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Exhibit 10.4
-------------------------------------
EAST ASIAN CROSSING
-------------------------------------
PROJECT DEVELOPMENT
AND
CONSTRUCTION CONTRACT
BETWEEN
KDD SUBMARINE CABLE SYSTEMS INC.
AND
ASIA GLOBAL CROSSING LTD.
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DATED AS OF DECEMBER 17, 1999
-------------------------------------
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TABLE OF CONTENTS
GENERAL TERMS AND CONDITIONS
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Article PAGE
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1 Provision of System.................................................................................... -1-
2 Documents Forming the Entire Contract.................................................................. -2-
3 Definitions............................................................................................ -2-
4 Contract Price........................................................................................ -16-
5 Terms of Payment by Purchaser......................................................................... -20-
6 Contract Variations................................................................................... -23-
6A Optional Upgrades..................................................................................... -25-
7 Responsibilities for Permits; Compliance with Laws; Hong Kong Cable Station........................... -29-
8 Route Survey.......................................................................................... -31-
9 Acceptance............................................................................................ -32-
10 Warranty.............................................................................................. -36-
11 Contractor Support; Use of Segment for Restoration Protection......................................... -41-
12 Purchaser's Obligations............................................................................... -42-
13 Termination for Default............................................................................... -43-
14 Termination for Convenience........................................................................... -45-
15 Suspension............................................................................................ -47-
16 Title and Risk of Loss................................................................................ -48-
17 Force Majeure......................................................................................... -48-
18 Intellectual Property................................................................................. -49-
19 Infringement.......................................................................................... -55-
20 Safeguarding of Information and Technology............................................................ -56-
21 Export Control........................................................................................ -57-
22 Liquidated Damages.................................................................................... -57-
23 Limitation of Liability/Indemnification............................................................... -58-
24 Counterparts.......................................................................................... -60-
25 Design and Performance Responsibility; Subcontractors................................................. -60-
26 Product Changes....................................................................................... -61-
27 Risk and Insurance.................................................................................... -62-
28 Plant and Work Rules.................................................................................. -65-
29 Right of Access and Review............................................................................ -65-
30 Quality Assurance; First Application.................................................................. -66-
31 Documentation......................................................................................... -67-
32 Training.............................................................................................. -67-
33 Settlement of Disputes/Arbitration/Litigation......................................................... -67-
34 Applicable Law........................................................................................ -69-
35 Notices............................................................................................... -69-
36 Publicity and Confidentiality......................................................................... -70-
37 Assignment............................................................................................ -71-
38 Relationship of the Parties........................................................................... -72-
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Article PAGE
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39 Successors Bound...................................................................................... -73-
40 Article Captions; Joint Drafting...................................................................... -73-
41 Severability.......................................................................................... -73-
42 Guarantor............................................................................................. -73-
43 Survival of Obligations............................................................................... -73-
44 Non-Waiver............................................................................................ -73-
45 Language.............................................................................................. -74-
46 Entire Agreement...................................................................................... -74-
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Exhibit A Network Configuration
Exhibit B Form of Parent Guaranty
Exhibit C Form of Consent and Agreement
Exhibit D-1 Form of Opinion for Contractor
Exhibit D-2 Form of Opinion for Guarantor
Exhibit E Form of Escrow Agreement
Exhibit F First Office Applications
Exhibit G Subcontractors
Exhibit H Intellectual Property
Exhibit I Landing Licenses
Exhibit J Examples of Contractor Permits
Exhibit K Examples of Owner Permits
Exhibit L Form of Supplement
Exhibit M Form of Indemnity and Confirmation Agreement
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PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
This Project Development and Construction Contract
("Contract") is made as of the 17th day of December, 1999 between KDD Submarine
Cable Systems Inc., a Japanese corporation organized and existing under the laws
of Japan, and having its principal office in Tokyo, Japan (hereinafter
"Contractor") and Asia Global Crossing Ltd., a corporation organized and
existing under the laws of Bermuda, and having its principal office in Hamilton,
Bermuda (hereinafter "Purchaser").
WHEREAS, Purchaser desires to establish a fiber optic cable
system, to be known as the East Asian Crossing Cable System (hereinafter, and as
more fully defined herein, the "System"), which will be used to provide service
among the Segments as described in Exhibit A hereto;
WHEREAS, Contractor is in the business of designing,
constructing, installing, supplying, delivering and manufacturing fiber optic
cable systems and is familiar with the general business of the fiber optic cable
system industry;
WHEREAS, Purchaser seeks to purchase and own the System and
wishes to engage Contractor to perform the Work and Upgrade Work; and
WHEREAS, Contractor is willing to perform the Work and Upgrade
Work on a turn-key, fixed-price basis in accordance with and subject to the
terms hereof.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable considerations, receipt of which is hereby acknowledged, it
has been agreed as follows:
ARTICLE 1 PROVISION OF SYSTEM
In consideration of the Contract Price and the Upgrade Prices,
the Contractor hereby agrees to perform the Work and the Upgrade Work, on a
turn-key, fixed price basis, and to provide Purchaser with the System meeting
the System Performance Requirements on or before the Scheduled RFS Date(s) and
the System Upgrades meeting the requirements of Article 6A, all in accordance
with the terms hereof.
