incorporated by
reference to Exhibit 10.7 to Global Crossing Ltd.'s Registration
Statement on Form S-4/A filed on August 5, 1999).
4.5 Indenture, dated as of November 19, 1999, among Global Crossing Ltd.,
Global Crossing Holdings Ltd. and United States Trust Company of New
York (previously filed with this Registration Statement). Except as
hereinabove provided, there is no instrument with respect to long-term
debt of
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
Global Crossing Ltd. and its consolidated subsidiaries under which the
total authorized amount exceeds 10 percent of the total consolidated
assets of Global Crossing Ltd. Global Crossing Ltd. agrees to furnish
to the SEC upon its request a copy of any instrument relating to long-
term debt.
5.1 Opinion of Appleby, Spurling & Kempe as to the legality of the Debt
Securities, the Preferred Stock and the Common Stock (previously filed
with this Registration Statement).
5.2 Opinion of Simpson, Thacher & Bartlett (previously filed with this
Registration Statement).
10.1 Project Development and Construction Contract, dated as of March 18,
1997, among AT&T Submarine Systems, Inc. and Atlantic Crossing Ltd.
(formerly Global Telesystems Ltd.) (incorporated by reference to
Exhibit 10.2 to the July 23, 1998 S-1/A).
10.2 Project Development and Construction Contract, dated as of April 21,
1998, among Tyco Submarine Systems, Ltd. and Pacific Crossing Ltd.
(incorporated by reference to Exhibit 10.3 to the July 23, 1998 S-
1/A).
10.3 Project Development and Construction Contract, dated as of June 2,
1998, among Alcatel Submarine Networks and Mid-Atlantic Crossing Ltd.
(incorporated by reference to Exhibit 10.4 to the July 23, 1998 S-
1/A).
10.4 Project Development and Construction Contract, dated as of July 21,
1998, among Tyco Submarine Systems, Ltd. and Pan American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to Global Crossing
Ltd.'s Quarterly Report on Form 10-Q filed on November 16, 1998).
10.5 Project Development and Construction Contract, dated as of July 30,
1999, among Alcatel Submarine Networks and South American Crossing
Ltd. (filed herewith) (portions have been omitted pursuant to a
request for confidential treatment).
10.6 Lease made as of October 1, 1999 between North Crescent Realty V, LLC
and Global Crossing Development Company (incorporated by reference to
Exhibit 10.1 to the November 15, 1999 10-Q).
10.7 Form of Stockholders Agreement dated as of August 12, 1998 among
Global Crossing Ltd. and the investors named therein (incorporated by
reference to Exhibit 9.1 to the July 23, 1998 S-1/A).
10.8 Form of Registration Rights Agreement dated as of August 12, 1998
among Global Crossing Ltd. and the investors named therein
(incorporated by reference to Exhibit 4.4 to the July 23, 1998 S-1/A).
10.9 Voting Agreement, dated as of March 16, 1999, among certain
shareholders of Global Crossing Ltd. parties thereto, Frontier
Corporation and, for certain purposes only, Global Crossing Ltd.
(incorporated by reference to Exhibit 10.2 to the March 19, 1999 8-K).
10.10 Second Reaffirmation of Voting Agreement and Share Transfer
Restriction Agreement, dated as of September 2, 1999 (incorporated by
reference to Annex S-B to the joint proxy statement/prospectus
supplement included in Global Crossing Ltd.'s Registration Statement
on Form S-4 filed on September 8, 1999 (the "September 8, 1999 S-4").
10.11 Share Transfer Restriction Agreement, dated as of September 2, 1999,
among certain shareholders of Global Crossing Ltd., certain
shareholders of Frontier Corporation and Global Crossing Ltd.
(incorporated by reference to Annex S-C to the joint proxy
statement/prospectus supplement included in the September 8, 1999 S-
4).
10.12 Tender Offer and Purchase Agreement, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc. (incorporated by reference to
Exhibit (c)(2) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.13 Standstill Agreement dated as of May 16, 1999 between U S WEST, Inc.
and Global Crossing Ltd. (incorporated by reference to Exhibit (c)(4)
to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and
Global Crossing Ltd. (incorporated by reference to Exhibit (c)(3) to U
S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST,
Inc., Global Crossing Ltd. and the shareholders party thereto
(incorporated by reference to Exhibit (c)(5) to U S WEST, Inc.'s
Schedule 14D-1 filed on May 21, 1999).
10.16 Agreement dated as of May 16, 1999 among Global Crossing Ltd. and the
shareholders party thereto (incorporated by reference to Exhibit
(c)(6) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.17 Transfer Agreement dated as of May 16, 1999 among Global Crossing Ltd.
and the shareholders party thereto (incorporated by reference to
Exhibit (c)(8) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.18 Amendment No. 1 dated as of July 18, 1999 to Tender Offer and Purchase
Agreement dated as of May 16 1999 between Global Crossing Ltd. and U S
WEST, Inc. (incorporated by reference to Exhibit 10.2 to the July 20,
1999 8-K).
10.19 Agreement, dated as of July 18, 1999, between Qwest Communications
International Inc. and Global Crossing Ltd. (incorporated by reference
to Exhibit 10.3 to the July 20, 1999 8-K).
10.20 Agreement, dated as of July 18, 1999, between Global Crossing Holdings
Ltd. and Qwest Communications International Inc. (incorporated by
reference to Exhibit 10.4 to the July 20, 1999 8-K).
10.21 1998 Global Crossing Ltd. Stock Incentive Plan, as amended and
restated effective December 7, 1999 (previously filed with this
Registration Statement).
10.22 Form of Non-Qualified Stock Option Agreement as in effect on September
30, 1999 (incorporated by reference to Exhibit 10.2 to the November
15, 1999 10-Q).
10.23 Frontier Corporation Supplemental Retirement Savings Plan as amended
and restated effective January 1, 1996 (incorporated by reference to
Exhibit 10.13 to Frontier Corporation's Annual Report on Form 10-K
filed March 28, 1997).
10.24 Amendment No. 1, effective March 16, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.2 to Frontier Corporation's Quarterly Report on Form 10-Q
filed August 3, 1999).
10.25 Amendment No. 2, dated September 21, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.5 to the November 15, 1999 10-Q).
10.26 Employment Agreement dated as of February 19, 1999 between Global
Crossing Ltd. and Robert Annunziata (incorporated by reference to
Exhibit 10.8 to Global Crossing Ltd.'s Quarterly Report on Form 10-Q
filed on May 10, 1999).
10.27 Executive Contract dated March 25, 1996 between Robert L. Barrett and
Frontier Corporation (incorporated by reference to Exhibit 10.25 to
Frontier Corporation's Quarterly Report on Form 10-Q filed May 14,
1996).
10.28 Amendment dated May 1, 1999 to Executive Contract between Robert L.
Barrett and Frontier Corporation (incorporated by reference to Exhibit
10.7 to the November 15, 1999 10-Q).
10.29 Executive Contract dated January 1, 1998 between Joseph P. Clayton and
Frontier Corporation (incorporated by reference to Exhibit 10.22 to
Frontier Corporation's Annual Report on Form 10-K filed March 26,
1998).
10.30 Amendment dated May 1, 1999 to Executive Contract between Joseph P.
Clayton and Frontier Corporation (incorporated by reference to Exhibit
10.9 to the November 15, 1999 10-Q).
10.31 Sale Agreement, dated October 10, 1999, among Controls and
Communications Limited, The Racal Corporation, Racal Electronics plc
and Global Crossing Ltd. (incorporated by reference to Exhibit 2.1 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on October 21,
1999).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.32 Registration Rights Agreement, dated as of November 19, 1999, among
Global Crossing Ltd., Global Crossing Holdings Ltd., Chase Securities
Inc. and CIBC World Markets Corp. (previously filed with this
Registration Statement).
10.33 Subscription and Sale and Purchase Agreement, dated November 15, 1999,
among Hutchison Whampoa Limited, Hutchison Telecommunications Limited,
Global Crossing Ltd. and HCL Holdings Limited (previously filed with
this Registration Statement).
12.1 Statement of Computation to Earnings to Fixed Charges (previously
filed with this Registration Statement).
21.1 Subsidiaries of Global Crossing Ltd. (incorporated by reference to
Exhibit 21.1 to Registrant's annual report on Form 10-K for the year
ended December 31, 1999).
23.1 Consent of Arthur Andersen (previously filed with this Registration
Statement).
23.2 Consent of PricewaterhouseCoopers LLP (previously filed with this
Registration Statement) .
23.3 Consent of KPMG Audit Plc (previously filed with this Registration
Statement).
23.4 Consent of Deloitte & Touche (previously filed with this Registration
Statement).
23.5 Consent of PricewaterhouseCoopers (previously filed with this
Registration Statement).
23.6 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1).
23.7 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.2).
24.1 Power of Attorney of Global Crossing Holdings Ltd. (previously filed
with this Registration Statement).
24.2 Power of Attorney of Global Crossing Ltd. (previously filed with this
Registration Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of United States Trust Company of
New York, as Trustee (previously filed with this Registration
Statement).
99.1 Form of Letter of Transmittal (previously filed with this Registration
Statement).
99.2 Form of Notice of Guaranteed Delivery (previously filed with this
Registration Statement).
</TABLE>
Item 22. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by them is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of that issue.
(b) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(c) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective Amendment to this registration statement:
II-5
<PAGE>
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrants' annual reports pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Hamilton, Country of Bermuda, on March 23, 2000.
Global Crossing Holdings Ltd.
/s/ S. Wallace Dawson, Jr.
By: _________________________________
Name: S. Wallace Dawson, Jr.
Title: Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ S. Wallace Dawson, Jr. Chief Executive Officer March 23, 2000
___________________________________________ and Director
S. Wallace Dawson, Jr.
/*/ President and Director March 23, 2000
___________________________________________
K. Eugene Shutler
/*/ Controller and Director March 23, 2000
___________________________________________
Rob Klug
/*/ Senior Vice President, March 23, 2000
___________________________________________ Chief Operating Officer
Ian McLean and Director
*By Power of Attorney
/s/ S. Wallace Dawson, Jr. Attorney-in-Fact
___________________________________________
S. Wallace Dawson, Jr.
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Los Angeles, State of California, on March 23, 2000.
Global Crossing Ltd.
By: /s/ Dan J. Cohrs
----------------------------------
Name: Dan J. Cohrs
Title: Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/*/ Chairman of the Board and March 23, 2000
___________________________________________ Director
Gary Winnick
/*/ Co-Chairman of the Board March 23, 2000
___________________________________________ and Director
Lodwrick M. Cook
/*/ Vice Chairman of the Board March 23, 2000
___________________________________________ and Director
Thomas J. Casey
/*/ Director; Vice Chairman of March 23, 2000
___________________________________________ the Board, Asia Global
Jack M. Scanlon Crossing
/s/ Leo J. Hindery Chief Executive Officer March 23, 2000
___________________________________________ and Director
Leo J. Hindery
/*/ President, Chief Operating March 23, 2000
___________________________________________ Officer and Director
David L. Lee
/*/ Senior Vice President and March 23, 2000
___________________________________________ Director
Barry Porter
/*/ Senior Vice President and March 23, 2000
___________________________________________ Director
Abbott L. Brown
/*/ Senior Vice President and March 23, 2000
___________________________________________ Chief Financial Officer
Dan J. Cohrs (principal financial
officer and principal
accounting officer)
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/*/ Director March 23, 2000
___________________________________________
Jay R. Bloom
/*/ Director March 23, 2000
___________________________________________
William E. Conway
/*/ Director March 23, 2000
___________________________________________
Dean C. Kehler
/*/ Director March 23, 2000
___________________________________________
Geoffrey J.W. Kent
/*/ Director March 23, 2000
___________________________________________
Bruce Raben
/*/ Director March 23, 2000
___________________________________________
Michael R. Steed
/*/ Director March 23, 2000
___________________________________________
Robert Annunziata
/*/ Director March 23, 2000
___________________________________________
James F. McDonald
/*/ Director March 23, 2000
___________________________________________
Eric Hippeau
/*/ Director March 23, 2000
___________________________________________
Joseph P. Clayton
/*/ Director March 23, 2000
___________________________________________
Douglas H. McCorkindale
Director March 23, 2000
___________________________________________
Cunning Fok
/s/ Dan J. Cohrs Attorney-in-Fact March 23, 2000
___________________________________________
Dan J. Cohrs
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 16, 1999 (the
"Frontier Merger Agreement"), among Global Crossing Ltd., Frontier
Corporation and GCF Acquisition Corp. (incorporated by reference to
Exhibit 2 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on March 19, 1999 (the "March 19, 1999 8-K")).
2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as
of May 16, 1999, among Global Crossing Ltd., GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to Global
Crossing Ltd.'s Current Report on Form 8-K filed on May 18, 1999 (the
"May 18, 1999 8-K")).
2.3 Amendment No. 2 to the Frontier Merger Agreement, dated as of
September 2, 1999, among Global Crossing Ltd., GCF Acquisition Corp.
and Frontier Corporation (incorporated by reference to Exhibit 2 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on September
3, 1999 (the "September 3, 1999 8-K")).
2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable
& Wireless plc and Global Crossing Ltd. (incorporated by reference to
Exhibit 2.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed
on July 16, 1999 (the "July 16, 1999 8-K")).
2.5 Amendment to the Sale and Purchase Agreement, dated as of June 25,
1999, between Cable & Wireless plc and Global Crossing Ltd.
(incorporated by reference to Exhibit 2.2 to the July 16, 1999 8-K).
2.6 Agreement and Plan of Merger, dated as of May 16, 1999, between Global
Crossing Ltd. and U S West, Inc. (incorporated by reference to Exhibit
2 to Global Crossing Ltd.'s Current Report on Form 8-K filed on May
21, 1999 (the "May 21, 1999 8-K")).
2.7 Letter Agreement, dated as of May 16, 1999, between Global Crossing
Ltd. and U S West, Inc. (incorporated by reference to Exhibit 99 to
the May 21, 1999 8-K).
2.8 Termination Agreement, dated as of July 18, 1999, between Global
Crossing Ltd. and U S West, Inc. (incorporated by reference to Exhibit
10.1 to Global Crossing Ltd.'s Current Report on Form 8-K filed on
July 20, 1999 (the "July 20, 1999 8-K")).
3.1 Memorandum of Association of Global Crossing Ltd. (incorporated by
reference to Exhibit 3.1 to Global Crossing Ltd.'s Registration
Statement on Form S-1/A filed on July 2, 1998 (the "July 2, 1998 S-
1/A")).
3.2 Certificate of Incorporation of Change of Name of Global Crossing Ltd.
dated April 30, 1998 (incorporated by reference to Exhibit 3.3 to
Global Crossing Ltd.'s Registration Statement on Form S-1/A filed on
July 23, 1998 (the "July 23, 1998 S-1/A")).
3.3 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
July 9, 1998 (incorporated by reference to Exhibit 3.4 to the July 23,
1998 S-1/A).
3.4 Memorandum of Increase of Share Capital of Global Crossing Ltd. dated
September 27, 1999 (incorporated by reference to Exhibit 3.1 to Global
Crossing Ltd.'s Quarterly Report on Form 10-Q filed on November 15,
1999 (the "November 15, 1999 10-Q")).
3.5 Bye-laws of Global Crossing Ltd. as in effect on October 14, 1999
(incorporated by reference to Exhibit 3.2 to the November 15, 1999 10-
Q).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
3.6 Certificate of Designations of 6 3/8% Cumulative Convertible Preferred
Stock of Global Crossing Ltd. dated November 5, 1999 (incorporated by
reference to Exhibit 3.3 to the November 15, 1999 10-Q).
3.7 Memorandum of Association of Global Crossing Holdings Ltd.
(incorporated by reference to Exhibit 3.1 of Global Crossing Holdings
Ltd.'s Registration Statement on Form S-4 (File No. 333-61457)).
3.8 Bye-laws of Global Crossing Holdings Ltd. (incorporated by reference
to Exhibit 3.2 of Global Crossing Holdings Ltd.'s Registration
Statement on Form S-4 (File No. 333-61457)).
3.9 Certificate of Designations of 7% Cumulative Convertible Preferred
Stock of Global Crossing Ltd., dated December 15, 1999 (previously
filed with this Registration Statement).
4.1 Certificate of Designations of 10 1/2% Senior Exchangeable Preferred
Stock Due 2008 of Global Crossing Holdings Ltd. dated December 1, 1998
(incorporated by reference to Schedule A to Exhibit 3.2 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on
December 22, 1998.)
4.2 Indenture, dated as of May 18, 1998, between Global Crossing Holdings
Ltd. and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on December 22,
1998).
4.3 Supplemental Indenture, dated as of June 25, 1999, between Global
Crossing Holdings Ltd. and United States Trust Company of New York, to
the Indenture dated as of May 18, 1998 (incorporated by reference to
Exhibit 4.4 to Global Crossing Ltd.'s Registration Statement on Form
S-4 filed on July 12, 1999).
4.4 Credit Agreement, dated as of July 2, 1999, among Global Crossing
Ltd., Global Crossing Holdings Ltd., the Lenders party thereto and The
Chase Manhattan Bank as Administrative Agent (incorporated by
reference to Exhibit 10.7 to Global Crossing Ltd.'s Registration
Statement on Form S-4/A filed on August 5, 1999).
4.5 Indenture, dated as of November 19, 1999, among Global Crossing Ltd.,
Global Crossing Holdings Ltd. and United States Trust Company of New
York (previously filed with this Registration Statement).
Except as hereinabove provided, there is no instrument with respect to
long-term debt of Global Crossing Ltd. and its consolidated
subsidiaries under which the total authorized amount exceeds 10
percent of the total consolidated assets of Global Crossing Ltd..
Global Crossing Ltd. agrees to furnish to the SEC upon its request a
copy of any instrument relating to long-term debt.
5.1 Opinion of Appleby, Spurling & Kempe as to the legality of the Debt
Securities, the Preferred Stock and the Common Stock (previously filed
with this Registration Statement).
5.2 Opinion of Simpson, Thacher & Bartlett (previously filed with this
Registration Statement).
10.1 Project Development and Construction Contract, dated as of March 18,
1997, among AT&T Submarine Systems, Inc. and Atlantic Crossing Ltd.
(formerly Global Telesystems Ltd.) (incorporated by reference to
Exhibit 10.2 to the July 23, 1998 S-1/A).
10.2 Project Development and Construction Contract, dated as of April 21,
1998, among Tyco Submarine Systems, Ltd. and Pacific Crossing Ltd.
(incorporated by reference to Exhibit 10.3 to the July 23, 1998 S-
1/A).
10.3 Project Development and Construction Contract, dated as of June 2,
1998, among Alcatel Submarine Networks and Mid-Atlantic Crossing Ltd.
(incorporated by reference to Exhibit 10.4 to the July 23, 1998 S-
1/A).
10.4 Project Development and Construction Contract, dated as of July 21,
1998, among Tyco Submarine Systems, Ltd. and Pan American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q filed on November 16, 1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.5 Project Development and Construction Contract, dated as of July 30,
1999, among Alcatel Submarine Networks and South American Crossing
Ltd. (filed herewith) (portions have been omitted pursuant to a
request for confidential treatment).
10.6 Lease made as of October 1, 1999 between North Crescent Realty V, LLC
and Global Crossing Development Company (incorporated by reference to
Exhibit 10.1 to the November 15, 1999 10-Q).
10.7 Form of Stockholders Agreement dated as of August 12, 1998 among
Global Crossing Ltd. and the investors named therein (incorporated by
reference to Exhibit 9.1 to the July 23, 1998 S-1/A).
10.8 Form of Registration Rights Agreement dated as of August 12, 1998
among Global Crossing Ltd. and the investors named therein
(incorporated by reference to Exhibit 4.4 to the July 23, 1998 S-1/A).
10.9 Voting Agreement, dated as of March 16, 1999, among certain
shareholders of Global Crossing Ltd. parties thereto, Frontier
Corporation and, for certain purposes only, Global Crossing Ltd.
(incorporated by reference to Exhibit 10.2 to the March 19, 1999 8-K).
10.10 Second Reaffirmation of Voting Agreement and Share Transfer
Restriction Agreement, dated as of September 2, 1999 (incorporated by
reference to Annex S-B to the joint proxy statement/prospectus
supplement included in Global Crossing Ltd. Registration Statement on
Form S-4 filed on September 8, 1999 (the "September 8, 1999 S-4").
10.11 Share Transfer Restriction Agreement, dated as of September 2, 1999,
among certain shareholders of Global Crossing Ltd., certain
shareholders of Frontier Corporation and Global Crossing Ltd.
(incorporated by reference to Annex S-C to the joint proxy
statement/prospectus supplement included in the September 8, 1999 S-
4).
10.12 Tender Offer and Purchase Agreement, dated as of May 16, 1999, between
Global Crossing Ltd. and U S WEST, Inc. (incorporated by reference to
Exhibit (c)(2) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.13 Standstill Agreement dated as of May 16, 1999 between U S WEST, Inc.
and Global Crossing Ltd. (incorporated by reference to Exhibit (c)(4)
to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and
Global Crossing Ltd. (incorporated by reference to Exhibit (c)(3) to U
S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST,
Inc., Global Crossing Ltd. and the shareholders party thereto
(incorporated by reference to Exhibit (c)(5) to U S WEST, Inc.'s
Schedule 14D-1 filed on May 21, 1999).
10.16 Agreement dated as of May 16, 1999 among Global Crossing Ltd. and the
shareholders party thereto (incorporated by reference to Exhibit
(c)(6) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.17 Transfer Agreement dated as of May 16, 1999 among Global Crossing Ltd.
and the shareholders party thereto (incorporated by reference to
Exhibit (c)(8) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.18 Amendment No. 1 dated as of July 18, 1999 to Tender Offer and Purchase
Agreement dated as of May 16 1999 between Global Crossing Ltd. and U S
WEST, Inc. (incorporated by reference to Exhibit 10.2 to the July 20,
1999 8-K).
10.19 Agreement, dated as of July 18, 1999, between Qwest Communications
International Inc. and Global Crossing Ltd. (incorporated by reference
to Exhibit 10.3 to the July 20, 1999 8-K).
10.20 Agreement, dated as of July 18, 1999, between Global Crossing Holdings
Ltd. and Qwest Communications International Inc. (incorporated by
reference to Exhibit 10.4 to the July 20, 1999 8-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.21 1998 Global Crossing Ltd. Stock Incentive Plan, as amended and
restated effective December 7, 1999 (previously filed with this
Registration Statement).
10.22 Form of Non-Qualified Stock Option Agreement as in effect on September
30, 1999 (incorporated by reference to Exhibit 10.2 to the November
15, 1999 10-Q).
10.23 Frontier Corporation Supplemental Retirement Savings Plan as amended
and restated effective January 1, 1996 (incorporated by reference to
Exhibit 10.13 to Frontier Corporation's Annual Report on Form 10-K
filed March 28, 1997).
10.24 Amendment No. 1, effective March 16, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.2 to Frontier Corporation's Quarterly Report on Form 10-Q
filed August 3, 1999).
10.25 Amendment No. 2, dated September 21, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.5 to the November 15, 1999 10-Q).
10.26 Employment Agreement dated as of February 19, 1999 between Global
Crossing Ltd. and Robert Annunziata (incorporated by reference to
Exhibit 10.8 to Global Crossing Ltd.'s Quarterly Report on Form 10-Q
filed on May 10, 1999).
10.27 Executive Contract dated March 25, 1996 between Robert L. Barrett and
Frontier Corporation (incorporated by reference to Exhibit 10.25 to
Frontier Corporation's Quarterly Report on Form 10-Q filed May 14,
1996).
10.28 Amendment dated May 1, 1999 to Executive Contract between Robert L.
Barrett and Frontier Corporation (incorporated by reference to Exhibit
10.7 to the November 15, 1999 10-Q).
10.29 Executive Contract dated January 1, 1998 between Joseph P. Clayton and
Frontier Corporation (incorporated by reference to Exhibit 10.22 to
Frontier Corporation's Annual Report on Form 10-K filed March 26,
1998).
10.30 Amendment dated May 1, 1999 to Executive Contract between Joseph P.
Clayton and Frontier Corporation (incorporated by reference to Exhibit
10.9 to the November 15, 1999 10-Q).
10.31 Sale Agreement, dated October 10, 1999, among Controls and
Communications Limited, The Racal Corporation, Racal Electronics plc
and Global Crossing Ltd. (incorporated by reference to Exhibit 2.1 to
Global Crossing Ltd.'s Current Report on Form 8-K filed on October 21,
1999).
10.32 Registration Rights Agreement, dated as of November 19, 1999, among
Global Crossing Ltd., Global Crossing Holdings Ltd., Chase Securities
Inc. and CIBC World Markets Corp. (previously filed with this
Registration Statement).
10.33 Subscription and Sale and Purchase Agreement, dated November 15, 1999,
among Hutchison Whampoa Limited, Hutchison Telecommunications Limited,
Global Crossing Ltd. and HCL Holdings Limited (previously filed with
this Registration Statement).
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges
(previously filed with this Registration Statement).
21.1 Subsidiaries of the Registrant (incorporated by reference to Exhibit
21.1 to Registrant's annual report on Form 10-K for the year ended
December 31, 1999).
23.1 Consent of Arthur Andersen & Co. (previously filed with this
Registration Statement).
23.2 Consent of PricewaterhouseCoopers LLP (previously filed with this
Registration Statement).
23.3 Consent of KPMG Audit Plc (previously filed with this Registration
Statement).
23.4 Consent of Deloitte & Touche (previously filed with this Registration
Statement).
23.5 Consent of PricewaterhouseCoopers (previously filed with this
Registration Statement).
23.6 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1).
</TABLE>
<PAGE>
<TABLE>
<C> <S>
23.7 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.2).
24.1 Power of Attorney of Global Crossing Holdings Ltd. (previously filed with
this Registration Statement).
24.2 Power of Attorney of Global Crossing Ltd. (previously filed with this
Registration Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of United States Trust Company of New
York, as Trustee (previously filed with this Registration Statement).
99.1 Form of Letter of Transmittal (previously filed with this Registration
Statement).
99.2 Form of Notice of Guaranteed Delivery (previously filed with this
Registration Statement).
</TABLE>
<PAGE>
EXHIBIT 10.5
EXECUTION COPY
_____________________________________
SOUTH AMERICAN CROSSING
_____________________________________
PROJECT DEVELOPMENT
AND
CONSTRUCTION CONTRACT
BETWEEN
ALCATEL SUBMARINE NETWORKS
AND
SOUTH AMERICAN CROSSING LTD.
_____________________________________
Dated as of July 30, 1999
_____________________________________
<PAGE>
TABLE OF CONTENTS
GENERAL TERMS AND CONDITIONS
<TABLE>
<CAPTION>
Article PAGE
- ------- ----
<S> <C>
1 Provision of System.................................................................. 1
2 Documents Forming the Entire Contract................................................ 1
3 Definitions.......................................................................... 2
4 Contract Price....................................................................... 17
5 Terms of Payment by Purchaser........................................................ 21
6 Contract Variations.................................................................. 24
6A Optional Upgrades.................................................................... 25
6B Construction Options for the Trans-Andes Crossing.................................... 29
6C Optional Branching Unit.............................................................. 30
7 Responsibilities for Permits; Compliance with Laws; Purchaser Access Rights.......... 30
8 Route Survey......................................................................... 32
9 Acceptance........................................................................... 33
10 Warranty............................................................................. 37
11 Contractor Support; Use of Segment for Restoration Protection........................ 42
12 Purchaser's Obligations.............................................................. 43
13 Termination for Default.............................................................. 44
14 Termination for Convenience.......................................................... 46
15 Suspension........................................................................... 48
16 Title and Risk of Loss............................................................... 49
17 Force Majeure........................................................................ 49
18 Intellectual Property................................................................ 50
19 Infringement......................................................................... 56
20 Safeguarding of Information and Technology........................................... 57
21 Export Control....................................................................... 58
22 Liquidated Damages................................................................... 58
23 Limitation of Liability/Indemnification.............................................. 60
24 Counterparts......................................................................... 61
25 Design and Performance Responsibility; Subcontractors................................ 61
26 Product Changes...................................................................... 63
27 Risk and Insurance................................................................... 63
28 Plant and Work Rules................................................................. 66
29 Right of Access and Review........................................................... 66
30 Quality Assurance; First Application................................................. 67
31 Documentation........................................................................ 68
32 Training............................................................................. 68
33 Settlement of Disputes/Arbitration................................................... 68
34 Applicable Law....................................................................... 70
35 Notices.............................................................................. 71
36 Publicity and Confidentiality......................................................... 71
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
37 Assignment...................................................................... 72
38 Relationship of the Parties..................................................... 73
39 Successors Bound................................................................ 73
40 Article Captions; Joint Drafting................................................ 73
41 Severability.................................................................... 73
42 *............................................................................... 74
43 Survival of Obligations......................................................... 74
44 Non-Waiver...................................................................... 74
45 Language........................................................................ 74
46 Entire Agreement................................................................ 74
</TABLE>
Exhibit A Route Segments
Exhibit B Form of Parent Guaranty
*
Exhibit D Forms of Opinion for Contractor and Guarantor
Exhibit E Form of Payment Escrow Agreement
Exhibit F First Use System Elements and Subsystems and Deliverable Software
Exhibit G Subcontractors
Exhibit H Intellectual Property
Exhibit I Landing Licenses
Exhibit J Examples of Contractor Permits
Exhibit K Examples of Owner Permits
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
-ii-
<PAGE>
PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
This Project Development and Construction Contract ("Contract") is
corporation organized and existing under the laws of France, and having its
principal office in Clichy Cedex, France, (hereinafter "Contractor") and (ii)
----------
South American Crossing Ltd., a corporation organized and existing under the
laws of Bermuda, and having its principal office in Hamilton, Bermuda
(hereinafter "Purchaser").
