<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999
REGISTRATION NO. 333-75195
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CARRIER1 INTERNATIONAL S.A.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
LUXEMBOURG 4813 98-0199626
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
ROUTE D'ARLON 3
L-8009 STRASSEN, LUXEMBOURG
(011) (41-1) 297-2600
(Address, including ZIP code, and telephone number,
including area code, of Registrant's principal executive offices)
------------------------------
KEES VAN OPHEM
VICE PRESIDENT, PURCHASE AND GENERAL COUNSEL
CARRIER1 INTERNATIONAL GMBH
MILITARSTRASSE 36
CH-8004 ZURICH, SWITZERLAND
(011) (41-1) 297-2600
(Name, address, including ZIP code, and telephone number,
including area code, of Registrant's agent for service)
------------------------------
WITH COPY TO:
DAVID A. BRITTENHAM, ESQ.
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 909-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE 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 of 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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PROPOSED AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER MAXIMUM AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) OFFERING PRICE(1) FEE(3)
<S> <C> <C> <C> <C>
13 1/4% Senior Dollar Notes Due 2009.............. $160,000,000 100% $160,000,000 $44,480.00
[Euro]85,000,000
13 1/4% Senior Euro Notes Due 2009................ ($92,803,000)(2) 100% $92,803,000 $25,800.00
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 promulgated under the Securities Act of 1933, as
amended.
(2) Euro amounts have been translated into U.S. Dollars at [Euro]1=$1.0918,
which was the noon buying rate in New York City for cable transfers in Euro
as certified for customs purposes by the Federal Reserve Bank of New York on
March 23, 1999.
(3) Paid with the initial filing of the Registration Statement.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Luxembourg law, civil liability of directors both to the company and
to third parties is generally considered to be a matter of public policy. It is
possible that Luxembourg courts would declare void an explicit or even implicit
contractual limitation on directors' liability to Carrier1 International S.A.
Carrier1 International S.A., however, can validly agree to indemnify the
directors against the consequences of liability actions brought by third parties
(including shareholders if such shareholders have personally suffered a damage
which is independent of and distinct from the damage caused to the company).
Under Luxembourg law, an employee of Carrier1 International S.A. can only be
liable to Carrier1 International S.A. for damages brought about by his or her
willful acts or gross negligence. Any arrangement providing for the
indemnification of officers against claims of Carrier1 would be contrary to
public policy. Employees are liable to third parties under general tort law and
may enter into arrangements with Carrier1 International S.A. providing for
indemnification against third party claims.
Under Luxembourg law, an indemnification agreement can never cover a willful
act or gross negligence.
Carrier1 intends to implement an agreement providing for the indemnification
of officers and directors (the "Agreement"), having terms substantially similar
to the following:
The corporation shall indemnify any director, any member of any
committee designated by the board of directors and any fonde de pouvoir and
his or her heirs, executors and administrators, against expenses (including
attorneys' fees) judgments and fines in connection with any action, suit or
proceeding or appeal therefrom, to which he or she may be made a party by
reason of his or her being or having been a director or a member of any
committee designated by the board of directors or a fonde de pouvoir of the
corporation, or, at the request of the corporation, of any other corporation
partnership, joint venture, trust or other enterprise in which the
corporation holds a direct or indirect ownership interest or of which the
corporation is a direct or indirect creditor and by which he or she is not
entitled to be indemnified, provided that he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding had no reasonable cause to believe his or her conduct was
unlawful; and in the event of a settlement, such indemnification shall be
provided for all expenses incurred and amounts paid in connection with such
settlement unless the corporation is advised by its legal counsel that the
person to be indemnified did not meet the above-indicated standard of
conduct; except that in the case of an action or suit brought by the
corporation against such a director, committee member or fonde de pouvoir to
procure a judgment in favor of the corporation (1) such indemnification
shall be limited to expenses (including attorneys' fees) actually and
reasonably incurred by such person in the defense or settlement of such
action or suit, and (2) notwithstanding, any other provisions hereof, no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Luxembourg Courts or the courts in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such costs and expenses as the Luxembourg Court or such other court may deem
legal and proper.
The corporation may purchase and maintain insurance on behalf of any
person who is or was or has agreed to become a director, committee member or
fonde de pouvoir of the corporation, or is or was serving at the request of
the corporation in any equivalent position in any such other corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or
II-1
<PAGE>
not the corporation would have the power to indemnify him against such
liability under the provisions of the Agreement, provided that such
insurance is available on acceptable terms, which determination shall be
made by a vote of a majority of the entire board of directors. If the
Agreement or any portion thereof shall be invalidated on any ground by any
court of competent jurisdiction, then the corporation shall nevertheless
indemnify each such director, committee member or fonde de pouvoir and may
indemnify each employee or agent of the corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the corporation, to the fullest extent permitted by any applicable
portion of the Agreement that shall not have been invalidated and to the
fullest extent permitted by applicable law.
Subject to the applicable provisions of Luxembourg law and in particular
Section 59 of the Luxembourg Law on Commercial Companies, no director,
committee member or fonde de pouvoir of the corporation shall be liable to
the corporation or its stockholders for his actions or omissions when
performing his duties as a director, committee member or fonde de pouvoir,
provided that nothing contained in the Agreement shall eliminate or limit
the liability of a director, committee member or fonde de pouvoir (i) for
any breach of his duty of loyalty to the corporation or its stockholder,
(ii) for acts or omissions not in good faith or which involves intentional
misconduct or a knowing violation of the law, or (iii) for any transaction
from which the director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Articles of Incorporation of Carrier1 International S.A.*
4.1 Indenture, dated as of February 19, 1999, between Carrier1 International S.A. and the Chase Manhattan
Bank, as Trustee, relating to Carrier1 International S.A.'s 13 1/4 Senior Dollar Notes Due 2009*
4.2 Form of 13 1/4 Senior Dollar Note (included in Exhibit 4.1)
4.3 Indenture, dated as of February 19, 1999, between Carrier1 International S.A. and the Chase Manhattan
Bank, as Trustee, relating to Carrier1 International S.A.'s 13 1/4 Senior Euro Notes Due 2009*
4.4 Form of 13 1/4 Senior Euro Note (included in Exhibit 4.3)
4.5 Notes Registration Rights Agreement, dated February 12, 1999, among Carrier1 International S.A., Morgan
Stanley & Co. Incorporated, Salomon Smith Barney Inc., Warburg Dillon Read LLC and Bear, Stearns & Co.
Inc.*
4.6 U.S. Dollar Collateral Pledge and Security Agreement, dated as of February 19, 1999, among Carrier1
International S.A., The Chase Manhattan Bank, as Trustee and The Chase Manhattan Bank, as securities
intermediary*
4.7 Euro Collateral Pledge and Security Agreement, dated as of February 19, 1999, among Carrier1
International S.A., The Chase Manhattan Bank, as Trustee and The Chase Manhattan Bank AG, as securities
intermediary*
5.1 Opinion of Debevoise & Plimpton**
10.1 Dollar Warrant Agreement, dated as of February 19, 1999, between Carrier1 International S.A. and The
Chase Manhattan Bank, as Warrant Agent*
10.2 Euro Warrant Agreement, dated as of February 19, 1999, between Carrier1 International S.A. and The Chase
Manhattan Bank, as Warrant Agent*
10.3 Warrants Registration Rights Agreement, dated as of February 12, 1999, between Carrier1 International
S.A. and The Chase Manhattan Bank, as Warrant Agent*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.4 Carrier1 International S.A. 1999 Share Option Plan*
10.5 Master Option Agreement, dated as of December 30, 1998, among Carrier1 International S.A., Carrier One
LLC, Carrier1 International GmbH, Carrier1 B.V., Carrier1 France S.A.R.L., Carrier1 U.K. Limited and
Carrier1 GmbH & Co. AG*
10.6 Form of Option Agreement*
10.7 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Stig Johansson*
10.8 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Eugene A. Rizzo*
10.9 Employment Agreement, dated as of March 26, 1998, between Carrier One AG and Terje Nordahl*
10.10 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Joachim Bauer*
10.11 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Kees van Ophem*
10.12 Securities Purchase Agreement, dated as of March 1, 1999, among Carrier1, Carrier One LLC and the
employee investors named therein**
10.13 Registration Rights Agreement, dated as of March 1, 1999, among Carrier1 International S.A., Carrier One
LLC, Stig Johansson, Joachim Bauer, Gene Rizzo, Kees van Ophem, Terje Nordahl and the other parties
named therein**
10.14 Securityholders' Agreement, dated as of March 1, 1999, among Carrier1 International S.A. and the
employee investors named therein**
10.15 Development Agreement, dated as of February 19, 1999 by and among ViCaMe Infrastructure Development
GmbH, Viatel German Asset GmbH, Carrier 1 Fiber Network GmbH & Co. oHG, Metromedia Fiber Network GmbH,
Viatel, Inc. and Metromedia Fiber Network, Inc.***
12.1 Calculation of Ratio of Earnings to Fixed Charges*
21.1 List of Subsidiaries of Carrier1 International S.A.*
23.1 Consent of Deloitte & Touche Experta AG
23.2 Consent of Debevoise & Plimpton (included in Exhibit 5.1 hereto)
24.1 Power of Attorney from Glenn M. Creamer*
24.2 Power of Attorney from Jonathan E. Dick*
24.3 Power of Attorney from Stig Johansson*
24.4 Power of Attorney from Mark A. Pelson*
24.5 Power of Attorney from Victor A. Pelson*
24.6 Power of Attorney from Thomas J. Wynne*
24.7 Power of Attorney from Joachim Bauer*
25.1 Statement of Eligibility of The Chase Manhattan Bank on Form T-1*
</TABLE>
- ------------------------
* Previously filed
** To be filed by amendment
*** Confidential treatment requested as to certain portions
II-3
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable or not material, or the information
called for thereby is otherwise included in the financial statements or related
notes and therefore has been omitted.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising over 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% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(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 of 1933, 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant 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 such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ZURICH ON MAY 28,
1999.
<TABLE>
<S> <C> <C>
By: *
-----------------------------------------
Name: Stig Johansson
Title: Chief Executive Officer and
President
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE
INDICATED.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- ------------------------------ --------------------------- -------------------
Director, Chief Executive
* Officer and President
- ------------------------------ (Principal Executive May 28, 1999
Stig Johansson Officer)
Chief Financial Officer
* (Principal Financial
- ------------------------------ Officer and Principal May 28, 1999
Joachim W. Bauer Accounting Officer)
* Director
- ------------------------------ May 28, 1999
Glenn M. Creamer
* Director
- ------------------------------ May 28, 1999
Jonathan E. Dick
* Director
- ------------------------------ May 28, 1999
Mark A. Pelson
* Director
- ------------------------------ May 28, 1999
Victor A. Pelson
* Director
- ------------------------------ May 28, 1999
Thomas J. Wynne
Authorized Representative
CARRIER 1, INC. ** in the U.S. May 28, 1999
<TABLE>
<S> <C> <C> <C>
*By: /s/ KEES VAN OPHEM
-------------------------
Kees van Ophem May 28, 1999
by Power of Attorney
**By: /s/ KEES VAN OPHEM
-------------------------
Kees van Ophem, ITS May 28, 1999
SECRETARY
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Articles of Incorporation of Carrier1 International S.A.*
4.1 Indenture, dated as of February 19, 1999, between Carrier1 International S.A. and the Chase Manhattan
Bank, as Trustee, relating to Carrier1 International S.A.'s 13 Senior Dollar Notes Due 2009*
4.2 Form of 13 Senior Dollar Note (included in Exhibit 4.1)
4.3 Indenture, dated as of February 19, 1999, between Carrier1 International S.A. and the Chase Manhattan
Bank, as Trustee, relating to Carrier1 International S.A.'s 13 Senior Euro Notes Due 2009*
4.4 Form of 13 Senior Euro Note (included in Exhibit 4.3)
4.5 Notes Registration Rights Agreement, dated February 12, 1999, among Carrier1 International S.A., Morgan
Stanley & Co. Incorporated, Salomon Smith Barney Inc., Warburg Dillon Read LLC and Bear, Stearns & Co.