Contractor understands that parts of the System comprising
portions of the cable stations in Qingdao, China, and Shima, Japan, are intended
to be installed by other contractor(s) (the components of the System described
in this sentence are herein referred to as the "Other Facilities"). The
Contractor agrees to reasonably cooperate with Purchaser and such other
contractor(s), as necessary, including with respect to (i) formulating and
carrying out installation, (ii) Contractor's and each such other contractor's
obligation to formulate testing procedures and (iii) ensuring that the System
properly interoperates with the Other Facilities to which it will be connected;
provided that the Contractor shall not be responsible for problems with
interoperability within the System caused by equipment installed by such other
contractors so
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long as Contractor has complied with the provisions of this Agreement and of the
Technical Volume regarding interoperability, such equipment and such other
contractors.
ARTICLE 2 DOCUMENTS FORMING THE ENTIRE CONTRACT
This Contract consists of these commercial Terms and
Conditions, Exhibits A through M, and the following documents (in the form of
attachments, including appendices, attached hereto), which shall be read and
construed as part of the Contract:
- Provisioning Schedule, Appendix 1, Upgrade Provisioning
Schedule, Appendix 1A
- Billing Schedule, Appendix 2, Upgrade Billing Schedule,
Appendix 2A
- Plan of Work, Appendix 3, Upgrade Plan of Work, Appendix 3A
- Invoice Format, Appendix 4, Form of Contractor's Certificate,
Appendix 4A
- Progress Schedule, Appendix 5, Upgrade Progress Schedule,
Appendix 5A
- Technical Volume (includes Route Information), Appendix 6
In the event of any inconsistency between the Terms and
Conditions and the above listed documents, the Terms and Conditions shall
prevail. The Appendices listed above have no order of precedence.
ARTICLE 3 DEFINITIONS
Terms used herein which are not defined herein, but which have
common meanings when used in the telecommunications industry, shall have such
common meanings when used herein. Definitions are as described in the specific
Articles. Except as otherwise defined the following definitions shall apply
throughout the Contract:
AAA has the meaning set forth in Sub-Article 33(B).
ACCEPTANCE TESTING means (i) with respect to a Segment, a
Phase or the System, the tests described in the System Commissioning
and Acceptance section of the Technical Volume or developed pursuant to
such section by mutual agreement of the Parties (with 15 days prior
notice to the Independent Engineer) and designed to verify that such
Segment or the System meets the applicable Performance Requirements and
(ii) with respect to any System Upgrade, the tests described in the
System Commissioning and Acceptance section of the Technical Volume or
developed pursuant to such section by mutual agreement of the Parties
(with 15 days prior notice to the Independent Engineer) and designed to
verify that the System Upgrade meets the applicable Performance
Requirements.
ACCESS RIGHTS means all ownership, easement, wayleaves and/or
other property rights, from both private and governmental entities,
both on land and below the surface of the water (including, without
limitation, agreements to use borepipes, conduits and ducts, install
manholes and to lease space in cable stations) necessary to access, use
and occupy cable stations and the sites for cable stations (including,
without limitation, to land and
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install the submarine cable and related equipment and to bring such
cable from the ocean to the cable stations) in order for the Purchaser
to own, operate and maintain the System.
ACTUAL KNOWLEDGE means the actual knowledge of any executives
with management responsibility for the Contract.
AJIGAURA CABLE STATION means the System cable station to be
located in Ajigaura, Japan to be built on land to be provided by the
Purchaser.
ASSIGNMENT has the meaning set forth in Sub-Article 37(A).
BANK ESCROW AGENT means The Chase Manhattan Bank or Deutsche
Bank, New York Branch, as chosen by Purchaser, in its capacity as
escrow agent under the Payment Escrow Agreement, and its successors in
such capacity.
BANKRUPTCY EVENT means an event specified in Sub-Article
13(A)(3) or 13(A)(4) with Contractor as the "other Party".
BILLING MILESTONES means the billing milestones set forth in
Appendix 6.
BILLING SCHEDULE means a billing schedule attached hereto as
Appendix 2.