---------
WHEREAS, Purchaser desires to establish a fiber optic cable system,
to be known as the South American Crossing Cable System (hereinafter, and as
more fully defined herein, the "System"), which will be used to provide service
among the Segments as described in Exhibit A hereto;
WHEREAS, Contractor is in the business of designing, constructing,
installing, supplying, delivering and manufacturing fiber optic cable systems
and is familiar with the general business of the fiber optic cable system
industry;
WHEREAS, Purchaser seeks to purchase and own the System and wishes to
engage Contractor to perform the Work and Upgrade Work; and
WHEREAS, Contractor is willing to perform the Work and Upgrade Work
on a turn-key, fixed-price basis in accordance with and subject to the terms
hereof.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable considerations, receipt of which is hereby acknowledged, it has
been agreed as follows:
Article 1 Provision of System
- ------------------------------
In consideration of the Contract Price and the Upgrade Prices, the
Contractor hereby agrees to perform the Work and the Upgrade Work, on a turn-
key, fixed price basis, and to provide the Purchaser with the System meeting the
System Performance Requirements on or before the Scheduled RFS Date(s) and the
System Upgrades meeting the requirements of Article 6A, all in accordance with
the terms hereof.
Contractor understands that a part of the System comprising portions
of the Trans-Andean Crossing is intended to be installed by another
contractor(s). The Contractor agrees to reasonably cooperate with Purchaser and
such other contractor(s), as necessary, including with respect to (i) and
carrying out installation and (ii) Contractor's and each such contractor's
obligation to formulate testing procedures.
Article 2 Documents Forming the Entire Contract
- ------------------------------------------------
This Contract consists of these commercial Terms and Conditions,
Exhibits A through K, and the following documents (in the form of attachments,
including appendices, attached hereto), which shall be read and construed as
part of the Contract:
<PAGE>
Commercial Volume
. Provisioning Schedule, Section 2
. Upgrade Provisioning Schedule, Section 3
. Billing Schedule, Section 4
. Upgrade Billing Schedule, Section 5
. Plan of Work, Section 6
. Upgrade Plan of Work, Section 7
. Invoice Format, Section 8
. Form of Contractor's certificate, Section 9
. Progress Schedule, Section 10
. Upgrade Progress Schedule, Section 11
Technical Volume (includes Route Information)
In the event of any inconsistency between the Terms and Conditions
and the above listed documents, the Terms and Conditions shall prevail. The
documents listed above have no order of precedence.
Article 3 Definitions
- ----------------------
Terms used herein which are not defined herein, but which have common
meanings when used in the telecommunications industry, shall have such common
meanings when used herein. Definitions are as described in the specific
Articles. Except as otherwise defined the following definitions shall apply
throughout the Contract:
AAA has the meaning set forth in Sub-Article 33(B).
Acceptance Testing means (i) with respect to a Segment, a Phase or
the System, the tests described in the System Commissioning and Acceptance
section of the Technical Volume or developed pursuant to such section by
mutual agreement of the Parties and designed to verify that such Segment,
such Phase or the System meets the applicable Performance Requirements and
(ii) with respect to any System Upgrade, the tests described in the System
Commissioning and Acceptance section of the Technical Volume or developed
pursuant to such section by mutual agreement of the Parties and designed to
verify that the System Upgrade meets the applicable Performance
Requirements.
Access Rights means all ownership, easement, wayleaves and/or other
property rights, from both private and governmental entities, both on land
and below the surface of the water (including, without limitation,
agreements to use borepipes, conduits and ducts, install manholes and to
lease space in cable stations) necessary to access, use and occupy cable
stations and the sites for cable stations (including, without limitation,
to land and install the submarine cable and related equipment and to bring
such cable from the ocean to the cable stations) in order for the Purchaser
to own, operate and maintain the System.
<PAGE>
3
Actual Knowledge means the actual knowledge of any executives with
management responsibility for the Contract.
Assignment has the meaning set forth in Sub-Article 37(A).
Bank Escrow Agent means The Chase Manhattan Bank, in its capacity as
escrow agent under the Payment Escrow Agreement, and its successors in such
capacity.
Bankruptcy Event means an event specified in Sub-Article 13(A)(3) or
13(A)(4) with Contractor as the "other Party".
Billing Milestones means the billing milestones set forth in the
Technical Volume.
Billing Schedule means a billing schedule attached hereto as Section 4
to the Commercial Volume.
Buenos Aires Telehouse means a telehouse located in Buenos Aires,
Argentina in which Purchaser has obtained Purchaser Access Rights.
Certificate of Commercial Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(D) to Contractor certifying that
a Segment, the System or a System Upgrade is Ready for Commercial
Acceptance.
Certificate of Final Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(E) to Contractor certifying that
a Phase; the System or a System Upgrade is Ready for Final Acceptance.
Certificate of Provisional Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(C) to Contractor certifying that
a Segment, the System or a System Upgrade is Ready for Provisional
Acceptance.
CIF means cost, insurance and freight, as defined in Incoterms.
Colombia Branching Unit means a branching unit (as described in the
Technical Volume) located off the coast of Colombia, which interconnects
Segments G, H and I.
Code means the Internal Revenue Code of 1986, as amended from time to
time.
Commissioning Report means a written report from Contractor
demonstrating that the System (or a Segment, if Purchaser agrees to accept
it) is Ready for Commercial Acceptance or Provisional Acceptance, as the
case may be, and has passed all Acceptance Testing and all other acceptance
and performance requirements set forth in the System Commissioning and
Acceptance section of the Technical Volume.
Confidential Information has the meaning set forth in Sub-Article
36(B).
<PAGE>
4
Contract means this agreement, specifically consisting of the
documents described in Article 2, and shall be deemed to include any
amendments thereto or Contract Variations pursuant to Article 6 (Contract
Variations).
Contract Countries means U.S. Virgin Islands, Brazil, Argentina,
Chile, Peru, Colombia, Panama and Uruguay or any political subdivision
thereof or taxing authority therein.
Contract Price means the Initial Contract Price, plus any variations
pursuant to Article 6 (Contract Variations), Article 6B (Construction
Options for the Trans-Andean Crossing), Article 6C (Optional Branching
Unit), Taxes as set forth in Sub-Article 4(B) and other adjustments to the
Contract Price provided for in this Contract.
Contract Taxes has the meaning set forth in Sub-Article 4(B)(1).
Contract Variation has the meaning set forth in Sub-Article 6(A).
Contractor means the entity that executed this Contract as the
Contractor and that will be responsible for the performance of the Work
(and if applicable, Upgrade Work) under this Contract and shall include its
permitted successors and/or assigns.
Contractor Permits means (i) all permits that the Contractor needs to
conduct its business, (ii) all Permits which the Contractor must obtain in
order to carry out its operations to perform the Work and (iii) minor and
routine construction and building Permits such as licenses to install
electricity and plumbing. Exhibit J hereto contains a list of sample
Contractor Permits; provided that such list is not meant to be complete or
--------
exclusive.
Cook's Crossing means (i) the Supplies contained in the Ft. Amador
(PAC) Cable Station, and the St. Croix (SAC) Cable Station, and (ii) the
transmission facility (owned by an affiliate of purchaser) connecting the
Ft. Amador (PAC) Cable Station, the St. Croix (PAC) Cable Station, and the
Venezuela (PAC) Cable Station; designed and constructed by TSSL for an
affiliate of Purchaser as a fully integrated and working Segment of the
System.
Cook's Crossing Upgrade shall have the meaning set forth in Sub-
Article 6A(A).
Dark Fiber shall mean fiber optic cable meeting the criteria of ITU
G.655 and having the ability to connect to associated repeaters,
regeneration equipment, transmission equipment, terminal equipment or other
Supplies, consisting of four fiber pairs, installed in all or any portion
designated by Purchaser (with notice to Contractor) of the Purchaser Access
Rights, which cable shall not come with any associated repeaters,
regeneration equipment, transmission equipment, terminal equipment or other
supplies, all as more fully described in the Technical Volume.
<PAGE>
5
Date of Commercial Acceptance, Provisional Acceptance or Final
Acceptance means the date set forth in the Certificate of Commercial
Acceptance, Certificate of Provisional Acceptance or Certificate of Final
Acceptance, as the case may be; provided, that for purposes of Article 21
--------
(Liquidated Damages) only, such date shall be deemed to be the date that
Purchaser receives a complete Commissioning Report or an Upgrade
Commissioning Report, as the case may be, demonstrating that a Segment, a
Phase, the System or a System Upgrade, as the case may be, is Ready for
Commercial Acceptance, Ready for Provisional Acceptance or Ready for Final
Acceptance in accordance with Article 9 (Acceptance).
Default means an Event of Default or any event, condition or
occurrence which with the giving of notice or passage of time or both would
be an Event of Default.
Deliverable Software has the meaning set forth in Sub-Article 18(C).
Deliverable Software Escrow has the meaning set forth in Sub-Article
18(H).
Deliverable Technical Material has the meaning set forth in Sub-
Article 18(B).
Dispute Account means the Dispute Account to be created under the
Payment Escrow Agreement.
Event of Default has the meaning set forth in Sub-Article 13(A).
Excluded Tax means a Tax described in any of the following clauses:
(i) any franchise, excess profits, net worth, capital or capital
gains Tax, as well as any Tax on doing business or imposed on net or gross
income or receipts (including minimum and alternative minimum Taxes
measured by any items of Tax preference), but in each case excluding Taxes
that are or are in the nature of sales, use, excise, license, stamp,
rental, ad valorem, value added or property Taxes (other than property
taxes on property owned by the Contractor and not intended to be
incorporated into the System);
(ii) any Taxes imposed by a jurisdiction other than one in which (a)
the Contractor is or is treated as engaged in activities contemplated by or
in fulfillment of the Contract or (b) the Purchaser or its affiliates has a
nexus to such jurisdiction and the Tax imposed is attributable to that
nexus;
(iii) Taxes imposed on the Contractor as a result of Contractor's
gross negligence or willful misconduct; or
(iv) any import duty, other import related charges, sales or use tax,
VAT or property tax imposed by any Non-Contract Country in respect of
Supplies brought into such Non-Contract Country for testing, modification
or other similar purposes prior to being installed or used outside such
Non-Contract Country.
<PAGE>
6
Expedited Upgrade has the meaning set forth in Sub-Article 6A(L).
Final Commissioning Report and Final Upgrade Commissioning Report
means a written report from Contractor demonstrating that the System (or a
Segment) is Ready for Final Acceptance and has passed all Acceptance
Testing and all other acceptance and performance requirements set forth in
the System Commissioning and Acceptance section of the Technical Volume.
Final Survey Report means the final survey report described in the
Technical Volume.
FOB means free on board as defined in the International Chamber of
Commerce, Guide to Incoterms (1990).
Ft. Amador (PAC) Cable Station (or the Panama (PAC) Cable Station)
means the cable station located in Ft. Amador, Panama which is part of the
Pan American Crossing submarine cable system, which is owned by an
affiliate of Purchaser.
Force Majeure has the meaning set forth in Sub-Article 17(A).
Guarantor means Alcatel, a French corporation and the ultimate parent
company of the Contractor.
Guaranty means the guaranty to be entered into by the Guarantor in
favor of the Purchaser, to be substantially in the form of Exhibit B
hereto.
Incoterms means the International Chamber of Commerce, Guide to
Incoterms (1990).
Information has the meaning set forth in Sub-Article 20(A).
Initial Contract Price has the meaning set forth in Sub-Article
4(A)(1).
Initial Upgrade Price has the meaning set forth in Sub-Article
4(A)(2).
Intellectual Property has the meaning set forth in Sub-Article 18(A).
Landing Country(ies) means each country in which the System connects
to a cable station.
Landing Licenses means, in the United States, a License to Land and
Operate a Submarine Cable System pursuant to the Submarine Cable Landing
Act, 47 U.S.C. 34-39 and in the other Landing Countries, the comparable
licenses, which licenses are specifically described in Exhibit I hereto.
Las Toninas Cable Station means the System cable station to be located
in Las Toninas, Argentina.
<PAGE>
7
Laws means any laws, ordinances, regulations, rules, orders,
proclamations, requirements of governmental authorities or treaties.
Manufacturing Materials has the meaning set forth in Sub-Article
13(B).
Non-Contract Countries means all countries, or any political
subdivision thereof or taxing authority therein, other than the Contract
Countries.
Non-Ship Costs has the meaning set forth in Sub-Article 10(A)(2).
Notice of Termination has the meaning set forth in Sub-Article 14(A).
Option Branching Unit shall mean *
Optional Branching Unit Price has the meaning set forth in Article 6C.
Optional TAC Segments means Segments E-1, E-2 and E-3.
Owner Permits means all Permits required to be obtained from
governmental authorities pursuant to Laws that the Purchaser needs to own
and operate the System and which the Purchaser would have had to obtain if
it were constructing the System itself. Exhibit K contains a sample list of
Owner Permits; provided that such list is not meant to be complete or
--------
exclusive.
Party(ies) means either of the Purchaser and/or the Contractor, as
appropriate.
Payment Escrow Agreement means that escrow agreement to be entered
into among the Contractor, Purchaser, and the Bank Escrow Agent,
substantially in the form of Exhibit E hereto, with such changes therein as
are reasonably requested by the Bank Escrow Agent, as amended modified or
supplemented from time to time.
Performance Requirements means (i) with respect to a Segment, a Phase
or the System, the applicable System Performance Requirements set forth or
to be developed by mutual agreement pursuant to the Transmission
Performance section of the System Description section of the Technical
Volume, (ii) with respect to any System Upgrade, the System Performance
Requirements set forth in or to be developed by mutual agreement pursuant
to the Technical Volume or (iii) in each case, such other Segment, Phase,
System or System Upgrade performance levels as mutually agreed by the
Parties, including the System acceptance limits included in the impairment
budgets.
Permits means all Access Rights, permits, pipeline and cable crossing
agreements, approvals, "no objections", permissions-in-principle,
authorizations,
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
8
consents, customs clearances, registrations, certificates, rights-of-way,
certificates of occupancy, licenses, including without limitation, export
and import licenses and similar authorizations, landing permits, orders,
vessel and crew authorizations/visas, permission for the operation of
navigational aids and radio systems and similar authorizations necessary to
complete the Work and operate and maintain the System (other than any of
the foregoing (i) relating to the ownership, operation and maintenance by
Purchaser of the System and not necessary until after the System is Ready
for Final Acceptance, (ii) which is or would be needed by Purchaser to
engage in any business outside the business of developing, owning and
operating a submarine cable system or (iii) which is or would be needed at
any time by any purchaser or lessee of capacity on the System). Permits
include all of the foregoing whether required to be obtained from
governmental entities or private parties. The term Permits includes all
Contractor Permits and all Owner Permits.
Phase 1 means Segments C and D and, if the Phase 1 Option is elected,
Segment E-1, all as more fully described in the Technical Volume hereto.
Phase 1 Option has the meaning set forth in Sub-Article 6B(A).
Phase 2 means Segments A, B and Cook's Crossing, and if the Phase 2
Option is elected, Segment E-2, as more fully described in the Technical
Volume hereto.
Phase 2 Option has the meaning set forth in Sub-Article 6B(B).
Phase 3 means Segments E-1, E-2, E-3, F, G and H, or, if the Phase 1
Option is elected, Segments E-2, E-3, F, G and H, or, if the Phase 2 Option
is elected, Segments E-3, F, G and H, as more fully described in the
Technical Volume.
Plan of Work means the Plan of Work attached as Section 6 to the
Commercial Volume.
Provisioning Schedule means the price schedule attached hereto in
Section 2 to the Commercial Volume.
Purchaser means South American Crossing Ltd. and shall include its
permitted successors and assigns.
Purchaser Access Rights means, with respect to the Trans-Andes
Crossing, the rights of way, duct space, and space and infrastructure in
both equipment huts and telehouses obtained by Purchaser or its affiliates
necessary for Contractor to install the Supplies, all as more fully
described in the Technical Volume.
Purchaser Hindrance has the meaning set forth in Article 12 hereof.
Purchaser Permits means, collectively, all Landing Licenses.
<PAGE>
9
Ready for Commercial Acceptance means
(i) for any Segment, that
(a) if the Phase including such Segment is not at the same time
also Ready for Commercial Acceptance, the Purchaser has
consented, in its sole discretion, to accept such Segment
as Ready for Commercial Acceptance,
(b) such Segment has been substantially completed and has the
ability to carry commercial traffic between the two landing
points of such Segment meeting performance criteria of ITU-
T G.826 as defined in the System Performance section of the
Technical Volume and has line monitoring and protection
switching capability,
(c) Contractor has tested and provided for STM-1
interconnectivity capability to the Segment terminal
equipment according to ITU-T G.826 or, if a different
interface rate is used, an equivalent standard,
(d) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to
be performed by it, and
(e) all Permits are obtained for such Segment, and
(ii) for any Phase, that
(a) such Phase has been substantially completed and has the
ability to carry commercial traffic operating at 20 Gb/s
per fiber pair on two fiber pair between the various
landing points of such Phase meeting performance criteria
of ITU-T G.826 as defined in the System Performance section
of the Technical Volume, has line monitoring and per
Segment protection switching capability and has network
management capability,
(b) Contractor has tested and provided for STM-1
interconnectivity capability to the System terminal
equipment according to ITU-T G.826 or if a different
interface rate is used, an equivalent standard,
(c) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to
be performed by it;
(d) all Permits are obtained for such Phase; and
<PAGE>
10
(e) in the case of Phase 3, the System is also ready for
Commercial Acceptance; and
(iii) for the System, that
(a) the System has been substantially completed and has the
ability to carry commercial traffic throughout the System
(operating at 20 Gb/s per fiber pair on two fiber pair)
meeting performance criteria of ITU-T G.826 as defined in
the System Performance section of the Technical Volume, has
line monitoring and per Segment protection switching
capability and has network management capability,
(b) Contractor has tested and provided for STM-1
interconnectivity capability to the System terminal
equipment according to ITU-T G.826, or, if a different
interface rate is used, an equivalent standard,
(c) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required to
be performed by it,
(d) all Permits are obtained for such Phase, and
(e) in the case of Phase 3, the System is also ready for
Commercial Acceptance, and
(iv) for any System Upgrade, the System is Ready for Commercial
Acceptance at the capacity specified for such System Upgrade.
<PAGE>
11
Ready for Final Acceptance means
(i) for any Phase, that
(a)(I) such Phase has successfully and continuously (other
than by reason of Force Majeure in which case the test
period shall be extended for a time period agreed
between the Parties) functioned in compliance with the
System Performance Requirements during the period of
ninety (90) consecutive days after the Date of
Provisional Acceptance, or
(II) if such Phase shall have failed to meet the System
Performance Requirements at any time during such period
(other than by reason of Force Majeure), the Contractor
has corrected such failure and such Phase has
successfully and continuously (other than by reason of
Force Majeure in which case the test period shall be
extended for a time period agreed between the Parties)
functioned in compliance with the System Performance
Requirements for such additional period of time not to
exceed ninety (90) days (and not to end prior to the
date ninety (90) days after the Date of Provisional
Acceptance) as reasonably determined by the Purchaser
as being sufficient to confirm that such failure has
been corrected and that no other failures are likely to
appear, and
(b) all deficiencies noted in the Certificate of
Provisional Acceptance have been corrected (other than
minor deficiencies which will not affect the operation
of such Phase, in respect of which an equitable
adjustment to the Contract Price will be made),
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property), and
(d) in the case of Phase 3 the System is also Ready for
Final Acceptance and meets the criteria of clause (ii)
below, and
(ii) for the System, that
(a)(I) the System has successfully and continuously (other
than by reason of Force Majeure in which case the test
period shall be extended for a time period agreed
between the Parties) functioned in compliance with the
System Performance Requirements during the period of
ninety (90) consecutive days after the Date of
Provisional Acceptance, or
(II) if the System shall have failed to meet the System
Performance Requirements at any time during such period
(other than by reason
<PAGE>
12
of Force Majeure), the Contractor has corrected such
failure and the System has successfully and
continuously (other than by reason of Force Majeure in
which case the test period shall be extended for a time
period agreed between the Parties) functioned in
compliance with the System Performance Requirements for
such additional period of time not to exceed ninety
(90) days (and not to end prior to the date ninety (90)
days after the Date of Provisional Acceptance) as
reasonably determined by the Purchaser as being
sufficient to confirm that such failure has been
corrected and that no other failures are likely to
appear,
(b) all deficiencies noted in the Certificate of
Provisional Acceptance have been corrected (other than
minor deficiencies which will not affect the operation
of the System, in respect of which an equitable
adjustment to the Contract Price will be made), and
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property), and
(iii) for any System Upgrade, that
(a)(I) the System Upgrade has successfully functioned in
compliance with the System Performance Requirements
during the period of ninety (90) days after the Date of
Provisional Acceptance of the System Upgrade, or
(II) if the System Upgrade shall have failed to meet the
System Performance Requirements during such period, the
Contractor has corrected such failure and the System
Upgrade has successfully functioned in compliance with
the System Performance Requirements for such additional
period of time not to exceed ninety (90) days as
reasonably determined by the Purchaser as sufficient to
confirm that such failure has been corrected, and
(b) all deficiencies noted in the Certificate of
Provisional Acceptance have been corrected (other than
minor deficiencies which will not affect the operation
of the System, in respect of which an equitable
adjustment of the Contract Price will be made), and
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property).
Ready for Provisional Acceptance means
(i) with respect to any Segment,
<PAGE>
13
(a) if the Phase including such Segment is not, at the same
time, also Ready for Provisional Acceptance, the
Purchaser has consented, in its sole discretion, to
accept such Segment as Ready for Provisional
Acceptance,
(b) such Segment is complete in all material respects (and
in any event is Ready for Commercial Acceptance),
(c) the results of Acceptance Testing of such Segment
demonstrate that such Segment has satisfied the System
Performance Requirements,
(d) Contractor has substantially performed its obligations
under Article 18 (Intellectual Property) then required
to be performed by it,
(e) all Permits are obtained for such Segment, and
(ii) with respect to any Phase, such Phase is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments of such Phase are Ready for
Provisional Acceptance with per Segment protection capability,
line monitoring and network management capability, and, in the
case of Phase 3, the System is also Ready for Provisional
Acceptance,
(iii) with respect to the System, the System is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments are Ready for Provisional Acceptance
with per Segment protection capability, line monitoring and
network management capability and self-healing ring protection
capability, and
(iv) with respect to any System Upgrade, the results of Acceptance
Testing of such System Upgrade demonstrate that such System
Upgrade is complete in all material respects and is sufficient
to realize the Performance Requirements.
Representatives has the meaning set forth in Article 36(B).
Retainage means (a) in the case of the System, an amount equal to
* of the Initial Contract Price and (b) in the case of each System
Upgrade, an amount equal to * of the Initial Upgrade Price.
Retesting has the meaning set forth in Sub-Article 9(B)(3).
Route Survey means the route survey described in the Technical Volume.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
14
Santiago Telehouse means a telehouse located in Santiago, Chile in
which Purchaser has obtained Purchaser Access Rights.
Scheduled Phase 1 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Phase 2 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Phase 3 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled RFS Date(s) means any of the Scheduled Phase 1 RFS Date,
Phase 2 RFS Date and/or Scheduled System RFS Date.
Scheduled System RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Upgrade Date means for any System Upgrade, the date by which
the Contractor agrees such System Upgrade will be Ready for Provisional
Acceptance or Commercial Acceptance.
Segment means any of Segments A through I and Cook's Crossing.
Segment A means the four fiber pair Segment of the System from the St.
Croix (SAC) Cable Station to Fortaleza, Brazil and landing in Fortaleza in
a location capable of interconnecting with major telecommunications
carriers.
Segment B means the four fiber pair Segment of the System from
Fortaleza, Brazil to Rio de Janeiro, Brazil and landing in Rio de Janeiro
in a location capable of interconnecting with major telecommunications
carriers.
Segment C means the four fiber pair Segment of the System from Rio de
Janeiro, Brazil to Santos, Brazil and landing in Santos in a location
capable of interconnecting with major telecommunications carriers.
Segment D means the four fiber pair Segment of the System from Santos,
Brazil to the Las Toninas Cable Station and, if elected, the Optional
Branching Unit.
Segment E-Base means the four fiber pair Segment of the System from
the Las Toninas Cable Station to the Buenos Aires Telehouse to the Santiago
Telehouse to the Valparaiso Cable Station.
Segment E-1 means the four fiber pair Segment from the Las Toninos
Cable Station connecting to the Buenos Aires Telehouse.
Segment E-2 means the four fiber pair Segment from the Buenos Aires
Telehouse connecting to the Santiago Telehouse.
<PAGE>
15
Segment E-3 means the four fiber pair Segment connecting the Santiago
Telehouse to the Valparaiso Cable Station.
Segment F means the four fiber pair Segment of the System from the
Valparaiso Cable Station to Lurin, Peru and landing in Lurin in locations
capable of interconnecting with major telecommunications carriers.
Segment G means the four fiber pair Segment of the System from Lurin,
Peru to the Colombia Branching Unit.
Segment H means the four fiber pair Segment of the System from the
Colombia Branching Unit to Buenaventura, Columbia and landing in
Buenaventura in a location capable of interconnecting with major
telecommunications carriers.
Segment I means the four fiber pair Segment of the System from the
Colombia Branching Unit to the Ft. Amador (PAC) Cable Station.
Ship Costs has the meaning set forth in Sub-Article 10(A)(2).
Ship Period has the meaning set forth in Sub-Article 10(A).
Software Escrow Agreement has the meaning set forth in Sub-Article
18(H).
St. Croix (PAC) Cable Station means the cable station located in St.
Croix, Virgin Islands which is connected to the Pan American Crossing
submarine cable system, which is owned by an affiliate of Purchaser.
St. Croix (SAC) Cable Station means the cable station to be
provisioned in St. Croix, Virgin Islands by the Contractor and which will
be located adjacent to the St. Croix (PAC) Cable Station and interconnected
to it.
Subcontractor means a contractor, vendor, supplier, licensor or other
person having a direct or indirect contract with the Contractor or with any
other Subcontractor of the Contractor who has been hired specifically to
assist the Contractor in certain specified areas of its performance of its
obligations under this Contract including, without limitation, performance
of any part of the Work.
Supplies means any and all materials, plant, machinery, equipment,
hardware and items supplied by the Contractor under this Contract.
Suspension means a suspension in all or part of the Work pursuant to
Sub-Article 15(A) or 15(B).
System means the fiber optic cable system as described in Exhibit A
and the Technical Volume.
<PAGE>
16
System Performance Requirements has the meaning set forth in the
Technical Volume.
System Upgrade has the meaning set forth in Sub-Article 6A(A).
TAC Options means the Phase 1 Option and/or the Phase 2 Option.
TAC Segments means Segments E-Base and/or E-1, E-2 and E-3, as the
case may be.
Tax means any tax, duty, levy, charge or custom (including, without
limitation, any sales or use tax, VAT or octroi duty relating to the
Contract items and fiscal stamps connected with Contract legalization)
imposed or collected by any taxing authority or agency (domestic or
foreign).
Technical Volume means the Technical Volume attached hereto.
Trans-Andes Crossing means that portion of the System that connects
the Las Toninas Cable Station, the Buenos Aires Telehouse, the Santiago
Telehouse and the Valparaiso Cable Station, as more fully described in the
Technical Volume.