Inc.*
4.6 U.S. Dollar Collateral Pledge and Security Agreement, dated as of February 19, 1999, among Carrier1
International S.A., The Chase Manhattan Bank, as Trustee and The Chase Manhattan Bank, as securities
intermediary*
4.7 Euro Collateral Pledge and Security Agreement, dated as of February 19, 1999, among Carrier1
International S.A., The Chase Manhattan Bank, as Trustee and The Chase Manhattan Bank AG, as securities
intermediary*
5.1 Opinion of Debevoise & Plimpton**
10.1 Dollar Warrant Agreement, dated as of February 19, 1999, between Carrier1 International S.A. and The
Chase Manhattan Bank, as Warrant Agent*
10.2 Euro Warrant Agreement, dated as of February 19, 1999, between Carrier1 International S.A. and The Chase
Manhattan Bank, as Warrant Agent*
10.3 Warrants Registration Rights Agreement, dated as of February 12, 1999, between Carrier1 International
S.A. and The Chase Manhattan Bank, as Warrant Agent*
10.4 Carrier1 International S.A. 1999 Share Option Plan*
10.5 Master Option Agreement, dated as of December 30, 1998, among Carrier1 International S.A., Carrier One
LLC, Carrier1 International GmbH, Carrier1 B.V., Carrier1 France S.A.R.L., Carrier1 U.K. Limited and
Carrier1 GmbH & Co. AG*
10.6 Form of Option Agreement*
10.7 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Stig Johansson*
10.8 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Eugene A. Rizzo*
10.9 Employment Agreement, dated as of March 26, 1998, between Carrier One AG and Terje Nordahl*
10.10 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Joachim Bauer*
10.11 Employment Agreement, dated as of March 4, 1998, between Carrier One AG and Kees van Ophem*
10.12 Securities Purchase Agreement, dated as of March 1, 1999, among Carrier1, Carrier One LLC and the
employee investors named therein**
10.13 Registration Rights Agreement, dated as of March 1, 1999, among Carrier1 International S.A., Carrier One
LLC, Stig Johansson, Joachim Bauer, Gene Rizzo, Kees van Ophem, Terje Nordahl and the other parties
named therein**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.14 Securityholders' Agreement, dated as of March 1, 1999, among Carrier1 International S.A. and the
employee investors named therein**
10.15 Development Agreement, dated as of February 19, 1999 by and among ViCaMe Infrastructure Development
GmbH, Viatel German Asset GmbH, Carrier 1 Fiber Network GmbH & Co. oHG, Metromedia Fiber Network GmbH,
Viatel, Inc. and Metromedia Fiber Network, Inc.***
12.1 Calculation of Ratio of Earnings to Fixed Charges*
21.1 List of Subsidiaries of Carrier1 International S.A.*
23.1 Consent of Deloitte & Touche Experta AG
23.2 Consent of Debevoise & Plimpton (included in Exhibit 5.1 hereto)
24.1 Power of Attorney from Glenn M. Creamer*
24.2 Power of Attorney from Jonathan E. Dick*
24.3 Power of Attorney from Stig Johansson*
24.4 Power of Attorney from Mark A. Pelson*
24.5 Power of Attorney from Victor A. Pelson*
24.6 Power of Attorney from Thomas J. Wynne*
24.7 Power of Attorney from Joachim Bauer*
25.1 Statement of Eligibility of The Chase Manhattan Bank on Form T-1*
</TABLE>
- ------------------------
* Previously filed
** To be filed by amendment
*** Confidential treatment requested as to certain portions
<PAGE>
Exhibit 10.15
DEVELOPMENT AGREEMENT
BY AND AMONG
VICAME INFRASTRUCTURE
DEVELOPMENT GMBH
VIATEL GERMAN ASSET GMBH
CARRIER 1 FIBER NETWORK GMBH & CO. OHG
METROMEDIA FIBER NETWORK GMBH
VIATEL, INC.
AND
METROMEDIA FIBER NETWORK, INC.
DATED AS OF FEBRUARY 19, 1999
<PAGE>
TABLE OF CONTENTS
1. Retention of Developer: Certain Definitions ............................ 2
2. Authority of Developer ................................................. 7
3. Obligations of Developer ...............................................11
4. Obligations of Owners ..................................................16
5. Representations and Warranties; Exculpation; Indemnity .................22
6. Funding; Reimbursable Expenses .........................................26
7 Termination ............................................................29
8. Publicity and Public Relations .........................................31
9. Independent Contractor/No Partnership ..................................32
10. Assignment .............................................................32
11. Notices ................................................................32
12. Intentionally Omitted ..................................................36
13. Confidentiality ........................................................36
14. Guaranty ...............................................................38
<PAGE>
15. Applicable Law .........................................................39
16. Severability ...........................................................39
17. Counterparts ...........................................................39
18. Benefits and Obligations ...............................................39
19. Integration; Amendment and Waiver ......................................40
20. Further Assurances .....................................................40
21. Force Majeure ..........................................................40
22. Audit Rights ...........................................................40
23. Headings ...............................................................41
24. No Immunity ............................................................41
25. Use of English Language ................................................41
26. Additional Capacity ....................................................41
27. Arbitration ............................................................42
28. Currency ...............................................................43
<PAGE>
EXHIBITS
Exhibit A Binding Letter of Intent Deposit and Balance
Exhibit B Major Decisions
Exhibit C Information to be Provided to Committee
Exhibit D Approved Cities
Exhibit E Development Plan and Budget
Schedule 1 Interests
Schedule 2 Funding of Project
<PAGE>
DEVELOPMENT AGREEMENT
DEVELOPMENT AGREEMENT, dated as of February 19, 1999, by and among Viatel
German Asset GmbH, a Gesellschaft mit beschrankter Haftung organized under the
laws of Germany, ("Viatel"), Carrier 1 Fiber Network GmbH & Co. oHG, an offene
Handelsgesellschaft organized under the laws of Germany ("Carrier 1"),
Metromedia Fiber Network GmbH, a Gesellschaft mit beschrankter Haftung organized
under the laws of Germany ("MFN" and together with Viatel and Carrier 1, the
"Owners"), Metromedia Fiber Network, Inc., a Delaware corporation
("Metromedia"), Viatel, Inc., a Delaware corporation ("Viatel Parent") and
ViCaMe Infrastructure Development GmbH, a Gesellschaft mit beschrankter Haftung
organized under the laws of Germany ("Developer").
WHEREAS, the Owners (except that Carrier1 Holdings Ltd., has assigned its
rights and obligations to Carrier 1 and Metromedia has assigned its rights to
MFN) and Guarantors (as defined below) have entered into a Binding Letter of
Intent (as defined below), pursuant to which Owners have agreed to jointly
arrange for the development and construction of the Outside Plant (as defined
below); and
WHEREAS, upon RFS Acceptance of the Outside Plant (as such terms are
defined below) each of Carrier 1 and MFN will each own * (filled with fiber
optic cable to the extent separately purchased by each Owner in accordance
with the terms of this Agreement) along the route of the entire Outside Plant
with separate access thereto, and Viatel will own * along the same route (one
of which * will be filled with fiber optic cable to the extent separately
purchased by Viatel in accordance with the terms of this Agreement and the
other of which may be vacant); and
WHEREAS, the Owners believe it is in their mutual best interest to work
together on the Network; and
WHEREAS, Owners desire to retain Developer to perform or arrange for
certain pre-development, development, design, procurement, construction,
supervisory and/or other services with respect to the Outside Plant, and
Developer wishes to perform such services, all on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Owners and Developer
hereby agree as follows:
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
1
<PAGE>
1. Retention of Developer: Certain Definitions
1.1 Owners hereby retain Developer to provide the services
hereinafter set forth for the Outside Plant all on behalf of, and at the sole
cost and expense of, Owners unless specifically provided to the contrary in this
Agreement.
1.2 Developer hereby accepts the relationship of trust and
confidence established among Developer and Owners by this Agreement. Developer
covenants with Owners to act in good faith with reasonable efforts and diligence
in the performance of Developer's responsibilities under this Agreement.
1.3 Each of the Owners and Developer understand that the other
parties and their respective Affiliates may be interested, directly or
indirectly, in certain other development and other activities and undertakings
not related to the Network. Subject to the provisions of Section 26, this
Agreement and the assumption by Owners and Developer of their respective duties
hereunder shall be without prejudice to the rights of any party to have such
other activities and undertakings (whether or not competitive with the Network)
and to receive and enjoy profits or compensation therefrom.
1.4 As used in this Agreement, the following terms shall have the
following respective meanings:
"Additional Fiber Costs" shall mean all costs associated with an
Owner installing greater than a * cable in its subduct. The costs referred to
in the preceeding sentence are the costs associated with splicing and blowing
more than * cable (and terminating more than * cable at each "POP" and
repeater location). Additional Fiber Costs shall also include all additional
costs incurred as a result of any delay in the completion of the Outside
Plant resulting from the separate ordering of the fiber optic cable by each
Owner unrelated to the actions of the Construction Contractor.
"Affiliates" shall mean any Person that (a) owns or controls the
first Person, (b) is owned or controlled by the first Person or (c) is under
common ownership or control with the first Person, where "own" means direct or
indirect ownership of more than * of the equity or voting interests or rights
to distributions on account of equity of the Person, and "control" means the
direct or indirect power to direct the management or policies of the Person,
whether through the ownership of voting securities, by contract or otherwise.
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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"Agreement" shall mean this Agreement including the Exhibits and
Schedules hereto, as it may be modified or amended from time to time.
"Approved Cities" shall mean the cities listed on Exhibit D to this
Agreement, as same may be amended from time-to-time with the unanimous consent
of the Owners.
"Binding Letter of Intent" shall mean that certain Binding Letter of
Intent dated August 20, 1998, among the Owners and certain of their affiliates,
as amended.
"Cash Flow Forecast" means the forecasted monthly expenditures for
Construction Costs for the Outside Plant (breaking out costs for rights of way,
engineering support, procurement, repeaters, points of presence and cable and
duct installation), which forecast is included as part of the Development Plan
and Budget.
"Co-Location Facilities" shall have the meaning set forth in the
definition of Required Configuration.
"Committee" shall mean the Committee of the Advisory Board of
Developer as set forth in the Shareholders' Agreement.
"Confidential Information" shall have the meaning set forth in
Section 13.
"Construction Contract" means the contract for the engineering,
procurement and construction of the Outside Plant to be entered into between the
Construction Contractor, Developer and the Owners. Developer shall enter into
the Construction Contract solely in its capacity as agent for and in the name of
the Owners, with the Owners (and not Developer) being severally liable for all
obligations and liabilities under the Construction Contract.
"Construction Contractor" means the contractor under the
Construction Contract.
"Construction Costs" means all costs (exclusive of recoverable value
added tax) (whether hard or soft) associated with the construction, procurement
and
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development (including obtaining all necessary licenses for construction,
permits, Necessary Rights, rights of way and other rights) of the Required
Configuration for the Outside Plant through RFS Acceptance, including,
without limitation, all Outside Plant Costs listed in Section 6.1(d) below,
but excluding actual commencement of commercial service of the Network and
the procurement and implementation of transmission and related equipment and
fiber optic cable, but including costs associated with splicing, blowing and
pushing up to * cable in one duct for each Owner (but only terminating *
cable at each POP and repeater location).
"Defaulting Owner" shall have the meaning set forth in Section
7.1(c) of this Agreement
"Developer's Trust Account" shall have the meaning given such terms
in the Shareholders' Agreement
"Development Plan and Budget" means the detailed statement of the
tasks and responsibilities, Construction Costs, Cash Flow Forecast and time
required to design, procure, construct and develop the Outside Plant which has
been approved by all the Owners and is attached to this Agreement as Exhibit E.
The Development Plan and Budget may only be amended in accordance with the terms
of this Agreement.
"Event of Default" shall have the meaning given such term in Section
7.1(c) of this Agreement.
"Funding Default" shall have the meaning given such term in Schedule
2 of this Agreement.
"Funding Notice" shall have the meaning given such term in Schedule
2 of this Agreement.
"Funding Obligation" shall have the meaning given such term in
Schedule 2 of this Agreement.
"Guarantor(s)" shall have the meaning given such term in Section 14
of this Agreement.
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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"Interest" shall mean, as of the date hereof until an Owner's
percentage Interest is changed in accordance with this Agreement, the percentage
for each Owner set forth on Schedule 1 and their ownership interest in all
assets created in connection with the Network pursuant to this Agreement or any
related agreement.
"IRU" shall mean an indefeasible right of use.
"Letter(s) of Credit" shall have the meaning given such term in
Schedule 2.
"Major Decisions" shall mean the approval of any one or more of the
actions or matters set forth on Exhibit B and any material changes to or
amendments of any previously approved Major Decision.
"Majority-in-Interest" shall mean an Owner or Owners owning more
than 50% of the Interests.
"Managing Directors" shall have the meaning given such term in the
Shareholders' Agreement.