BRANCHING UNIT 1 means the branching unit in Segment B
attached to the System off the coast of Taiwan, which would allow the
System to be connected to the Shar Fu Cable Station at a location
capable of interconnecting with major telecommunications carriers, as
more specifically described in the Technical Volume.
BRANCHING UNIT 2 means the branching unit in Segment E
attached to the System off the coast of Taiwan which would allow the
System to be connected to the Shar Fu Cable Station at a location
capable of interconnecting with major telecommunications carriers, as
more specifically described in the Technical Volume.
BRANCHING UNIT 3 means the branching unit in Segment H
attached to the System off the coast of Korea, which would allow the
System to be connected to the Taean Cable Station at a location capable
of interconnecting with major telecommunications carriers, as more
specifically described in the Technical Volume.
BRANCHING UNIT 4 shall mean the branching unit in Segment J
attached to the System off the coast of Korea, which would allow the
System to be connected to the Taean Cable Station at a location capable
of interconnecting with major telecommunications carriers, as more
specifically described in the Technical Volume.
CERTIFICATE OF COMMERCIAL ACCEPTANCE means a certificate
issued by Purchaser in accordance with Sub-Article 9(D) to Contractor
certifying that a Segment, a Phase, the System or a System Upgrade is
Ready for Commercial Acceptance.
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CERTIFICATE OF FINAL ACCEPTANCE means a certificate issued by
Purchaser in accordance with Sub-Article 9(E) to Contractor certifying
that the System or a System Upgrade is Ready for Final Acceptance.
CERTIFICATE OF PROVISIONAL ACCEPTANCE means a certificate
issued by Purchaser in accordance with Sub-Article 9(C) to Contractor
certifying that a Segment, a Phase, the System or a System Upgrade is
Ready for Provisional Acceptance.
CIF means cost, insurance and freight, as defined in
Incoterms.
CODE means the Internal Revenue Code of 1986, as amended from
time to time.
COMMISSIONING REPORT means a written report from Contractor
demonstrating that the System (or a Segment, if Purchaser agrees to
accept it) is Ready for Commercial Acceptance or Provisional
Acceptance, as the case may be, and has passed all Acceptance Testing
and all other acceptance and performance requirements set forth in the
System Commissioning and Acceptance section of the Technical Volume.
CONFIDENTIAL INFORMATION has the meaning set forth in
Sub-Article 36(B).
CONSENT means a Consent and Agreement to be entered into among
Contractor, Purchaser and the financing parties described in
Sub-Article 37(C) and substantially in the form of Exhibit C hereto,
with such changes therein as made pursuant to Sub-Article 37(C) hereto.
CONTRACT means this agreement, specifically consisting of the
documents described in Article 2, and shall be deemed to include any
amendments thereto or Contract Variations pursuant to Article 6
(Contract Variations).
CONTRACT COUNTRIES means Taiwan, Hong Kong, S.A.R., China, the
People's Republic of China, the Republic of Korea and Japan, or any
political subdivision thereof or taxing authority therein.
CONTRACT PRICE means the Initial Contract Price, plus any
variations pursuant to Article 6 (Contract Variations), Taxes as set
forth in Sub-Article 4(B) and other adjustments to the Contract Price
provided for in this Contract.
CONTRACT TAXES has the meaning set forth in Sub-Article
4(B)(1).
CONTRACT VARIATION has the meaning set forth in Sub-Article
6(A).
CONTRACTOR means the entity that executed this Contract as the
Contractor and that will be responsible for the performance of the Work
(and if applicable, Upgrade Work) under this Contract and shall include
its permitted successors and/or assigns.
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CONTRACTOR PERMITS means (i) all permits that the Contractor
needs to conduct its business, (ii) all Permits which the Contractor
must obtain in order to carry out its operations to perform the Work
and (iii) minor and routine construction and building Permits such as
licenses to install electricity and plumbing. Exhibit J hereto contains
a list of sample Contractor Permits; provided that such list is not
meant to be complete or exclusive.
DATE OF COMMERCIAL ACCEPTANCE, PROVISIONAL ACCEPTANCE OR FINAL
ACCEPTANCE means the date set forth in the Certificate of Commercial
Acceptance, Certificate of Provisional Acceptance or Certificate of
Final Acceptance, as the case may be; provided, that for purposes of
Article 22 (Liquidated Damages) only, such date shall be deemed to be
the date that Purchaser receives a complete Commissioning Report or an
Upgrade Commissioning Report, as the case may be, demonstrating that a
Segment, a Phase, the System or a System Upgrade, as the case may be,
is Ready for Commercial Acceptance, Ready for Provisional Acceptance or
Ready for Final Acceptance in accordance with Article 9 (Acceptance).