Transferee means any entity to which purchaser assigns rights
hereunder pursuant to Sub-Article 37(C) hereof.
TSSL means Tyco Submarine Systems Ltd., a Delaware corporation.
Upgrade Billing Schedule means the billing schedule attached hereto as
Section 5 to the Commercial Volume.
Upgrade Commissioning Report means a written report from Contractor
demonstrating that a System Upgrade is Ready for Commercial Acceptance or
Provisional Acceptance, as the case may be, and has passed all Acceptance
Testing and all other acceptance and performance requirements set forth in
the System Commissioning and Acceptance section of the Technical Volume.
Upgrade Option Period has the meaning set forth in Sub-Article 6A(B).
Upgrade Period has the meaning set forth in Sub-Article 6A(E).
Upgrade Plan of Work means the plan of work attached hereto as Section
7 to the Commercial Volume.
Upgrade Price means, for any System Upgrade, the Initial Upgrade Price
for such System Upgrade, plus any variations pursuant to Article 6
(Contract Variations), Taxes as set forth in Sub-Article 4(B) and other
adjustments to such Upgrade Price provided for in this Contract.
<PAGE>
17
Upgrade Provisioning Schedule means the provisioning schedule attached
hereto as Section 3 to the Commercial Volume.
Upgrade Warranty Period has the meaning set forth in Sub-Article
10(A).
Upgrade Work means the activities and services to be performed or
provided by Contractor under Article 6A (Optional Upgrades).
*
Valparaiso Cable Station means the System cable station located in
Valparaiso, Chile.
Venezuela (PAC) Cable Station means the cable station located in
Venezuela which is part of the Pan American Crossing submarine cable
system, which is owned by an affiliate of Purchaser.
Warranty Period has the meaning set forth in Sub-Article 10(A).
Work means all activities and services (other than the activities and
services specified in this Contract to be provided by Purchaser) necessary
to be performed or provided in developing, planning, engineering,
designing, manufacturing, constructing, delivering, installing and testing
the System until the System is Ready for Final Acceptance, including
without limitation, designating, coordinating and obtaining all Permits,
except for the Purchaser Permits, provided that Work shall not include
obtaining Purchaser Access Rights. Whether or not used in conjunction with
the term "Supplies", the term "Work" shall always be deemed to include the
provision of the relevant Supplies, unless the context requires otherwise.
Year 2000 Compliant means, when used with respect to any software or
materials, that such software or materials will operate accurately and,
without interruption, accept, possess and in all manner retain full
functionality when referring to, or involving, any year or date in the
twentieth or twenty first centuries.
Article 4 Contract Price
- -------------------------
A. Contract Price
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
18
1. The initial Contract Price for the Work, in United States Dollars
(US$) is a fee of $743,163,751 (the "Initial Contract Price")
which is composed of the Phase 1 price of *, the Phase 2 price of
* and the Phase 3 price of *. The Initial Contract price may also
be reduced pursuant to the provisions of paragraph C of Article
6B. The Initial Contract Price does not include the cost of
optional upgrades which are described in Article 6A (Optional
Upgrades), Article 6B (Construction Options for the Trans-Andes
Crossing), Article 6C (Optional Branching Unit), any contract
variations as provided for in Article 6 (Contract Variations) or
any Taxes. The Initial Contract Price includes all charges for
CIF and all costs and expenses incurred in obtaining all Permits
(including Access Rights but not including Purchaser Access
Rights).
2. The initial Upgrade Price for any Upgrade Work, in United States
Dollars (US$) is the fixed fee set forth in Sub-Article 6A(G),
payable as set forth in Section 5 of the Commercial Volume (the
"Initial Upgrade Price"). No Initial Upgrade Price includes the
cost of any contract variations as provided for in Article 6
(Contract Variations) or any Taxes.
3. (a) The Provisioning Schedule sets forth the Contractor's
breakdown of the Initial Contract Price among various
aspects of the Work. If the actual cost of any aspect of the
Work is greater or less than that set forth in the
Provisioning Schedule, such fact shall not cause any change
in the Initial Contract Price.
(b) At its discretion, the Purchaser may direct the Contractor
to deliver either Universal Joints conforming to qualified
Universal Jointing Consortium Technology or Contractor
proprietary joints as spares, in such quantities as provided
in the Provisioning Schedule; such direction may be given
during the course of the Work, but not later than such date
as the Parties shall mutually agree, and such direction,
whichever spare joint type is selected, shall not cause any
change in the Initial Contract Price.
4. Without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or delayed, the Contractor
shall not arrange for any
(a) Access Right which requires payments to be made by the
Purchaser or made after the System is Ready for Provisional
Acceptance, or
(b) Permit which requires aggregate payments in excess of
$250,000 to be made by Purchaser or made after the System is
Ready for Provisional Acceptance.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
19
5. The Contractor and the Purchaser will share equally the costs and
expenses of the Payment Escrow Agent.
B. Taxes, Levies and Duties
1. The Initial Contract Price and each Initial Upgrade Price, as
stated in Sub-Article 4(A) above, excludes any Tax. The Contract
Price and each Upgrade Price shall without duplication be
adjusted for any Tax imposed on or in connection with this
Contract (including, without limitation, the execution and
delivery of this Contract, the Work, the Upgrade Work and the
Supplies, but excluding any Excluded Taxes) (any such Taxes,
other than Excluded Taxes, are hereinafter referred to as
"Contract Taxes"). Contractor has provided a good faith estimate
of the Contract Taxes payable by the Purchaser; it being
understood that the Contractor shall have no liability under this
Contract or otherwise to the Purchaser for any errors or
omissions in such estimate or any losses arising therefrom. The
Contractor shall be responsible for any Excluded Tax that might
be incurred by the Contractor as well as any Tax described in
clause (iv) of the definition of Excluded Tax.
2. The Purchaser will be ultimately responsible for the payment of
all Contract Taxes (including, without limitation, Contract Taxes
that are VAT, octroi duties relating to Contract items and fiscal
stamps, etc. connected with Contract legalizations to the
authorities in their countries). In the case of any Contract
Taxes paid by the Contractor, the Contractor shall submit payment
on the Purchaser's behalf and Contractor will be reimbursed by
the Purchaser in accordance with Article 5 (Terms of Payment by
Purchaser).
3. The Contractor agrees to use reasonable efforts, including,
without limitation, by registering for VAT and any applicable
sales Taxes in any country, state or other jurisdiction where
legally required, to cooperate with and assist Purchaser in its
efforts (i) to have Supplies which are the subject of this
Contract made exempt from Contract Taxes, whether in the
manufacture of the Supplies or related to the importation or
location or installation of the Supplies, (ii) to request
revisions, drawbacks, remissions, reclassifications or the like
to the jurisdictions identified by the Purchaser; or (iii) to
reduce or eliminate Contract Taxes (including the provision of
applicable certifications and forms) and to obtain any available
refunds of Contract Taxes, provided that the Contractor shall not
--------
be required to act other than in accordance with the relevant
Laws then in force. The Purchaser shall reimburse the Contractor,
in accordance with Article 5, for any reasonable costs (including
the reasonable fees and expenses of legal counsel, accountants
and other advisors) incurred by the Contractor under this Sub-
Article 4(B)(3), provided that Purchaser was notified and has
--------
consented to the incurrence of such costs, fees and
<PAGE>
20
expenses. Contractor shall not be required to cooperate with and
assist Purchaser in its efforts under this Sub-Article 4(B)(3) or
to take any action hereunder which in the Contractor's good faith
judgment would incur any costs or if in Contractor's good faith
judgment it would be advisable to obtain the advice of counsel,
accountants or other advisors prior to cooperating with or
assisting purchaser or taking any action, unless in each case,
Purchaser has agreed to reimburse Contractor under the foregoing
proviso.
4. Prior to the Date of Provisional Acceptance with respect to a
Phase, the System or any System Upgrade, the Contractor shall
provide evidence of having made all payments for Taxes included
in the Contract Price or Upgrade Price or described in clause
(iv) of the definition of Excluded Taxes, other than VAT due on
payments of the Contract Price or Upgrade Price made on or after
the Date of Provisional Acceptance of the System or System
Upgrade, which evidence shall be provided within sixty (60) days
of the date of each such payment.
5. As part of Work or any Upgrade Work, the Contractor shall obtain
at its expense, on Purchaser's behalf, any import license or
other official authorization and carry out all customs
formalities necessary for the importation or exportation of goods
in connection with such Work or Upgrade Work. With respect to
each Contract Country, the Purchaser agrees to be the Importer or
Exporter of Record or designate an Importer or Exporter of
Record/Consignee on its behalf, unless, in either case, in the
Purchaser's reasonable opinion such action could expose the
Purchaser to a possible material burden or risk. Purchaser must
provide a Letter of Authorization from any third party designate
stating it agrees to be the Importer or Exporter of Record on
Purchaser's behalf and identify the name and address of the
designated Importer or Exporter of Record.
6. The Supplies to be installed or held on land shall be delivered
to the agreed point at the named place of destination and shall
be consigned to the Purchaser.
C. Withholding Tax
1. If withholding for any Tax is required in respect of any payment
to the Contractor, the Purchaser shall (i) withhold the
appropriate amount from such payment, (ii) pay such amount to the
relevant authorities in accordance with the applicable Laws and
(iii) in the case of any such withholding in respect of a
Contract Tax (other than any withholding that would not have been
required if the Contractor had satisfied its other Tax payment
obligations) and subject to the Contractor's satisfying the
obligations set forth in the last sentence of this Sub-Article
4(C)(1), pay the Contractor an additional amount such that the
net amount received by
<PAGE>
21
the Contractor is the amount the Contractor would have received
in the absence of such withholding. In such a case, the Purchaser
shall provide to the Contractor, as soon as reasonably
practicable, a certified copy of an official tax receipt for any
Tax which is retained from any payment due to the Contractor or
for any Tax which is paid on behalf of the Contractor. All such
receipts shall be in the name of the Contractor. The Contractor
agrees to complete accurately and timely provide to the Purchaser
or, if required, to the applicable Taxing authority, such forms,
certifications or other documents as may be requested in timely
manner by Purchaser, in order to allow it to make payments to the
Contractor without any deduction or withholding on account of
withholding Taxes (or at a reduced rate thereof) or to receive a
refund of any amounts deducted or withheld on account of
withholding Taxes.
2. If the Contractor shall become aware that it is entitled to
receive a refund or credit from a relevant taxing or governmental
authority in respect of a Contract Tax as to which the Purchaser
has paid an additional amount pursuant to Sub-Article 4(C)(1)
above, the Contractor shall promptly notify the Purchaser of the
availability of such refund or credit and shall, within 30 days
after receipt of a request by the Purchaser (whether as a result
of notification that it has made to the Purchaser or otherwise),
make a claim to such taxing or governmental authority for such
refund or credit at the Purchaser's expense. If the Contractor
receives a refund or credit in respect of a Contract Tax as to
which the Purchaser has paid an additional amount pursuant to
Sub-Article 4(C)(1) above, or if, as a result of the Purchaser's
payment of such additional amounts, the Contractor or any other
member of an affiliated group, as defined in section 1504(a) of
the Code, of which the Contractor is a member, receives a credit
against Taxes imposed on its income or franchise taxes imposed on
it by the country under the laws of which it is organized or any
political subdivision thereof, the Contractor shall promptly
notify the Purchaser of such refund or credit and shall within 30
days from the date of receipt of such refund or benefit of such
credit pay over the amount of such refund or benefit of such
credit (including any interest paid or credited by the relevant
taxing or governmental authority with respect to such refund or
credit) to the Purchaser (but only to the extent of the
additional payments made by the Purchaser under Sub-Article
4(C)(1) above with respect to the Contract Tax giving rise to
such refund or credit), net of all out-of-pocket expenses of the
Contractor which it would not have incurred but for the
application of this paragraph; provided, however, that the
-------- -------
Purchaser, upon the request of the Contractor agrees to repay the
amount paid over to the Purchaser (plus penalties, interest or
other charges due to the appropriate authorities in connection
therewith) to the Contractor in the event the Contractor is
required to repay such refund or credit to such relevant
authority.
Article 5 Terms of Payment by Purchaser
- ----------------------------------------
<PAGE>
22
A. General Conditions of Payment
1. All payments shall be made and all invoices shall be rendered in
US Dollars (US$). The Purchaser shall be responsible for and
shall pay all costs and fees for payment, as well as the banking
and wiring costs. All banking documents and correspondence must
be in English.
B. Invoice Procedures
1. All invoices for Work shall be submitted according to the Billing
Schedule, provided, that the appropriate Billing Milestones have
--------
been achieved. All invoices for Work shall have a certificate in
the form of Section 9 of the Commercial Volume attached.
2. Any Contract Variations shall be invoiced and paid in accordance
with the terms of the Contract Variation as specified in Article
6 (Contract Variations).
3. Invoices for Upgrade Work shall be submitted according to the
Upgrade Billing Schedule and shall be paid in accordance with
this Article 5.
4. Invoices for amounts not described in Sub-Sections 1 through 3
above, which may become payable hereunder, shall be submitted
after applicable costs have been incurred or such other time as
may be specified in this Contract, and shall be accompanied by a
certificate of the Contractor explaining such amount and
certifying that it is payable.
5. The Contractor shall render all invoices to the following address
or facsimile number:
South American Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Facsimile: 441-296-6749/8606
Attn: Robert Klug
C. Payment Procedures
1. The Purchaser shall pay the Contractor, and the Contractor shall
accept payment, in accordance with this Article 5 (Terms of
Payment by Purchaser). Purchaser agrees to pay an initial payment
to Contractor in the amount of *. Within three business days of
the time the conditions set forth in Article 42 hereof are
fulfilled by all Parties, the first portion of the initial
payment, in the amount of *, shall be paid by Purchaser to
Contractor. Failure to receive this payment shall entitle
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
23
Contractor, upon 5 business days' notice to Purchaser of intent
to suspend, to immediately suspend Work hereunder. The second
portion of the initial payment, in the amount of *,
shall be paid by Purchaser within 30 days. The third portion of
the initial payment in the amount of *, shall be paid
by Purchaser within 56 days.
2. Invoices given to the Purchaser on or before the last day of any
month shall, subject to Sub-Article 5(C)(5) below, be due and
payable on the last day of the next month or such other time as
may be specified in this Contract.
3. Invoices not paid when due shall accrue late payment charges from
the day, following the day, on which payment was due until the
day on which it is paid. Invoices for such extended payment
charges shall not be issued for an amount less than U.S. $1,000.
Extended payment charges shall be computed at the rate of one
percent (1%) per month.
4. In the event that the Purchaser has an objection to any invoice
or other payment obligation or any amount owing by Contractor to
Purchaser shall not have been paid when due, the Purchaser shall
promptly notify the Contractor of such objection and such amount,
and the Purchaser and Contractor shall make every reasonable
effort to settle promptly the dispute concerning the payment(s)
in question. In the event such dispute cannot be settled within
60 days, the Contractor and the Purchaser will promptly execute
and deliver a Payment Escrow Agreement substantially in the form
of Exhibit E hereto, with such changes therein as the Bank Escrow
Agent may reasonably request, and the Purchaser will have the
right to withhold payment of the disputed amount(s) (or withhold
from the invoice amount a sum equal to the amount purportedly
owing by Contractor) so long as it deposits, in full, such
disputed amount(s) into the Dispute Account.
(a) Provided such disputed amount is placed into the Dispute
Account in a timely manner, the Purchaser shall not be
deemed to be in breach of or in default for failing to pay
Contractor and the Contractor shall continue to perform all
of its obligations hereunder.
(b) The Bank Escrow Agent will distribute the disputed amount in
accordance with the terms of the Payment Escrow Agreement.
(c) In addition, the prevailing Party shall be entitled to
receive from the Dispute Account an amount equal to the
interest earned by the Bank Escrow Agent on the distributed,
disputed amount, which shall be distributed by the Bank
Escrow Agent under clause (b) above.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
24
The Contractor and the Purchaser will share equally the costs and
expenses of the Bank Escrow Agent.
5. The Purchaser shall make timely payments for that portion of the
invoice not in dispute in accordance with Sub-Article 5(C) or
such payments will be assessed extended payment charges as set
forth in Sub-Article 5(C)(4). Pending resolution of the dispute,
the Purchaser may not withhold payment (unless also subject to
dispute) on any other invoice concerning different goods and/or
services submitted by Contractor.
6. The Retainage for the System, or any System Upgrade shall be
invoiced on the Date of Final Acceptance of the System, or such
System Upgrade, as the case may be and shall be payable as set
forth in Sub-Article 5(C)(2).
Article 6 Contract Variations
- ------------------------------
A. Either Party may request, during construction of the System or any
System Upgrade, by written order, a contract variation ("Contract Variation")
requiring additions or alterations to, deviations or deductions from the System
or System Upgrade. If the other Party consents, in its sole discretion, this
change will be formalized as an amendment to this Contract by a Contract
Variation; provided, that the Contractor will not unreasonably withhold its
--------
consent to a Contract Variation requested by the Purchaser; and provided
--------
further, that Purchaser will not unreasonably withhold its consent to a Contract
- -------
Variation requested by the Contractor so long as such Contract Variation does
not affect the Contract Price, any Upgrade Price, the Scheduled System RFS Date,
the Scheduled Phase 1 RFS Date, the Scheduled Phase 2 RFS Date, any Scheduled
Upgrade Date, any warranties or the Performance Standards.
B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension of time
and all other terms have been mutually agreed upon by the Parties (and the
Parties shall act reasonably and in good faith in connection with all such
terms) and such Contract Variation is signed by an authorized representative of
each Party. Each Contract Variation shall be incorporated as an amendment to the
Contract.
C. Contractor may seek a Contract Variation for any change, after the
date hereof, of any Law (except those, and to the extent, affecting only Taxes
or wages) which requires a change in the Work or the Upgrade Work or affects the
costs (other than wages) incurred or to be incurred by the Contractor or any
combination of the foregoing and Purchaser shall agree to any such change in
Work or Upgrade Work as may be required and to an equitable adjustment to the
Contract Price or the applicable Upgrade Price; provided, that the Contractor
--------
shall not be entitled to any increase in the Contract Price for any change of
Law resulting from any act or omission of Contractor. As of the date hereof,
neither Party has Actual Knowledge of any proposed change in any Law that would
require a change in the Work or the Upgrade Work.
D. The Initial Contract Price is based on the assumption that the SDH
low speed interconnect configuration shall be as set forth in the System
Description section of the Technical
<PAGE>
25
Volume. Purchaser may elect to change such configuration by eliminating,
replacing or adding optical interfaces and SDH equipment each with respect to
one or more Segments, where all such elections (i.e. eliminations, replacements
or additions of optical interfaces) to such interconnect configuration shall be
implemented using equipment as listed in the Provisioning Schedule or as
otherwise mutually agreed by the Parties. If Purchaser makes any such election,
both Parties shall agree to an equitable adjustment, up or down, based on the
prices set forth in the Provisioning Schedule, to the Contract Price and/or one
or more of the Scheduled RFS Dates, as necessary for each such election. The
equitable adjustment shall take into account the actual costs incurred by
Contractor, including but not limited to, costs associated with canceling firm
commitments.
Article 6A Optional Upgrades
- -----------------------------
A. This Article includes the terms and conditions governing options for
future upgrades to the System (each a "System Upgrade") that may be exercised by
Purchaser during the Upgrade Option Period. Purchaser shall have the option to
cause Contractor to perform System Upgrades *. Contractor will have the
obligation, as part of each System Upgrade, to fully integrate as a working
Segment of the System, additional supplies furnished by another contractor for
Cook's Crossing so the entire System is upgraded by *, as more fully
described in the Technical Volume.
B. The option period ("Upgrade Option Period") during which Purchaser
may place orders to upgrade the System shall end * after the Date of Final
Acceptance of the System (and shall commence with respect to System Upgrades on
the Scheduled System RFS Date).
C. Purchaser may from time to time exercise an option, during the
Upgrade Option Period, to upgrade the System, in accordance with the terms and
conditions contained in this Article, by providing notice pursuant to Article
35.
Each System Upgrade shall consist of an incremental increase in the
System capacity in integral multiples of *
* around the ring network. Each System Upgrade shall increase the
capacity of all Segments by equal increments for service and protection capacity
and shall include all necessary spares, documentation and training attendant to
such System Upgrade. For each System Upgrade, the System capacity shall be *
*. Purchaser shall provide a separate notice pursuant to Article 35 for each
System Upgrade.
D. While Contractor only anticipates the need for dry plant
modifications to achieve each System Upgrade, Contractor reserves the right to
replace or supplement wet plant equipment, including repeaters and cable, if
Contractor determines that such replacement or supplement is reasonably
necessary to provide a particular System Upgrade that meets the Performance
Requirements. *.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
26
E. In implementing each System Upgrade, Contractor will not impair
service of existing System traffic. Contractor, upon receiving authorization
from Purchaser, may reroute traffic on a service path on the installed System to
a protection path on the installed System in order to implement the System
Upgrade so as not to incur traffic disruption.
F. The performance of the System, at the end of each Upgrade Period,
shall be consistent *.
G. The System Upgrades shall be provided by Contractor at the
following fixed prices payable as set forth in the Upgrade Billing Schedule:
<TABLE>
<CAPTION>
A B
--------------------------------- -------------------------------------------
Fixed Initial Upgrade Price(s) Fixed Initial Upgrade Price for
Each Upgrade of System Capacity Of for *
* *
- ---------------------------------- --------------------------------- -------------------------------------------
<S> * <C> * <C> *
</TABLE>
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
27
<TABLE>
<CAPTION>
A B
--------------------------------- -------------------------------------------
Fixed Initial Upgrade Price(s) Fixed Initial Upgrade Price for *
Each Upgrade of System Capacity Of for *
*
- ---------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C>
* * *
Total of Upgrades * : 1,543,779,041 1,933,788,475
</TABLE>
If and when the aggregate prices of System Upgrades ordered by
Purchaser pursuant to column A above equals *, then Purchaser will be entitled
to a * discount on the portion of any System Upgrade price which exceeds *
provided, that if and when such aggregate price equals * such discount shall be
- --------
increased to *. If and when the aggregate prices of System Upgrades ordered by
Purchaser pursuant to column B above equals *, then Purchaser will be entitled
to a * discount on the portion of any System Upgrade price which exceeds *;
provided, that such discount shall not be applied to the portion of such price
- --------
which relates to the Supplies which are furnished by *; provided, further, that
--------
if and when such aggregate price equals *, such discount shall be increased to
*. In addition, if *, at any time after the aggregate prices of System Upgrades
ordered by Purchaser pursuant to column B above equals or exceeds *, offers the
Contractor a discount on the price of * to be provided in connection with any
--------
future such System Upgrades, the Contractor agrees to pass the full amount of
such discount through to the Purchaser. Amounts payable for System Upgrades in
increments of more than * will be increased in accordance with the foregoing
schedule. For example, if the first System Upgrade chosen from column B is for
*, the Price would be *. An initial payment may be invoiced at the time a
System Upgrade is ordered in the amount of * of the fixed Initial Upgrade Price
for such Upgrade plus, if applicable, the additional amounts set forth below. *
such initial payment (or * of the fixed Initial Upgrade Price for such Upgrade),
plus, so long as the Contractor is maintaining inventory for Expedited Upgrades
pursuant to Sub-Article 6A(L), an additional payment of *, will be payable
within * business days of Purchaser's receipt of such invoice. The remaining
half of such initial payment will be payable within * of Purchaser's receipt of
such invoice. Such initial payment, including any additional payment described
above shall be part of the Initial
<PAGE>
28
Upgrade Price stated above for such System Upgrade and shall not
be an increase to such System Upgrade's Initial Upgrade Price.
H. The plan of work for any System Upgrade is included in the
Commercial Volume.
I. The provisioning schedule for any System Upgrade is included in
the Commercial Volume.
J. Contractor shall have no obligation to perform a System Upgrade
(and no liability for failure to perform a System Upgrade) if Purchaser, its
representatives, employees or agents (other than Contractor) shall have modified
the System in such a way as to make it more difficult (unless there is an
equitable adjustment to the Upgrade Work) or more costly (unless such cost is
provided for by Purchaser) for Contractor to perform such System Upgrade,
provided that Contractor shall be relieved of its obligation to perform such
System Upgrade (and shall have no liability for failure to perform such System
Upgrade) if such modification makes it impossible for Contractor to perform such
System Upgrade.
K. Contractor agrees that the installation, testing and acceptance of
each System Upgrade will occur not later than the date (the "Scheduled Upgrade
Date") which is (i) * after notice in the case of a requested System Upgrade of
not more than * per fiber pair on two fiber pairs and (ii) * after notice in the
case of a requested System Upgrade of not more than * per fiber pair on two
fiber pair. In each case, such period shall begin upon the giving of notice
pursuant to paragraph C of this Article 6A. Purchaser will use reasonable
efforts to try to forecast its System Upgrade capacity requirements so as to
give earlier notice of an estimated time of upgrade to Contractor. The Parties
agree that where overlapping occurs because the Purchaser exercises an option
for a System Upgrade prior to the completion of a previously elected System
Upgrade, the Parties will agree in good faith to a mutually acceptable delivery
schedule and price adjustment. Should a need for a special upgrade (in addition
to the foregoing) arise, the Parties will negotiate in good faith to meet
Purchaser's needs.
L. 1. In addition to, and apart from the other provisions of this
Article 6A, Contractor agrees that unless and until instructed otherwise by
Purchaser, Contractor will (at no cost or expense to Purchaser, except as set
forth in this Sub-Article) at all times from the date the System is Ready for
Provisional Acceptance until the end of the Upgrade Option Period, cause to be
substantially installed at each cable station and telehouse, sufficient
equipment so as to be able to cause testing and acceptance of the Expedited
Upgrade within * of Purchaser's upgrade election, sufficient equipment to
provide Purchaser with a System Upgrade of * of fully protected capacity (* of
service on one fiber pair and * of protection on the second fiber pair) (an
"Expedited Upgrade"). Upon such request, the Contractor will in good faith
develop with the Purchaser a plan to most expeditiously finish installation and
test such equipment. Purchaser agrees that it will not place such substantially
installed Expedited Upgrade Equipment into service without prior written consent
of the Contractor. The fixed price payable for each Expedited Upgrade (fully
installed, tested and accepted) will be * of the price of the next scheduled
System Upgrade which may be ordered. Notwithstanding any other provision to the
contrary contained herein, title (free and clear of all liens other than those
deriving through or from the Purchaser) and risk of loss to such Expedited
Upgrade equipment
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
29
shall vest in the Purchaser when it is substantially installed. All relevant
Taxes with respect to the installation and transfer of title to such Expedited
Upgrade shall be invoiced by Contractor and paid by Purchaser in accordance with
this Contract. Such price shall be payable on a similar basis as the System
Upgrade Billing Schedule. Purchaser will accept the Factory acceptance test
report on Expedited Upgrades, but such report must show that the equipment left
the Factory working as a unit. Whenever Purchaser orders an Expedited Upgrade,
if Purchaser so requests, Contractor shall replace the equipment used for such
Upgrade so that it substantially installs the equipment for the next Expedited
Upgrade at the time of the completion of the next System Upgrade, or within
* of such request, whichever is earlier. Expedited Upgrades may be ordered
during the periods when Purchaser is waiting for a System Upgrade pursuant to
Sub-Article 6A(K) above. Expedited Upgrades shall be in addition to System
Upgrades and shall not affect the schedule set forth in Sub-Article 6A(G) above,
except that Contractor shall not be obligated to install more than * of
capacity in the System. The capacity of all Expedited Upgrades installed will be
subtracted from the last System Upgrade ordered and the Price of such System
Upgrade shall be adjusted accordingly. Expedited Upgrades shall be considered
"Upgrade Work" for all purposes of this Contract. The provisions of Sub-Articles
6A (B), (C) (first paragraph only), (D), (E), (F) and (J) shall apply to
Expedited Upgrades. If requested by Purchaser, at any time during the six (6)
month period immediately preceding the expiration of the Upgrade Option Period,
Contractor shall use reasonable efforts to sell (at Purchaser's cost) any
equipment for an Expedited Upgrade which has been substantially installed but
not activated, to other customers. Notwithstanding the foregoing sentence, if,
at the end of the Upgrade Option Period, equipment for an Expedited Upgrade has
been installed in accordance with this Sub-Article, but not activated, Purchaser
shall pay Contractor for such equipment in accordance with the Payment terms of
this Contract, provided that if Contractor has sold such equipment in accordance
--------
with the foregoing sentence, the proceeds of such sale (less Contractor's costs
in connection with its efforts to sell) shall be deducted from the price owed by
Purchaser to Contractor.