"Necessary Rights" shall mean, to the extent possible under
applicable German law, substantially equivalent but separately divisible and
transferable rights in and to easements, rights of way, licenses, permits and
other rights necessary for the construction and ownership of the Network (not
including licenses or permits related to the operation of a telecommunications
network in Germany [eg., Class 3 and Class 4 licenses under the German
Telecommunications Act], which are the individual responsibility of the Owners).
"Network" shall mean when used in respect of each individual Owner,
a fully-operational fiber optic telecommunications link completed and ready for
commercial use in accordance with the Required Configuration which Network shall
consist of (i) the whole of the Outside Plant to which the relevant Owner is
entitled hereunder or under the Construction Contract, (ii) fiber optic cable
procured by each Owner separately and installed pursuant to the Construction
Contract and (iii) any and all transmission electronics and related equipment
procured for, installed upon or integrated with (in each case, at each Owner's
sole cost and risk) such Outside Plant.
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"Outside Completion Date" shall have the meaning given such term in
Section 3.5 of this Agreement.
"Outside Plant" shall mean the entirety of the fiber optic
telecommunications infrastructure underlying, as the context may require, each
individual Owner's Network or all of such Networks collectively, which Outside
Plant shall (i) be completed by the Construction Contractor in accordance with
the Required Configuration and the Construction Contract, (ii) link the Approved
Cities and (iii) include any and all equipment, facilities, materials, services
and supplies necessary or incidental to achievement of RFS Acceptance in respect
thereof; provided, in any event that reference to such "Outside Plant" shall not
be deemed hereunder to include the procurement of fiber optic cable nor the
procurement or installation of any transmission electronics or related equipment
to be procured by the individual Owners for use in their respective Networks.
"Outside Plant Costs" shall have the meaning given such term in
Section 6.1(d).
"Parent's Trust Account" shall have the meaning given such term in
the Binding Letter of Intent.
"Person" means any domestic or foreign individual, corporation,
limited liability company, partnership, joint venture, estate, trust,
unincorporated association, any federal, state, county or municipal government
or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
"Required Configuration" shall mean, in respect of the Network
(and each of its components), a fiber optic telecommunications network
containing four identical subducts generally buried in the ground into which
necessary access along the route of the Network for each Owner will be
obtained through separate manholes for each of the separate subducts. The
Required Configuration specifically excludes transmission and related
equipment and fiber optic cable but will include separate facilities of
approximately * (to be shared by each of the Owners pro-rata in accordance
with their Interests except in Frankfurt, Dusseldorf and Berlin in which
locations MFN and Carrier 1 will each have units within such facilities of
approximately *) each to house such equipment, with one such facility located
in each of the Approved Cities (the "Co-Location Facilities"). The
Co-Location Facilities shall be owned or leased by an entity reasonably
acceptable to all Owners, including Affiliates of Viatel, so long as all
Owners shall have equivalent rights of access and use thereto.
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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"Required Qualifications" means one or more individuals with ten
(10) or more years experience in civil work construction projects similar to the
construction of the Network.
"RFS Acceptance" shall mean in respect of the Outside Plant, the
date on which the Construction Contractor has satisfied all requirements of the
Construction Contract as to completion and delivery of such Outside Plant
(including without limitation, completion of all splicing, joining and
installation activities with respect to the fiber optic cable to be procured and
furnished by each of the Owners in accordance with this Agreement (to the extent
each Owner complies with its obligations hereunder) and the Construction
Contract).
"ROWCO" shall mean a German partnership or similar entity (to be
treated as a partnership for United States Federal income tax purposes by making
an election in the time and in the manner set forth in United States Treasury
Regulations Section 301.7701-3) to be owned by the Owners in proportion to
their Interests and the sole purpose of which shall be to own Necessary Rights
that are not owned separately by each Owner or Viatel and which shall provide
each Owner the benefits of the Necessary Rights so held by it.
"Shareholders' Agreement" shall mean that certain Shareholders'
Agreement of Developer dated of even date herewith, as the same may be amended
from time to time.
2. Authority of Developer
2.1 Subject to the terms of this Agreement, Owners hereby appoint
Developer as their agent and authorize Developer to take all actions, and to
make all decisions, necessary or appropriate in Developer's reasonable judgment
to coordinate, oversee and supervise the Construction Contract and the
development, design, procurement and construction of the Outside Plant,
substantially in accordance with the Development Plan and Budget. Until the
Outside Completion Date all communications with respect to the Outside Plant
from Owners to the Construction Contractor, any subcontractors, suppliers,
vendors (including the vendors of the fiber optic cable) or service providers
and other persons affiliated or associated with the Outside Plant, including all
approvals, shall be communicated through Developer.
It is expressly understood and agreed that actions taken by Developer in
accordance with this Agreement shall be taken by Developer as agent for and in
the name of Owners, and all obligations, costs or expenses reasonably incurred
by
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<PAGE>
Developer in the performance of its obligations hereunder are the liability of
the Owners in proportion to their Interests (except as otherwise provided in
this Agreement) and not the liability of Developer. Any payments made by
Developer in the performance of its responsibilities under this Agreement shall
be made out of funds (a) that Developer from time to time holds in trust for the
Owners or (b) that Owners provide to Developer, including amounts available to
be drawn under the Letters of Credit provided by the Owners to Developer.
Developer shall not be required to make any advances to, or for the account of,
Owners or to pay any amount except out of funds held, provided or obtained as
aforesaid nor shall Developer be required to incur any liability or obligation
for the account of Owners. Developer shall be reimbursed by Owners on a monthly
basis upon submission of appropriate supporting documentation to Owners, for all
costs advanced by Developer.
2.2 In addition to, and not in limitation of, the foregoing,
Developer shall have the authority to take all actions, and to make all
decisions, necessary or appropriate in Developer's reasonable judgment, for the
performance of Developer's obligations set forth herein and to complete the
Outside Plant in accordance with the Construction Contract and Development Plan
and Budget, including without limitation: (a) the right to incur liabilities on
behalf of Owners pursuant to Section 3.2 (r) hereof and reimbursable
out-of-pocket expenses pursuant to Section 6.2 hereof, and (b) the right to
disburse funds to pay when due (i) all the costs, expenses and fees incurred in
connection with the predevelopment and development of the Outside Plant
including, without limitation, the fees and expenses of outside counsel and
consultants retained by Developer as agent for and in the name of the Owners,
(ii) the cost of all services, materials and labor in connection with the
development of the Outside Plant in accordance with the Development Plan and
Budget and this Agreement (including all applicable value added tax payable to
the Construction Contractor), (iii) the fees and disbursements payable to
Developer under this Agreement, and (iv) all other fees and charges incurred by
Developer on account of Owners in accordance with this Agreement, provided,
however, that Developer shall not have authority to disburse funds to pay or
incur liabilities to pay costs or expenses related to the Outside Plant and
associated with Major Decisions which have not been approved by unanimous vote
of the Owners with respect to Major Decisions set forth in paragraphs 1, 2, 4
and 5 of Exhibit B and the vote of at least two of the Owners with respect to
Major Decisions set forth in paragraph 3 of Exhibit B.
2.3 Notwithstanding any other provision of this Agreement, Developer
shall not, without the approval of all Owners, have the authority to:
(a) make expenditures for items not included, or in excess of the
amounts for any items provided for, in the Development Plan and Budget, or incur
8
<PAGE>
any liability related thereto; provided, however, that Developer may disburse
such funds and/or incur liabilities notwithstanding the lack of Owners' approval
if:
(i) the aggregate of all such expenditures does not exceed the
total amount for the Outside Plant specified in the Development Plan and
Budget (exclusive of all amounts related to value added tax in Germany)
and either (A) the aggregate of all such expenditures in respect of the
applicable line item in the approved budget does not exceed the amount
budgeted for such line item, or (B) Developer reasonably projects that
savings from another line item (the "Projected Savings") will upon
completion of the work relating to such line item be sufficient to pay for
such expenditure and such Projected Savings are concurred to in writing by
Owners holding at least * of the Interests, or
(ii) an emergency exists which, in the reasonable judgment of
Developer, requires the expenditure of unbudgeted funds for the
preservation or safety of the Network, or to avoid the suspension of any
necessary service in or to the Network, or
(iii) such expenditures are necessary, in the reasonable
judgment of Developer, in order to avoid a material increase in cost to
Owners resulting from the delay in such expenditure, provided, that the
expenditure is contemplated in the Development Plan and Budget; or
(b) make or permit to be made any material changes in the
Development Plan and Budget; or
(c) take any action which, at the time such action was taken,
Developer knew or had reason to know, would result in a delay in achieving a
major milestone identified in the Development Plan and Budget or the
Construction Contract by more than a total of * days; or
(d) modify the Network to add or delete cities, towns or other areas
from the list of Approved Cities set forth on Exhibit D which will be included
in the Network.
Developer shall provide each Owner with written notice and an explanation
of all expenditures made under Section 2.3(a)(i) at least * business days before
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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<PAGE>
such expenditure is made, except in the event of an emergency. In the case of an
emergency, Developer shall provide such notice within * days thereafter.
Section 2.4. Notwithstanding the provisions of Section 2.3
hereof, in the event Developer makes a written request (the "Approval
Request") to the Owners for the taking of an action described in paragraph 2
of Exhibit B hereof (i.e. cost increases greater than the amounts set forth
in the Development Plan and Budget, exclusive of all amounts related to value
added tax in Germany) or for delays in achieving major milestones for greater
than * days) if the approval of all Owners has not been obtained within *
days following the receipt of the Approval Request, unless exigent
circumstances require a shorter time period, in which event such shorter time
period (but in no event less than * days), then the Owners which have
provided such approval (the "Approving Owners") shall have the rights set
forth in this Section 2.4. Within the * day period following the expiration
of the aforesaid * day period, or such shorter time period as exigent
circumstances shall require (but in no event less than * days) the Approving
Owners shall have the right, but not the obligation, to elect to purchase (i)
the Interest of the Owner(s) voting against such approval (the "Rejecting
Owner(s)") for an amount equal to the aggregate amount paid, invested, drawn
down under such Rejecting Owner(s) Letter of Credit and/or contributed by the
Rejecting Owner(s) for Outside Plant Costs (whether paid to Developer or at
its direction), including the Additional Fiber Costs, and amounts drawn on
the Letter of Credit provided by the Rejecting Owner(s) and (ii) all fiber
optic cable and electronics and transmission equipment actually installed and
made a part of the Network by the Rejecting Owner at a price equal to the
actual out-of-pocket third party costs incurred by the Rejecting Owner for
such items (the "Purchase Price"). Such election shall be made by giving
written notice thereof to the Rejecting Owner(s). The Interest of the
Rejecting Owner(s) shall be purchased on a date specified by the Approving
Owner(s) which date shall not be more than * days after the expiration of
such * day period (the "Buyout Date"). On the Buyout Date the Rejecting
Owners shall be irrevocably obligated to transfer its or their Interest to
the Approving Owners in exchange for the Purchase Price and the return by
Developer of the Rejecting Owner's Letter of Credit. On the Buyout Date the
Rejecting Owner(s) also shall be paid for all reimbursable expenses due such
Rejecting Owner in accordance with Section 6.2. The Interest of the Rejecting
Owner(s) will be purchased by the Approving Owners (if more than one) in
proportion to the Interests of the Approving Owner(s). Notwithstanding the
foregoing, nothing in this Section 2.4 shall grant or be deemed to (i) grant
the Approving Owner(s) the right to purchase the share of stock in Developer
owned by such Rejecting Owner or (ii) obligate the Rejecting Owner to
transfer such Rejecting Owner's share in Developer.
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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3. Obligations of Developer
3.1 During the term of this Agreement, Developer shall: (i) use
commercially reasonable efforts and diligence to coordinate, supervise, manage
and facilitate such services as may be necessary to implement the
pre-development, development, design, procurement, construction and completion
of the Outside Plant in accordance with the Development Plan and Budget, and
(ii) provide, upon the request of an Owner or as required under this Agreement,
consultation and assistance to such Owner concerning all matters with respect to
the development of the Network. Developer shall arrange for the personnel and
services necessary to perform its responsibilities under this Agreement. It is
understood that Developer will rely primarily on independent contractors and may
not have employees of its own.
3.2 Developer's obligations under this Agreement for the Outside
Plant shall include, but shall not be limited to, the following areas:
Budget, Planning and Administration.