DEFAULT means an Event of Default or any event, condition or
occurrence which with the giving of notice or passage of time or both
would be an Event of Default.
DELIVERABLE SOFTWARE has the meaning set forth in Sub-Article
18(C).
DELIVERABLE SOFTWARE ESCROW has the meaning set forth in
Sub-Article 18(H).
DELIVERABLE TECHNICAL MATERIAL has the meaning set forth in
Sub-Article 18(B).
DISPUTE ACCOUNT means the Dispute Account to be created under
the Payment Escrow Agreement.
EVENT OF DEFAULT has the meaning set forth in Sub-Article
13(A).
EXCLUDED TAX means a Tax described in any of the following
clauses:
(i) any franchise, excess profits, net worth, capital or
capital gains Tax, as well as any Tax on doing business or imposed on
net or gross income or receipts (including minimum and alternative
minimum Taxes measured by any items of Tax preference), but in each
case excluding Taxes that are or are in the nature of sales, use,
excise, license, stamp, rental, ad valorem, value added or property
Taxes (other than property taxes on property owned by the Contractor
and not intended to be incorporated into the System);
(ii) any Taxes imposed by a jurisdiction other than one in
which (a) the Contractor is or is treated as engaged in activities
contemplated by or in fulfillment of the Contract or (b) the Purchaser
or its affiliates has a nexus to such jurisdiction and the Tax imposed
is attributable to that nexus;
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(iii) Taxes imposed on the Contractor as a result of
Contractor's gross negligence or willful misconduct; or
(iv) any import duty, other import related charges, sales or
use tax, VAT, consumption tax or property tax imposed by any
Non-Contract Country in respect of Supplies brought into such
Non-Contract Country for testing, modification or other similar
purposes prior to being installed or used outside such Non-Contract
Country.
EXPEDITED UPGRADE has the meaning set forth in Sub-Article
6A(L).
FINAL COMMISSIONING REPORT AND FINAL UPGRADE COMMISSIONING
REPORT means a written report from Contractor demonstrating that the
System (or a Segment, if Purchaser agrees to accept it) is Ready for
Final Acceptance and has passed all Acceptance Testing and all other
acceptance and performance requirements set forth in the System
Commissioning and Acceptance section of the Technical Volume.
FINAL SURVEY REPORT means the final survey report described in
the Marine Installation section of the Technical Volume.
FOB means free on board as defined in the International
Chamber of Commerce, Guide to Incoterms (1990).
FORCE MAJEURE has the meaning set forth in Sub-Article 17(A).
GLOBAL MARINE means Global Marine Systems Ltd.
GUARANTOR means KDD Corporation, a Japanese corporation and
the ultimate parent company of the Contractor.
GUARANTY means the guaranty to be entered into by the
Guarantor in favor of the Purchaser, to be substantially in the form of
Exhibit B hereto.
HONG KONG CABLE STATION means the System cable station to be
located in Hong Kong, S.A.R., China.
INCOTERMS means the International Chamber of Commerce, Guide
to Incoterms (1990).
INDEPENDENT ENGINEER means Conexart Technologies, Inc., or a
similarly qualified successor in the capacity as the engineer to the
financing sources specified in Sub-Article 37(C) who has agreed to be
bound by the confidentiality provisions of this Contract and who is not
affiliated with a competitor of Contractor.
INFORMATION has the meaning set forth in Sub-Article 20(A).
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INITIAL CONTRACT PRICE has the meaning set forth in
Sub-Article 4(A)(1).
INITIAL UPGRADE PRICE has the meaning set forth in Sub-Article
4(A)(2).
INSTALLATION INTERVAL has the meaning set forth in Sub-Article
6A(L)(1).
INTELLECTUAL PROPERTY has the meaning set forth in Sub-Article
18(A).
LANDING COUNTRY(IES) means each country in which the System
connects to a cable station.
LANDING LICENSES means those licenses comparable to a License
to Land and Operate a Submarine Cable System pursuant to the Submarine
Cable Landing Act, 47 U.S.C. 34-39, which licenses are specifically
described in Exhibit I hereto.
LAWS means any laws, ordinances, regulations, rules, orders,
proclamations, requirements of governmental authorities or treaties.
LUCENT means Lucent Technologies Inc.
MANUFACTURING MATERIALS has the meaning set forth in
Sub-Article 13(B).
NON-CONTRACT COUNTRIES means all countries, or any political
subdivision thereof or taxing authority therein, other than the
Contract Countries.
NON-SHIP COSTS has the meaning set forth in Sub-Article
10(A)(2).
NOTICE OF TERMINATION has the meaning set forth in Sub-Article
14(A).