2. The Expedited Upgrade Price and supporting equipment
availability are based on * being provided for interconnectivity. With respect
to any Expedited Upgrade, Purchaser may elect (i) to exclude from such Expedited
Upgrade some or all * and/or (ii) to include other *. If Purchaser elects (i)
and/or (ii), both Parties shall agree to an equitable adjustment, up or down,
based on the prices set forth in the Provisioning Schedule, to the Expedited
Upgrade Price and the supporting equipment availability and an equitable
adjustment in the schedule for the Expedited Upgrade, as needed in the event
Purchaser elects (ii) above.
Article 6B Construction Options for the Trans-Andes Crossing
- -------------------------------------------------------------
A. The Purchaser, at any time on or prior to *, shall have the option
to interconnect the Las Toninas Cable Station with the Buenos Aires Telehouse
during Phase 1 (the "Phase 1 Option"). If the Purchaser elects such option, (i)
the Phase 1 Option shall become part of Phase 1, (ii) * and (iii) the Scheduled
Phase 1 RFS Date shall remain unchanged. Under the Phase 1 Option, the System
will be *
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
30
*. Purchaser hereby elects the Phase 1 Option.
B. The Purchaser, at any time on or prior to *, shall have the option
to elect to interconnect the Santiago Telehouse with the Buenos Aires Telehouse
during Phase 2 (the "Phase 2 Option"). If the Purchaser elects such option, (i)
the Phase 2 Option shall become part of Phase 2, (ii) * and (iii) the Scheduled
System RFS Date shall remain unchanged. Under the Phase 2 Option, the Purchaser
shall *. If Purchaser does not elect such option, Contractor may invoice
Purchaser for engineering and design work performed up to * for Segment E-2. If
such option is exercised, and * is not available, Contractor will install the *,
and when * is available, Contractor will retrofit * with * at no additional cost
to the Purchaser.
C. The Purchaser shall have the option to supply * on all or
any portion of the Trans-Andes Crossing, in which case, *, provided
--------
that Purchaser notifies Contractor of its intention to supply the * on or prior
to * (which notice must set forth the characteristics of * to be provided). In
the event that Purchaser elects to supply * in accordance with the prior
sentence with respect to the Phase 2 Option, the deadline for ordering such
Option shall be *.
Article 6C Optional Branching Unit
- -----------------------------------
The Purchaser shall have the option to elect to change the
configuration of the System by adding the Optional Branching Unit as more fully
described in the Technical Volume. If the Purchaser shall elect such option on
or prior to *, the Contract Price shall be increased by the amount of * (the
"Optional Branching Unit Price"), and the Scheduled System RFS Date shall remain
unchanged. If the Purchaser shall elect such option after *, the Contractor
shall be entitled to * and the Scheduled System RFS Date.
Article 7 Responsibilities for Permits; Compliance with Laws; Purchaser
- -------------------------------------------------------------------------
Access Rights
- -------------
A. Upon written request of the Contractor, the Purchaser shall
reasonably cooperate with and assist the Contractor to obtain all Permits
(except those specified in paragraph C below), to the extent that Purchaser's
cooperation and assistance are necessary for Contractor to expeditiously and
cost-efficiently obtain such Permits. The Purchaser agrees to respond reasonably
promptly to any such request from Contractor; provided, that, the failure of
--------
Purchaser to comply with such request shall not give rise to a Purchaser
Hindrance unless (i) the requested
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
31
cooperation was required by Law and (ii) Purchaser failure is due to gross
negligence or willful misconduct. Contractor shall reimburse reasonable outside
counsel fees, reasonable independent consultant fees and other reasonable
out-of-pocket expenses incurred by Purchaser in connection with such
cooperation. Further, the Purchaser agrees that it will not impede or interfere
with Contractor's abilities to perform its obligations under paragraph B of this
Article 7. Upon notice from Contractor with respect to a Permit or receipt by
Purchaser of a copy of a Permit, Purchaser shall fulfill all conditions of such
Permit and perform all responsibilities thereunder, except to the extent that
such conditions or responsibilities are those of the Contractor under the Work.
Contractor will inform Purchaser as to any such conditions or responsibilities
that are not ordinary and routine (based on industry standards) and obtain
Purchaser's consent thereto prior to arranging for any such Permit. Purchaser
(and its representatives and lawyers, whose services shall be paid by Purchaser)
may, at its sole option and cost, participate with Contractor in the process of
obtaining any Permits to the extent it deems reasonably necessary; provided,
--------
that any such participation shall not relieve or alter any of Contractor's
obligations under this Contract with respect to obtaining all Permits and shall
not, by itself, be deemed to impede or interfere with Contractor.
B. Subject to paragraph C below, the Contractor shall have the
responsibility for obtaining, at the Contractor's sole cost and expense, all
Permits on Purchaser's behalf. The Contractor will cause all Permits ultimately
required to be held by Purchaser but not initially issued in the name of
Purchaser to be assignable to Purchaser, and to be assigned to Purchaser at
the time title to the System (or a Phase or any Segment) is transferred to
Purchaser pursuant to this Contract. Contractor shall be responsible to pay any
transfer fees in connection with any such assignment. Subject to Sub-Article
4(A)(4), Purchaser shall be responsible for payment of all Permit fees and other
costs and expenses due with respect to any Permit after the Date of Provisional
Acceptance of the System.
C. The Contractor shall not be responsible for obtaining Purchaser
Permits or Purchaser Access Rights, but the Contractor will cooperate with the
Purchaser in connection therewith. Purchaser shall reimburse reasonable outside
counsel fees, reasonable independent consultant fees and other reasonable
out-of-pocket expenses incurred by Contractor in connection with such
cooperation.
D. Any delay in obtaining or failure to obtain any Owner Permit shall
constitute a Force Majeure and be treated as described in Article 17 (Force
Majeure), except to the extent such delay is a result of Contractor's negligence
or willful misconduct. No Force Majeure shall be granted with respect to
Contractor Permits, except for Force Majeure events which are unrelated to the
process by which such Contractor Permits are obtained. For example, a delay in
issuance of a Contractor Permit because of a change in administration or rules
is not a Force Majeure, but such a delay caused by a war or an earthquake may be
a Force Majeure.
E. Except with respect to variations necessitated by complying with
any changes, enacted after the date hereof, in any Laws (the costs with respect
to which shall be borne by the Purchaser unless such change is a result of any
act or omission by Contractor), the Contractor shall be responsible for the
payment of any and all costs incurred as a result of the need to vary design,
drawings, plans or procedures to comply with any of the circumstances set forth
in this
<PAGE>
32
Article. The Contractor shall, before making any variations from the designs,
drawings, plans or procedures that may be necessitated by so complying with any
Laws and that would represent a material change to the overall design of the
System, give to the Purchaser written notice, specifying the variations proposed
to be made, and the reasons for making them. As of the date hereof, neither
Party has Actual Knowledge of any proposed changes in the Laws which would
necessitate any such variation.
F. The Contractor shall (i) comply with all applicable Laws in
performing the Work, (ii) give all notices required by any Laws to be given to
any authority and (iii) perform or permit the performance by authorized persons
of any inspection required by the said Laws. All Work and the Project, upon
completion, will comply with all applicable Laws.
G. As part of the Initial Contract Price, the Contractor shall
obtain, at its own risk and expense, any export and import license and other
official authorization and carry out all customs formalities for the exportation
and importation of goods and, where necessary, for their transit through another
country.
H. Within 30 days after the date of execution of this Contract, the
Contractor will prepare and deliver to the Purchaser a detailed list of Permits
that to its knowledge are required to be obtained under current law in order to
complete the Work and shall update such list from time to time if it becomes
aware of changes in Permit requirements. Such list, as updated from time to
time, shall set forth the projected dates of filing for such Permits and an
estimate of when such Permits are expected to be obtained. Without limiting
Contractor's liabilities in respect of Sub-Articles 7(B), Contractor shall have
no liability in respect of the accuracy of the information furnished under this
Sub-Article, except in the case of gross negligence or willful misconduct.
Article 8 Route Survey
- -----------------------
A. The Contractor shall conduct a Desk Top Study, the Route Survey
and, where prudent, a Burial Assessment Survey, and select the cable route for
the System in accordance with the information in the Final Route Survey Report
and such Burial Assessment Survey. Contractor shall be permitted to make
changes, at its discretion, to the route selection, if necessary for operational
reasons, without additional cost to Purchaser. The Contractor shall review with
the Purchaser the route for the System, and the results of the Burial Assessment
Survey, within 20 business days of the presentation of the Final Route Survey
Report, which Report must include the results of such Burial Assessment Survey.
B. Any changes to the route selection requested by Purchaser shall be
treated as a Contract Variation in accordance with Article 6 (Contract
Variations).
C. Any changes to any aspect of the Work due to any Desk Top Study,
Route Survey, Burial Assessment Survey or Final Route Survey Report will not
result in any change to the Initial Contract Price.
D. The Contractor will perform the Desktop Study, Route Survey and
Burial Assessment Survey, and engineer and design the cable route, using
generally accepted practices
<PAGE>
33
in the industry. In the engineering and design of the cable route the Contractor
will give due consideration to the interests of the Purchaser and shall in good
faith try to satisfy such interests, particularly (but without limitation)
regarding survivability, maintainability and tax consequences, in each case
arising from the location of the cable.
Article 9 Acceptance
- ---------------------
A. General
1. The Acceptance Testing shall be performed by the Contractor.
The Purchaser and its designated representatives may observe,
at their own expense, the Contractor's tests and review the
test results. Purchaser may request the Contractor to conduct
and/or may itself conduct any additional tests to demonstrate
compliance with the provisions of this Agreement and the
specifications in the Technical Volume. If such additional
tests do demonstrate that the provisions of this Agreement
and the specifications in the Technical Volume have been
complied with, then the Purchaser shall be responsible for
paying the costs of such additional tests, and any delay
beyond the Contractor's schedule for completion of its tests
caused by such process shall be a Purchaser Hindrance. If,
however, such additional tests demonstrate that the
provisions of this Agreement or the specifications in the
Technical Volume have not been complied with, then it shall
be the Contractor's responsibility to pay the costs of such
additional tests, and any delay caused by such process shall
not be a Force Majeure.
2. Until the Date of Final Acceptance of the System or if a
System Upgrade is requested by Purchaser, the Date of Final
Acceptance of such System Upgrade, the Purchaser agrees to
allow Contractor access to all Segments of the System.
3. The Purchaser shall issue a Certificate of Commercial
Acceptance in accordance with the provisions of Sub-Article
9(D)(1).
4. Once a Segment of the System, a Phase of the System, or a
System Upgrade is Ready for Provisional Acceptance, the
Purchaser shall issue a Certificate of Provisional
Acceptance, provided, that it is within the Purchaser's sole
discretion as to whether to accept a Segment instead of a
Phase of the System.
5. Once a Phase of the System or a System Upgrade is Ready for
Final Acceptance, the Purchaser shall issue a Certificate of
Final Acceptance.
6. The Purchaser shall not unreasonably withhold or delay
issuance of a Certificate of Commercial Acceptance, a
Certificate of Provisional Acceptance or a Certificate of
Final Acceptance.
<PAGE>
34
7. The Contractor agrees that the Date of Provisional Acceptance
or Commercial Acceptance of Phase 1 of the System will occur
by August 15, 2000 (as such date may be extended under
Article 6 (Contract Variations), Article 17 (Force Majeure)
or otherwise under this Contract or by agreement of the
Parties, the "Scheduled Phase 1 RFS Date").
8. The Contractor agrees that the Date of Provisional Acceptance
or Commercial Acceptance of Phase 2 of the System will occur
by September 30, 2000 (as such date may be extended under
Article 6 (Contract Variations), Article 17 (Force Majeure)
or otherwise under this Contract or by agreement of the
Parties, the "Scheduled Phase 2 RFS Date").
9. The Contractor agrees that the Date of Provisional Acceptance
or Commercial Acceptance of Phase 3 of the System and of the
System will occur by March 31, 2001 (as such date may be
extended under Article 6 (Contract Variations), Article 17
(Force Majeure) or otherwise under this Contract or by
agreement of the Parties, the "Scheduled Phase 3 RFS Date"
and the "Scheduled System RFS Date").
10. The Date of Commercial Acceptance, Provisional Acceptance and
Final Acceptance, as the case may be, shall be deemed to have
occurred with respect to a Segment, the System or a System
Upgrade if a Certificate of Commercial Acceptance, a
Certificate of Provisional Acceptance or a Certificate of
Final Acceptance, as the case may be, is issued with respect
thereto.
B. Notice of Acceptance or Rejection
1. Within thirty (30) days of receipt by Purchaser of a complete
Commissioning Report or Upgrade Commissioning Report, as the
case may be, the Purchaser must issue notification to the
Contractor of the following:
(a) issuance of a Certificate of Provisional Acceptance in
accordance with Sub-Article 9(C); or
(b) rejection of a Certificate of Provisional Acceptance,
but instead issuance of a Certificate of Commercial
Acceptance in accordance with Sub-Article 9(D) below; or
(c) rejection of the Segment, the Phase; the System or the
System Upgrade in its existing condition and issuance of
neither a Certificate of Provisional Acceptance nor a
Certificate of Commercial Acceptance, and in the case of
the Phase; the System or the System Upgrade, a written
explanation of reasons for
<PAGE>
35
rejection (it being understood that acceptance of a
Segment instead of a Phase or the System is at the sole
discretion of the Purchaser).
If the Purchaser fails to respond with such notification
within thirty (30) days, then the Date of Provisional
Acceptance of the Segment (subject to Purchaser's consent),
the Phase; the System or System Upgrade shall be deemed to be
the date occurring thirty (30) days after such Commissioning
Report or Upgrade Commissioning Report, as the case may be,
was received by the Purchaser.
2. On receipt of a notice from the Purchaser pursuant to Sub-
Articles 9(B)(1)(b) or (c) above, the Contractor shall be
entitled to address any disputes and explain any
discrepancies to the Purchaser. Unless Purchaser, for good
cause, rejects such explanation, it shall issue a new notice
pursuant to Sub-Article 9(B)(1) above, which shall be deemed
to have been issued on the date of the original notice.
3. In case of rejection, and if the explanation by the
Contractor as in Sub-Article 9(B)(2) above is not accepted,
for good cause, by the Purchaser, the Contractor shall carry
out the necessary corrective actions and will effect a new
series of Acceptance Testing ("Retesting"). After receipt by
Purchaser of the new Commissioning Report or Upgrade
Commissioning Report, as the case may be, describing the
corrective action and the results of Retesting, the Purchaser
will be granted a new period of thirty (30) days to analyze
the new Report according to the provisions of Sub-Article
9(B)(1) and any new notice of the Purchaser shall apply from
the date the Purchaser receives such new Commissioning Report
or Upgrade Commissioning Report, as the case may be.
C. Provisional Acceptance
1. The Certificate of Provisional Acceptance may have annexed to
it a list of any outstanding deficiencies to be corrected by
the Contractor.
2. The Contractor shall, as soon as reasonably practicable,
correct, at its sole cost and expense, such deficiencies and
complete the Work or Upgrade Work indicated on all such
listed items so as to comply in all material respects with
the requirements of this Contract, provided that the
Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to correct such
deficiencies and complete the Work or Upgrade Work. The
Contractor shall give the Purchaser reasonable notice of its
requirement for such access.
<PAGE>
36
D. Commercial Acceptance
1. A Certificate of Commercial Acceptance shall be issued by
Purchaser with respect to a Segment, a Phase, the System or a
System Upgrade if the results of the Acceptance Testing
demonstrate that such Segment, such Phase, the System or such
System Upgrade does not justify the issuance of a Certificate
of Provisional Acceptance, but nevertheless, such Segment,
such Phase, the System or such System Upgrade is Ready for
Commercial Acceptance; provided, that acceptance of a Segment
--------
instead of a Phase or the System shall be in the sole
discretion of the Purchaser.
2. Each Certificate of Commercial Acceptance shall have annexed
to it a list of all outstanding items to be completed by the
Contractor.
3. The Contractor shall, as soon as reasonably practicable,
remedy, at its sole cost and expense, the outstanding items,
provided that the Purchaser allows Contractor the necessary
access to the Segment(s) as the Contractor needs to remedy
such outstanding items. The Contractor shall give the
Purchaser reasonable notice of its requirement for such
access. Notwithstanding the above, provided that Contractor
has been allowed access to the Segment(s) as required in Sub-
Article 9(A)(2), the Contractor shall continue to carry the
risk of loss for any outstanding item until such item is no
longer outstanding.
4. When the outstanding items referenced in Sub-Article 9(D)(3)
above have been remedied, and the Segment(s), the Phase, the
System or the System Upgrade is otherwise Ready for
Provisional Acceptance, the Purchaser will promptly issue a
Certificate of Provisional Acceptance; provided, that
--------
acceptance of a Segment instead of the System shall be in the
sole discretion of the Purchaser.
5. The issuance of a Certificate of Commercial Acceptance with
respect to a Segment, a Phase, the System or a System Upgrade
shall in no way relieve the Contractor from its obligation to
provide a Segment, a Phase, the System or System Upgrade
conforming with the Performance Requirements at the time of
the issuance of a Certificate of Commercial Acceptance.
E. Final Acceptance
1. Within thirty (30) days of the date of receipt by Purchaser
of the Final Commissioning Report, the Purchaser shall issue
a Certificate of Final Acceptance or reject such Report. If
the Purchaser neither issues a Certificate of Final
Acceptance nor rejects such Report within such thirty (30)
day period, then the Date of Final Acceptance of the System
shall be
<PAGE>
37
deemed to be the date occurring thirty (30) days after such
Final Commissioning Report was received by the Purchaser.
F. Title and Risk of Loss
1. If the Purchaser, in its sole discretion, chooses to accept a
Segment prior to accepting the System, then upon the issuance
of a Certificate of Commercial Acceptance or a Certificate of
Provisional Acceptance with respect to such Segment by the
Purchaser in accordance with this Contract, title (free and
clear of all liens other than those deriving through or from
the Purchaser) to such Segment shall vest in the Purchaser. A
statement of the time of passage of title in such Certificate
shall be final and conclusive.
2. Upon the issuance of a Certificate of Commercial Acceptance
or a Certificate of Provisional Acceptance with respect to a
Phase or the System by the Purchaser in accordance with this
Contract, title (free and clear of all liens other than those
deriving through or from the Purchaser) to such Phase or the
System shall vest in the Purchaser. A statement of the time
of passage of title in such Certificate shall be final and
conclusive.
3. Upon the issuance of a Certificate of Commercial Acceptance
or a Certificate of Provisional Acceptance with respect to a
System Upgrade by the Purchaser in accordance with this
Contract, title to such System Upgrade shall vest in the
Purchaser. A statement of the time of passage of title in
such Certificate shall be final and conclusive.
4. As from the date of vesting of title in a Segment, a Phase,
the System or a System Upgrade, the Purchaser shall, except
as set forth in the following sentence, assume the risk of
loss in respect of all parts of such Segment, such Phase, the
System or System Upgrade and responsibility for its
maintenance. As stated in Sub-Article 9(A)(2), the Contractor
will be allowed access to such Segment, and, so long as the
Contractor has been allowed access to such Segment as may be
required, the Contractor shall continue to carry the risk of
loss with respect of each item outstanding under Sub-Article
9(C)(1) and 9(D)(2) until such item is no longer outstanding.
Article 10 Warranty
- --------------------
A. The Contractor warrants that the System and each System Upgrade,
including its spares, shall be free from defects in supplies, workmanship and
design for a period of * years commencing from the Date of Provisional
Acceptance of the System or such System Upgrade, as the case may be,
(hereinafter "Warranty Period" and ""Upgrade Warranty Period"), with Ship Costs
being covered for the first * years of the Warranty Period (the "Ship
Period") and the Purchaser being responsible for all Ship Costs thereafter.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
38
1. During the Warranty Period for the System or the Upgrade
Warranty Period for a System Upgrade, the Contractor shall
make good, by repair or replacement, at its sole option, any
defects in the System or such System Upgrade, as the case may
be, including any spares, which may become apparent or be
discovered due to imperfect workmanship, faulty design or
faulty material supplied by the Contractor, or any act,
neglect or omission on the Contractor's part.
(a) If at any time within the Warranty Period or the
Upgrade Warranty Period for a System Upgrade any defect
occurs which causes the System or such System Upgrade,
as the case may be, to fail to meet its overall
Performance Requirements, the Contractor shall repair
or replace such part or parts. In making such repairs,
Contractor may make changes to the System or such
System Upgrade, as the case may be, or substitute
equipment of later or comparable design, provided the
changes, modifications, or substitutions under normal
and proper use do not cause the System or such System
Upgrade as the case may be to fail to meet the
Performance Requirements.
(b) The Contractor shall use reasonable efforts to minimize
the period of time that any Segment or the System is
out of service for testing and repair. The Purchaser
agrees to cooperate with the Contractor to facilitate
the Contractor's repair activity.
(c) It is understood that if there is a problem on the
System, the Purchaser may immediately dispatch the
maintenance authority to effect repairs. If and to the
extent that such problem is determined to be caused by
a defect in the System covered by this warranty, the
Contractor shall reimburse the Purchaser for its actual
Non-Ship Costs incurred and, with respect to any such
repair relating to a defect identified in good faith by
Purchaser in writing prior to the end of the Ship
Period, actual Ship Costs incurred. If the Purchaser
has entered into arrangements whereby maintenance is
all or partially covered by a "lump sum" payment
covering a specific period (e.g., an annual fixed fee
operations and maintenance contract), then Contractor
understands that Purchaser may not actually incur costs
with respect to any particular warranty repair. In such
a case, Contractor agrees that the Purchaser is still
entitled to a payment from Contractor in connection
with such warranty repair. The Contractor and Purchaser
will agree in good faith to an equitable method of
determining the industry standard typical costs for
such a repair based upon what the repair would have
actually cost had it been paid under a specific
maintenance agreement and such typical costs shall be
reimbursed to Purchaser. The Purchaser will provide the
Contractor with all reasonably requested information,
data or invoices available with respect to
<PAGE>
39
such warranty repair to enable the Contractor to
recover its costs from its insurers. The unavailability
or denial of any such insurance shall in no way relieve
the Contractor of its obligations under this clause
(c).
(i) The Contractor shall be given advance notice and
be entitled to have a representative on board ship
to observe at sea repairs and shall be given the
earliest possible notice of any such repair.
(ii) Subject to the foregoing and to Sub-Article 10(D),
any repair by the Purchaser shall not in any way
diminish the Contractor's obligation under the
warranty. Any equipment discovered to be defective
or faulty and recovered during a warranty repair
shall be returned to the Contractor at its
request.
(d) In the event that the Contractor fails to make the
repair or to make reasonable efforts to minimize the
period of time that the System is out of service for
repair, the Purchaser may repair the System or the
System Upgrade and the Contractor shall reimburse the
Purchaser for Non-Ship Costs and, with respect to any
such repair relating to a defect identified in good
faith by Purchaser in writing prior to the end of the
Ship Period, Ship Costs.
(i) The Contractor shall be given advance notice and
be entitled to have a representative on board ship
to observe at sea repairs and shall be given the
earliest possible notice of any such repair.
(ii) Subject to the foregoing, any repair by the
Purchaser shall not in any way diminish the
Contractor's obligation under the warranty. Any
equipment discovered to be defective or faulty and
recovered during a warranty repair shall be
returned to the Contractor at its request.
2. Contractor shall bear the Ship Costs of only those repairs of
the defects identified in good faith by Purchaser in writing
prior to the end of the Ship Period. However, the Contractor
shall bear the Non-Ship Costs of each repair, replacement or
improvement required during the Warranty Period.
As used herein, "Ship Cost" means the costs of operating a
vessel, including but not limited to running and standing
charges for the vessel (including but not limited to labor
charges for the vessel's crew, at sea insurance, port
charges, fuel and lube oils, consumables, cable loading,
cable unloading, navigation and maritime communications) as
well as the
<PAGE>
40
costs associated with the use and operation of a remotely
operated vehicle and the tracked self propelled burial tool
and ANon-Ship Costs" means the costs of making a repair,
including the cost of components, equipment or materials
requiring replacement, the cost of any additional equipment
necessary to effect the repair, the cost of making the
repair, including the cost of reburying any previously buried
portion, the cost of labor and engineering assistance or
development required to make the repair and all necessary
associated costs, such as, but not limited to, shipping and
customs and services that may be required to make the repair,
but excluding any of the foregoing which are Ship Costs.
3. The Contractor shall effect all warranty repairs of the
System and shall supply all necessary repair materials.
However, the Contractor may use, with the consent of the
Purchaser, which shall not be unreasonably withheld, the
materials needed to effect a repair from the Purchaser's
available spare materials. The Contractor shall promptly
replace in kind such materials supplied from the Purchaser's
spare materials or at the option of the Purchaser, reimburse
the Purchaser for such materials at its original purchase
price. The replacement of or reimbursement for such materials
shall be made at a time mutually agreed to by the Purchaser
and the Contractor.
4. The Contractor warrants that services furnished hereunder
will be performed in a workmanlike manner using materials
free from defects except when such materials are provided by
the Purchaser (it being understood that all materials
arranged for directly by Contractor, whether or not purchased
in the name of Purchaser, are not materials provided by the
Purchaser). If such services prove to be not so performed and
Purchaser notifies the Contractor within six (6) months from
the completion of the service or before the end of the
Warranty Period, whichever is later, the Contractor will
promptly correct the defect.
5. Any part which replaces a defective part during the
applicable Warranty Period or Upgrade Warranty Period, shall
be covered by these warranties for the remaining Warranty
Period and Ship Period, if any, or Upgrade Warranty Period,
as the case may be, of the part which was replaced or, if
longer, six months from the date of replacement. The
foregoing is not meant to limit any separate warranty that
may apply to the replacement part. However, the Warranty
Period shall never exceed * years from the Date of
Provisional Acceptance of the System and the Upgrade Warranty
Period for any System Upgrade shall never exceed * years
from the Date of Provisional Acceptance of such System
Upgrade. Further, Ship Costs shall be included only with
respect to defects identified by Purchaser in writing during
the first * years from the Date of Provisional Acceptance
of the System, and shall be included with respect to such
defect until it is repaired.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
41
B. The Contractor represents and warrants that the System has been
designed to last for * years. The Contractor warrants that (i) the System
shall be designed so that during the Warranty Period no pattern of failure shall
develop that causes the System (as upgraded from time to time by System
Upgrades) to fail to meet its reliability as set forth in the System Performance
Requirements (as upgraded from time to time by System Upgrades) over the Design
Life Period and (ii) the System shall be designed with sufficient transmission
margin to be upgradable to a capacity of * per fiber pair. Contractor shall
have no liability with respect to the design warranty set forth in clause (ii)
of this Sub-Article unless and until Contractor shall have failed to perform a
System Upgrade requested by Purchaser. The Design Life Period shall run for
* years from the Date of Provisional Acceptance of the System (whether or
not any System Upgrades are done). In the event the System is not so designed as
provided in the first two sentences of this Sub-Article, Contractor shall effect
such reengineering and redesign and make such repairs or replace such parts as
may be necessary to correct such deficiency. The Contractor shall bear the costs
of all repairs and parts and of the reengineering and redesign necessary to
effect such repairs and replacements and the Ship Costs incurred in connection
with such repairs and replacements. The Contractor warrants that all Supplies,
Deliverable Software and Deliverable Technical Materials are Year 2000
Compliant.
C. The warranties provided above in Sub-Articles 10(A) and (B) by the
Contractor shall not apply to defects or failures of performance, which result
from damage caused by acts or omissions of the Purchaser or its agents,
employees or representatives or third parties (other than the Contractor or its
Subcontractors), or which result from modifications, misuse, neglect, accident
or abuse, repair, storage or maintenance by other than the Contractor or its
Subcontractors or, use in a manner not in accordance with the System Description
or other causes set forth in Article 17 (Force Majeure).
D. THE FOREGOING WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED.
E. The Contractor shall, in accordance with its normal operating
practices, investigate any defective part or parts repaired or replaced pursuant
to this Article 10 to determine the type of defect and the cause of failure of
the part or parts. The Contractor shall provide a written report to the
Purchaser on the results of the investigation, if any.
F. Contractor warrants that the System and the Optional Branching
Unit, as applicable, shall be designed in a manner (i) adequate to support,
without modification to the System, any extension constructed by Contractor from
such branching unit and (ii) such that any extension will have performance equal
to or better than the System, provided that (i) and (ii) are contingent upon
each such extension falling within the applicable distance parameters set forth
in the Technical Volume.