(a) Developer shall update or modify the Development Plan and Budget
from time to time upon the request of Owners and otherwise when it deems
necessary or appropriate, and all such revisions to the Development Plan and
Budget shall promptly be submitted to Owners for their approval and shall become
effective only after such approval has been given in writing in accordance with
the terms of this Agreement. If the Development Plan and Budget is modified in
accordance with the preceding sentence or Developer otherwise determines, in its
reasonable judgment, that based upon the status of the construction of the
Outside Plant ("Changed Conditions"), the Letter of Credit from each Owner
exceeds the amount reasonably necessary to pay such Owner's share of the Outside
Plant Costs to be incurred to reach RFS Acceptance ("Maximum Amount"), Developer
shall advise each Owner of the allocable reduction in their respective Letter of
Credit based upon the revised Development Plan and Budget or Changed Conditions.
Thereafter each Owner may reduce its respective Letter of Credit accordingly but
in no event to an amount less than such Owner's Maximum Amount.
(b) Negotiate any documents, instruments or agreements or amendments
thereto necessary or appropriate for the implementation of each phase of the
Outside Plant and services related thereto provided such documents, instruments
or agreements, or amendments thereto are consistent with the Development Plan
and Budget.
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(c) Supervise, inspect or cause to be inspected and coordinate the
services and activities of the Construction Contractor, equipment vendors, fiber
optic cable suppliers (for coordination purposes only), architects, construction
managers, subcontractors, engineers, consultants, and others, to insure
cooperative efforts in the implementation of the Development Plan and Budget.
(d) Prepare and submit to Owners for their approval, and upon their
approval obtain, an insurance package for the Outside Plant, including bonding
requirements for the Construction Contractor. Any and all insurance shall name
Owners and Developer as insured and loss payees thereunder, and shall include,
to the extent available, a waiver by the insurer of any rights of subrogation to
claims against Developer or Owners or their direct and indirect members, and
their officers, directors, shareholders, principals, representatives, agents and
employees.
(e) Perform all accounting functions necessary or appropriate for
and in connection with the coordination of the development, design, procurement
and construction or capital improvement activities being conducted pursuant to
and in accordance with the Development Plan and Budget
(f) Retain such consultants and other professionals as Developer in
its reasonable judgment deems necessary or appropriate in connection with
obtaining Necessary Rights, any right of way planning, environmental analysis,
development, design, procurement, construction or capital improvement activities
being conducted. Developer will require any contractors, architects, engineers
and other professionals retained hereunder to be insured in customary amounts
against professional liability for errors and omissions to the extent such
insurance is customarily required in the applicable geographical region.
(g) Review all applications for payment by the Construction
Contractor, engineers, consultants, architect, construction manager, manager and
others ("Payment Applications") as to the completeness and determine the
appropriateness of such applications for payment under the Construction Contract
and other agreements and the Development Plan and Budget, as the case may be,
negotiate and settle any disputes or irregularities in connection with such
Payment Applications and agreements, and pay, from Owners' funds, of all such
Payment Applications deemed appropriate by Developer in its reasonable judgment.
(h) Developer will provide each Owner a copy of all Payment
Applications, together with copies of all documents, certificates and other
information submitted in support of such Payment Applications (the "Supporting
Information"). Payment Applications and related Supporting Information in
respect of payments to
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<PAGE>
be made in a given month shall be provided not later than the fifteenth day of
the preceding month.
(i) As soon as Developer is informed by the Construction Contractor
of the proposed location of nodes, points of presence and/or Co-Location
Facilities for the Network, Developer will give notice thereof to the Owners.
Developer will cooperate with each Owner in providing information and applicable
time periods regarding fiber optic cable delivery schedules, fiber optic cable
count related to the cable to be placed in each Owner's subduct and such other
information as each Owner shall reasonably request related to fiber optic cable
as is reasonably available to Developer. Each Owner agrees that either prior to
or simultaneously with the execution of the Construction Contract, they will
each have executed separate purchase orders for the fiber optic cable to be used
in connection with the Network and that it shall be the responsibility of the
Construction Contractor (and not Developer) to request the delivery of fiber
optic cable (from the vendor of such fiber optic cable) on behalf of each Owner
in accordance with the Construction Contract.
(j) Assist the Owners in obtaining, to the extent available under
applicable German law, the recovery of value added tax (VAT) paid in connection
with the construction of the Outside Plant.
Design, Construction and Construction Management; Necessary Rights
(k) Supervise and inspect or cause to be inspected the activities of
the Construction Contractor and any subcontractors, suppliers, vendors,
providers and other Persons connected with the construction of the Outside
Plant.
(l) Authorize, on Owners' behalf, change orders submitted by
contractors or others, or initiated by Developer, subject to Section 2.3 hereof,
which, in Developer's reasonable judgment, are appropriate or necessary,
provided that Owners' authorization must be obtained if such change order
involves a Major Decision listed on Exhibit B.
(m) Intentionally Omitted.
(n) Subject to the provisions of Section 4.8, submit, prosecute and
administer applications and agreements in the name of Owners (or in accordance
with this Agreement, ROWCO or Viatel) for the Necessary Rights and other similar
approvals with respect to the Outside Plant with utility companies, public
agencies,
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private owners and federal, state, county, municipal and other governmental
authorities (collectively "Governmental Authorities").
(o) Negotiate all necessary agreements with Governmental Authorities
and other third parties including, but not limited to, those related to
Necessary Rights, access, and traffic, but excluding any negotiations related to
telecommunications licenses.
(p) Schedule meetings, as often as Developer or any of the Owners
deem appropriate, among Owners, the Construction Contractor and its construction
manager and such other parties as Developer or any Owner may deem necessary or
appropriate concerning the Outside Plant.
(q) Coordinate, to the extent applicable, (i) RFS Acceptance, (ii)
schedule and coordinate inspections and (iii) completion of all punch-list
items, retainage and final acceptance of the Outside Plant by Owners.
Finance
(r) Incur any obligations and expenses and expend Owners' funds in
accordance with the terms of the Development Plan and Budget, subject to Section
2.3 hereof.
(s) Call funds from Owners and draw down the Letters of Credit (in
accordance with Schedule 2 hereto) from time to time as required to pay
Construction Costs, Additional Fiber Costs and expenses (including reimbursable
expenses to Developer pursuant to Section 6.2) or in anticipation of payment to
third parties of costs and expenses incurred in preparation of or pursuant to
the Development Plan and Budget. Drawdowns of the Owners' funding obligations
for the Outside Plant and calls on the Letters of Credit shall be made in
accordance with the provisions of Schedule 2.
Local Requirements
(t) Retain competent consultants, attorneys, accountants, planners
and other professionals as Developer shall deem necessary (collectively
"Advisors") to ensure that the Outside Plant and all aspects of design,
procurement, licensing and construction of the Outside Plant conform to the
applicable laws of the relevant
14
<PAGE>
locality. The fees and expenses of such Advisors shall be paid by Developer as
agent for and in the name of the Owners from funds budgeted for such purpose in
the Development Plan and Budget.
3.3 Developer shall keep Owners promptly informed of all material
matters which come to Developer's attention relating to or affecting the Network
or any of Owners' obligations under this Agreement. In addition, Developer shall
promptly and in a timely manner answer all inquiries any of the Owners may have
with respect to implementation of the Development Plan and Budget. In addition,
Developer and its officers and agents will keep the Committee fully informed as
to the status of the Outside Plant including providing monthly reports on the
Outside Plant and the Network, monthly expenditures compared to budget, progress
toward meeting the RFS Acceptance, status of obtaining the Necessary Rights or
other material licenses, rights of way and easements, the information specified
on Exhibit C and all other information reasonably requested by the Committee
related to the Outside Plant and the Network. Senior representatives of
Developer and, if requested by an Owner, a representative of the Construction
Contractor shall meet with the Committee at least monthly until the RFS
Acceptance.
3.4. To the extent that calls for funds or drawdowns on the Letters
of Credit are made from Owners by Developer, or otherwise obtained by Developer
from Owners (including all amounts paid to Parent's Trust Account pursuant to
the Binding Letter of Intent), such sums, together with all interest earned
thereon, shall be deposited in, and held in trust in Developer's Trust Account
(except to the extent Developer determines, in its reasonable judgment, to pay
such funds directly to the Construction Contractor), and shall not be commingled
with other funds held by Developer. Developer shall invest such funds as are
temporarily not needed in connection with the Outside Plant in obligations of
the United States Government, the Federal Republic of Germany, Euro denominated
obligations, money market funds, certificates of deposit of banks or other
lending institutions with at least $500,000,000 of capital surplus or other
similar interest-bearing investments of comparable credit quality to be
determined by Developer; provided, however, that Developer shall not be required
to make any such investment if it would interfere with the timely application of
such funds to Construction Costs. All such funds shall be the property of
Owners, subject to the rights of Developer to disburse same as provided herein.
3.5 Owners and Developer acknowledge and agree that any plans and
specifications prepared for the Outside Plant and the Network shall be prepared
by the Construction Contractor, engineers or other professionals and that
Developer shall not be expected or required to render professional
architectural, engineering or other similar services to Owners. No loss that
results from any errors, insufficiencies, omissions, or inconsistencies in such
plans and specifications whatsoever shall be
15
<PAGE>
borne by Developer; provided, however, from and after March 30, 2000 (the
"Outside Completion Date"), each Owner (singly or with other Owners as they may
elect) shall have the right to pursue all available remedies against the
Construction Contractor, architects, engineers and other parties providing the
property or services that resulted in such loss, provided that RFS Acceptance
has not be achieved by that date. Prior to the Outside Completion Date,
Developer, as agent for and in the name of the Owners, shall have the right to
pursue the remedies against such parties as and when it shall reasonably
determine, however, following the Outside Completion Date each Owner may elect
to take over the enforcement of any claims (to the extent related to such
Owner's rights) commenced and then being pursued by Developer. In addition, it
is understood that Owners are relying on warranties and guarantees to be
received from the Construction Contractor, the subcontractors and other
suppliers with regard to the construction of the Outside Plant and Network, and
that Developer shall not be liable for construction means, methods, techniques,
materials, and procedures employed by such persons in the performance of
contract(s), the failure of the Construction Contractor to carry out its
responsibilities in accordance with the Construction Contract, or any other
defects or failure of the construction. The Owners shall receive any and all
warranties and guarantees directly from the Construction Contractor and any
applicable subcontractor. Notwithstanding the foregoing, Developer shall be
responsible for exercising and administering all claims in connection with such
guarantees and warranties until the first to occur of RFS Acceptance or the
Outside Completion Date.
4. Obligations of Owners
4.1 Owners shall cooperate with Developer in all respects in
connection with the development, design, procurement, construction and capital
improvement of the Outside Plant and the Network and shall promptly and in a
timely manner (a) provide information regarding their requirements for the
Network, (b) promptly answer all inquiries Developer may have with respect to
such information, and (c) approve or disapprove any items submitted by Developer
to Owners pursuant to this Agreement. Additional information or decisions
requested by Developer of Owners shall also be given by Owners to Developer in a
prompt and timely manner. To the extent legally possible under applicable German
law each of the Owners shall own (i) all right, title and interest in their
subduct and fiber (to the extent installed) as such items are constructed and
delivered pursuant to, and subject to compliance with, the terms and conditions
of the Construction Contract and (ii) directly, have an interest in or otherwise
have a right to use the Necessary Rights as and when obtained in accordance with
the terms of this Agreement.
4.2 Each Owner shall provide its Letter of Credit or funds to
Developer as required in accordance with Schedule 2 and Section 3.2(s) hereof.
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4.3 Developer shall, as agent for and in the name of the Owners (not
as a guarantor), enter into agreements with architects, engineers, construction
managers, contractors and other consultants, which agreements shall be in
substantial conformity with the Development Plan and Budget and be typical for
projects of a type and size similar to the Project, and be in substantially
identical form for each Owner. The services, duties and responsibilities of each
such person or entity shall be described in such agreement, and copies of same
will be furnished to Owners and Developer. If necessary, the Owners will, at
Developer's request, enter into agreements in their own name or the name of an
Affiliate selected by such Owner, provided that the agreements entered into by
the Owners shall be substantially identical. All agreements executed by Owners
will provide for copies of all notices thereunder to be sent to Developer, and
vice versa, and if any such agreement does not so provide, Owners and Developer,
as the case may be, shall promptly send copies of all notices delivered
thereunder to Developer. Developer shall be entitled to rely upon the accuracy
and completeness of any information and reports provided by the architect,
manager, sales and marketing manager and any consultants, engineers, contractors
and other professionals retained by Owners or by Developer pursuant to and in
accordance with this Agreement.