OWNER PERMITS means all Permits required to be obtained from
governmental authorities pursuant to Laws that the Purchaser needs to
own and operate the System and which the Purchaser would have had to
obtain if it were constructing the System itself. Exhibit K contains a
sample list of Owner Permits; provided that such list is not meant to
be complete or exclusive.
PARTY(IES) means either of the Purchaser and/or the
Contractor, as appropriate.
PAYMENT ESCROW AGREEMENT means that escrow agreement to be
entered into among the Contractor, Purchaser, and the Bank Escrow
Agent, substantially in the form of Exhibit E hereto, with such changes
therein as are reasonably requested by the Bank Escrow Agent, as
amended modified or supplemented from time to time.
PERFORMANCE REQUIREMENTS means (i) with respect to a Segment,
a Phase or the System, the applicable System Performance Requirements
set forth or to be developed by mutual agreement pursuant to the
Transmission Performance section of the System
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Description section of the Technical Volume, (ii) with respect to any
System Upgrade, the System Performance Requirements set forth in or to
be developed by mutual agreement pursuant to the Technical Volume or
(iii) in each case, such other Segment, Phase, System or System Upgrade
performance levels as mutually agreed by the Parties, including the
System acceptance limits included in the impairment budgets.
PERMITS means all Access Rights, permits, pipeline and cable
crossing agreements, approvals, "no objections",
permissions-in-principle, authorizations, consents, customs clearances,
registrations, certificates, rights-of-way, certificates of occupancy,
licenses, including without limitation, export and import licenses and
similar authorizations, landing permits, orders, vessel and crew
authorizations/visas, permission for the operation of navigational aids
and radio systems and similar authorizations necessary to complete the
Work and operate and maintain the System (other than any of the
foregoing (i) relating to the ownership, operation and maintenance by
Purchaser of the System and not necessary until after the System is
Ready for Final Acceptance, (ii) which is or would be needed by
Purchaser to engage in any business outside the business of developing,
owning and operating a submarine cable system or (iii) which is or
would be needed at any time by any purchaser or lessee of capacity on
the System). Permits include all of the foregoing whether required to
be obtained from governmental entities or private parties. The term
Permits includes all Contractor Permits and all Owner Permits, but
excludes Purchaser Permits.
PHASE 1A means Segments A and C and that portion of Segment B
containing Branching Unit 1 and the ten (10) kilometers of stubbed
cable from Branching Unit 1 towards the Shar Fu Cable Station, all as
more fully described in the Technical Volume.
PHASE 1A PRICE has the meaning set forth in Sub-Article 4(A).
PHASE 1B means Segment B (less that portion included in Phase
1A), Segments D, E (including Branching Unit 2), F, G, H (including
Branching Unit 3), I, J (including Branching Unit 4), K and L, all as
more fully described in the Technical Volume.
PHASE 1B PRICE has the meaning set forth in Sub-Article 4(A).
PLAN OF WORK means the Plan of Work attached as Appendix 3
hereto.
PROVISIONING SCHEDULE means the price schedule attached hereto
in Appendix 1.
PURCHASER means Asia Global Crossing Ltd. and shall include
its permitted successors and assigns.
PURCHASER HINDRANCE has the meaning set forth in Article 12
hereof.
PURCHASER PERMITS means, collectively, all Landing Licenses.
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QINGDAO CABLE STATION means the System cable station to be
located in Qingdao, China, which shall be furnished by Purchaser.