G. The Contractor agrees that the foregoing provisions of this
Article 10 may be enforced, on behalf of Purchaser, by the entity or entities
performing operation, administration or maintenance services for the System.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
42
Article 11 Contractor Support; Use of Segment for Restoration Protection
- -------------------------------------------------------------------------
A. For a period of ten (10) years from the applicable Date of
Provisional Acceptance or Date of Commercial Acceptance of the System whichever
is earlier, the Contractor will make available to the Purchaser replacement
parts and repair service for the System as may be reasonably necessary for its
operation, maintenance or repair. Where identical parts cannot be supplied, the
Contractor shall provide fully compatible parts with characteristics equal or
superior to those originally provided by the Contractor. Such parts and services
shall be provided under commercially reasonable conditions of price and
delivery.
B. Notwithstanding Sub-Article 11(A), if for any reason the
Contractor or Contractor's suppliers intend to cease or ceases manufacturing or
having manufactured identical or fully compatible replacement parts, the
Contractor shall use reasonable efforts to give one year's prior written notice
to the Purchaser to allow the Purchaser to order from the Contractor any
required replacement parts and shall provide full details of the arrangements to
provide equivalents.
C. Once the Purchaser has accepted a Segment of the System, the
Purchaser shall be entitled to use, without charge, any other unaccepted Segment
or Segments of the System solely for purposes of instituting restoration
protection in the System (a "Restoration Segment"); provided that:
--------
1. Contractor shall be relieved from its obligations pursuant to
Article 22, to pay liquidated damages with respect to any
Restoration Segment for any delays in the Contractor's Work
directly resulting from, and only to the extent of,
Purchaser's usage of such Restoration Segment or Segments for
restoration protection purposes;
2. Contractor shall be compensated for any payment milestones
delayed or made unachievable arising out of or as a result of
Purchaser's use of such Restoration Segment or Segments for
restoration protection purposes; and
3. Purchaser shall be responsible for all maintenance costs that
would not have been incurred but for Purchaser's use of such
Restoration Segment or Segments for restoration protection
purposes.
4. At the time Purchaser makes a request for a Restoration
Segment, the Contractor shall notify the Purchaser whether
Purchaser's use of such Restoration Segment will cause a
delay in the RFS Date for such Restoration Segment and, as a
result, cause the Contractor to incur additional insurance
premium costs, which notice shall set forth the amount of
such premiums. Upon receipt of such notice, Purchaser shall
determine, in its sole discretion, whether it will utilize
the Restoration Segment and therefore compensate Contractor
for such additional insurance premium costs.
<PAGE>
43
The Purchaser's use of any unaccepted Segment or Segments for
restoration protection purposes shall in no way obligate the Purchaser to accept
such other Segment or Segments, nor shall it be deemed to constitute an
acceptance by the Purchaser of any such other Segment or Segments, and the title
and any risk of loss associated with the any such other Segment or Segments
shall remain with the Contractor.
Article 12 Purchaser's Obligations
- -----------------------------------
A. If the Purchaser's failure to perform any of its express
obligations under this Contract directly results in an increase in the costs of
performance or the time required for performance of any of the Contractor's
duties or obligations under this Contract, such failure shall be deemed a
"Purchaser Hindrance." In the event of a Purchaser Hindrance, the Contractor
shall be entitled, as appropriate, to (i) an equitable extension of time for
completion of its Work or the Upgrade Work if the Purchaser Hindrance meets the
requirements for a Force Majeure delay, (ii) reimbursement for all such
additional costs incurred, and (iii) to the extent necessary in light of
Purchaser's failure and the adjustments made in accordance with clauses (i) and
(ii) above, an equitable adjustment of the Work and/or Upgrade Work. The
Contractor shall not be entitled to any other right or remedy with respect to a
Purchaser Hindrance.
1. The Contractor's remedies described in clauses (i), (ii) and
(iii) above are conditioned upon the Contractor informing the
Purchaser promptly of any potential Purchaser Hindrance, and
using reasonable efforts to minimize any such additional
costs or delay.
2. The Contractor shall promptly provide to the Purchaser an
estimate of the anticipated additional costs and time
required to complete the Work or Upgrade Work and request
relief from contractual obligations or duties, as
appropriate. Purchaser shall, upon notification, make advance
payment to Contractor for the estimated amount of anticipated
additional costs; provided that Purchaser may deposit such
--------
amount into the Dispute Account and Sub-Article 5(C)(4) shall
apply. Contractor shall without limiting Purchaser's
obligations in the foregoing sentence, discuss such costs
with Purchaser upon Purchaser's request.
3. As soon as reasonably practicable after the actual costs
become known to the Contractor, the Contractor shall provide
a statement of such actual costs to the Purchaser.
4. If the estimated amount is greater than the amount of actual
costs, then the Contractor shall reimburse the Purchaser. If
the amount of actual costs incurred is greater than the
estimated amount, then the Purchaser shall reimburse the
Contractor for any shortfall in accordance with Article 5
(Terms of Payment of Purchaser).
<PAGE>
44
Article 13 Termination for Default
- -----------------------------------
A. Either Party may, by written Notice of Termination for Default,
effective fifteen (15) days after receipt or such later date as specified in the
notice, terminate the whole or any part of this Contract if any one of the
following circumstances continues after such notice (each an "Event of
Default"):
1. In the case of the Purchaser, (a) if Contractor fails to
comply in any material respect with any of the terms and
conditions of this Contract and such failure shall continue
for thirty (30) days after written notice from Purchaser to
Contractor specifying the failure and demanding that the same
be remedied; provided that, if such default cannot be
--------
reasonably corrected within such thirty (30) day period, an
Event of Default with respect to Contractor shall not be
deemed to occur until the expiration of such further period,
not to exceed ninety (90) days, as reasonably required to
correct such failure, if the Contractor commences, within
such thirty (30) day period, and continues diligently at all
times thereafter, to take reasonable steps to correct the
failure as soon as possible, or (b) any representation or
warranty made by Contractor herein or in any certificate,
statement or document given pursuant to the terms hereof
shall prove to be false, incorrect or misleading in any
material respect as of the date on which it was made and any
material adverse consequences to Purchaser caused thereby
shall not have been remedied within thirty (30) days after
written notice thereof shall have been given to Contractor by
Purchaser; or (c) the Contractor fails to cause the System to
be Ready for Provisional Acceptance within 200 days after the
Scheduled System RFS Date;
2. If the other Party defaults on any of its payment obligations
and does not cure such default within a period of thirty (30)
days (or such longer period as the non-breaching Party may
authorize in writing) after receipt of written notice
demanding cure (subject to dispute provisions);
3. If the other Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action
to authorize any of the foregoing;
4. If an involuntary case or other proceeding shall be commenced
against the other Party seeking liquidation, reorganization
or other relief with respect to
<PAGE>
45
it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the other Party;
5. The Guaranty shall for any reason cease to be in full force
and effect or the Guarantor shall repudiate any of its
obligations thereunder.
B. If this Contract is terminated by the Purchaser as provided in
Sub-Article 13(A), the Purchaser, in addition to any other rights provided in
this Article, and upon payment to Contractor of all monies due and owing as set
forth in Sub-Article 13(C) below, may require the Contractor to transfer title
and deliver to the Purchaser in the manner and to the extent directed by the
Purchaser any completed equipment, material or supplies, and such partially
completed cable and materials, parts, tools, dies, jigs, fixtures, plans,
drawings, information, and contract rights (hereinafter collectively
"Manufacturing Materials") as the Contractor has had specifically produced or
specifically acquired for the performance of such part of this Contract as has
been terminated and which, if this Contract had been completed, would have been
required to be furnished to the Purchaser; and the Contractor shall, upon the
direction of the Purchaser, protect and preserve property in the Contractor's
possession in which the Purchaser has an interest.
C. If the Contract is terminated by Contractor as provided in Sub-
Article 13(A), the Purchaser shall pay, in addition to any other damages payable
pursuant to Sub-Article 13(E) below, the total of:
1. the cost of settling and paying claims arising out of the
termination of Work under the contracts and orders, as
provided in Sub-Article 14(B)(3) below which are properly
chargeable to the terminated portion of this Contract; and
2. the reasonable costs of settlement including accounting,
legal, clerical and other expenses necessary for the
preparation of settlement claims and supporting data with
respect to the terminated portion of this Contract and for
termination and settlement of contracts thereunder, together
with reasonable storage, transportation and other costs
incurred in connection with the protection, preservation and
disposition of property proper to this Contract.
D. Force Majeure or Purchaser Hindrance events shall not constitute a
default or provide a basis for termination under this Article.
E. Regardless of any termination of this Contract as provided in Sub-
Article 13(A), neither Party shall be relieved from any liability for damages or
otherwise which may have been incurred by reason of any breach of this Contract.
<PAGE>
46
F. Without limitation to the foregoing, in the event that Purchaser
terminates this Contract pursuant to Sub-Article 13(A), the Contractor shall be
liable to Purchaser (without duplication) for the total of all costs and
expenses reasonably incurred by Purchaser in completing the Work or in
correcting deficiencies in the Work to the extent that the payments made to
Contractor pursuant to this Contract, together with such costs and expenses,
exceed the Contract Price.
Article 14 Termination for Convenience
- ---------------------------------------
A. The performance of Work under this Contract may be terminated by
the Purchaser in whole, or in part, at its discretion. The Purchaser shall
deliver to the Contractor a written notice specifying the extent to which
performance of Work under this Contract is terminated, and the date upon which
such termination becomes effective (a "Notice of Termination"). Upon
termination, the Purchaser will make payment to Contractor of all monies due and
owing as set forth in Sub-Article 14(D) below.
B. After receipt of such Notice of Termination, and except as
otherwise directed by the Purchaser, the Contractor shall:
1. Stop Work under this Contract on the date and to the extent
specified in the Notice of Termination;
2. Place no further orders or contracts for materials, services
or facilities except as may be necessary for completion of
such portion of Work under this Contract as is not
terminated;
3. Use reasonable efforts to terminate all orders and contracts
to the extent that they relate to the performance of Work
terminated by the Notice of Termination;
4. Assign to the Purchaser, in the manner, at the time, and to
the extent directed by the Purchaser, all of the Contractor's
rights, title and interest under the orders and contracts so
terminated;
5. Use reasonable efforts to settle all outstanding liabilities
and all claims arising out of such termination of orders and
contracts, with the Purchaser's approval or ratification to
the extent required;
6. Transfer title and deliver to the Purchaser in the manner, at
the time and to the extent (if any) directed for the
fabricated or unfabricated parts, work in process, completed
work, supplies and other material produced as a part of, or
acquired in connection with, the performance of the Work
terminated by the Notice of Termination;
7. Use reasonable efforts to sell, in the manner, at the time,
to the extent and at the price or prices directed or
authorized by the Purchaser, any property
<PAGE>
47
of the types referred to in Sub-Article 14(B)(6) above
provided, however, that the Contractor:
-------- -------
(a) shall not be required to extend credit to any buyer; and
(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;
and provided further that the net proceeds of any such
-------- -------
transfer or disposition shall be applied in reduction of any
payments to be made by the Purchaser to the Contractor under
this Contract or, if no such payments are due, paid in such
other manner as the Purchaser may direct;
8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the
Contractor's possession and in which the Purchaser has
acquired or may acquire an interest.
C. After such Notice of Termination, the Contractor shall submit to
the Purchaser a written termination claim. Such claim shall be submitted
promptly, but, unless otherwise extended, in no event later than six months from
the effective date of termination.
D. In the settlement of any such partial or total termination claim,
the Purchaser shall pay to the Contractor the total of:
1. all amounts invoiced in accordance with the Contract plus,
for Work or Supplies which have been done or is in progress
or provided but which have not been invoiced, an amount
calculated by reference to the prices set forth in the
Provisioning Schedule and to the amount of such Work or
Supplies done or provided;
2. the cost of settling and paying claims arising out of the
termination of Work under the contracts in orders, as
provided in Sub-Article 14(D)(4) below which are properly
chargeable to the terminated portion of this Contract; and
3. the reasonable costs of settlement including accounting,
legal, clerical and other expenses necessary for the
preparation of settlement claims and supporting data with
respect to the terminated portion of this Contract and for
termination and settlement of contracts thereunder, together
with reasonable storage, transportation and other costs
incurred in connection with the protection and disposition of
property proper to this Contract.
<PAGE>
48
E. In arriving at the amount due to the Contractor under this Article
14, all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.
F. The Purchaser may, from time to time, under such terms and
conditions as they prescribe approve partial payments and payments on account
against costs incurred by the Contractor in connection with the terminated
portion of this Contract. If such payments total in excess of the amount finally
agreed or determined to be due under this Article 14, such excess shall be
refunded, upon demand, by the Contractor to the Purchaser.
G. For a period of one year after final settlement under this
Contract, the Contractor shall preserve and make available to the Purchaser at
reasonable times at the Contractor's office, but without direct charge to the
Purchaser, all supporting books, records and documents required to be kept
relating to the terminated Work.
Article 15 Suspension
- ----------------------
A. The Purchaser may, at its convenience, order the Contractor to
suspend all or part of the Work for such period of time as the Purchaser
determines to be appropriate. If, as a result of such Suspension, the Contractor
incurs additional costs or losses in the discharge of its responsibilities under
this Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule and an equitable extension in the
time required for performance.
B. Upon the occurrence of:
(i) an Event of Default by the Purchaser;
(ii) any transfer prior to the Date of Final Acceptance of any
portion of the System except in accordance with Article 37; or
(iii) any supplement executed by a Transferee shall not be in full
force and effect;
the Contractor, in addition to any other rights provided in Article 14, may
suspend performance of its obligations and all Work and (in the case of clause
(i)) Upgrade Work.
C. Every forty-five (45) days, during the period of Suspension, the
Parties shall meet formally and review the circumstances surrounding the
Suspension including without limitation, the anticipated date of re-commencing
Work.
D. Thereafter, if the Suspension continues for a total of one hundred
and eighty (180) days, the Contractor may terminate the Contract by notice to
the Purchaser and the Contract shall
<PAGE>
49
be deemed to have been terminated by Purchaser, effective on the date of
Contractor's notice, in accordance with Sub-Article 14(A) and the remaining
provisions of Article 14 shall apply.
Article 16 Title and Risk of Loss
- ----------------------------------
A. Except as provided in Article 18 (Intellectual Property), Article
20 (Safeguarding of Information and Technology) and Article 21 (Export Control),
title to all Supplies provided by the Contractor hereunder for incorporation in
or attachment to a Segment shall pass to and vest in the Purchaser in accordance
with Article 9 (Acceptance). Risk of loss or damage to all Supplies provided by
the Contractor for incorporation in or attachment to such Segment shall pass to
and vest in the Purchaser in accordance with Article 9. Upon termination of this
Contract pursuant to Article 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment of all amounts due
thereunder (provided that, without limiting Purchaser's obligation to make any
--------
such payment, if this Contract is terminated by Purchaser because of a
Bankruptcy Event full payment shall not be required prior to the transfer of
title), that title to the equipment, materials and supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances other than those deriving through
Purchaser.
B. Upon the passage of title in accordance with the terms of Article
13 (except a transfer described in the proviso of the last sentence of Sub-
Article 16(A)), the Contractor warrants that all parts, materials, and equipment
to which title has passed will be free and clear of all liens, claims, charges
and other encumbrances other than those deriving through the Purchaser.
Article 17 Force Majeure
- -------------------------
A. The Contractor shall not be responsible for any loss, damage,
delay or failure of performance resulting directly or indirectly from any cause
which is beyond its reasonable control ("Force Majeure"), including but not
limited to: delay in obtaining or failure to obtain any Owner Permits (subject
to the provisions of Sub-Article 7(D)); acts of God or of the public enemy; acts
or failures to act (other than with respect to Permits) of any governmental
authority unless resulting from any act or omission of Contractor; war or
warlike operations, civil war or commotion, mobilizations or military call-up,
and acts of similar nature; revolution, rebellions, sabotage, and insurrections
or riots; fires, floods, epidemics quarantine restrictions; strikes, and other
labor actions; freight embargoes; unworkable weather (so long as Contractor
shall have taken reasonably foreseeable unworkable weather into account when
planning its Work schedule; trawler or anchor damage caused by other marine
activity such as fishing, marine research and marine development; acts or
omissions of transporters; or a Purchaser Hindrance, but only to the extent that
the obligation underlying such Hindrance is not performed at the time
contemplated by the Plan of Work, provided that the following shall not
--------
constitute Force Majeures: (i) a loss by Contractor of employees (other than by
reason of Force Majeure), (ii) strikes and other labor actions involving the
Contractor's own work force, (iii) the first 5 days of unworkable weather
(unless any such day occurs during the 30 days immediately preceding the then
Scheduled RFS Date), (iv) the failure (other than by reason of Force Majeure) of
any subcontractor, supplier or transporter to perform its obligations to
Contractor (including on account of insolvency), (v) the
<PAGE>
50
unavailability of any raw materials or components, unless such raw materials or
components are generally unavailable in the marketplace at the time Contractor
would customarily have placed orders therefore or are unavailable by reason of
force majeure or (vi) any increase in Contractor's costs.
B. If any such Force Majeure causes an increase in the time or costs
required for performance of any of its duties or obligations, the Contractor
shall be entitled to an equitable extension of time for completion of the Work
or the Upgrade Work, as the case may be, but not any adjustment in the Contract
Price nor any reimbursement for any such additional costs incurred.
C. Increase in cost due to Purchaser Hindrance will be as provided
for in Article 12 (Purchaser's Obligations).
D. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases within fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional delays. The Contractor shall
promptly provide an estimate of the anticipated time required to complete the
Work or the Upgrade Work. Contractor shall be entitled to an equitable extension
of time resulting from the Force Majeure condition, but only to the extent that
such Force Majeure actually causes a delay in the timely completion of the Work
or Upgrade Work after all reasonable efforts to minimize such a delay have been
made.
E. Within thirty (30) days of receipt of such a notice from
Contractor, the Purchaser may provide a written response. The absence of a
response shall not be deemed as acceptance of Contractor's notice and request
for additional time.
F. If a Force Majeure continues for a total of two hundred (200)
days, either Party may terminate the Contract by notice to the other and the
Contract shall be deemed to have been terminated by Purchaser, effective on the
date of the terminating Party's notice, in accordance with Sub-Article 14(A) and
the remaining provisions of Article 14 shall apply to such termination.
G. Majeure, the Parties shall meet and review the circumstances
surrounding the Force Majeure, including, without limitation, the anticipated
date of recommencing work.
Article 18 Intellectual Property
- ---------------------------------
A. Ownership
Subject to the provisions of the next two sentences, all right,
title, and interest in and to all Intellectual Property (excluding Project
Patent Rights) created or developed by Contractor in the course of its
performance under this Contract that is (a) specifically and exclusively
applicable to the System or a System Upgrade; and (b) either (i) embodied in
Deliverable Technical Material (as that term is defined in Sub-Article 18(B)
below) or (ii)
<PAGE>
51
embodied in the System or a System Upgrade (the "Project Intellectual
Property"), is and shall remain the sole property of Purchaser. Contractor
represents that as of the date of this Contract, no software is planned to be
developed that would be included as Project Intellectual Property.
* All right, title and interest in and to all Intellectual Property created
or developed by Contractor before commencing its performance under this
Contract, or created or developed by Contractor exclusively in connection with
activities other than its performance under this Contract, or created or
developed by Contractor in the course of its performance under this Contract
that is not Project Intellectual Property, and all Project Patent Rights
(collectively, the "Contractor Intellectual Property"), is and shall remain the
sole property of Contractor. Unless otherwise expressed in this Contract, no
license is implied or granted herein to Purchaser to any Contractor Intellectual
Property by virtue of this Contract, nor by the transmittal or disclosure of any
such Contractor Intellectual Property to Purchaser. Any Contractor Intellectual
Property disclosed, furnished, or conveyed to Purchaser that is marked as
"Proprietary" or "Confidential" (or if transmitted orally is identified as being
proprietary or confidential in a subsequent writing) shall be treated in
accordance with the provisions of Article 20 (Safeguarding of Information and
Technology). As used herein, "Intellectual Property" means any information,
computer or other apparatus programs, software, specifications, drawings,
designs, sketches, tools, market research or operating data, prototypes,
records, documentation, works of authorship or other creative works, ideas,
concepts, methods, inventions, discoveries, improvements, or other business,
financial and/or technical information (whether or not protectable or
registrable under any applicable intellectual property law). As used herein,
"Project Patent Rights" means all inventions, discoveries, methods and
improvements of a patentable nature created or developed by Contractor in the
course of its performance under this Contract. Project Intellectual Property
will include the materials to be listed in a Schedule (to be attached as Exhibit
H hereto) to be created mutually by the Parties within thirty (30) days of
execution of this Contract, as it may be amended from time to time by mutual
agreement of the Parties.
B. Licenses
Contractor shall furnish to Purchaser, upon the transfer of title
to any portion of the System or a System Upgrade pursuant to Article 9, copies
of all technical information, specifications, drawings, designs, sketches,
tools, operating data, records, documentation and/or other types of engineering
or technical data or information reasonably relating to the operation,
maintenance or repair of each component of such portion of the System or System
Upgrade as delivered by Contractor (the "Deliverable Technical Material").
Contractor grants to Purchaser a perpetual, royalty-free, non-transferable
(except under the circumstances specified in Sub-Article 18(F) below) license to
use and reproduce those Deliverable Technical Materials owned, controlled, or
developed by Contractor and all Contractor Intellectual Property included in or
necessary to use all the Deliverable Technical Materials for purposes of
fulfilling Purchaser's obligations under this Contract and using and operating
the System (as upgraded by any System
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
52
Upgrades) supplied by Contractor with the right to employ third parties (under
appropriate written obligations respecting confidentiality) to assist Purchaser
in fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
Contractor grants to Purchaser a perpetual, royalty-free, non-transferable
(except under the circumstances specified in Sub-Article 18(F) below) license to
use and reproduce those portions of Deliverable Technical Materials owned or
controlled by third parties (but only to the extent of any rights which may have
been granted to Contractor by such third parties) for the purpose of fulfilling
Purchaser's obligations under this Contract and using and operating the System
supplied by Contractor with the right to employ third parties (under appropriate
written obligations respecting confidentiality) to assist Purchaser in
fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
Except as set forth in this provision, no license under Contractor's patents,
copyrights, trade or service marks, trade secrets or other intellectual property
rights protectable under law in the United States or any foreign country is
granted to Purchaser. It is expressly understood that it shall not be a
violation of this license for Purchaser, on its own behalf or through third
parties (under appropriate written obligations respecting confidentiality)
specifically employed for the purpose, to use and reproduce Deliverable
Technical Material that is not Project Intellectual Property to modify the
System (as upgraded by any System Upgrades) or connect the System (as upgraded
by any System Upgrades) to other systems, provided that Purchaser may not use
the Deliverable Technical Materials that is not Project Intellectual Property in
achieving such modification or interconnection for any purpose other than
determining the technical configuration, systems interface and/or
interoperability requirements of the System (as upgraded by any System Upgrades)
as delivered by Contractor (subject to the rights of third parties therein and
thereto), and subject to the limitations on Contractor's obligations as set
forth in Articles 10(D) and 19(A) concerning any such modification or
interconnection.
C. Deliverable Software
Contractor shall furnish to the Purchaser, upon transfer of title
to any portion of the System or System Upgrade pursuant to Article 9, copies of
all computer or other apparatus programs and software, in executable form, and
related documentation relating to the operation, maintenance, or repair of the
computer systems of such portion of the System or System Upgrade, as the case
may be, as delivered by Contractor (the "Deliverable Software"). In the
case of Contractor Intellectual Property, such copies of programs and software
shall consist solely of executable code provided in offline media (e.g., tapes,
or diskettes) for restoration purposes, sufficient to operate, maintain or
repair the computer systems of such portion of the System or System Upgrade, as
the case may be, as delivered by Contractor, and in the case of Project
Intellectual Property, such programs and software shall be delivered in both
source and object code forms. Contractor shall furnish to Purchaser, from time
to time during the Warranty Period or any Upgrade Warranty Period, copies of all
computer or other apparatus programs and software, in executable form (and in
the case of Project Intellectual Property, in source code form), and related
documentation that Contractor may develop to correct errors or to maintain
Deliverable Software previously furnished to Purchaser, which shall also be
treated as Deliverable Software for purposes of this Contract upon delivery
thereof to Purchaser. Contractor grants to Purchaser a perpetual, royalty-free,
non-transferable (except under the circumstances
<PAGE>
53
specified in Sub-Article 18(F) below) license to use and reproduce the
Deliverable Software owned, controlled, or developed by Contractor for the
purpose of fulfilling Purchaser's obligations under this Contract and using and
operating the System (as upgraded by any System Upgrades) supplied by Contractor
with the right to employ third parties (under appropriate written obligations
respecting confidentiality) to assist Purchaser in fulfilling its obligations
under this Contract and in using and operating the System (as upgraded by any
System Upgrades), but with no right to sublicense. Contractor grants to
Purchaser a perpetual, royalty-free, non-transferable (except under the
circumstances specified in Sub-Article 18(F) below) license to use and reproduce
those portions of Deliverable Software owned or controlled by third parties (but
only to the extent of any rights which may have been granted to Contractor by
such third parties) for the purpose of fulfilling Purchaser's obligations under
this Contract and using and operating the System (as upgraded by any System
Upgrades) supplied by Contractor with the right to employ third parties (under
appropriate written obligations respecting confidentiality) to assist Purchaser
in fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
These licenses shall be limited to the right to use Deliverable Software that is
not Project Intellectual Property only with the particular type of computer
equipment or substantially similar replacement equipment for which such
Deliverable Software was provided in the System (as upgraded by any System
Upgrades) as supplied by Contractor.
1. Confidentiality
Purchaser shall keep the Deliverable Software that is not
Project Intellectual Property confidential in accordance with
Article 20 (Safeguarding of Information and Technology) and
Article 21 (Export Control) to the extent that such
Deliverable Software is designated as Confidential
Information by its owner and agrees to use its best efforts
to see that its employees, consultants, and agents, and other
users of such software, comply with the provisions of this
Contract. Purchaser also agrees to refrain from taking any
steps, such as reverse assembly or decompilation, to derive a
source code equivalent of any object code that is furnished
by Contractor, provided that Contractor continues to maintain
the Deliverable Software that is not Project Intellectual
Property in accordance with the terms of a support and
maintenance agreement to be entered into on such terms to be
agreed upon by the Parties, which terms shall in all events
contain assurances of support and maintenance similar to
those otherwise available to Purchaser at such time through
any other third party operations and maintenance service
provider or is willing and able to enter into an agreement to
maintain the Deliverable Software upon terms reasonably
comparable to the pertinent terms of the initial agreement to
be entered into by the Parties with regard to support and
maintenance after the expiration or termination thereof or
does not go insolvent or bankrupt to thereby trigger a
software escrow event in accordance with Article 18(G)
(Escrow). In the case of insolvency or bankruptcy of
Contractor, Purchaser shall limit any derivation of a source
code equivalent to that portion of the Deliverable Software
that is Contractor Intellectual Property. Purchaser shall not
under any circumstances take any
<PAGE>
54
steps to derive a source code equivalent from that portion of
the Deliverable Software comprising commercial, off-the-shelf
software developed or provided by third parties.
2. Backup Copies
Purchaser may make and retain two archive copies in
executable form of the Deliverable Software that is not
Project Intellectual Property. Any copy will contain the same
copyright notice and proprietary markings as are on the
original software and shall be subject to the same
restrictions as the originals.
3. Termination of Software Licenses
In the event of (i) use by the Purchaser of Deliverable
Software that is not Project Intellectual Property in a
manner other than that permitted in Sub-Article 18(C) or (ii)
any other material breach of this Article 18 by Purchaser
that in either event is not cured within sixty (60) days from
receipt by Purchaser of written notice of such impermissible
use or breach, Contractor, at its option, may terminate the
rights granted to Purchaser pursuant to this Article, upon
written notice to Purchaser, which termination shall take
effect no sooner than sixty (60) days following receipt by
Purchaser of a subsequent written notice of termination. Upon
termination, Purchaser shall either return or destroy, at
Contractor's option, all copies of Deliverable Software that
is not Project Intellectual Property furnished under this
Contract.
4. Indemnification
In the event of (i) use by Purchaser of Deliverable Software
that is not Project Intellectual Property furnished hereunder
other than that permitted in Sub-Article 18(C) or (ii) any
other material breach of this Article 18 by Purchaser, the
Purchaser shall indemnify and hold Contractor harmless from
any and all third party claims resulting therefrom whether
arising from a defect in the software or otherwise.