4.4 All decisions required by the Owners hereunder will be made by a
Majority-In-Interest of the Owners except for Major Decisions or as otherwise
specifically provided for in this Agreement. Major Decisions shall be approved
by unanimous vote of the Owners with respect to Major Decisions set forth in
paragraphs 1, 2, 4 and 5 Exhibit B and the vote of at least two Owners with
respect to Major Decisions set forth in paragraph 3 of Exhibit B.
4.5 Owners shall pay all costs and expenses reasonably incurred in
connection with Necessary Rights and other appropriate approvals, permits,
variances, easements, assessments, fees and charges required or desirable as
contemplated in the Development Plan and Budget, and Owners hereby appoint
Developer as its agent to make such applications and obtain such approvals.
Owners agree to cooperate with Developer in connection with all applications for
Necessary Rights and other approvals, permits, licenses and all other documents
and agreements necessary or appropriate to be filed or entered into with all
Governmental Authorities, utility companies, public agencies and private owners
and to execute, acknowledge and deliver all documents and agreements reasonably
requested or required to obtain such Governmental Authorities, approvals,
permits and licenses or to create utility and other easements necessary to
furnish utilities.
4.6 Each Owner shall keep Developer and the other Owners promptly
informed of all material matters which come to such Owner's attention relating
to or affecting the development, design, procurement or construction of the
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Outside Plant and the Network or any of Developer's obligations under this
Agreement, including, without limitation, all agreements and discussions between
an Owner and third parties which relate to such matters, and Owners shall
promptly notify Developer of any developments necessitating or warranting a
change in the Development Plan and Budget.
4.7 Owners agree that the Outside Plant is to be constructed so that
each Owner shall own a single subduct (except for Viatel which will own two). As
provided in Section 3.2(i) Developer will provide each Owner timely notice of
the Co-Location Facilities for the Network and the location of nodes and points
of presence. In accordance with Section 3.2, each Owner shall be responsible for
purchasing the fiber optic cable to be placed in its subduct. Subject to the
provisions of Section 3.2(i), Developer shall be under no obligation to delay
the construction of the Outside Plant if one or more Owner(s) fails to either
timely order or cause timely delivery of the fiber optic cable. Viatel agrees to
make available to the Owners the ability to purchase fiber optic cable for the
Network at the same price that it is able to purchase fiber optic cable for the
Network. Developer will add to the funding request for an Owner pursuant to
Schedule 2 the Additional Fiber Costs caused by such Owner and reasonably
expected to be paid in the month following such funding request.
If a portion of the subducts cannot be owned directly by the Owners and is
subject to a long-term lease, license or similar arrangement applicable under
German law ("Lease Arrangements"), the portion of the subducts subject thereto
and the terms and conditions of the Lease Arrangements shall be substantially
equivalent for all Owners (with Owners sharing costs under the Lease
Arrangements in proportion to their Interests) and Owners shall direct Developer
to negotiate any Lease Arrangements in such fashion.
4.8 The Owners agree that, to the maximum extent possible, each Owner
shall be the beneficiary of and have substantially equivalent but separately
divisible and transferable rights in and to the Necessary Rights and shall
direct Developer to apply for and negotiate the terms of the Necessary Rights
to accomplish such objective. * The determination regarding the ownership of
the Necessary Rights will be made by Developer in good faith, based upon
consultations with Owners, each Owner's ability to own the Necessary Rights
and licensing and other applicable legal
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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requirements under German law. * Notwithstanding the foregoing, the Owners
confirm their understanding that the telecommunication licenses required for
the operation of the portion of the Network being built for Viatel is held by
Viaphone GmbH, an Affiliate of Viatel, and that pursuant to Applicable Legal
Requirements, the Necessary Rights and the Precluded Rights (as they relate
to rights of way in both the public and the private domain) arise from the
licenses held by Viaphone GmbH. Furthermore, Developer will provide full
cooperation to the Owners in connection with assisting each such Owner in
obtaining all Necessary Rights as soon as practicable and permissible under
applicable German law.
*
* Viatel on behalf of itself and its Affiliates and ROWCO acknowledge
that an Owner will be irreparably damaged in the event it does not have the
full benefit of the Necessary Rights held on its behalf, accordingly, in
addition to all other remedies that are available to an Owner at law or in
equity, Viatel on behalf of itself and its Affiliates and ROWCO agree that an
Owner shall be entitled to specific enforcement of its rights under Sections
4.8 and 4.9. *
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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*
From and after the date hereof, Developer agrees that in connection with
the negotiation of any written agreement with third parties documenting the
Necessary Rights, Developer shall use "commercially reasonable efforts" to
include a provision stating that such third party shall have no ownership in all
or any part of the Network. For purposes of the preceding sentence,
"commercially reasonable efforts" shall mean efforts that will not, in
Developer's reasonable judgment, result in (x) an increase in the cost of the
construction of the Outside Plant or the Network, (y) delay in the timing for
completion of the Outside Plant or the Network, or (z) otherwise adversely
affect Developer's ability to fulfill its duties and obligations under this
Agreement.
* In connection with the foregoing, Carrier 1 and MFN (severally to the
extent the Title Defect impacts such party) agree (x) to reimburse Viatel for
all costs incurred with the Corrective Efforts within 10 business days of the
date of written notice and (y) indemnify and hold harmless Developer, Viatel
and its Affiliates from any and all loss, cost, damage or liability
(including income tax) arising as a result of Title Defect and Viatel's
Corrective Efforts.
4.9 Prior to RFS Acceptance, except as otherwise provided in this
Agreement, no Owner shall have the right to grant a security interest or
otherwise encumber its rights in and to the Necessary Rights. Following RFS
Acceptance, each Owner (including Viatel) may grant security interests and other
encumbrances in its rights in and to the Necessary Rights so long as such
secured party agrees to the conditions set forth in the next sentence. If Viatel
grants any lien, security interest or other encumbrance on Necessary Rights
being held by Viatel for the benefit of one or more other Owners, the party to
whom such lien, security interest or other encumbrance is granted shall, as a
condition to any such grant, acknowledge in
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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writing (in a form and on terms reasonably satisfactory to all Owners) the
rights of the other Owners, agree that its lien, security interest or
encumbrance is subordinate to the rights of the other Owners, to the extent any
exists, and covenant not to take any action that would interfere with the other
Owner's right in and use of the Necessary Rights. The provisions of this Section
4.9 shall not prohibit the sale, transfer, assignment, license or other
disposition of IRUs, dark fiber or other similar interests in the Network by an
Owner (whether before or after RFS Acceptance).
4.10 Owners shall maintain comprehensive liability insurance, in
customary amounts, against claims relating to or arising out of the Network,
except for claims arising in connection with the construction of the Network
which shall be covered through insurance provided by the Construction
Contractor. Such policy shall name Developer as a named insured thereunder and
shall include broad form contractual liability coverage insuring the indemnity
provisions of this Agreement. Any insurance obtained hereunder may be maintained
under a blanket insurance policy.
4.11 (a) The Owners agree that following RFS Acceptance, to the
extent repairs, expansion, modification or other actions are required with
respect to their respective Networks (the "Owner Actions"), the Owner Actions
shall be performed by such Owner (the "Acting Owner") in a manner intended to
result in a minimal level of interference and disruption to the remaining Owners
(the "Non-Acting Owners"). The Acting Owners agree to use reasonable efforts to
coordinate the performance of the Owner Actions and all other activities related
to the Network with the other Owners in the manner set forth in the preceding
sentence. To the extent any losses, costs or damages are incurred by the
Non-Acting Owners as a result of the Owner Actions, the Acting Owner agrees to
indemnify and hold harmless the Non-Acting Owners from any and all such losses,
costs, damages or otherwise.
(b) The Owners agree to take all actions necessary or desirable to
obtain and maintain separate ownership of all component parts of their
respective Networks. However, to the extent that, for any reason, as a matter of
operation of mandatory German law, all three or any two owners (each, a
"Co-Owner" and, collectively the "Co-Owners") obtain joint property in any item
(Sache) which is intended to be a component part of at least one of the Networks
(each, a "Joint Item") at any time before or after RFS Acceptance, the Owners
agree as follows:
(i) If the Joint Item is divisible into legally separate parts
(Teilung in Natur), each Co-Owner may demand such division at any time and
all Owners agree to take all actions necessary or desirable to implement
such division. The cost of such division shall be borne in equal parts by
the Co-
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Owners. Each Co-Owner shall obtain separate ownership in such part(s) of
the Joint Item as was intended to have been transferred separately to such
Owner.
(ii) If the Joint Item, as a matter of mandatory German law,
is not divisible into legally separate parts (the "Indivisible Item"), the
Co-Owners shall agree on the maintenance and administration ( Verwaltung)
of such Joint Item, provided that each Co-Owner shall have the right to
(i) take all actions necessary to preserve the Indivisible Item (the
"Preservation Action") without the prior written consent of the other
Co-Owner(s) and (ii) demand the prior written consent of the other
Co-Owners to such Preservation Action. Any maintenance or administration
expenses shall be borne in equal parts by the Co-Owners. To the extent
permitted as a matter of mandatory German law, the Co-Owners shall not
have the right to demand partition (Auseinandersetzung) of the Indivisible
Item. To the extent that the exclusion of the right to demand partition is
unenforceable as a matter of mandatory law (e.g. pursuant to Section 84
subsection 2 of the German Bankruptcy Code [Insolvenzordnung]), the
Co-Owners agree that the sale to a third party would be improper
(unstatthaft) and that each Co-Owner shall be entitled to demand that the
Indivisible Item be auctioned solely among the Co-Owners in accordance
with Section 753 subsection 1, sentence 2 of the German Civil Code.
(c) The terms of this Section 4.11 shall survive the termination or expiration
of this Agreement.
5. Representations and Warranties; Exculpation; Indemnity
5.1 Representations and Warranties. Each Owner represents and
warrants to the other parties to this Agreement on the date hereof as follows:
(a) Organization; Power and Authority. Such party is duly organized,
validly existing and has all requisite legal power and authority to execute this
Agreement and to perform the terms, conditions and provisions hereof.
(b) Authorization. The execution, delivery and performance by such
party of this Agreement have been duly authorized by all requisite action.
(c) Enforceability. This Agreement constitutes the legal, valid and
binding obligation of such party, enforceable against such party in accordance
with its
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terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and to the extent that the remedies of specific
performance, injunctive relief and other forms of equitable relief are subject
to equitable defenses, the discretion of the arbitration board before which any
proceeding therefor may be brought, and the principles of equity in general.
(d) No Conflict. Neither the execution, delivery or performance by
such party of this Agreement, nor the consummation of the transactions
contemplated thereby, will result in a (i) violation of, or conflict with, any
provision of the organizational documents of such party, (ii) contravention or
breach of, or a default under, any term or provision of any material contract,
agreement or instrument to which such party is a party or by which it or its
property may be bound, which contravention, breach or default could be
reasonably expected to have a material adverse effect on the ability of such
party to perform its obligations under this Agreement or to consummate the
transactions contemplated by this Agreement or (iii) violation by such party of
any applicable law.
(e) No Violation of Law. The party is not in violation of any
applicable law promulgated, or judgment entered, by any governmental authority,
which violations, individually or in the aggregate, would adversely affect it or
its performance of any obligations under this Agreement.
(f) Compliance with Laws. The party currently possesses or intends
to apply for and pursue and is not aware of any reason why it will not be in a
position to obtain all necessary licenses and permits from all applicable
authorities in Germany and the United States.
(g) No Litigation There are no material actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of such party threatened, against such party or any Affiliate of such
party which is set forth on its Organizational Chart.
(h) No Bankruptcy Filing. Neither such party nor any Affiliate of
such party which is set forth on its Organizational Chart is contemplating
either the filing of a petition under any bankruptcy, insolvency or similar laws
(either in the United States, Germany or otherwise) or the liquidation of all or
a major portion of its assets or property. Such party has no knowledge that any
Person has taken any action to file or cause to be filed any such petition
against it.
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5.2 Owners' Indemnity. (a) Each Owner shall be entitled to demand
from each other Owner (each, an "Other Owner") that the Other Owner shall
defend, indemnify, and hold harmless Developer, its Affiliates and their
respective partners, shareholders, directors, managing directors, managers,
officers, members, employees, agents, successors and assigns from and against
all loss, damage, charges, liabilities (direct or indirect), claims, expenses
(including, without limitation, reasonable attorneys' fees and expenses) and
suits or other causes of action of any nature whatsoever (hereinafter
collectively referred to in this Section 5 as "Claims") arising from or in any
way connected with (A) the Network or the performance of Developer's obligations
under and in accordance with the terms of this Agreement, (B) any other acts
performed by Developer at the direction of the Other Owner, (C) the breach of
any material provision of this Agreement by such Other Owner, and (D) such Other
Owner's failure (other than by reason of Developer's default or another Owner's
default under this Agreement) or refusal to comply with or abide by any legal
requirements, unless, following a final adjudication on the merits by a court of
competent jurisdiction, it is determined that the Claim was attributable to one
of the Indemnified Owner Matters described below in Section 5.3.