READY FOR COMMERCIAL ACCEPTANCE means
(i) for any Segment, that
(a) if the Phase including such Segment is not
at the same time also Ready for Commercial
Acceptance, the Purchaser has consented, in
its sole discretion, to accept such Segment
as Ready for Commercial Acceptance,
(b) such Segment has been substantially
completed and has the ability to carry
commercial traffic between the two landing
points of such Segment meeting performance
criteria of ITU-T G.826 as defined in the
System Performance section of the Technical
Volume and has line monitoring and
protection switching capability,
(c) Contractor has tested and provided for STM-1
and/or STM-16 interconnectivity capability
to the Segment terminal equipment according
to ITU-T G.826 or, if a different interface
rate is used, an equivalent standard,
(d) Contractor has substantially performed its
obligations under Article 18 (Intellectual
Property) then required to be performed by
it, and
(e) all Permits are obtained for such Segment,
and copies of such Permits with English
translations are delivered to Purchaser, and
(ii) for any Phase, that
(a) such Phase has been substantially completed
and has the ability to carry commercial
traffic operating at 20 Gb/s per fiber pair
on four fiber pair between the various
landing points of such Phase meeting
performance criteria of ITU-T G.826 as
defined in the System Performance section of
the Technical Volume, has line monitoring
and per Segment protection switching
capability and has network management
capability,
(b) Contractor has tested and provided for STM-1
and/or STM-16 interconnectivity capability
to the System terminal equipment according
to ITU-T G.826 or if a different interface
rate is used, an equivalent standard,
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(c) Contractor has substantially performed its
obligations under Article 18 (Intellectual
Property) then required to be performed by
it, and
(d) all Permits are obtained for such Phase,
copies of such Permits with English
translations are delivered to Purchaser, and
(iii) for the System, that
(a) the System has been substantially completed
and has the ability to carry commercial
traffic throughout the System (operating at
20 Gb/s per fiber pair on four fiber pair)
meeting performance criteria of ITU-T G.826
as defined in the System Performance section
of the Technical Volume, has line monitoring
and per Segment protection switching
capability and has network management
capability,
(b) Contractor has tested and provided for STM-1
and/or STM-16 interconnectivity capability
to the System terminal equipment according
to ITU-T G.826, or, if a different interface
rate is used, an equivalent standard,
(c) Contractor has substantially performed its
obligations under Article 18 (Intellectual
Property) then required to be performed by
it,
(d) all Permits are obtained for the System, and
copies of such Permits with English
translations are delivered to Purchaser, and
(e) the System has self-healing ring protection
capability, and
(iv) for any System Upgrade, the System is Ready for
Commercial Acceptance at the capacity specified for
such System Upgrade.
READY FOR FINAL ACCEPTANCE means
(i) for the System, that
(a)(I) the System has successfully and continuously
(other than by reason of Force Majeure in
which case the test period shall be extended
for a time period agreed between the
Parties) functioned in compliance with the
System Performance Requirements during the
period of ninety (90) consecutive days after
the Date of Provisional Acceptance, or
(II) if the System shall have failed to meet the
System Performance Requirements at any time
during such period (other than by reason of
Force Majeure), the Contractor has corrected
such failure and
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the System has successfully and continuously
(other than by reason of Force Majeure in
which case the test period shall be extended
for a time period agreed between the
Parties) functioned in compliance with the
System Performance Requirements for such
additional period of time not to exceed
ninety (90) days (and not to end prior to
the date ninety (90) days after the Date of
Provisional Acceptance) as reasonably
determined by the Purchaser as being
sufficient to confirm that such failure has
been corrected and that no other failures
are likely to appear,
(b) all deficiencies noted in the Certificate of
Provisional Acceptance have been corrected
(other than minor deficiencies which will
not affect the operation of the System, in
respect of which an equitable adjustment to
the Contract Price will be made), and
(c) Contractor has complied in all material
respects with Article 18 (Intellectual
Property), and
(ii) for any System Upgrade, that
(a)(I) the System Upgrade has successfully
functioned in compliance with the System
Performance Requirements during the period
of ninety (90) days after the Date of
Provisional Acceptance of the System
Upgrade, or
(II) if the System Upgrade shall have failed to
meet the System Performance Requirements
during such period, the Contractor has
corrected such failure and the System
Upgrade has successfully functioned in
compliance with the System Performance
Requirements for such additional period of
time not to exceed ninety (90) days as
reasonably determined by the Purchaser as
sufficient to confirm that such failure has
been corrected, and
(b) all deficiencies noted in the Certificate of
Provisional Acceptance have been corrected
(other than minor deficiencies which will
not affect the operation of the System, in
respect of which an equitable adjustment of
the Contract Price will be made), and
(c) Contractor has complied in all material
respects with Article 18 (Intellectual
Property).
READY FOR PROVISIONAL ACCEPTANCE means
(i) with respect to any Segment,
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(a) if the Phase including such Segment is not,
at the same time, also Ready for Provisional
Acceptance, the Purchaser has consented, in
its sole discretion, to accept such Segment
as Ready for Provisional Acceptance,
(b) such Segment is complete in all material
respects (and in any event is Ready for
Commercial Acceptance),
(c) the results of Acceptance Testing of such
Segment demonstrate that such Segment has
satisfied the System Performance
Requirements,
(d) Contractor has substantially performed its
obligations under Article 18 (Intellectual
Property) then required to be performed by
it,
(e) all Permits are obtained for such Segment,
and copies of such Permits with English
translations are delivered to Purchaser, and
(ii) with respect to any Phase, such Phase is complete in
all material respects (and in any event is Ready for
Commercial Acceptance), all Segments of such Phase
are Ready for Provisional Acceptance with per Segment
protection capability, line monitoring and network
management capability,
(iii) with respect to the System, the System is complete in
all material respects (and in any event is Ready for
Commercial Acceptance), all Segments are Ready for
Provisional Acceptance with per Segment protection
capability, line monitoring and network management
capability and self-healing ring protection
capability, and
(iv) with respect to any System Upgrade, the results of
Acceptance Testing of such System Upgrade demonstrate
that such System Upgrade is complete in all material
respects and is sufficient to realize the Performance
Requirements.