D. Trademarks, Tradenames, etc.
No rights are granted herein to either Party to use any
identification (such as, but not limited to tradenames, trademarks, service
marks or symbols, and abbreviations, contractions, or simulations thereof) owned
or used by the other Party or its parent company or its affiliates to identify
itself or its affiliates or any of its products or services. Each Party agrees
that it will not, without the prior written permission of the other Party, use
such identification in advertising, publicity, packaging, labeling, or in any
other manner to identify itself or any of its products, services, or
organizations, or represent directly or indirectly that any product, service, or
organization of it is a product, service, or organization of the other Party or
its affiliates, or that any product or service of a Party is made in accordance
with or utilizes any intellectual property of the other Party or its affiliates.
<PAGE>
55
E. DISCLAIMER, LIMITATION OF LIABILITY
CONTRACTOR REPRESENTS THAT ANY INFORMATION OR INTELLECTUAL
PROPERTY FURNISHED IN CONNECTION WITH THIS CONTRACT SHALL BE TRUE AND ACCURATE
TO THE BEST OF ITS KNOWLEDGE AND BELIEF, BUT CONTRACTOR SHALL NOT BE HELD TO ANY
LIABILITY FOR UNINTENTIONAL ERRORS OR OMISSIONS THEREIN. EXCEPT AS EXPRESSLY
PROVIDED, CONTRACTOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSLY OR
IMPLIEDLY. BY WAY OF EXAMPLE, BUT NOT OF LIMITATION, CONTRACTOR AND ITS PARENT
COMPANY AND AFFILIATES MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF INFORMATION OR
INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY. EXCEPT AS
OTHERWISE PROVIDED IN THIS CONTRACT, CONTRACTOR AND ITS PARENT AND AFFILIATES
SHALL NOT BE HELD TO ANY LIABILITY WITH RESPECT TO ANY CLAIM BY PURCHASER OR ANY
THIRD PARTY CLAIM AGAINST PURCHASER ON ACCOUNT OF, OR ARISING FROM, PURCHASER'S
USE OF INFORMATION OR INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED BY CONTRACTOR.
F. Transferability
The licenses granted to Purchaser by Contractor in the Deliverable
Technical Materials and Deliverable Software are personal and non-transferable,
except that Purchaser may assign or transfer such licenses to an affiliated
entity under common control with the Purchaser or to any entity succeeding to
Purchaser's entire interest in the System (as upgraded by any System Upgrades)
as a result of reorganization or restructuring of the Purchaser or in the event
of a change of control of the Purchaser.
G. Deliverable Software Escrow
Within sixty (60) days of the Date of Provisional Acceptance or
Commercial Acceptance of any portion of the System or any System Upgrade,
Contractor shall deliver copies of source code and related documentation for
that portion of Deliverable Software that is Contractor Intellectual Property
(but not that portion of Deliverable Software comprising commercial, off-the-
shelf software, or software developed or provided by third parties) to a third
party commercial software escrow service, and from time to time as it becomes
available, copies of source code for updates, maintenance releases, or other new
versions of the Deliverable Software that is Contractor Intellectual Property
that is reasonably relating to the operation, maintenance or repair of the
computer systems of any portion of the System or any System Upgrade as delivered
by Contractor during the System's twenty-five (25) year Design Life Period.
A detailed listing of commercial, off-the-shelf software, or
software developed or provided by third parties to be included in the
Deliverable Software shall be delivered by Contractor to Purchaser within sixty
(60) days of the Date of Provisional Acceptance of any portion of the System or
any System Upgrade, as the case may be.
<PAGE>
56
The escrow service shall be authorized by Contractor to release
the escrowed software to Purchaser within five (5) business days after the
receipt of notice by Purchaser that (i) a Bankruptcy Event has occurred, (ii)
that the Contractor is no longer engaged in the business of operating or
maintaining, or providing support for other parties in operating or maintaining,
systems comparable to the System (as modified by System Upgrades) or (iii) that
Purchaser has terminated the Contract pursuant to Article 12 (Termination for
Default) due to Contractor's default, unless Contractor agrees to continue to
support Purchaser with respect to Deliverable Software.
Article 19 Infringement
- ------------------------
A. The Contractor agrees to defend or settle at its own expense all
suits for infringement of any patent, copyright, trademark or other form of
intellectual property right in any country of the world, for the use and
operation of the System (as upgraded by any System Upgrades) as supplied by
Contractor and for any component part thereof or material or equipment used
therein (or the manufacture of any material or the normal use thereof) provided
by the Contractor or on its behalf pursuant to this Contract and will hold the
Purchaser harmless from all expense of defending any such suit and all payments
for final judgment assessed on account of such infringement, except such
infringement or claim arising from:
1. The Contractor's adherence to the Purchaser's directions in
the design and configuration of the System (as upgraded by
any System Upgrades) or to use materials, parts or equipment
of the Purchaser's selection; or
2. Such material, parts or equipment furnished to the Contractor
by the Purchaser, other than in each case, items of the
Contractor's design or selection or the same as any of the
Contractor's commercial merchandise or in processes or
machines of the Contractor's design or selection used in the
manufacture of such standard products or parts; or
3. Use of the System (as upgraded by any System Upgrades) or the
materials, parts or equipment furnished by Contractor other
than for the purposes indicated in, or reasonably to be
inferred from, this Contract or in conjunction with other
products; or
4. Modification of the System (as upgraded by any System
Upgrades) or the materials, parts or equipment furnished by
the Contractor, or connection of the System to another system
by any person or entity other than Contractor, without prior
expressed written approval by Contractor.
B. The Purchaser will, at its own expense, defend all suits against
the Contractor for such excepted infringement and hold the Contractor harmless
from all expense of defending any such suit and from all payments by final
judgment assessed against the Contractor on account of such excepted
infringement.
<PAGE>
57
C. The Contractor and the Purchaser agree to give each other prompt
written notice of claims and suits for infringement, full opportunity and
authority to assume the sole defense, including appeals and, upon request and at
its own expense, the other agrees to furnish all information and assistance
available to it for such defense.
D. If all or any portion of the System (as upgraded by any System
Upgrades) or any material, part or equipment provided by the Contractor or on
its behalf is held to constitute an infringement (excluding such excepted
infringements specified in Sub-Article 19(A)) and is subject to an injunction
restraining its use or any order providing for its delivery up to or
destruction, or if in respect of any such claim of infringement the Contractor
deems it advisable to do so, the Contractor shall at its own expense either:
1. Procure for the Purchaser the right to retain and continue to
use the System, the affected portion thereof, or any such
material, part or equipment without interruption for the
Purchaser;
2. Replace or modify the System, the affected portion thereof,
or any material, part or equipment so that it becomes
noninfringing while continuing to meet the Performance
Requirements or
3. If the remedies specified in Sub-Articles 19(D)(1) an
19(D)(2) are not feasible, refund to the Purchaser the full
purchase price paid for the System, the affected portion
thereof, or any material, part or equipment found to be
infringing.
E. In no event shall the Purchaser make any admission or settle any
claim in relation with any claim for infringement without Contractor's consent.
Article 20 Safeguarding of Information and Technology
- ------------------------------------------------------
A. In performance of this Contract, it may be mutually advantageous
to the Parties hereto to share certain specifications, designs, plans, drawings,
software, market research or operating data, prototypes, or other business,
financial, and or/technical information related to products, services, or
systems which are proprietary to the disclosing Party or its affiliates (and in
the case of Contractor, Contractor's parent company) (together with this
Contract and related documents, "Information"). The Parties recognize and agree
that Information includes information that was supplied in contemplation hereof
prior to execution of this Contract, and further agree that Information includes
information in both tangible and intangible form.
B. Unless such Information was previously known to the Party
receiving such Information free of any obligation to keep it confidential, or
such Information has been or is subsequently made public through other than
unauthorized disclosure by the receiving Party or is independently developed by
the receiving Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such Information, shall be
used only in the performance of this Contract, and may not be used for any other
purposes except upon such terms as may be agreed upon in writing by the Party
owning such Information. The receiving
<PAGE>
58
Party may disclose such Information to other persons, upon the furnishing
Party's prior written authorization, but solely to perform acts which this
Article expressly authorizes the receiving Party to perform itself and further
provided such other person agrees in writing (a copy of which writing will be
provided to the furnishing Party at its request) to the same conditions
respecting disclosure and use of Information contained in this Article and to
any other reasonable conditions requested by the furnishing Party. Nothing
herein shall prevent a Party from disclosing Information (a) upon the order of
any court or administrative agency, (b) upon the request or demand of, or
pursuant to any regulation of, any regulatory agency or authority, (c) to the
extent reasonably required in connection with the exercise of any remedy
hereunder and (d) to a Party's legal counsel or independent auditors.
C. The Purchaser may disclose Information to its lenders and their
representatives in connection with obtaining financing for the System, provided
that each such lender or their representative enters into a confidentiality
agreement containing terms and conditions similar to those in this Contract. Any
such disclosure of Information shall be subject to the restrictions in Sub-
Article 20(B).
Article 21 Export Control
- --------------------------
The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of the United States and the destination country(ies) and any use or
transfer of such products, software and technical information must be authorized
under those Laws. The Parties agree that they will not use, distribute, transfer
or transmit the products, software or technical information (even if
incorporated into other products) except in compliance with export Laws. If
requested by either Party, the other Party agrees to sign all necessary export-
related documents as may be required to comply with export Laws.
Article 22 Liquidated Damages
- ------------------------------
A. If Phase 1 of the System is not Ready for Commercial Acceptance or
Provisional Acceptance within * of the Scheduled Phase 1 System RFS Date, as it
may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay
following the * for up to 200 days or, if earlier, to the day Contractor
begins making payments under paragraph C of this Article 22, by way of pre-
estimated and liquidated damages for the
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
59
delay and not as a penalty, an amount equal to * of the Phase 1 portion of
the Initial Contract Price for the System, subject to the maximum aggregate
amount set forth in Paragraph E of this Article 22.
B. If Phase 2 of the System is not Ready for Commercial Acceptance or
Provisional Acceptance within * of the Scheduled Phase 2 RFS Date, as it may
have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay
following the expiration of the * for up to 200 days or, if earlier, to the
day Contractor begins making payments under paragraph C of this Article 22, by
way of pre-estimated and liquidated damages for the delay and not as a penalty,
an amount equal to * of the Phase 2 portion of the Initial Contract Price
for the System, subject to the maximum aggregate amount set forth in Paragraph E
of this Article 22.
C. If the System is not Ready for Commercial Acceptance or
Provisional Acceptance by the Scheduled RFS Date, as it may have been extended
under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay, for up
to 200 days, by way of pre-estimated and liquidated damages for the delay and
not as a penalty, an amount equal to * of the Initial Contract Price for the
System, * subject to the maximum aggregate amount set forth in Paragraph E of
this Article 22.
D. If a System Upgrade is not Ready for Commercial Acceptance or
Provisional Acceptance by the Scheduled Upgrade Date, as it may have been
extended under:
1. Article 6 (Contract Variations);
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
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60
2. Article 17 (Force Majeure); or
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay, for up
to 90 days, by way of pre-estimated and liquidated damages for the delay and not
as a penalty, an amount equal to * of the Initial Upgrade Contract Price.
E. In no event shall the aggregate amount payable with respect to
Phases and/or the System pursuant to Paragraphs A, B and/or C above exceed *
of the Initial Contract Price.
Article 23 Limitation of Liability/Indemnification
- ---------------------------------------------------
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND
IRRESPECTIVE OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO
EVENT SHALL EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS
BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL
(INCLUDING PUNITIVE) DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE,
LOSS OF BUSINESS OPPORTUNITY OR THE COSTS ASSOCIATED WITH THE USE OF RESTORATION
FACILITIES RESULTING FROM ITS FAILURE TO PERFORM PURSUANT TO THE TERMS AND
CONDITIONS OF THIS CONTRACT.
B. EXCEPT AS SET FORTH BELOW IN THE LAST TWO SENTENCES OF THIS SUB-
ARTICLE 23(B), THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT,
CONTRACT OR OTHERWISE, EXCEPT FOR CLAIMS RELATING TO SYSTEM UPGRADES, SHALL NOT
EXCEED ONE HUNDRED PERCENT (100%) OF THE CONTRACT PRICE. THE CONTRACTOR'S
MAXIMUM AGGREGATE LIABILITY FOR CLAIMS RELATING TO SYSTEM UPGRADES (IF
CONTRACTOR CAN PROVE THAT THE SYSTEM WAS DESIGNED WITH SUFFICIENT TRANSMISSION
MARGIN AND THUS SUCH CLAIMS DO NOT ARISE UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B))
SHALL NOT EXCEED ONE HUNDRED PERCENT (100%) OF THE APPLICABLE UPGRADE PRICE. THE
FOREGOING LIMITATION SHALL NOT APPLY TO CLAIMS UNDER SUB-ARTICLES 19(A) AND
23(C). IF CONTRACTOR CANNOT PROVE THAT THE SYSTEM WAS DESIGNED WITH SUFFICIENT
TRANSMISSION MARGIN FOR A SYSTEM UPGRADE, THE CONTRACTOR'S MAXIMUM AGGREGATE
LIABILITY FOR CLAIMS ARISING UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B) SHALL NOT
EXCEED ONE HUNDRED PERCENT (100%) OF THE UPGRADEABILITY LIABILITY LIMIT.
C. Contractor, at its expense, shall defend, indemnify and hold
harmless Purchaser, its affiliates, agents, subcontractors and employees
(collectively, the "Indemnitees") against any and all claims, proceedings,
demands, costs, expenses, liabilities (including without limitation, reasonable
legal fees), and judgements for losses (collectively, "Liabilities") asserted
against or
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
61
incurred by any Indemnitee, arising out of, or in connection with (a) this
Contract, and/or the performance thereof by Contractor or any of its
subcontractors, or (b) the operation and maintenance of the System prior to the
risk of loss passing to Purchaser, resulting from acts or omissions of
Contractor or any Subcontractor, regardless of whether involving errors,
negligence or willful misconduct or resulting from, strict liability or
statutory liability, except to the extent that such Liabilities were caused by
the negligent acts or willful misconduct of Purchaser. The defense,
indemnification and save harmless obligation is specifically conditioned on the
following: (i) Purchaser providing prompt notification in writing of any such
Liability when it obtains Actual Knowledge thereof, unless such failure shall
not have materially impaired Contractor's ability to defend against such claim;
(ii) Contractor having control of the defense of any such action, claim or
demand and of all negotiations for its settlement or compromise; and (iii)
Purchaser cooperating, at Contractor's expense, in a reasonable way to
facilitate the defense of such claim or demand or the negotiations for its
settlement. The Purchaser, at its option, shall be entitled to participate, at
its own expense, in any proceeding, claim or demand involving an Indemnitee.
D. Purchaser, at its expense, shall defend, indemnify and hold
harmless Contractor, its agents, subcontractors and employees against any and
all claims, demands, and judgments for losses due to any act or omission,
arising out of, or in connection with this Contract or, after risk of loss
passes to Purchaser, the operation or maintenance of the System, to the extent
such losses were caused by the negligence or willful misconduct of the
Purchaser, its subcontractors, employees or agents (other than Contractor). The
defense, indemnification and save harmless obligation is specifically
conditioned on the following (i) Contractor providing prompt notification in
writing of any such claim or demand when it obtains Actual Knowledge thereof,
unless such failure shall not have materially impaired Purchaser's ability to
defend against such claim; (ii) Purchaser having control of the defense of any
such action, claim or demand and of all negotiations for its settlement or
compromise; and (iii) Contractor cooperating, at Purchaser's expense, in a
reasonable way to facilitate the defense of such claim or demand or the
negotiations for its settlement.
Article 24 Counterparts
- ------------------------
This Contract may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Article 25 Design and Performance Responsibility; Subcontractors
- -----------------------------------------------------------------
A. The Contractor shall be solely responsible for the engineering and
design of and for all details of the System and the System Upgrades and for the
adequacy thereof.
B. The Contractor's responsibility for engineering and designing of
the System and the System Upgrades shall not in any way be diminished, nor shall
the Contractor's design approach be restricted or limited by, the Purchaser's
acceptance of the Contractor's guidance or recommendations as to engineering
standards and design specifications, or by the Purchaser's approval, suggestions
or recommendations on any aspect of the engineering or design.
<PAGE>
62
C. Purchaser shall use reasonable efforts in assisting the
Contractor, at Contractor's expense, to obtain in a timely manner accurate
information required for the Contractor to perform the Work and the Upgrade
Work, which Contractor cannot expeditiously and cost-effectively obtain from any
source other than the Purchaser.
D. The Contractor will select Subcontractors in connection with the
performance of the Work such that all Work provided by any such Subcontractors
meet the System specifications set out in the Technical Volume hereto and the
reliability and performance requirements set forth in this Contract. Regardless
of whether or not the Contractor obtains approval from the Purchaser of a
Subcontractor or whether the Contractor uses a Subcontractor recommended or
designated by the Purchaser, use by the Contractor of a Subcontractor will not,
under any circumstances: (i) give rise to any claim by the Contractor against
the Purchaser if such Subcontractor breaches its subcontract or contract with
the Contractor; (ii) give rise to any claim by such Subcontractor against the
Purchaser; (iii) create any contractual obligation by the Purchaser to the
Subcontractor; (iv) give rise to a waiver by the Purchaser of its rights to
reject any defects or deficiencies or defective Work; or (v) in any way release
the Contractor from being solely responsible to the Purchaser for the Work to be
performed under this Contract.
E. The Contractor is the general contractor for the Work and remains
responsible for all of its obligations under this Contract, including the Work,
regardless of whether a subcontract or supply agreement is made or whether the
Contractor relies upon any Subcontractor to any extent. The Contractor's use of
Subcontractors for any of the Work will in no way increase the Contractor's
rights or diminish the Contractor's liabilities to the Purchaser with respect to
this Contract, and in all events the Contractor's rights and liabilities
hereunder with respect to the Purchaser will be as though the Contractor had
itself performed such Work. The Contractor will be liable for any delays caused
by any Subcontractor as if such delays were caused by the Contractor.
F. The terms of this Contract will in all events be binding upon the
Contractor regardless of and without regard to the existence of any inconsistent
terms in any agreement between the Contractor and any Subcontractor whether or
not and without regard to the fact that the Purchaser may have directly and/or
indirectly had notice of any such inconsistent term.
G. The Contractor must make all payments to all Subcontractors
(except in the case of legitimate disputes between the Contractor and any such
Subcontractor arising out of the agreement between the Contractor and such
Subcontractor) in accordance with the respective agreements between the
Contractor and its Subcontractors such that Subcontractors will not be in a
position to enforce liens and/or other rights against the Purchaser, the System
or any part thereof.
H. If a proposed Subcontractor of major Supplies is not listed on
Exhibit G hereto, Contractor shall obtain approval thereof from Purchaser, which
approval will not be unreasonably withheld. Contractor will not terminate any
such listed or approved Subcontractor except for good cause (taking into account
the interests of Purchaser) and after consultation with Purchaser, *
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
63
*
Article 26 Product Changes
- ---------------------------
The Contractor may at any time make changes to the System or
System Upgrades furnished pursuant to this Contract, or modify the drawings and
published specifications relating thereto, or substitute equipment of later
design, provided the changes, modifications, or substitutions under normal and
proper use do not impact upon the form, fit, expected life or function of the
System as provided in the System Performance Requirements.
Article 27 Risk and Insurance
- ------------------------------
A. The Contractor shall at all times maintain, and upon request, the
Contractor shall furnish the Purchaser with certificates, or other reasonable
evidence, that Contractor maintains, the following insurance or has adequate
self-insurance (other than as required to comply with any statutory insurance
requirements); provided, that the following insurance coverages may be combined
--------
or in different form so long as Contractor maintains insurance consistent with
the following requirements:
1. Workmen's Compensation and Employers Liability Insurance
(with a limit of not less than * for any one incident
or series of incidents arising from one event or such higher
limit as may be required by the laws of any jurisdiction)
covering the officers and employees of the Contractor for all
compensation or other benefits required of the Contractor by
the laws of any nation or political sub-division thereof to
which the Contractor and its operations under this Contract
are subject in respect of injury of death of any such
employee.
2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less than * for claims of injury or
death of any persons or loss of or damage to property
resulting from any one accident. This insurance to be
extended to provide Marine Comprehensive General Liability
including liabilities arising out of the operation of subsea
equipment.
3. Comprehensive Automobile Liability insurance covering all
vehicles and automotive equipment owned, hired, or in the
custody and control of Contractor and complying with all
applicable legislation with limits not less than *
combined single limit for the death or injury of any person
per accident and not less than * for the loss or
damage to property resulting from any one accident.
4. Excess Liability Coverage over that required in Sub-Articles
27(A)(1), (2) and (3) with minimum limits of * for
any one accident or occurrence.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
64
5. All Risk Insurance in respect of all property of Contractor,
its respective officers, agents and employees connected with
the performance of the Work against all loss or damage from
whatever cause.
6. Conventional Marine Hull and Machinery Insurance including
War Risks or any vessel(s) owned, operated or chartered by
the Contractor, in an amount equal to the full value thereof.
In the event of damage to or loss of such vessel(s), the
Contractor agrees to look to its insurance carrier for
payment of such loss or damage and hereby releases the
Purchaser and waives any claims against the Purchaser for the
loss of such vessel(s) unless due to the negligence of
Purchaser, its agent or representatives (other than
Contractor).
7. All vessels are to be entered in a Mutual Protection and
Indemnity Association with a full and unlimited entry or to
have Marine Protection and Indemnity Insurance with a limit
of not less than * including coverage for illness,
injury or death of crew members (unless covered under
Workmen's Compensation Insurance), Contractual Liability
Coverage, Collision and Tower's Liability, Removal of Wreck
and Debris and Third Party Liability, except that the
foregoing shall not apply to small craft which are not
customarily so insured; provided, that such small craft will
--------
be insured to the limits customary for such commercial small
craft vessels.
8. Specialist Operations Insurance with a limit of not less than
* as per London Wording 1993 or equivalent.
9. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all
risks 1.1.63, Institute War Clauses, London Malicious Damage
Clause, and Institute Strikes Riots and Civil Commotion
Clauses or their equivalent.
10. Marine Cargo or equivalent is required to protect, for full
cost, against all risks of physical loss or damage to the
plant, equipment and supplies to be included in the System
(other than War Risks) beginning with when each such item is
ready for shipping and ending when the submersible plant and
equipment are placed overside the cable laying vessel and
when the equipment and supplies are delivered to the cable
stations, central offices, or network operation center. The
coverage continues to cover cable lying on the seabed.
11. Sea Bed or equivalent coverage (including an Old Mines and
Torpedoes Clause, including other derelict weapons of War) is
required to protect, for full cost, against all risks of
physical loss or damage to the submersible
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
65
plant and equipment described in Sub-Article 27(A)(10) above.
See last paragraph.
12. War Risks or equivalent coverage is required to protect
against damage to, seizure by and/or destruction of the
System by means of war, piracy, takings at sea and other
warlike operations until discharge of the submersible plant
and equipment. For the purposes of this Article "discharge of
the submersible plant and equipment" shall be deemed to take
place when the plant and equipment reaches the sea bottom, as
far as the submersible plant and equipment is concerned, and
when the plant is off-loaded in the respective terminal
country, as far as non-submersible plant is concerned.
13. Pollution Liability (EIL) insurance for installation
operations and as arising from the use of vessels in an
amount not less than * or such higher sum as may
be required to meet any legal requirement in area of
operations.
The Comprehensive General Liability Insurance required pursuant to
Sub-Article 27(A)(2) above, shall include Contractual Liability Coverage which
shall specifically apply to the obligations assumed by the Contractor under the
Terms and Conditions of this Contract.
B. 1. All the foregoing insurances shall be effected with a
creditworthy insurer and shall be endorsed to provide
Purchaser with at least thirty (30) days prior written notice
of cancellation or material change.
2. The foregoing insurances, where relevant, shall name
Purchaser and its lenders as an additional insured as to
operations hereunder, in which event the Contractor's
insurance shall be primary and non-contributory to any
insurance carried by Purchaser.
3. The limits specified herein are minimum requirements and
shall not be construed in any way as limits of liability or
as constituting acceptance by Purchaser of such
responsibility for financial liabilities in excess of such
limits. The Contractor shall bear all deductibles applicable
to any insurance.
4. If it is judicially determined that the monetary limits of
insurance required hereunder or of any indemnity voluntarily
assumed under the Terms and Conditions of this Contract which
the Contractor agrees will be supported either by available
liability insurance or voluntarily self-insured, in part or
whole, exceeds the maximum limits permitted under applicable
law, it is agreed that said insurance requirements or
indemnity shall automatically be amended to conform to the
maximum monetary limits permitted under such law.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
66
5. Contractor shall take reasonable steps to provide that any
sub-contractor engaged by it has in effect or will effect
Employer's Liability, Workmen's Compensation, Hull and
Machinery and Protection and Indemnity insurances and any
other insurances required by law, together with such other
insurances as the Contractor may consider necessary.
6. If the Contractor fails to effect or keep in force any of the
insurances required under this Contract, Purchaser may effect
and keep in force any such insurances and pay such premiums
as may be necessary for that purpose and from time to time
deduct the amount so paid by Purchaser from any money due or
which may become due to the Contractor hereunder or recover
the same as a debt due from the Contractor, provided that
Purchaser is not in Default.
7. Each Party shall give the other prompt notification of any
claim with respect to any of the insurances to be provided
hereunder, accompanied by full details giving rise to such
claim. Each Party shall afford the other all such assistance
as may be required for the preparation and negotiation of
insurance claims.
8. Contractor shall report to Purchaser as soon as practicable
all accidents or occurrences resulting in injuries to
Contractor's employees or third parties, or damage to
property of third parties, arising out of our during the
course of services for Purchaser by Contractor.
C. The Contractor may organize such reasonable levels of deductibles,
excesses and self-insurance as it considers appropriate and which are within
prudent industry standards.
D. The insurance requirements of this Article 27 will remain in place
with respect to each Segment, the System or System Upgrade, as the case may be,
and will not in any way be diminished or reduced until the transfer of title and
risk of loss shall have passed to Purchaser of such Segment, System or System
Upgrade, as the case may be, even in the event of the sale of substantially all
the assets of the Contractor by way of a merger, consolidation or sale of
assets.
Article 28 Plant and Work Rules
- --------------------------------
Employees and agents of each Party shall, while on the premises of
the other or its subcontractors, comply with all plant rules and governmental
regulations.
Article 29 Right of Access and Review
- --------------------------------------
A. The Contractor shall, upon reasonable notice during normal
business hours and in a manner to avoid any disruption of the work on the
premises including performance of other contracts, permit access by the
Purchaser or its Quality Assurance (QA) Representatives (other than a competitor
of the Contractor or any affiliate of a competitor) to the Contractor's premises
where the work will be performed, and will use its best endeavors to secure
rights of access to
<PAGE>
67
premises of its subcontractors where the work will be performed, having
subcontracts or orders in the amount of, or equivalent to U.S. $125,000 or more,
in accordance with the Contractor's contractual arrangements with its
Subcontractors, and allow the Purchaser or its QA Representative to:
1. audit the Contractor's quality assurance system and its
application to the Work and Upgrade Work, including
manufacture, development and raw materials and components
provision;
2. inspect all parts of the Work and Upgrade Work to the extent
reasonably practicable to ensure that their quality meets the
Specification.
This right of access shall allow for the Purchaser and/or its QA
representatives. The Purchaser shall provide the name(s) of each such visitor
prior to the visit. The Contractor shall not be responsible for any costs,
including travel and accommodation costs, of the Purchaser or its
representatives.
B. The right of access shall also allow for the Purchaser and/or
representatives to be aboard the vessel(s) during installation and the route
survey, provided accommodations are available. The Contractor shall not be
responsible for any costs of the Purchaser or its representatives, except for
living expenses on board the vessel which includes one (1) daily telex or fax,
all other travel and accommodation costs for the Purchaser or its QA
Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any
obligation requiring the Contractor or its subcontractors to disclose trade
secrets or proprietary information. Further, such right of access may be
conditioned on the execution of a confidentiality and non-disclosure agreement
and/or subject to routine building or security rules, regulations or procedures.
D. Any exercise of any right of the Purchaser under this Contract to
inspect, audit, visit or to observe or to review or approve any part of the Work
or System Upgrades shall not be construed as limiting any obligation of
Contractor hereunder, including without limitation, under Articles 1 and 10
hereof.
E. Contractor will have access to the System as necessary to
accomplish its responsibilities under this Contract and in order to make repairs
and to make System Upgrades. Contractor will provide reasonable notice of its
need for access and will take reasonable steps to minimize disruptions to the
operation of the System.