(b) Each Owner shall defend, indemnify and hold harmless each other
Owner and its Affiliates and their respective partners, shareholders, directors,
managing directors, managers, officers, members, employees, agents, successors
and assigns from and against all Claims arising from or in any way connected
with (A) such Owner's failure (other than by reason of another Owner's default)
or refusal to comply with or to abide by any Applicable Legal Requirements; or
(B) a breach of any material provision of this Agreement by such Owner or (c)
such Owner's gross negligence or willful misconduct.
5.3 Developer's Indemnity. Developer agrees to indemnify, defend and
hold harmless each Owner and its Affiliates and their respective partners,
shareholders, directors, Owners, Owners' managing directors, managers, officers,
members, employees, agents, successors and assigns (collectively, "Owner
Indemnitees") from and against any and all Claims due to Developer's or
Developer's employees and agents (which for purposes of this Agreement shall
under no circumstances include the Construction Contractor or any independent
contractors, consultants or other similar third parties retained by Developer
pursuant to this Agreement) willful and material breach of this Agreement, or
gross negligence ("Indemnified Owner Matters"). Developer agrees to reimburse
Owner Indemnitees for and indemnify Owner Indemnitees against the payment of any
monies which Owner Indemnitees are required to pay out in connection with or as
any expense (including, without limitation, reasonable attorneys' fees) in
defense of any Claim, civil or criminal action, proceeding, charge or
prosecution made, instituted or maintained against Developer, Owner Indemnitees,
or Owner Indemnitees and
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<PAGE>
Developer jointly and/or severally, determined by a court of competent
jurisdiction to have been due to, caused by, or arising out of the Indemnified
Owner Matters.
5.4 Waiver of Claims. Developer shall not be liable or accountable,
in damages or otherwise, to Owners for any act or failure to act performed by it
in good faith and which does not constitute fraud, bad faith, willful
misconduct, or gross negligence. Owner shall not be liable or accountable, in
damages or otherwise, to any other Owner or Developer for any act or failure to
act performed by it in good faith and which does not constitute fraud, bad
faith, willful misconduct or gross negligence.
5.5 Exculpation
(a) Except as otherwise provided in Section 14, no direct or
indirect partner, shareholder, officer, director or member in or of any Owner
(and no officer, director, manager, member, employee or agent of such partner or
shareholder) will be personally liable for the performance of such Owner's
obligations under this Agreement. The liability of each Owner for such Owner's
obligations under this Agreement will be limited to such Owner's Interest in the
Network and the proceeds thereof. Nothing in this Section 5.5 (a) will affect
the rights of Developer to seek appropriate relief against any person to the
extent that such person misappropriates funds of Developer or commits fraud
against Developer.
(b) Except as provided in Section 14, no direct or indirect partner,
shareholder or member in or of Developer (and no officer, director, manager,
member, employee or agent of such member, partner or shareholder) will be
personally liable for the performance of Developer's obligations under this
Agreement. The liability of Developer for its obligations under this Agreement
will be limited to its assets. Nothing in this Section 5.5 (b) will affect the
rights of any Owner to seek appropriate relief against any person to the extend
that such person misappropriates funds of such Owner or commits fraud against
such Owner.
5.6 Survival. The provisions of this Section 5 (other than
subsection 5.1) shall survive the termination of this Agreement.
5A. Covenants
5A.1 Affirmative Covenants. Each Owner hereby covenants and agrees
that so long as this Agreement is in effect:
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(a) Such party will do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, and material
contractual rights, franchises and licenses.
(b) Such party will comply in all material respects with all
applicable legal requirements in respect of the conduct of its business and the
ownership of its property other than where the failure to so comply would not
materially prevent the completion of the Outside Plant in material compliance
with the Development Plan and Budget.
6. Funding: Reimbursable Expenses
6.1 Funding
(a) Binding Letter of Intent Funds. Prior to the execution of
this Agreement, Carrier 1 and MFN each transferred into Parent's Trust
Account * of the amount specified on Exhibit A. This amount represented
Carrier 1's and MFN's share of certain costs contemplated by the Binding
Letter of Intent. Viatel confirms that it or Viatel Parent has advanced its
pro rata share of the funds expended pursuant to the Binding Letter of Intent
(including * advanced into the Parent's Trust Account and credit for an
additional * of funds previously expended pursuant to Section 4(b) of the
Binding Letter of Intent). Upon execution of this Agreement, the amount set
forth on Exhibit A as the Total, less all amounts expended by the Viatel
Parent pursuant to the terms of the Binding Letter of Intent shall be
deposited by Viatel into Developer's Trust Account (the "Balance"). In
addition, upon the execution of this Agreement, Viatel from its own funds
shall deposit an amount equal to the Balance (reduced by * previously
deposited by or credited for the account of Viatel) into Developer's Trust
Account. Upon execution of this Agreement, Developer shall provide Carrier 1
and MFN reasonably detailed documentation reflecting the sums deposited into
Developer's Trust Account and the sums expended therefrom and the sums
expended by Viatel's Parent prior to depositing the Balance into Developer's
Trust Account.
(b) Development Plan and Budget. The Owners hereby authorize
Developer to incur the costs set forth in the Development Plan and Budget and to
expend the funds deposited into Developer's Trust Account to pay for such costs
(but not for any other costs) including any cost reimbursements on the terms
described in Section 6.2 of this Agreement.
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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(c) Construction Cost Funding. Owners agree to fund the Construction
Costs (which are all costs related to the Outside Plant, including Outside Plant
Costs, in accordance with Schedule 2).
(d) Outside Plant Costs. "Outside Plant Costs" shall mean and
include all costs of pre-development, development and construction of the
Outside Plant (unless expressly indicated otherwise), including, without
duplication, the following:
(i) the cost of the Necessary Rights and other rights of way,
licenses, permits, easements or other rights (including the
cost of obtaining same together with any fees incurred in
connection therewith), plus any other costs related to the
acquisition thereof, but excluding any costs connected to a
telecommunications license under the German Telecommunications
Act;
(ii) the cost of all labor, materials, utilities, equipment
(acquired or rented) and similar items incorporated into or
consumed in the construction and development of the Outside
Plant including all contract prices, including fees and
bonuses, of contractors or materialmen;
(iii) architectural, topographical and boundary surveying, legal,
consulting, accounting and engineering fees and expenses paid
to outside architects, surveyors, accountants, consultants,
attorneys, notaries and engineers in connection with the
planning, construction and obtaining the Necessary Rights for
the Network; the cost of related site, utility, or landscaping
work, including borings, soil analysis, traffic studies and
market studies;
(iv) all insurance premiums paid or payable by Owners with respect
to the Outside Plant, including any builder's risk, fire and
extended coverage, or general liability coverage carried by
Owners;
(v) all credit support and other performance security related
costs incurred under or in connection with the Construction
Contract;
(vi) all amounts reimbursable to Developer pursuant to Section 6.2;
and
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(vii) all other costs appropriately incurred in connection with the
Outside Plant.
Any of such costs and expenses which have been incurred or paid by Developer or
its Affiliates with respect to the Outside Plant prior to the date hereof shall
be included in Outside Plant Costs for all purposes hereof. Outside Plant Costs
shall not include the costs of transmission and transmission related equipment,
fiber optic cable. Additional Fiber Costs and costs associated with commencement
of commercial service for the Network.
6.2 Reimbursable Expenses; Developer's Remuneration. Owners shall
reimburse Developer in proportion to their Interest for all reasonable
out-of-pocket costs and expenses (exclusive of recoverable value added tax)
incurred by it in accordance with the Development Plan and Budget and
reimbursable to Developer hereunder including, without limitation, reasonable
travel and entertainment expenses advanced by any shareholder(s) of Developer
from its own funds (which advances shall not be obligatory). Developer shall
have the right to reimburse any shareholder(s) of Developer for amounts due
under this Section 6.2 for advances for reimbursement of expenses as set
forth in this Section 6.2. Owners shall also separately reimburse the
applicable shareholder(s) of Developer for (i) all compensation paid to
on-site employees of any shareholder of Developer working full-time on the
construction of the Outside Plant including, but not limited to, base
salaries, bonuses, medical benefits, retirement benefits, other fringe
benefits, payroll taxes and any severance payments (in an amount not to
exceed * per annum for one employee appointed by each of the two Owners that
are not responsible for designating the Managing Directors pursuant to the
Shareholders' Agreement), (ii) the fair and equitable portion of such
compensation paid to off-site employees of the shareholder(s) of Developer
responsible for the designation of the Managing Directors pursuant to the
Shareholders' Agreement and responsible for the day-to-day operations of
Developer (other than employees at or above the level of vice president)
working on matters relating to the construction of the Outside Plant (iii)
the fair and equitable portion of any other overhead items (such as office
space, office equipment and support staff) allocable to time or resources
spent in respect of the construction of the Outside Plant by the
shareholder(s) of Developer responsible for the designation of the Managing
Directors under the Shareholders' Agreement and responsible for the
day-to-day operations of Developer and (iv) reasonable legal and accounting
expenses incurred directly by Developer (and not its shareholders) in
connection with the performance of its duties hereunder. A fee equal to * of
all reimbursable expenses to Developer will be paid to Developer plus
applicable value added tax due under German law, if any. Reimbursable
expenses shall be invoiced by Developer and payable per month, within * days
following the end of such month. To the extent all Owners agree, the expenses
of each Owner, including reasonable legal fees and expenses, related to the
negotiation
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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of the Binding Letter of Intent and this Agreement shall be an Outside Plant
Cost and shall be reimbursed to Owners. Developer shall provide, at an
Owner's request, reasonable supporting documentation of the foregoing
expenses. In the event an Owner (pursuant to subsections (i)-(iii)) above
shall provide services which benefit all Owners related to the Network (which
are not duplicative of services provided by Developer and which are not
incurred merely for the monitoring of construction for such Owner's
individual benefit), the allocable costs or expenses of such employee
incurred by such Owner shall be reimbursed. If Viatel no longer has the right
to designate the Managing Director(s) of Developer in accordance with the
Shareholders' Agreement, the Owners (other than Viatel) are hereby authorized
to (x) nominate one of the shareholders of Developer (other than Viatel) to
provide directly or (y) cause the Developer to subcontract with a third party
to provide the services required by Developer; provided such subcontractor or
shareholder has substantial experience in international construction projects
of the scope and size of the Network, has a net worth of no less than * and
such subcontractor or shareholder assumes all the obligations of Developer
under this Agreement (including those set forth in Section 14) and all
related agreements occurring after the date such shareholder provides the
services required by Developer. In such event, Developer shall be entitled to
receive a fee (payable in accordance with each Owner's Interest), to be
passed directly through to the shareholder providing such services or the
applicable subcontractor, in an amount equal to * of all remaining
Construction Costs.
7. Termination
7.1 Termination
(a) This Agreement shall expire by its terms when RFS Acceptance is
achieved and upon completion of all obligations of Developer under this
Agreement and contracts and agreements with third parties; provided the
obligations related to ROWCO and Viatel holding Necessary Rights for the benefit
of the Owners (and other matters specifically designated as surviving the
termination of this Agreement) shall survive the termination of this Agreement.
(b) Intentionally Omitted.
(c) This Agreement may be terminated by Developer as to each
breaching Owner (a "Defaulting Owner) upon the occurrence of the following
specified events (each an "Event of Default"):
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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(i) The occurrence of a Funding Default;
(ii) The material breach of any covenant, obligation,
representation, warranty or other agreement under this Agreement by each
Owner (in their capacity as Owner) which breach (A) remains uncured for a
period of * days after receipt by Owner of written notice from Developer
describing such breach and the action required to cure it (or, if such breach
is not susceptible of cure within such * day period, such longer period of
time as is reasonably necessary with diligence to cure such breach, but in no
event more than *) and (B) prevents the Network from being completed in
material compliance with the Development Plan and Budget; or
(iii) Such party shall commence a bankruptcy, insolvency or other
similar proceeding under the Bankruptcy Code in Title 11 of the United States
Code or any similar bankruptcy or creditors rights law in the United States,
Germany or other applicable jurisdiction (as amended, modified, succeeded or
replaced, from time to time, the "Bankruptcy Code"); or an involuntary case is
commenced against any such party under the Bankruptcy Code and the petition is
not dismissed within 60 days after commencement of the case; or a custodian,
trustee or other similar party is appointed for, or takes charge of all or
substantially all of the property of any such party; or any such party commences
any other proceeding under any reorganization, arrangement, adjustment of the
debt, relief of creditors, dissolution, insolvency or similar law of any
jurisdiction whether now or hereafter in effect relating to any such party.