REPRESENTATIVES has the meaning set forth in Article 36(B).
RETAINAGE means (a) in the case of the System, an amount equal
to* of the Initial Contract Price and (b) in the case of each System
Upgrade, an amount equal to* of the Initial Upgrade Price.
RETESTING has the meaning set forth in Sub-Article 9(B)(3).
ROUTE SURVEY means the route survey described in the Route
Survey, Cable Loading and Marine Operations section of the Technical
Volume.
SCHEDULED PHASE 1A RFS DATE has the meaning set forth in
Sub-Article 9(A).
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 16
13
SCHEDULED PHASE 1B RFS DATE has the meaning set forth in
Sub-Article 9(A).
SCHEDULED RFS DATE(S) means any of the Scheduled Phase 1A RFS
Date, the Scheduled Phase 1B RFS Date and/or the Scheduled System RFS
Date.
SCHEDULED SYSTEM RFS DATE has the meaning set forth in
Sub-Article 9(A).
SCHEDULED UPGRADE DATE means for any System Upgrade, the date
by which the Contractor agrees such System Upgrade will be Ready for
Provisional Acceptance or Commercial Acceptance.
SEGMENT means any of Segments A through L.
SEGMENT A means the portion of the System containing the Shima
Cable Station and the four fiber pair facility from Shima, Japan to
Branching Unit 1.
SEGMENT B means the portion of the System containing the Shar
Fu Cable Station and the four fiber pair facility from and including
Branching Unit 1 to Shar Fu, Taiwan and landing in Shar Fu in a
location capable of interconnecting with major telecommunications
carriers.
SEGMENT C means the portion of the System containing the four
fiber pair facility from Branching Unit 1 to Lantau Island, Hong Kong,
S.A.R., China and landing in Lantau Island in a location capable of
interconnecting with major telecommunications carriers and that portion
of the Hong Kong Cable Station necessary to operate Segment C as a part
of Phase 1A.
SEGMENT D means the portion of the System containing the Hong
Kong Cable Station, less the portion thereof delivered as part of
Segment C, and the four fiber pair facility from Hong Kong, S.A.R.,
China to Branching Unit 2.
SEGMENT E means the portion of the System containing the four
fiber pair facility from and including Branching Unit 2 to Shar Fu,
Taiwan and landing in Shar Fu in a location capable of interconnecting
with major telecommunications carriers.
SEGMENT F means the portion of the System containing the four
fiber pair facility from Branching Unit 2 to Qingdao, China and landing
in Qingdao in a location capable of interconnecting with major
telecommunications carriers.
SEGMENT G means the portion of the System containing the
Qingdao Cable Station and the four fiber pair facility from Qingdao,
China to Branching Unit 3.
<PAGE> 17
14
SEGMENT H means the portion of the System containing the two
fiber pair facility from and including Branching Unit 3 to Taean, Korea
and landing in Taean in a location capable of interconnecting with
major telecommunications carriers.
SEGMENT I means the portion of the System containing the two
fiber pair facility from Branching Unit 3 to Branching Unit 4.
SEGMENT J means the portion of the System containing the Taean
Cable Station and the two fiber pair facility from and including
Branching Unit 4 to Taean, Korea and landing in Taean in a location
capable of interconnecting with major telecommunications carriers.
SEGMENT K means the portion of the System containing the four
fiber pair facility from Branching Unit 4 to Ajigaura, Japan and
landing in Ajigaura, in a location capable of interconnecting with
major telecommunications carriers.
SEGMENT L means the portion of the System containing the
Ajigaura Cable Station and the four fiber pair facility from Ajigaura,
Japan to Shima, Japan and landing in Shima in a location capable of
interconnecting with major telecommunications carriers.
SHAR FU CABLE STATION means the System cable station to be
located in Shar Fu, Taiwan.
SHIMA CABLE STATION means the cable station to be located in
Shima, Japan, which shall be furnished by Purchaser.
SHIP COSTS has the meaning set forth in Sub-Article 10(A)(2).
SHIP PERIOD has the meaning set forth in Sub-Article 10(A).
SOFTWARE ESCROW AGREEMENT means the escrow agreement described
in Sub-Article 18(H).