F. Contractor shall give the Purchaser reasonable prior written
notice of each monthly project management review meeting with respect to the
status of the construction and/or installation of the System, and Purchaser's
representatives shall at their cost be permitted to attend and participate in
such meetings.
Article 30 Quality Assurance; First Application
- ------------------------------------------------
<PAGE>
68
A. All equipment, material and supplies provided under this Contract
shall be inspected and tested by representatives designated by the Contractor to
the extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with commercial practices
normally employed by the Contractor in the construction of submarine cable
systems. The foregoing shall not be construed as limiting any of the
Contractor's obligations under this Contract.
B. The Contractor represents that the list in Exhibit F identifies
(i) all major System elements and subsystems and (ii) all Deliverable Software,
which have not been used, as of the date hereof, in any other currently
operating submarine cable system, the qualification plans for which are more
fully described in the First Office Application section of the Quality Plan
section of the Technical Volume.
Article 31 Documentation
- -------------------------
The Contractor shall furnish to the Purchaser one copy of the
standard documentation in the English language for the System provided
hereunder. Such documentation shall be provided prior to the Acceptance testing.
Additional copies of the documentation are available at additional cost. The
Contractor agrees to reformat the Commercial Volume and the Technical Volume in
a manner that is consistent with Purchaser's guidelines within four weeks of the
execution of this Contract.
Article 32 Training
- --------------------
The Contractor will provide, as part of the Initial Contract
Price, any and all training, as more particularly described in the training
section of the Technical Volume, necessary for the operation and maintenance of
the System.
Article 33 Settlement of Disputes/Arbitration/Litigation
- ---------------------------------------------------------
A. The Parties shall endeavor to settle amicably by mutual
discussions any disputes, differences, or claims whatsoever related to this
Contract.
B. Failing such amicable settlement, any controversy, claim or
dispute arising under or relating to this Contract, including the existence,
validity, interpretation, performance, termination or breach thereof, shall, if
both Parties agree in writing thereto, finally be settled by arbitration in
accordance with the International Arbitration Rules of the American Arbitration
Association ("AAA"). Unless the Parties agree to a sole arbitrator, there shall
be three (3) arbitrators, with each Party appointing one arbitrator, who
collectively will select a third. The language of the arbitration shall be
English. The Arbitrator will not have authority to award punitive damages to
either Party. Each Party shall bear its own expenses, but the Parties shall
share equally the fees and expenses of the Arbitration Tribunal and the AAA.
This Contract shall be enforceable, and any arbitration award shall be final,
and judgment thereon may be entered in any court of competent jurisdiction. In
any such arbitration, the decision in any prior arbitration
<PAGE>
69
under this Contract shall not be deemed conclusive of the rights as among
themselves of the Parties hereunder. The arbitration shall be held in New York,
New York, U.S.A.
C. 1. If both Parties do not agree to arbitration pursuant to
paragraph (B) above, then either Party may institute suit in
the Supreme Court of the State of New York sitting in New
York County or the United States District Court of the
Southern District of New York, or any appellate court from
any thereof.
2. Each Party hereby irrevocably and unconditionally submits to
the non-exclusive jurisdiction of any New York State or
Federal court sitting in The City of New York, and any
appellate court from any thereof, in any action or proceeding
arising out of or relating to this Contract, and each Party
hereby irrevocably and unconditionally agrees that all claims
in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent
permitted by law, in such Federal court. Each Party hereby
irrevocably and unconditionally waives, to the fullest extent
it may effectively do so, any defense of an inconvenient
forum to the maintenance of such action or proceeding in any
such court and any right of jurisdiction on account of the
place of residence or domicile of either Party. The
Contractor hereby irrevocably and unconditionally appoints CT
Corporation System with an office on the date hereof at 1633
Broadway, New York, New York, as its agent and Purchaser
hereby irrevocably appoints Global Crossing Ltd., with an
office at 712 Fifth Avenue, New York, New York, as its agent
(collectively, the "New York Process Agents"), in the case of
each, to receive on behalf of each such Party and its
respective property service of copies of the summons and
complaint and any other process which may be served in any
such action or proceeding in any such New York State or
Federal court and agrees promptly to appoint a successor New
York Process Agent in The City of New York (which successor
Process Agent shall accept such appointment in a writing
prior to the termination for any reason of the appointment of
the initial New York Process Agent). In any such action or
proceeding in such New York State or Federal court sitting in
The City of New York, such service may be made on a Party by
delivering a copy of such process to such Party in care of
the appropriate Process Agent at such Process Agent's above
address and by depositing a copy of such process in the mails
by certified or registered air mail, addressed to such Party
at its address referred to in Article 35 of this Contract
(such service to be effective upon such receipt by the
appropriate Process Agent and the depositing of such process
in the mails as aforesaid). Each Party hereby irrevocably and
unconditionally authorizes and directs such Process Agent to
accept such service on its behalf. As an alternate method of
service, each Party also irrevocably and unconditionally
consents to the service of any and all process in any such
action or proceeding in such New York State or Federal court
sitting in The City of New York by mailing of
<PAGE>
copies of such process to such Party, as the case may be, by
certified or registered air mail at its address referred to
in Article 35 of this Contract. Each Party agrees that, to
the fullest extent permitted by applicable law, a final
judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
3. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
--------------------
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS PARAGRAPH.
D. THE OBLIGATIONS OF EACH PARTY IN RESPECT OF THIS CONTRACT DUE TO
ANY PARTY SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE "JUDGMENT
CURRENCY") OTHER THAN DOLLARS, BE DISCHARGED ONLY TO THE EXTENT THAT ON THE
BUSINESS DAY FOLLOWING RECEIPT BY SUCH PARTY OF ANY SUM ADJUDGED TO BE SO DUE IN
THE JUDGMENT CURRENCY SUCH PARTY MAY IN ACCORDANCE WITH NORMAL BANKING
PROCEDURES PURCHASE DOLLARS WITH THE JUDGMENT CURRENCY; IF THE AMOUNT OF DOLLARS
SO PURCHASED IS LESS THAN THE SUM ORIGINALLY DUE TO SUCH PARTY IN DOLLARS, EACH
PARTY AGREES, AS A SEPARATE OBLIGATION AND NOTWITHSTANDING ANY SUCH JUDGMENT, TO
INDEMNIFY SUCH PARTY AGAINST SUCH LOSS, AND IF THE AMOUNT OF DOLLARS SO
PURCHASED EXCEEDS THE SUM ORIGINALLY DUE TO ANY PARTY TO THIS CONTRACT, EACH
PARTY AGREES TO REMIT TO SUCH PARTY, SUCH EXCESS.
Article 34 Applicable Law
- --------------------------
THIS CONTRACT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, UNITED STATES, EXCLUDING ITS CONFLICTS OF LAW
PROVISIONS AND EXCLUDING THE CONVENTION FOR THE INTERNATIONAL SALE OF GOODS.
<PAGE>
71
Article 35 Notices
- -------------------
A. Any notices, consent, approval, or other communication pursuant to
this Contract shall be in writing, in the English language, and shall be deemed
to be duly given or served on a Party if sent to the Party at the address
stipulated in Sub-Article 35(B) and if sent by any one of the following means
only:
1. Sent by hand: Such communication shall be deemed to have been
received on the day of delivery provided receipt of delivery
is obtained.
2. Sent by facsimile: Such communication shall be deemed to have
been received, under normal service conditions, twenty-four
(24) hours following the time of dispatch or on confirmation
by the receiving Party, whichever is earlier.
3. Sent by registered or certified mail: Such communication
shall be deemed to have been received, under normal service
conditions, on the day it was received or on the tenth day
after it was dispatched, whichever is earlier.
B. For purposes of this Article, the names, addresses and fax numbers
of the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.
Alcatel Submarine Networks
30, rue Pierre Beregovoy
92111 Clichy Cedex
France
Facsimile: 33-(0)-1-4756-6920
Attn: Charles H. Matthews
South American Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
Facsimile: 441-296-6749/8606
Attn: Robert Klug
Article 36 Publicity and Confidentiality
- -----------------------------------------
A. No information relating to this Contract shall be released by
either Party to any newspaper, magazine, journal or other written, oral or
visual medium without the prior written approval of an authorized representative
of the other Party; provided that, subject to Article 20 (Safeguarding of
--------
Information and Technology) and the following Sub-Article, this Article shall
not restrict either Party from responding to customary press inquiries or
otherwise making public or private statements in the normal course of business,
so long as consistent with a mutually agreed press-release.
<PAGE>
72
B. This Contract and any non-public information, written or oral,
with respect to this Contract, "Confidential Information", will be kept
confidential and shall not be disclosed, in whole or in part, to any person
other than affiliates, officers, directors, employees, agents or representatives
of a Party (collectively, "Representatives") who need to know such Confidential
Information for the purpose of negotiating and executing this Contract. Each
Party agrees to inform each of its Representatives of the non-public nature of
the Confidential Information and to direct such persons to treat such
Confidential Information in accordance with the terms of this Article. Nothing
herein shall prevent a Party from disclosing Confidential Information (a) upon
the order of any court or administrative agency, (b) upon the request or demand
of, or pursuant to any regulation of, any regulatory agency or authority, (c) to
the extent reasonably required in connection with the exercise of any remedy
hereunder, (d) to a Party's legal counsel or independent auditors, (e)
prospective lenders to the Purchaser or Purchaser's parent or affiliate
companies, (f) to the extent required, to any actual or proposed person or
entity which will provide any operation, administrative or maintenance services
with respect to the System or any part thereof and (g) to any actual or proposed
assignee of all or part of its rights hereunder provided that such actual or
proposed assignee agrees in writing to be bound by the provisions of this
Article.
Article 37 Assignment
- ----------------------
A. Except as provided in this Article, neither Party shall assign
this Contract or any right or interest under this Contract, nor delegate any
work or obligation to be performed under this Contract ("Assignment"), without
the other Party's prior written consent which shall not be unreasonably withheld
(it being understood that it shall be deemed to be reasonable to withhold
consent to the assignment of this Contract or any rights, interest or
obligations hereunder to a competitor of Contractor or an affiliate of a
competitor or uncreditworthy party).
B. The Contractor has the right to assign all or any part of its
rights under this Contract, or to delegate all or any part of its duties
hereunder at any time without the Purchaser's consent to a successor to
substantially all the assets of the Contractor by way of a merger, consolidation
or sale of assets; provided that in the case of any assignment or delegation
--------
pursuant to this Sub-Article 37(B), such assignee or delegee shall assume in
writing all liabilities, warranties, representations and obligations of
Contractor under this Contract. The Contractor shall give the Purchaser written
notice 30 days prior to any assignment or delegation. Contractor shall remain
jointly and severally liable with any assignee or delegee described in clause
(i) of this paragraph.
C. The Purchaser has the right to assign all of its rights and
delegate all of its duties under this Contract to any other entity to whom all
of Purchaser's rights and interests in the System have been transferred.
Purchaser also has the right (i) to assign all of its rights hereunder with
respect to any particular Landing Assets to any Transferee, (ii) to assign
Permits with respect to such Landing Assets, or have Permits with respect to
such Landing Assets issued in the name of, such Transferee and (iii) to transfer
such Landing Assets or have such Landing Assets transferred directly to, such
Transferee; provided that such Transferee shall execute a supplement to this
--------
Contract whereby it becomes jointly and severally liable, together with
Purchaser, for all of Purchaser's obligations under this Contract. "Landing
Assets" means, with respect to each
<PAGE>
73
jurisdiction where a portion of the System is located, all or part of such
portion of the System located therein. It is understood that the Purchaser, at
its option, may assign and transfer rights with respect to Landing Assets in
different jurisdictions to different Transferees.
Purchaser contemplates effecting the foregoing assignment pursuant to a
Supplement hereto and the Contractor agrees to execute and deliver such
Supplement. Purchaser shall not transfer any of its rights under this Contract
or the System except in accordance with the foregoing. Any assignment or
transfer by Purchaser not expressly permitted by Sub-Article 37(C) shall be of
no force and effect. Any assignment or transfer by Purchaser which results in
any increase in costs or any loss, damage, delay or failure of performance shall
constitute a Force Majeure, and, without limiting the applicability of Article
17 (Force Majeure), Purchaser shall be responsible for any increase in costs
resulting therefrom.
Article 38 Relationship of the Parties
- ---------------------------------------
All work performed by a Party under this Contract shall be
performed as an independent contractor and not as an agent of the other and no
persons furnished by a Party shall be considered the employees or agents of the
other. Each Party shall be responsible for its employees' compliance with all
Laws while performing under this Contract. This Contract shall not form a joint
venture or partnership between the Parties.
Article 39 Successors Bound
- ----------------------------
This Contract shall be binding on the Contractor and the Purchaser
and their respective successors and permitted assigns.
Article 40 Article Captions; Joint Drafting
- --------------------------------------------
A. The captions of the Articles do not form part of this Contract and
shall not have any effect on the interpretation thereof.
B. This Contract has been fully negotiated between, and jointly
drafted by, the Parties hereto.
Article 41 Severability
- ------------------------
If any of the provisions of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions and the rights and obligations of the Contractor and the
Purchaser shall be construed and enforced accordingly. In the event such invalid
or unenforceable provision is an essential and material element of this
Contract, the Parties shall promptly negotiate a replacement provision.
<PAGE>
74
Article 42 *
- ----------
The Contractor agrees to cause the Guarantor to execute and
deliver the Guaranty to Purchaser within five days of the execution of this
Agreement. *
Article 43 Survival of Obligations
- -----------------------------------
The Parties' rights and obligations, which, by their nature would
continue beyond the termination, cancellation or expiration of this Contract,
including, but not limited to, those contained in Sub-Article 4(B) (Taxes,
Levies and Duties) and Sub-Article 4(C) (Withholding Tax), Article 18
(Intellectual Property), Article 20 (Safeguarding of Information and
Technology), Article 21 (Export Control) and Article 23 (Limitation of
Liability/Indemnification) shall survive termination, cancellation or expiration
hereof. Article 10 (Warranty) and Article 11 (Contractor Support), shall survive
termination, cancellation or expiration hereof, if and only if, this Contract is
terminated by Purchaser pursuant to Sub-Article 13(A).
Article 44 Non-Waiver
- ----------------------
A waiver of any of the terms and conditions of this Contract, or
the failure of either Party strictly to enforce any such term or condition, on
one or more occasions shall not be construed as a waiver of the same or of any
other term or condition of this Contract on any other occasion.
Article 45 Language
- --------------------
This Contract has been executed in the English language and
English will be the controlling language for interpretation of this Contract.
Article 46 Entire Agreement
- ----------------------------
This Contract supersedes all prior oral or written understanding
between the Parties and constitutes the entire agreement with respect to the
subject matter herein. Such terms and conditions shall not be modified or
amended except by a writing signed by authorized representatives of all Parties.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
75
This Contract is executed as of the date first set forth above in
the location set forth below the signature of the duly authorized representative
of each Party, as set forth below.
ALCATEL SUBMARINE NETWORKS
By: /s/ P.A. Scully
----------------------------------
Name: P.A. Scully
Title: Contracting Director
Signed In:
SOUTH AMERICAN CROSSING LTD.
By: /s/ S. Wallace Dawson Jr.
----------------------------------
Name: S. Wallace Dawson Jr.
Title:
Signed In: The Netherlands
<PAGE>
EXHIBIT A TO
CONSTRUCTION CONTRACT
*
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
EXHIBIT B
TO
CONSTRUCTION CONTRACT
________________________________________________________________________________
________________________________________________________________________________
_______________________________
GUARANTY
by
ALCATEL
in favor of
SOUTH AMERICAN CROSSING LTD.
______________________________
Dated as of August 6, 1999
_______________________________
________________________________________________________________________________
<PAGE>
This GUARANTY, executed as of August 6, 1999, by ALCATEL, a
societe anonyme established in France (the "Guarantor"), in favor of SOUTH
AMERICAN CROSSING LTD., a Bermuda corporation (the "Purchaser").
R E C I T A L S
- - - - - - - -
(A) Pursuant to the Project Development and Construction Contract (as
the same may from time to time be amended, modified or supplemented, the
"Contract") dated as of July 30, 1999 between Alcatel Submarine Networks, a
societe anonyme established in France [and Alcatel Submarine Networks, Inc., a
Delaware corporation, jointly and severally] (together with any successor or
assignee under the Contract, collectively, the "Contractor"), and the Purchaser,
the Contractor has agreed to design, build and install the System.
(B) The Purchaser has required, as a condition precedent to entering
into the Contract, that the Guarantor execute and deliver this Guaranty. The
Purchaser would not enter into the Contract with the Contractor but for the
execution and delivery of this Guaranty by the Guarantor.
(C) In furtherance of the business purposes of the Guarantor, the
Guarantor desires to guaranty all of the obligations of the Contractor under the
Contract as provided herein.
(D) The Guarantor is the owner either directly or indirectly of all
of the capital stock of the Contractor.
NOW, THEREFORE, based upon the foregoing, and in order to induce the
Purchaser to enter into the Contract, the Guarantor hereby agrees as follows:
ARTICLE A.
Definitions
Section 1. Definitions. Capitalized terms not otherwise defined in this
Guaranty shall have the meanings ascribed to them in the Contract. As used in
this Guaranty, the following terms have the following meanings unless the
context otherwise requires:
"Guarantied Obligations" has the meaning ascribed to such term in Section
2.1.
"Guaranty" means this Guaranty, as it may be amended, supplemented or
otherwise modified from time to time in writing signed by the Guarantor and the
Purchaser.
<PAGE>
ARTICLE B.
The Guaranty
Section 1. The Guaranty. Except as expressly set forth herein, the
Guarantor hereby unconditionally guarantees to Purchaser the full and punctual
performance by Contractor (i) of the Work required under the Contract (including
Upgrade Work, when and if an upgrade is ordered) and/or the payment of damages
which become due, owing or incurred under or in connection with the Contract
(including, without limitation, liquidated damages), for Contractor's failure to
perform such Work (or Upgrade Work, as the case may be), in each case subject to
the limitations on liability therefor expressly set forth in the Contract and
(ii) of the covenants and other obligations of the Contractor under the Contract
(including all warranties) (collectively, the "Guarantied Obligations"). The
Guarantor and the Purchaser expressly acknowledge that, (i) subject to Section
2.5 below, default by the Contractor or the failure of the Contractor to perform
any Guarantied Obligation in the time required in each case under the Contract,
is a condition of the exercise of this Guaranty, and (ii) in no event shall the
Guarantied Obligations exceed the Contractor's obligations and liabilities under
the Contract. The Guarantor agrees unconditionally to pay to the Purchaser,
forthwith on demand by the Purchaser, in the manner and currency prescribed
under the Contract for payments by the Contractor thereunder, any and every sum
or sums of money which the Contractor shall at any time be liable to pay under
the Contract and which the Contractor shall have failed to pay at the time that
such demand is made. If the Purchaser requests the Guarantor to perform any
Guarantied Obligation (other than the payment of money) the Guarantor may
undertake to satisfy such obligation by causing another qualified person to
perform such Guarantied Obligation or, in its sole discretion, by assigning such
obligation to a qualified party; provided, that such assignment shall not
relieve the Guarantor of any liability for the performance of such obligation
unless and until such obligation has been completely performed. The Guarantied
Obligations shall conclusively be deemed to have been created in reliance upon
this Guaranty.
Section 2. Termination of Guaranty. Except as expressly set forth
herein, (a) this Guaranty shall remain in full force and effect with respect to
the Guarantied Obligations, including, without limitation, all obligations such
as covenants and warranties which survive completion of the Work and all
obligations under any supplements, extensions, amendments, Upgrades or Contract
Variations, until terminated in accordance with paragraph (b) below.
(b) This Guaranty shall terminate with respect to each of the
Guarantied Obligations described below on the respective dates described below
(each a "Termination Date") subject to the survival of certain obligations and
----------------
liabilities as expressly described in the last paragraph (c) below:
(i) with respect to all Guarantied Obligations (except for any longer
periods for those Guarantied Obligations described in clauses (b)(ii) and
(b)(iii) below) on the date occurring ten (10) years after the Date of
Provisional Acceptance of the System;
2
<PAGE>
(ii) with respect to all Guaranteed Obligations relating to or
in connection with Contractor's obligation to implement System Upgrades
(including, without limitation, Contractor's warranties as to
Upgradeability contained in Article 10(B)(ii) of the Contract), on the
earlier of (A) the last date of the Upgrade Option Period or (B) the Date
of Final Acceptance of the last possible System Upgrade provided for in the
Contract; provided, that such Termination Date shall not limit any longer
--------
period with respect to any elected System Upgrade in accordance with clause
(b)(iii) below; and
(iii) with respect to all Guarantied Obligations relating to or
in connection with each System Upgrade elected during the Upgrade Option
Period, on the date occurring ten (10) years after the Date of Provisional
Acceptance of such System Upgrade.
(c) If a Guarantied Obligation has become due, owing or performable
prior to the Termination Date relating to such Guarantied Obligation, then this
Guaranty shall continue only with respect to such Guarantied Obligation until
fully performed. For example:
(i) pursuant to Article 10(A) of the Contract, if a defect
covered by the Warranty Period is identified in good faith just prior to
the Termination Date set forth in clause (b)(i) above, the Guarantor's
obligations under this Guaranty shall continue with respect to such
Guarantied Obligation, not withstanding such Termination Date, until
Contractor performs all of its obligations under the Contract with respect
to such defect, or
(ii) if Purchaser elects a System Upgrade just prior to the
Termination Date set forth in clause (b)(ii) above, Guarantor's obligation
under this Guaranty shall continue with respect to such Guarantied
Obligation, not withstanding such Termination Date, until Contractor
performs all its obligations under the Contract with respect to such System
Upgrade.
(d) The Guarantor's performance or payment of a portion, but not all,
of the Guarantied Obligations shall in no way limit, affect, modify or abridge
the Guarantor's liability, as set forth herein, for any portion of the
Guarantied Obligations that has not been completely performed or paid in full.
Section 3. Guaranty Unconditional. Except as expressly set forth
herein, the Guarantor agrees that the obligations of the Guarantor hereunder
shall be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by any of the
following, whether with or without notice to or assent by the Guarantor:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Contractor under the Contract,
by operation of law or otherwise;
3
<PAGE>
(b) any modification or amendment of or supplement to the
Contract;
(c) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the Contractor under the
Contract;
(d) any change in the corporate existence, structure or
ownership of the Contractor, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Contractor or its assets or any
resulting release or discharge of any obligation of the Contractor
contained in the Contract;
(e) the existence of any claim, set-off or other rights which
the Guarantor may have at any time against the Contractor, the Purchaser,
or any other corporation or person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
the Contractor for any reason of the Contract, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Contractor of any other amount payable by the Contractor under the
Contract; or
(g) any other act or omission to act or delay of any kind by the
Contractor, the Purchaser, or any other corporation or person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of or defense to the
Guarantor's obligations hereunder.
Notwithstanding any provision of this Guaranty to the contrary, the Guarantor
shall be entitled to assert as a defense to any claim for payment or performance
of the Guarantied Obligations, that (i) such Guarantied Obligations are not
currently due under the terms of the Contract or (ii) such Guarantied
Obligations have previously been paid or performed in full. In addition,
notwithstanding any provision of this Guaranty to the contrary, any defense or
counterclaim available to the Contractor under the Contract based on a breach of
contract by Purchaser or failure of Purchaser to satisfy conditions to perform
shall be available as a defense to performance or counterclaim by Guarantor
hereunder to the same extent it would be a defense to performance or
counterclaim by Contractor under the Contract.
Section 4. Waivers of Notices and Defenses. The Guarantor hereby
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any corporation or person against the Contractor or any other
corporation or person.
Section 5. Stay; Indemnity. (a) The Guarantor, unconditionally and
irrevocably, agrees that, notwithstanding anything to the contrary herein, if
the Purchaser is stayed upon the insolvency, bankruptcy, or reorganization of
the Contractor from exercising its rights to enforce
4
<PAGE>
or exercise any right or remedy with respect to the Guarantied Obligations, or
is prevented from giving any notice or demand for payment or performance or
taking any action to realize on any security or collateral or is prevented from
collecting any of the Guarantied Obligations, in any such case, by such
proceeding or action, the Guarantor shall pay or render to the Purchaser upon
demand therefor the amount or performance that would otherwise have been due had
such rights and remedies been permitted to be exercised by the Purchaser. The
foregoing is not meant to imply that the Purchaser may terminate the Contract in
contravention of law in the event of a Contractor bankruptcy.
(b) The Guarantor irrevocably and unconditionally agrees as a primary
obligation to indemnify the Purchaser from time to time on demand from and
against any loss incurred by the Purchaser as a result of any of the obligations
of the Contractor under or pursuant to the Contract being or becoming void,
voidable, unenforceable or ineffective as against the Contractor for any reason
whatsoever, whether or not known to the Purchaser or any other person, the
amount of such loss being the amount which the person or persons suffering it
would otherwise have been entitled to recover from the Contractor.
Section 6. No Enforcement of Subrogation. Upon making any payment or
performance with respect to any Guarantied Obligation hereunder, the Guarantor
shall be subrogated to the rights of the Purchaser against the Contractor with
respect to such payment or performance; provided that the Guarantor shall not
enforce any payment or performance right by way of subrogation until all
Guarantied Obligations been paid and performed in full.
ARTICLE C.
Representations and Warranties
The Guarantor hereby represents and warrants to the Purchaser that the
following statements are true and correct:
Section 1. Binding Obligation. This Guaranty has been duly and
validly executed and delivered by the Guarantor and constitutes the legal, valid
and binding obligations of the Guarantor enforceable against the Guarantor in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by equitable principles relating to the
availability of equitable remedies.
Section 2. Relationship to the Contractor. As of the date hereof,
the Guarantor is the owner, directly or through one or more wholly-owned
subsidiaries, of all of the issued and outstanding capital stock of the
Contractor; the agreement of the Purchaser to enter into the Contract with the
Contractor is of substantial and material benefit to the Guarantor; and the
Guarantor has reviewed and approved copies of the Contract and all other related
documents and is fully informed of the remedies the Purchaser may pursue upon
the occurrence of a default
5
<PAGE>
under the Contract. This Guaranty will remain in full force and effect if
Contractor ceases to be a direct or indirect subsidiary of Guarantor.
Section 3. Status. Guarantor is a corporation duly organized and
existing under the laws of France.
Section 4. Governing Law and Judgments. In any proceedings taken in
France in relation to this Guaranty, the choice of English law as the governing
law of this Guaranty and any judgment obtained in England will be recognized and
enforced, without it affecting the representation made in Section 3.1 in case of
insolvency.
Section 5. Claims Pari Passu. Under the laws of France in force at
the date hereof, the claims of the Purchaser against Guarantor under this
Guaranty will rank at least pari passu with the claims of all its other
unsecured and unsubordinated creditors save those whose claims are preferred
solely by any bankruptcy, insolvency, liquidation or other similar laws of
general application.
Section 6. No Filing or Stamp Taxes. Under the laws of France in
force at the date hereof, it is not necessary that this Guaranty be filed,
recorded or enrolled with any court or other authority in such jurisdiction or
that any stamp, registration or similar tax be paid on or in relation to this
Guaranty.
Section 7. No Deduction or Withholding. Under the laws of France in
force at the date hereof, it will not be required to make any deduction or
withholding from any payment Guarantor may make hereunder.
ARTICLE D.
Miscellaneous
Section 1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission, telex or similar writing) and shall be given to such party at its
address, telecopy number or telex number set forth, in the case of the
Guarantor, on the signature pages hereof, or in the case of the Purchaser, in
the Contract, or such other address or telecopy number or telex number as such
party may hereafter specify for the purpose by notice to the other party. Each
such notice, request or other communication shall be effective (i) if given by
facsimile transmission, 24 hours after such telecopy is transmitted to the
telecopy number specified in this Section and answerback has been received, (ii)
if given by telex, when such telex is transmitted to the telex number specified
in this Section and the appropriate answerback is received, (iii) if given by
mail, ten business days after such communication is deposited in the mails with
first class (or, in the case of international mail, airmail) postage prepaid,
addressed as aforesaid, or (iv) if given by any other means, when delivered at
the address specified in this Section.
6
<PAGE>
Section 2. No Waivers. No failure or delay by the Purchaser in
exercising any right, power or privilege hereunder or under the Contract shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 3. Amendments and Waivers. This Guaranty constitutes the
complete agreement of the Purchaser and the Guarantor with respect to the
subject matter hereof and supersedes all prior or contemporaneous negotiations,
promises, covenants, agreements or representations. No amendment, modification,
termination or waiver of any provision of this Guaranty, shall in any event be
effective without the written consent of the Purchaser and Guarantor.