(d) Upon agreement of all Owners and Developer.
7.2 Consequences of Termination. If this Agreement is terminated in
accordance with the provisions of Section 7.1 above, the following provisions
shall apply:
(a) No party shall have any further rights or obligations to one
another under this Agreement if the parties mutually agree to terminate this
Agreement pursuant to Section 7.1(d), except for the obligations set forth in
this Section 7.2(a) and Sections 4.11, 5 and 13. Developer shall provide an
accounting to the Owners for all monies advanced to Developer pursuant to
this Agreement within * days of the termination of this Agreement and within
* days of the termination of this Agreement, refund to the Owners their
proportionate share of those funds which have not yet been spent, incurred or
irrevocably committed to be spent or incurred as of the termination date
(unless such commitment may be canceled
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
30
<PAGE>
without penalty or Owners agree to pay such cancellation penalty) and shall
return each Owner's Letter of Credit to such Owner.
(b) Upon the occurrence of an Event of Default related to any Owner,
Developer shall have the right to (i) terminate this Agreement with respect to
the Defaulting Owner (except with respect to any continuing obligations of the
Defaulting Owner set forth in this Agreement to pay money, indemnify the
non-Defaulting Owners or Developer or such other terms and conditions hereof
which survive the termination of this Agreement) such that the Defaulting Owner
will have none of the rights, benefits or privileges of an Owner set forth
herein (including, but not limited to voting rights) and (ii) draw down on the
Letter of Credit posted by the Defaulting Owner and deposit the proceeds of same
in Developer's Trust Account. Developer and the non-Defaulting Owners shall have
the right to complete the construction of the Network and use such funds for the
purpose of paying for (i) the portion of the Outside Plant Costs, Construction
Costs and expenses incurred pursuant to Section 6.2 allocable to the Defaulting
Owner and (ii) all actual out-of-pocket costs and expenses incurred by Developer
in connection with the enforcement of its rights under this Section 7.2(b). In
addition, Developer and the non-Defaulting Owners shall have a claim a against
the Defaulting Owner for any increased costs incurred in connection with the
completion of the Network, if any, arising directly from the default of the
Defaulting Owner. Notwithstanding the foregoing, following an Event of Default
during construction of the Outside Plant, the Defaulting Owner shall have the
right to receive delivery of the assets comprising the Outside Plant from the
Construction Contractor pursuant to the terms of the Construction Contract.
8. Publicity and Public Relations
All publicity and public relations releases with respect to the
Network shall receive the prior written approval of all Owners, except where
immediate disclosure is required by applicable law. In such event the
information shall be provided to the Owners at the same time as it is disclosed.
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9. Independent Contractor/No Partnership
Developer, in accordance with its status as independent contractor,
covenants and agrees that it will conduct itself consistent with such status,
that it will neither hold itself out as nor claim to be an officer or employee
of any of the Owners by reason hereof. No provision of this Agreement shall be
construed as creating a partnership or any other formal business association, or
authorizing one party to act as an agent of another party except to the extent
specifically set forth herein.
10. Assignment
10.1 Except as otherwise provided in this Section 10, this Agreement
may not be assigned by any party without the prior written consent of the other
parties hereto. The provisions of this Section 10 shall not be construed to
prohibit the sale, transfer, assignment, license or other disposition of IRU's,
dark fiber or similar interests in the Network by an Owner (whether before or
after RFS Acceptance).
10.2 Without limiting Developer's right to delegate certain duties
as permitted under Section 2 of the Agreement and the rights of the Owners set
forth in Section 4.9, Developer may not assign or transfer this Agreement or any
rights or benefits under this Agreement to any person or entity without the
prior written approval of all Owners, which consent may be granted or withheld
by Owners in their discretion. This Agreement may not be assigned by any Owner
provided that any Owner may assign its rights and obligations under this
Agreement to an Affiliate of such Owner, subject to the execution of such
documentation as Developer shall reasonably require to effectuate the assignment
in a manner consistent with the terms and purposes of this Agreement.
11. Notices
11.1 Any notice required or permitted to be given hereunder and any
approval by the parties shall be in writing and shall be (as elected by the
party giving such notice or proposing such approval): (i) personally delivered,
(ii) by recognized overnight courier for next business day delivery, or (iii)
transmitted by telefax, telecopy or other similar transmittal device to the
parties as listed below with a hard copy sent by one of the other methods
described in clauses (i) and (ii) of this section.
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11.2 Except as otherwise specified herein, all notices and other
communications shall be deemed to have been duly given on the earlier to occur
of: (i) the date of receipt if delivered personally; (ii) on the next business
day if sent by overnight courier, or (iii) the date of transmission with
confirmed answerback if transmitted by telefax, telecopy or other similar
transmittal device. Any party may change its address for purposes hereof by
notice given to the other parties.
11.3 Notices, requests and approvals hereunder shall be directed as
follows:
TO OWNERS AND GUARANTORS:
If to Viatel or
Viatel Parent: Viatel German Asset GmbH
Hanauer LandstraBe 187-189
60314 Frankfurt am Main
with a copy to: Viatel, Inc.
685 Third Avenue
New York, New York 10017
Telephone: (212) 350-9201
Facsimile: (212) 350-9245
Attention: Michael J. Mahoney, President
33
<PAGE>
with a copy to: Viatel, Inc.
685 Third Avenue
New York, New York 10017
Telephone: (212) 350-9261
Facsimile: (212) 350-9245
Attention: Sheldon M. Goldman, Senior Vice
President
If to Carrier 1: Carrier 1 Fiber Network GmbH & Co. oHG
Lyoner StraBe 15
60528 Frankfurt am Main
with a copy to: Carrier 1 International S.A.
Militarstrasse 36
CH-8004 Zurich, Switzerland
Telephone: (41) 1-297-2600
Facsimile: (41) 1-297-2601
Attention: Stig Johansson, President
with a copy to: Providence Equity Partners Inc.
901 Fleet Center
50 Kennedy Plaza
Providence, RI 02903
Telephone: (401) 751-1700
Facsimile: (401) 751-1790
Attention: Glenn M. Creamer, Managing Director
34
<PAGE>
with a copy to: Primus Venture Partners
5900 Landerbrook Drive, Suite 200
Cleveland, OH 44124
Telephone: (440) 684-7300
Facsimile: (440) 684-7342
Attention: Jonathan E. Dick, Managing Director
If to MFN or
Metromedia: Metromedia Fiber Network GmbH
Bethman StraBe 50/54
60311 Frankfurt
Germany
with a copy to: Metromedia Fiber Network, Inc.
One North Lexington Ave.
White Plains, NY 10601
Telephone: (914) 421-6700
Facsimile: (914) 421-6777
Attention: Howard M. Finkelstein, President
with a copy to: Metromedia Fiber Network, Inc.
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attention: General Counsel
TO DEVELOPER:
ViCaMe Infrastructure Development GmbH
c/o Viatel German Asset GmbH
Hanauer LandstraBe 187-189
60314 Frankfurt am Main
35
<PAGE>
with a copy to: Viatel, Inc.
685 Third Avenue
New York, NY 10017
Telephone: (212) 350-9201
Facsimile: (212) 350-9245
Attention: Michael J. Mahoney, President
with a copy to each Owner at its address listed above.
12. Intentionally Omitted
13. Confidentiality
The Owners and Developer, to the extent of their respective rights
and abilities to do so, shall exchange such information and data as is
reasonably required for each party to perform under this Agreement or any other
information regarding the Network. This Agreement and all documents and
information received from a party under this Agreement, including draft
documents, notes, reports, studies, pricing information, technical descriptions
and diagrams, correspondence, oral discussions, facsimile or electronic
transmissions or data, wire transfers, telephone conversations, or any other
means of transmitting or transferring documents or information shall be deemed
confidential ("Confidential Information") and shall be maintained as
confidential and shall not be disclosed for a period of two (2) years from the
date of termination or expiration of this Agreement unless the disclosing party
shall otherwise have received consent in writing from the other parties.
Information, including but not limited to Confidential Information, disclosed by
a party under this Agreement shall not be used by the receiving party except for
the purposes of this Agreement, and each party shall take such steps as are
reasonably necessary to keep such Confidential Information from being disclosed
to third parties and shall use no less than the same standard of care to avoid
disclosure, publication, misuse, espionage, loss or theft of Confidential
Information as it takes in protecting its own sensitive, confidential and
proprietary information.
Notwithstanding the foregoing, it is understood and agreed that the
Owners and their respective Affiliates may disclose such portion of the
Confidential Information as is reasonable or customary in connection with (i)
seeking and obtaining financing including high yield debt financing in the
public and private markets, (ii) to potential acquirors of an Owner or its
Affiliates, (iii) to an Owner's
36
<PAGE>
potential customers for the Network, including acquirors of IRUs; and (iv)
complying with customary reporting requirements to their investors and lenders
(collectively, "Permitted Disclosures").
(a) Information Not Deemed Confidential. As used herein, the term
Confidential Information shall not include any documents or information which:
(i) was known by the receiving party prior to its receipt
hereunder, as evidenced by written documentation;
(ii) is acquired by the receiving party from a third party
which has the right to disclose such information and
which is not under any obligation to maintain the same
confidential;
(iii) is or comes into the public domain other than by
violation of a confidentiality agreement; or
(iv) is released in response to a subpoena, court order,
governmental authority requirement, or legal process;
provided that the party requested to release such
information shall, if reasonably possible, notify the
party initially disclosing the information of the demand
at least three (3) business days before responding to
such demand.
(b) Use of Confidential Information. The parties shall use
Confidential Information for the sole purpose of assessing or pursuing the
Network under this Agreement and shall restrict access only to those persons
working on the Network who need to know such information or in connection with
Permitted Disclosures. The parties will cause their respective officers,
directors, employees, counsel, representatives, agents, advisors and Affiliates
to abide by the terms of the confidentiality provisions of this Agreement.
Except for Permitted Disclosures, prior to disclosing any information obtained
from the other parties to any third party, including without limitation all
subcontractors, consultants and other advisors to the parties, the party making
such disclosure shall obtain from such third party a signed confidentiality
agreement which contains essentially the same obligations of secrecy as does
this Agreement and an agreement not to compete against the parties in building
the Network.
37
<PAGE>
(c) No License. Nothing in this Agreement shall be interpreted as
granting a license to use, or a transfer of, any intellectual property rights of
any party, including but not limited to, copyrights, trademarks, trade secrets,
and patents, unless specifically stated in a separate writing signed by the
party owning such rights.
14. Guaranty
Viatel Parent hereby unconditionally guarantees the timely performance of
each and every obligation, representation, warranty and covenant of Viatel
hereunder. Metromedia hereby unconditionally guarantees the timely performance
of each and every obligation, representation, warranty and covenant of MFN
(Viatel Parent and Metromedia are collectively known as the "Guarantors"). The
Owners hereby agree that the obligations of the Guarantors hereunder are
several, absolute and unconditioned, shall not be subject to any counter-claim,
set-off, deduction, or defense based upon any claims each of the Guarantors may
have against Developer or each of the Owners and shall remain in full force and
effect in that regard to, and shall not be released, discharged or terminated or
in any other way affected by any circumstance or condition. Each of the
Guarantors unconditionally waive notice of acceptance of this guaranty or any
notice to the Owners or themselves in connection with the enforcement of the
guaranty provisions of this Section 14.
Viatel Parent hereby unconditionally guarantees the obligations of
Developer set forth in this Agreement. Viatel Parent hereby agrees that its
obligations hereunder are absolute and unconditioned, shall not be subject to
any counter-claim, set-off, deduction, or defense based upon any claims it may
have against Developer or each of the Owners and shall remain in full force and
effect in that regard to, and shall not be released, discharged or terminated or
in any other way affected by any circumstance or condition. Viatel Parent
unconditionally waives notice of acceptance of this guaranty or any notice to
the Owners or themselves in connection with the enforcement of the guaranty
provisions of this Section 14. Notwithstanding the foregoing, Viatel Parent's
guaranty of the obligations of Developer set forth in this Section 14 shall not
apply to any liability, costs, expenses or other fact, matter or condition
arising: (i) as a result of the acts, omissions or failure to act of the Owners
(where such Owner had an obligation to act) or the Guarantors (other than Viatel
and Viatel Parent) or (ii) from and after the date, if ever, that Viatel (or
such other Owner as may then be applicable) has no longer appointed the Managing
Director of Developer (the "Managing Director Date"); provided that any
obligations of Viatel Parent (or Metromedia) pursuant to this Section 14 that
existed prior to the Managing Director Date shall remain in full force and
effect. From and after the Managing Director Date, the Owner responsible for
appointing the Managing Director of Developer shall be obligated to execute such
documents as the Owners, including Viatel and Viatel Parent, shall reasonably
require evidencing the obligation of Metromedia (if it is MFN) or Carrier 1
International, S.A.