Section 4. Successors and Assigns; Beneficiaries. This Guaranty is a
continuing Guaranty and shall be binding upon the Guarantor and its successors
and assigns, provided, however, that the Guarantor may not assign this Guaranty
or transfer any of the rights or obligations of the Guarantor hereunder without
the prior written consent of the Purchaser and a majority of the lenders
referred to below. This Guaranty shall inure to the benefit of (i) the
Purchaser and its successors and assigns permitted under the Contract, (ii) any
"Transferee" under Article [ ] of the Contract and its successors and assigns
permitted under the Contract, (iii) any lenders participating in the financing
of the System to which the Purchaser assigns its rights hereunder and (iv) any
of the successors, assigns and transferees of such lenders to whom the Contract
has also been assigned in accordance with the terms of any consent to the
assignment of the Contact executed by Contractor. Nothing contained in this
Guaranty shall be deemed to confer upon anyone other than the parties hereto and
the other beneficiaries described in the preceding sentence any right to insist
upon or to enforce the performance or observance of any of the obligations
contained herein. If requested by the Purchaser, the Guarantor will execute and
deliver a consent, in a form reasonably requested by such lenders, to such
assignment in favor of such lenders.
Section 5. Limitation on Liability. Notwithstanding anything to the
contrary contained or implied herein, except as otherwise agreed by Guarantor
and Purchaser, the aggregate liability for payment by Guarantor hereunder shall
not in any event exceed the maximum aggregate liability set forth in Sub-Article
23(B) of the Contract, as such amount may be increased or decreased pursuant to
such Article, less amounts previously paid as damages under the Contract to the
Purchaser and/or its successors and assigns by Contractor.
Section 6. APPLICABLE LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH ENGLISH LAW.
Section 7. Jurisdiction.
(i) English Courts. The courts of England shall have exclusive
--------------
jurisdiction to hear and determine any suit, action or
proceeding and to settle any dispute
7
<PAGE>
(a "Dispute") arising out of or in connection with this
Guaranty (including a dispute regarding the existence, validity
or termination of this Guaranty or the consequences of its
nullity).
(ii) Convenient Forum. The parties agree that the courts of England
----------------
are the most appropriate and convenient forum to settle a
Dispute between them and, accordingly, that they will not argue
to the contrary.
(iii) Non-Exclusive Jurisdiction. This Section is only for the
--------------------------
benefit of the Purchaser. As a result and notwithstanding
Section (a) (English Courts), it does not prevent the Purchaser
from taking proceedings relating to a Dispute ("Proceedings")
in any other courts of competent jurisdiction. To the extent
allowed by law, the Purchaser may take concurrent Proceedings
in any number of jurisdictions.
Section 8. Service of Process. The Guarantor agrees that the
documents which start any Proceedings and any other documents required to be
served in relation to those Proceedings may be served by it on the Guarantor at
Alcatel Submarine Networks, Christchurch Way, Greenwich, London SE10 0"G,
England or at any address in Great Britain at which process may be served on it
in accordance with Part XXIII of the Companies Act 1985.
If Alcatel Submarine Networks ceases to have a place of business in
Great Britain or, as the case may be, the appointment of the person mentioned in
this Section 4.8 ceases to be effective, the Guarantor shall immediately appoint
another person in England to accept service of process on its behalf in England.
If the Guarantor fails to do so (and such failure continues for a period of not
less than fourteen days), the Purchaser shall be entitled to appoint such a
person by notice to the Guarantor. Nothing contained herein shall restrict the
right to serve process in any other manner allowed by law. This section 4.8
applies to Proceedings in England and to Proceedings elsewhere.
Section 9. Judgment. The obligations of the Guarantor in respect of
this Guaranty due to any party hereto shall, notwithstanding any judgment in a
currency (the "judgment currency") other than Dollars, be discharged only to the
-----------------
extent that on the Business Day following receipt by such party of any sum
adjudged to be so due in the judgment currency such party may in accordance with
normal banking procedures purchase Dollars with the judgment currency; if the
amount of Dollars so purchased is less than the sum originally due to such party
in Dollars, the Guarantor agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify such party against such loss, and if the amount
of Dollars so purchased exceeds the sum originally due to any party to this
Guaranty, such party agrees to remit to the Guarantor, such excess.
Section 10. Severability. If any provision in or obligation under
this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and
8
<PAGE>
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 11. Interpretation. Section headings in this Guaranty are
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
Section 12. Further Assurances. At any time or from time to time,
upon the request of the Purchaser, the Guarantor shell execute and deliver such
further documents and do such other acts and things as the Purchaser may
reasonably request in order to effect fully the purposes of this Guaranty. The
Guarantor agrees to be liable for any reasonable expenses incurred by Purchaser
and/or its successors and assigns with respect to any action or proceeding to
enforce this Guaranty. The Guarantor agrees to deliver an opinion of counsel
satisfactory to the Purchaser, addressed to the Purchaser and the lenders
described in Section 4.4(iii) hereof substantially in the form of Exhibit D
to the Contract.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as a Deed
as of the date first above written.
EXECUTED AS A DEED BY:
ALCATEL
/s/ S. Tchuruk
By _____________________________________
Name: S. Tchuruk
Title:Chairman and CEO
Address: Alcatel
54 rue la Boetie
75411 Paris Cedex 08
France
Fax: 011-33-1-4076-1400
9
<PAGE>
EXHIBIT C
TO
CONSTRUCTION CONTRACT
*
* Two pages of material omitted and separately filed with the Commission under
an application for confidential treatment.
<PAGE>
EXHIBIT D
TO
CONSTRUCTION CONTRACT
FORM OF CONTRACTOR OPINION
DATE
Re: South American Crossing Cable System
South American Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM-12
Bermuda
Gentlemen,
I am the General Counsel of Alcatel Submarine Networks, a societe anonyme
established in France ("ASN"). This opinion is furnished to you in connection
with the Project Development and Construction Contract and its appendices dated
July __, 1999 for the supply and installation of the SAC submarine cable system
made between ASN and South American Crossing Ltd. (the "Supply Contract").
I have not investigated the laws of any jurisdiction but France and do not
express an opinion on the laws of any jurisdiction but France.
I or attorneys under my supervision have examined the Supply Contract, as well
as such documents, records and matters of law as I have deemed necessary for
purposes of this opinion. Based on the foregoing and subject to the assumptions
and qualifications set forth herein, I am of the opinion that:
1. ASN has been duly established and is validly existing under the laws of
France as a legal entity in the form of a societe anonyme.
2. ASN has the corporate power and corporate authority and has taken all
necessary corporate action to execute and deliver the Supply Contract and
to perform its obligations thereunder and has duly executed and delivered
the Supply Contract.
<PAGE>
[DATE]
3. The Supply Contract constitutes the legal, valid and binding obligations
of ASN, enforceable in accordance with its terms.
4. The execution and delivery by ASN of the Supply Contract and the
performance by ASN of its obligations thereunder will not conflict with
or result in a breach of any provision of French law or of the Articles
of Association (status) of ASN or any other agreements to which it is a
party.
5. No license, authorization, permission or consent from any French public
authority or governmental agency or any other party is required for the
valid execution and delivery by ASN of the Supply Contract or for the
valid performance by ASN of its obligations thereunder.
6. In order to ensure the legality, validity, enforceability or
admissibility in evidence of the Supply Contract, it is not necessary
that the Supply Contract be filed or recorded with any public office in
France.
7. The choice of law and submission to jurisdiction provisions included in
the Supply Contract (that is, the choice of New York law and submission
to jurisdiction of New York Courts) are valid and binding under the laws
of France and would be given effect by the courts of France and any
political subdivision thereof.
8. A judgment rendered against ASN in a court in New York in respect of the
Supply Contract would be recognized and enforced by the courts of the
Republic of France, provided the application of such laws does not
violate French ordre public international. I have no reason to believe
that the application of New York Law in connection with the enforcement
of the Supply Contract would be judged contrary to French ordre public
international.
The opinions expressed above are subject to the following assumptions and
qualifications:
(i) I have assumed that the Supply Contract will constitute the legal,
valid and binding obligations of ASN under the laws of New York, to which
it is expressed to be subject, enforceable in accordance with its terms.
(ii) This opinion is subject to any French laws applicable to reglement
amiable, redressement judiciaire, liquidation judiciaire, insolvency and
reorganization of companies, to moratoriums and similar laws affecting
creditors' rights generally.
(iii) I do not express any view on any particular remedies that may be
available in the French courts, which may be discretionary or otherwise
affected by the application of rules of French ordre public (public
policy).
(iv) Claims may become barred under statutes of limitations, imposing
limited periods within which suits, actions, or proceedings can be
brought.
2
<PAGE>
[DATE]
(v) Enforcement proceedings in France are subject to the general
jurisdiction of the French courts with regard to the award of costs, even
as against a successful party.
3
<PAGE>
[DATE]
This opinion letter is addressed to you and may not be relied upon by any person
but yourselves and your legal advisers.
Yours faithfully,
Charles Matthews
4
<PAGE>
FORM OF GUARANTOR OPINION
DATE
Re: South American Crossing Cable System
South American Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM-12
Bermuda
Ladies and Gentlemen,
I am the General Counsel of Alcatel, a societe anonyme established in France
("Alcatel"). This opinion is furnished to you in connection with the Guaranty
dated ______, 1999 from Alcatel to South American Crossing Ltd., a copy of which
is enclosed (the "Guaranty").
I have not investigated the laws of any jurisdiction but France and do not
express an opinion on the laws of any jurisdiction but France.
I or attorneys under my supervision have examined the Guaranty, as well as such
documents, records and matters of law as I have deemed necessary for purposes of
this opinion. Based on the foregoing and subject to the assumptions and
qualifications set forth herein, I am of the opinion that:
1. Alcatel has been duly established and is validly existing under the laws
of France as a legal entity in the form of a societe anonyme.
2. Alcatel has the corporate power and corporate authority and has taken all
necessary corporate action to execute and deliver the Guaranty and to
perform its obligations thereunder and has duly executed and delivered
the Guaranty.
3. The Guaranty constitutes the legal, valid and binding obligations of
Alcatel, enforceable in accordance with its terms.
4. The execution and delivery by Alcatel of the Guaranty and the performance
by Alcatel of its obligations thereunder will not conflict with or result
in a breach of any provision of French law or of the Articles of
Association (statut) of Alcatel or any other agreements to which it is a
party.
<PAGE>
5. No license, authorization, permission or consent from any French public
authority or governmental agency or any other person is required for the
valid execution and delivery by Alcatel of the Guaranty or for the valid
performance by Alcatel of its obligations thereunder.
6. In order to ensure the legality, validity, enforceability or
admissibility in evidence of the Guaranty, it is not necessary that the
Guaranty be filed or recorded with any public office in France.
7. The choice of law and submission to jurisdiction provisions included in
the Guaranty (that is, the choice of English law and submission to
jurisdiction of English Courts) are valid and binding under the laws of
France and would be given effect by the courts of France and any
political subdivision thereof.
8. A judgment rendered against Alcatel in a court in England pursuant to the
submission of jurisdiction provision of the Guaranty would be recognized
and enforced by the courts of the Republic of France, provided the
application of such laws does not violate French "ordre public
international." I have no reason to believe that the application of
English law in connection with the enforcement of the Guaranty would
violate French ordre public international.
The opinions expressed above are subject to the following assumptions and
qualifications:
(i) I have assumed that the Guaranty will constitute the legal,
valid and binding obligations of Alcatel under the laws of
England, to which it is expressed to be subject, enforceable in
accordance with its terms.
(ii) This opinion is subject to any French laws applicable to
"reglement amiable," "redressement judiciaire," "liquidation
judiciaire," insolvency and reorganization of companies, to
moratoriums and similar laws affecting creditors' rights
generally.
(iii) I do not express any view on any particular remedies that
may be available in the French courts, which may be discretionary
or otherwise affected by the application of rules of French
"ordre public" (public policy); in particular, the remedy of
specific performance or the issue of an injunction or other
similar remedy may not be available in a French court in respect
of any obligations under the Guaranty.
(iv) Claims may become barred under statutes of limitations,
imposing limited periods within which suits, actions, or
proceedings can be brought.
(v) Enforcement proceedings in France are subject to the
general jurisdiction of the French courts with regard to the
award of costs, even as against a successful party.
This opinion letter is addressed to you and may not be relied upon by any person
but yourselves and your legal advisers.
Yours faithfully,
Pascal Durand-Barthez
2
<PAGE>
EXHIBIT E
TO
CONSTRUCTION CONTRACT
FORM OF ESCROW AGREEMENT
[________________] CROSSING
ESCROW AGREEMENT dated as of ______ __, 1999 by and among
[________________ Crossing Ltd.], a [corporation] organized and existing under
the laws of Bermuda (the "Purchaser"), [________________], a [corporation]
organized and existing under the laws of [________________], and having an
office in [________________] (the "Contractor") and [________________] (the
"Escrow Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Project Development and Construction
Contract, dated as of ________ ___, 1999 (said agreement, as the same may be
amended, modified or supplemented from time to time, the "Supply Contract"),
between the Purchaser and the Contractor, there is required to be deposited by
Purchaser in escrow certain payments to be held by the Escrow Agent subject to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
The Purchaser and the Contractor do hereby appoint and designate the
Escrow Agent as escrow agent for the purposes set forth herein, and the Escrow
Agent does hereby accept such appointment under the terms and conditions set
forth herein.
1. Establishment of Dispute Account. The Purchaser and the
--------------------------------
Contractor hereby establish and, at all times until this Escrow Agreement is
terminated, shall maintain, with the Escrow Agent an escrow account (the
"Dispute Account"), in the name of and under the control of [________________]
as Escrow Agent, in which the Purchaser shall deposit payments (if and when)
made pursuant to Sub-Articles 5(C)(4) of the Supply Contract (the "Disputed
Payments"). Such funds shall be delivered to, and held by the Escrow Agent in,
the Escrow Agent's account set forth in Exhibit C hereto. The Escrow Agent shall
hold, subject to the terms and conditions hereof, such cash and such investments
and reinvestments as may be permitted pursuant to Section 2 hereof (which,
together with the income from such investments, are hereinafter, referred to as
the "Dispute Fund"). If any withholding tax is required to be paid from amounts
in the Dispute Fund, the Contractor and the Purchaser shall deliver to the
Escrow Agent any necessary and appropriate forms instructing the Escrow Agent as
to the amount and timing of such payments.
<PAGE>
2. Investment of Dispute Fund. During the term of this Escrow
--------------------------
Agreement, the Dispute Fund shall be invested and reinvested by the Escrow Agent
in interest-bearing or money market bank accounts of the Escrow Agent and such
other investments as the Contractor and the Purchaser may mutually agree upon
from among the Permitted Investments described on Exhibit D. In the absence of
any instruction, the Escrow Agent shall invest and reinvest the Dispute Fund in
its sole discretion in interest-bearing or money market bank accounts of the
Escrow Agent. All interest or other income earned under the Escrow Agreement
shall be allocated and paid as provided herein and reported by the recipient to
the Internal Revenue Service as having been so allocated and paid.
In addition, the Escrow Agent shall have the right to liquidate any
investments held in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent in its capacity as escrow agent
hereunder shall not have any liability for any loss sustained as a result of any
investment made pursuant to the instructions of the parties hereto or as a
result of any liquidation of any investment prior to its maturity or for the
failure of the parties to give the Escrow Agent instructions to invest or
reinvest the Dispute Fund or any earnings thereon. Costs incurred by the Escrow
Agent in connection with the making or liquidation of any investment of the
Dispute Fund may be charged by the Escrow Agent against amounts in the Dispute
Fund if such costs are not paid when due.
3. Dispositions. All or a portion of the Dispute Fund shall be paid
------------
to (i) the Contractor account as set forth in Exhibit A upon the receipt by the
Escrow Agent of a written instruction from the Contractor to do so and
countersigned by the Purchaser, (ii) the Purchaser's account as set forth in
Exhibit B upon the receipt by the Escrow Agent of a written instruction from the
Purchaser to do so and countersigned by the Contractor, (iii) the account of the
prevailing party, if the dispute underlying the Disputed Payments is submitted
to arbitration in accordance with the Supply Contract, and upon receipt by the
Escrow Agent of a written instruction of the arbitrators directing the Escrow
Agent to do so or (iv) the account of the prevailing party, if the dispute
underlying the Disputed Payments is submitted to a court of competent
jurisdiction in accordance with the Supply Contract, and upon receipt by the
Escrow Agent of a final order or determination (no longer capable of being
appealed) from such court (or appellate court) setting forth the resolution of
such dispute and directing the Escrow Agent to do so. The Escrow Agent shall pay
amounts to the Contractor or the Purchaser, as the case may be, in accordance
with such written instruction, order or determination on (A) the business day
that such instruction, order or determination is received in the case of an
instruction, order or determination received by the Escrow Agent by no later
than 12:00 noon, New York City time or (B) the next business day in the case of
an instruction, order or determination received by the Escrow Agent after 12:00
noon, New York City time. All written instructions, orders or determinations may
be delivered by facsimile transmission to the Escrow Agent.
4. The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, order, determination,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall be under no duty to inquire into or investigate the validity,
accuracy or content of any such document. The Escrow Agent shall have no duty to
solicit any payments which may be due it hereunder.
<PAGE>
5. The Escrow Agent shall not be liable for any action taken by it in
good faith and believed by it to be authorized or within the rights or powers
conferred upon it by this Agreement, and may consult with counsel of its own
choice and shall have full and complete authorization and protection for any
action taken or suffered by it hereunder in good faith and in accordance with
the opinion of such counsel unless a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct was the cause of
any loss to the Contractor or the Purchaser. In the administration of the
Dispute Account hereunder, the Escrow Agent may execute any of its powers and
perform its duties hereunder directly or through agents or attorneys and may
consult with counsel, accountants and other skilled persons to be selected and
retained by it.
6. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice to the Contractor and the Purchaser in
writing of such resignation specifying a date when such resignation shall take
effect except that the Escrow Agent shall hold the Dispute Fund until it is paid
in accordance with the joint written instructions of Contractor and Purchaser.
If no such instructions are received within 30 days, the resigning Escrow Agent
may, upon notice to Contractor and Purchaser, arrange for a successor escrow
agent which shall be a national banking institution or trust company located in
New York City, New York. The Escrow Agent shall have the right to withhold an
amount equal to the amount due and owing to the Escrow Agent, plus any costs and
expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow
Agent in connection with the termination of the Escrow Agreement.
7. The Purchaser and Contractor hereby agree to pay to the Escrow
Agent upon execution of this agreement compensation for the services to be
rendered hereunder as described in Exhibit E hereto, in advance, and will pay or
reimburse the Escrow Agent upon request for all expenses, disbursements and
advances, including reasonable attorneys' fees, incurred or made by it in
connection with carrying out its duties hereunder (including, without
limitation, in connection with the making or liquidation of any investments
under Section 2).
8. The Purchaser and the Contractor hereby agree to jointly and
severally indemnify the Escrow Agent for, and to hold it harmless against any
loss, liability or expense incurred without gross negligence or bad faith on the
part of the Escrow Agent, arising out of or in connection with its entering into
this Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability and with respect to
any investigation. The Escrow Agent may charge against all property in the
Dispute Account any amounts owed to it under the foregoing indemnity if not paid
when due or may withhold payment of such property as security for any
unliquidated claims. Notwithstanding anything in this Escrow Agreement to the
contrary, in no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.
9. The duties and responsibilities of the Escrow Agent hereunder
shall be determined solely by the express provisions of this Escrow Agreement,
and no other or further duties or responsibilities shall be implied.
10. The Escrow Agent hereby expressly acknowledges and agrees that it
shall have neither a lien nor any other right or claim on any amounts deposited
in the Dispute Account on its
3
<PAGE>
own account (excepting its fees and expenses under this Agreement to the extent
not paid after demand upon Purchaser).
11. All notices and communications hereunder shall be in writing and
shall be deemed to be duly given when received if sent by registered mail,
return receipt requested, or when delivered if sent by personal hand or by
facsimile transmission, as follows:
If to Escrow Agent:
- ------------------
[________________]
Attn:
Fax:
If to Purchaser:
- ---------------
[________________ Crossing Ltd.]
Wessex House
45 Reid Street
Hamilton HM12
Bermuda
Attn: Robert Klug
Tel: 441-296-8600
Fax: 441-296-8606
Tax Identification Number:
If to Contractor:
- ----------------
[_______________]
Tel:
Fax:
Tax Identification Number:
or at such other address as any of the above may have furnished to the other
parties in writing as set forth above and any such notice or communication given
in the manner specified in this Paragraph 11. A copy of any notice or
communication under this Escrow Agreement which is given by any party shall be
given by such party to each of the parties hereto.
12. (a) In the event funds transfer instructions are given (other than
in writing at the time of execution of the Escrow Agreement), whether in
writing, by telecopier or otherwise, the Escrow Agent is authorized to seek
confirmation of such instructions by telephone call-back to the person or
persons designated in Exhibit F hereto, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated.
The persons and telephone numbers for call-backs may be changed only in a
writing actually received and acknowledged by the Escrow Agent. The parties to
this Escrow Agreement acknowledge that such security procedure is commercially
reasonable.
(b) It is understood that the Escrow Agent and the beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the parties hereto to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an
4
<PAGE>
intermediary bank. The Escrow Agent may apply any of the escrowed funds for any
payment order it executes using any such identifying number, even where its use
may result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary's bank, or an intermediary bank
designated.
13. The provisions of this Escrow Agreement may be waived, altered,
amended or supplemented, in whole or in part, only by a writing signed by all of
the parties hereto.
14. It is understood and agreed that the Escrow Agent makes no
representations or warranties hereunder.
15. Neither this Escrow Agreement nor any right or interest hereunder
may be assigned in whole or in part by any party without the prior consent of
the other parties[; provided that Purchaser may grant a security interest in its
--------
rights hereunder to the senior lenders participating in the financing of its
cable system].
16. This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
17. The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto.
18. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any provision of this
Agreement, it shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties hereto or by final
order or judgment of a court of competent jurisdiction.
19. Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Escrow Agreement without further act.
20. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby. Nothing contained in this Agreement shall be deemed to confer
upon anyone other than the parties hereto (and their permitted successors and
assigns) any legal right or equitable right, remedy or claim under or by reason
of this Agreement.
21. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK AND ANY ACTION BROUGHT HEREUNDER SHALL BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, LOCATED IN THE COUNTY OF NEW
YORK. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION ON THE GROUND OF VENUE,
FORUM
5
<PAGE>
NON-CONVENIENS OR ANY SIMILAR GROUNDS AND IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS BY MAIL OR IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW AND
CONSENTS TO THE JURISDICTION OF SAID COURTS.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the day and year first above written.
[PURCHASER]
By: ______________________________________
Name:
Title:
[CONTRACTOR]
By: ______________________________________
Name:
Title:
[ESCROW AGENT]
By: ______________________________________
Name:
Title:
7
<PAGE>
EXHIBIT A TO ESCROW AGREEMENT
------------------------------
Contractor's Account
--------------------
Account Name:
Account Number:
Bank Name:
ABA No.:
Reference:
Attn:
<PAGE>
EXHIBIT B TO ESCROW AGREEMENT
-----------------------------
Purchaser's Account
-------------------
Account Name: [_________ Crossing Ltd.]
Account Number:
Bank Name:
ABA No.:
[Reference: __________________]
[Attn: __________________]
<PAGE>
EXHIBIT C TO ESCROW AGREEMENT
-----------------------------
Escrow Agent's Account
----------------------
Account Name:
Account Number:
Bank Name:
ABA Number:
Attention:
<PAGE>
EXHIBIT D TO ESCROW AGREEMENT
-----------------------------
Permitted Investments
(a) Direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof; and
(b) Investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and overnight sweep accounts, money
market deposit accounts issued or offered by, (i) the Escrow Agent or any of its
affiliates or (ii) any of Purchaser's senior lenders and/or any other bank
which, in each case, has a combined capital and surplus and undivided profits of
not less than $250,000,000.
<PAGE>
EXHIBIT E TO ESCROW AGREEMENT
-----------------------------
Compensation To Be Paid To Escrow Agent
---------------------------------------
<PAGE>
EXHIBIT F TO ESCROW AGREEMENT
-----------------------------
Persons Authorized To Confirm Transfer Instructions
---------------------------------------------------
Purchaser: S. Wallace Dawson, Tel: 441-296-8600
- ---------
Robert Klug, Tel: 441-296-8600
Ian McLean, Tel: 441-296-8600
Contractor: Christian Reinaudo
- ----------
Jean Godeluck
Michel Gonazalvez
<PAGE>
EXHIBIT F
TO
CONSTRUCTION CONTRACT
First Office Applications
-------------------------
1) Submarine Line Terminal Equipment (SLTE) OALW64
2) CORBA/IDL over TCP/IP
3) BWM and OLS4006 Retail Schedules and features sets are as shown in the
Technical Volume
<PAGE>
EXHIBIT G
TO
CONSTRUCTION CONTRACT
List of Major Subcontractors
----------------------------
Terminal Transmission Alcatel Submarine Networks
Equipment Avenue Charles de Gaulle
Ormes
45915 Orleans Cedex 9
FRANCE
And/or
Alcatel Submarine Networks
Christchurch Way
Greenwich
London SE10 OAG
ENGLAND
And/or
Lucent Technologies
475 South Street
Morristown
New Jersey 07692
USA
Repeaters and Alcatel Submarine Networks
Branching Units Christchurch Way
Greenwich
London SE10 OAG
ENGLAND
Power Feeding Alcatel Submarine Networks
Equipment Christchurch Way
Greenwich
London SE10 OAG
ENGLAND
SDH Equipment Lucent Technologies
Network Management 600 Mountain Avenue
Murray Hill
New Jersey
USA
<PAGE>
Cable Lucent Technologies
(For TAC Segment) 600 Mountain Avenue
Murray Hill
New Jersey
USA
Cable Alcatel Cable
536 Quai de la Loire
62225 Calais Cedex
FRANCE
And/or
Alcatel TCC Pty Ltd
2 Bomband/orah Point Road
Port Botnay
Sydney N.S.W
AUSTRALIA
And/or
Alcatel Submarine Networks Inc.
15540 North Lombard Street
Portland - Oregon 97203
USA
Optical Fibre Lucent Technologies
Atlanta Works
2000 Northeast Expressway
Norcross, GA 30071
USA
And/or
Sumitomo
1-3-12, Motoakasaka
Minato-Ku
Tokyo 107
JAPAN
<PAGE>
And/or
Corning
MP-RO-04-2
Corning
New York 14831
USA
And/or
Alcatel Alsthom Recherche
Route de Nozay
91460, Macoussis
Terminal Installations Atcatel Submarine Networks
Centre de Villarceaux
91625 Nozay
FRANCE
Lucent Technologies
475 South Street
Morristown
New Jersey 07692
USA
Marine Installations Global Marine
East Saxon House
27 Duke Street
Chelmsford, Essex CM1 1HT
ENGLAND
And/or
France Cable et Radio (FCR)
Dept. sous-marine
124 rue Reaumur
75002 Paris
FRANCE
And/or
TeleDanmark International Marine
Talegade 2
Tasstrup
Danmark
3
<PAGE>
EXHIBIT H
TO
CONSTRUCTION CONTRACT
Intellectual Property
---------------------
[To be completed pursuant to the last sentence of Sub-Article 18(A)]
<PAGE>
EXHIBIT I
TO
CONSTRUCTION CONTRACT
Landing Licenses
----------------
Country Landing Licenses Required
- ------- -------------------------
Argentina None;
Brazil None;
Chile Intermediate Telecommunications Service Concession (to be granted
by SUBTEL);
Colombia Concession to install the network and Carrier Service Provider
Concession (both to be granted by the Ministry of
Communications);
Peru International Carrier Concession (to be granted by the Ministry
of Transportation, Communications, Construction and Housing); and
Panama None.
* *
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE>
EXHIBIT J
TO
CONSTRUCTION CONTRACT
EXAMPLES OF CONSTRUCTION PERMITS
--------------------------------
Permission of Entry to EEZ
Permission of Entry to Harbor
Notifications of Operations
Visas
Work Permits
Import Licenses
Customs Clearances
Export Licenses
<PAGE>
EXHIBIT K
TO
CONSTRUCTION CONTRACT
EXAMPLES OF OWNER PERMITS
-------------------------
Building Permits for Cable Stations
Permits to land cables
Permits to lay cables on land and in the water
Environmental or Conservation Permits