38
<PAGE>
(if it is Carrier 1) to guaranty the obligations of Developer in form and
substance equivalent to the guaranty of Viatel Parent set forth in this Section
14.
15. Applicable Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. Severability
If any item or provision of this Agreement or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
17. Counterparts
This Agreement may be executed in one or more counterparts, and each
of such counterparts shall, for all purposes, be deemed to be an original, but
all of such counterparts shall constitute one and the same instrument.
18. Benefits and Obligations
The covenants and agreements herein contained shall (subject to
Section 10 hereof) inure to the benefit of, and be binding upon, the parties
hereto and their respective heirs, administrators, legal representatives and
permitted successors and assigns. Except as otherwise provided herein, no
provisions of this Agreement shall inure to the benefit of, or be enforceable
by, any creditors, contractors or other third parties.
39
<PAGE>
19. Integration; Amendment and Waiver
This Agreement represents the entire and integrated agreement
between the Owners and Developer and supersedes all prior negotiations,
representations or agreements, either written or oral with respect to the
subject matter hereof. This Agreement may be amended or modified only by written
instrument signed by all of the Owners and Developer.
20. Further Assurances
Each Owner agrees to execute and deliver such further instruments as may
be necessary or desirable to effect this Agreement and the covenants and
obligations of the parties hereto. Viatel Parent agrees to enter into good faith
discussions concerning the co-location of transmission equipment for Carrier 1
and/or MFN on Viatel Parent's Affiliate's premises with favorable pricing and
commercial terms and conditions. Viatel Parent and its Affiliates also agree to
undertake to enter good faith discussions relating to the management of the
Network of Carrier 1 and MFN on commercially reasonable terms.
21. Force Majeure
No party hereto shall be liable or deemed in default for failure to
perform or delay in performance due to acts of God, acts of nature, acts of
government, fire, flood, accidents, strikes or other interruptions of labor,
shortages or scarcity of material, electricity, labor or fuel or inability to
obtain transportation provided each party shall give the other parties timely
notice of its inability to so perform or deliver.
22. Audit Rights
Each Owner or its designated agent may at any time during the term of this
Agreement and within three years of RFS Acceptance cause a complete audit to be
made of all or any portion of those books, records or other materials of
Developer and/or any shareholder of Developer or any engineer, contractor or
subcontractor that directly or indirectly relate to any component or phase of
the Network for the purpose of verifying all costs and expense of the Network.
Such books, records and materials shall be preserved for a period of three (3)
years, or for such longer period as may be required by law, after RFS
Acceptance. Developer agrees to use all commercially reasonable efforts to cause
all contracts entered into in connection with the Network to contain a provision
granting the Owner the foregoing audit rights.
40
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23. Headings
The headings in this Agreement are solely for convenience of reference and
shall not affect its interpretation.
24. No Immunity
To the extent any Owner may be or becomes entitled, in any jurisdiction in
which judicial proceedings may at any time be commenced with respect to this
Agreement, to claim for itself or its properties or revenues any immunity from
suit, court jurisdiction, attachment in aid of execution of a judgement,
execution of a judgment or from any other legal process or remedy relating to
its obligations under this Agreement, and to the extent that in any such
jurisdiction there may be attributed such an immunity (whether or not claimed),
such Owner hereby irrevocably agrees not to claim and hereby irrevocably waives
such immunity to the fullest extent permitted by the laws of such jurisdiction.
25. Use of English Language
This Agreement has been negotiated and executed in the English language.
All certificates, reports, notices and other documents and communications given
or delivered pursuant to this Agreement by the parties hereto (including any
modifications or supplements hereto) shall be in the English language.
26. Additional Capacity.
Each Owner agrees upon behalf of itself and its Affiliates that prior to
RFS Acceptance to the extent capacity and/or dark fiber (outside the scope of
the Network) is obtained in Germany, each such party shall offer a portion of
such capacity and/or dark fiber to the other Owners on commercially reasonable
terms and conditions as determined by the offering Owner.
41
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27. Arbitration.
The parties to this Agreement agree that any dispute arising out of, or in
connection with, the execution, interpretation, performance or non-performance
of this Agreement (including the validity, scope and enforceability of this
arbitration provision) (each, a "Dispute") shall be settled by arbitration,
which shall be conducted in New York, New York, pursuant to the then prevailing
rules of the International Chamber of Commerce ("ICC) by a panel of three
arbitrators of the ICC (the "Board of Arbitration.") acceptable to the parties
hereto. If the parties agree within ten (10) days of filing an arbitration
request with the ICC that for the purposes of the dispute to be arbitrated
certain of the parties collectively constitute one side ("Side 1") and the
remaining parties collectively constitute the other side ("Side 2"), then Side
1, on the one hand, and Side 2, on the other hand, shall select one (1)
arbitrator and the third arbitrator shall be selected by mutual agreement of the
other arbitrators. If the other arbitrators fail to reach agreement on a third
arbitrator (the "Third Arbitrator") within ten (10) days after their selection,
then the ICC shall designate, in accordance with ICC rules, a Third Arbitrator.
If the parties fail to agree on the composition of the two sides within the
specified time, the parties shall jointly appoint a panel of three arbitrators
within ten (10) days (the "Joint Appointment"). If the parties fail to reach an
agreement on a panel of three arbitrators within such ten (10) day period, then
any party may request the ICC to designate, in accordance with ICC rules, all
three arbitrators (the "ICC Appointment"). The language of the arbitration
proceedings shall be in English and all arbitrators shall be familiar with the
laws of the state of New York and the Federal Republic of Germany except that
the Third Arbitrator, or, in the case of Joint Appointment or ICC Appointment,
one of the arbitrators is not required to have such familiarity, shall not be a
lawyer and shall have expertise in infrastructure development Networks or other
Networks of similar scope and nature. The parties agree to facilitate the
arbitration by (a) making available to one another and to the Board of
Arbitration for inspection and extraction all documents, books, records, and
personnel under their control or under the control of a person controlling or
controlled by such party if determined by the Board of Arbitration to be
relevant to the dispute, (b) conducting arbitration hearings to the greatest
extent possible on successive business days and (c) using their best efforts to
observe the time periods established by the rules of the ICC by the Board of
Arbitration for the submission of evidence and briefs. The Board of Arbitration
is not authorized to decide any Dispute ex aequo et bono but shall strictly
apply the applicable law. The decision of the Board of Arbitration shall be
final, binding and not subject to further review, and judgment on the award of
the Board of Arbitration may be entered in and enforced by any court having
jurisdiction over the parties or their assets subject to the procedural
requirements in such jurisdiction. The Board of Arbitration shall be authorized
and directed to award reasonable costs and attorney's fees to the prevailing
party.
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(b) To the extent that a Dispute pertains to the same or
substantially similar issues that are pending before the Board of Arbitration in
a proceeding filed in accordance with (i) Section 8.7 of the Shareholders'
Agreement by and among Viatel, Carrier 1 and MFN as of the date hereof, and (ii)
Section 12 of the Fee Agreement between Viatel Parent, MFN and Carrier 1 dated
as of the date hereof and the parties shall agree to consolidate all such
proceedings in a single proceeding. Notwithstanding Section 27(a) hereof, to the
extent the Dispute is consolidated pursuant to the terms of this Section 27(b),
the arbitrators appointed pursuant to the Development Agreement shall be deemed
the Board of Arbitration under the other agreements referenced in this Section
27(b). Upon such consolidation, the Board of Arbitration shall decide each of
the disputes in accordance with the law applicable to such dispute.
28. Currency.
This is an international transaction in which the specification of German
DM or their Euro equivalent is of the essence, and the obligations of all
parties under this Agreement to make payment in such currency shall not be
discharged or satisfied by a tender or recovery pursuant to any other currency
and any arbitral award (or judgment to enforce such award) shall also be made in
such currency.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year written above.
OWNERS:
VIATEL GERMAN ASSET GMBH
By: /s/ [ILLEGIBLE]
---------------------------------------
Name: [ILLEGIBLE]
-------------------------------------
Title: [ILLEGIBLE]
------------------------------------
CARRIER 1 FIBER NETWORK GMBH & CO. OHG
By: Carrier 1 Holding GmbH
By: /s/ Edward Gross
---------------------------------------
Name: Edward Gross
-------------------------------------
Title: Managing Director
------------------------------------
METROMEDIA FIBER NETWORK
GMBH
By: /s/ Vincent A. Galluccio
---------------------------------------
Name: Vincent A. Galluccio
-------------------------------------
Title: [ILLEGIBLE]
------------------------------------
DEVELOPER:
VICAME INFRASTRUCTURE
DEVELOPMENT GMBH
By: /s/ [ILLEGIBLE]
---------------------------------------
Name: [ILLEGIBLE]
-------------------------------------
Title: [ILLEGIBLE]
------------------------------------
<PAGE>
GUARANTORS:
VIATEL, INC.
By: /s/ Sheldon M. Goldman
---------------------------------------
Name: Sheldon M. Goldman
-------------------------------------
Title: Senior Vice Presidnet
------------------------------------
METROMEDIA FIBER NETWORK, INC.
By: /s/ Howard Finkelstein
---------------------------------------
Name: Howard Finkelstein
-------------------------------------
Title: President
------------------------------------
<PAGE>
EXHIBIT A
BINDING LETTER OF INTENT DEPOSIT AND BALANCE
Cost of Subducts: *
Outside Plant Installation: *
Pre-Development Plan and Budget *
Program Costs and Insurance: *
-----------
Total *
Amounts
Expended
or Committed *
Balance *
-----------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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EXHIBIT B
MAJOR DECISIONS
1. Approval and amendment of the Development Plan and Budget.
2. Approval of any actions which are likely to result in * for the
construction of the Outside Plant greater than the amount set forth
in the Development Plan and Budget (exclusive of all amounts related
to value added tax in Germany) or *
3. Any transaction or agreement between Developer and any Owner or Affiliate
of an Owner except transactions and agreements in the ordinary course of
business which are on arms length terms and conditions comparable to those
which could be expected to be obtained from an independent third party
(the transactions and agreements covered by such exception not being Major
Decisions) or amend any such agreement after it has been approved by the
Owners.
4. Any changes in the Approved Cities included in the Network set forth on
Exhibit D.
5. Approval of the Construction Contract with the Construction Contractor.
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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EXHIBIT C
INFORMATION TO BE PROVIDED TO COMMITTEE
1. Monthly reports comparing expenditures made in such month and year to date
against the Development Plan and Budget on a line item basis.
2. Reports on the status of obtaining the Necessary Rights and other rights
of way, including the areas covered, name of party obtaining such
Necessary Rights and other rights of way, term of rights and annual cost.
3. Monthly reports of Construction Contractor for any anticipated delay in
achieving milestones.
4. Status on achieving major milestones and reasons for any anticipated delay
in achieving same (including construction, procurement and management
(CPM)), scheduling, right of way acquisitions, engineering, design,
procurement and construction status).
5. Other information reasonably requested and available.
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EXHIBIT D
APPROVED CITIES
Essen
Dortmund
Bremen
Hamburg
Berlin
Leipzig
Dresden
Nuremberg
Munich
Stuttgart
Manheim
Frankfurt
Koln
Dusseldorf
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EXHIBIT E
DEVELOPMENT PLAN AND BUDGET
*
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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<PAGE>
SCHEDULE 1
INTERESTS
*
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
<PAGE>
SCHEDULE 2
FUNDING OF NETWORK
*
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration No. 333-75195
of Carrier1 International S.A. of our report dated March 17, 1999 appearing
in the Prospectus, which is a part of such Registration Statement, and to the
reference to us under the headings "Summary Consolidated Financial Data,"
"Selected Financial Data" and "Experts" in such Prospectus.
DELOITTE & TOUCHE EXPERTA AG
/s/ DAVID WILSON /s/ JERRY M. MAYER
David Wilson Jerry M. Mayer
Erlenbach, Switzerland
May 27, 1999