SUBCONTRACTOR means a contractor, vendor, supplier, licensor
or other person having a direct or indirect contract with the
Contractor or with any other Subcontractor of the Contractor who has
been hired specifically to assist the Contractor in certain specified
areas of its performance of its obligations under this Contract
including, without limitation, performance of any part of the Work.
SUPPLIES means any and all materials, plant, machinery,
equipment, hardware and items supplied by the Contractor under this
Contract.
SUSPENSION means a suspension in all or part of the Work
pursuant to Sub-Article 15(A) or 15(B).
<PAGE> 18
15
SYSTEM means the fiber optic cable system as described in
Exhibit A and the Technical Volume.
SYSTEM PERFORMANCE REQUIREMENTS has the meaning set forth in
Section 2 of the Technical Volume.
SYSTEM UPGRADE has the meaning set forth in Sub-Article 6A(A).
TAEAN CABLE STATION means the cable station to be located in
Taean, Korea.
TAX means any tax, duty, levy, charge or custom (including,
without limitation, any sales or use tax, VAT or octroi duty relating
to the Contract items and fiscal stamps connected with Contract
legalization) imposed or collected by any taxing authority or agency
(domestic or foreign).
TECHNICAL VOLUME means the Technical Volume attached hereto as
Appendix 6.
TRANSFEREE means any entity to which Purchaser assigns rights
hereunder pursuant to Sub-Article 37(D) hereof.
UPGRADE BILLING SCHEDULE means the billing schedule attached
hereto as Appendix 2A.
UPGRADE COMMISSIONING REPORT means a written report from
Contractor demonstrating that a System Upgrade is Ready for Commercial
Acceptance or Provisional Acceptance, as the case may be, and has
passed all Acceptance Testing and all other acceptance and performance
requirements set forth in the System Commissioning and Acceptance
section of the Technical Volume.
UPGRADE OPTION PERIOD has the meaning set forth in Sub-Article
6A(B).
UPGRADE PERIOD has the meaning set forth in Sub-Article 6A(E).
UPGRADE PLAN OF WORK means the plan of work attached hereto as
Appendix 3A.
UPGRADE PRICE means, for any System Upgrade, the Initial
Upgrade Price for such System Upgrade, plus any variations pursuant to
Article 6 (Contract Variations), Taxes as set forth in Sub-Article 4(B)
and other adjustments to such Upgrade Price provided for in this
Contract.
UPGRADE PROVISIONING SCHEDULE means the provisioning schedule
attached hereto as Appendix 1A.
UPGRADE WARRANTY PERIOD has the meaning set forth in
Sub-Article 10(A).
<PAGE> 19
16
UPGRADE WORK means the activities and services to be performed
or provided by Contractor under Article 6A (Optional Upgrades).
*
WARRANTY PERIOD has the meaning set forth in Sub-Article
10(A).
WORK means all activities and services (other than the
activities and services specified in this Contract to be provided by
Purchaser) necessary to be performed or provided in developing,
planning, engineering, designing, manufacturing, constructing,
delivering, installing and testing the System until the System is Ready
for Final Acceptance, including without limitation, designating,
coordinating and obtaining all Permits, except for the Purchaser
Permits. Whether or not used in conjunction with the term "Supplies",
the term "Work" shall always be deemed to include the provision of the
relevant Supplies, unless the context requires otherwise.
YEAR 2000 COMPLIANT means, when used with respect to any
software or materials, that such software or materials will operate
accurately and, without interruption, accept, possess and in all manner
retain full functionality when referring to, or involving, any year or
date in the twentieth or twenty first centuries.
ARTICLE 4 CONTRACT PRICE
A. Contract Price
1. The initial Contract Price for the Work, in United
States Dollars (US$) is a fee of * (the
"Initial Contract Price") which is composed of the
Phase 1A Price of * (the "Phase 1A Price")
and the Phase 1B price of * (the "Phase 1B
Price). The Initial Contract Price does not include
the cost of optional upgrades which are described in
Article 6A (Optional Upgrades), any contract
variations as provided for in Article 6 (Contract
Variations) or any Taxes. The Initial Contract Price
includes all charges for CIF and all costs and
expenses incurred in obtaining all Permits (including
Access Rights).
2. The initial Upgrade Price for any Upgrade Work, in
United States Dollars (US$) is the fixed fee set
forth in Sub-Article 6A(G), payable as set forth in
Appendix 2A (the "Initial Upgrade Price"). No Initial
Upgrade Price includes the cost of any contract
variations as provided for in Article 6 (Contract
Variations) or any Taxes.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 20
17
3. (a) The Provisioning Schedule sets forth the
Contractor's breakdown of the Initial
Contract Price among various aspects of the
Work. If the actual cost of any aspect of
the Work is greater or less than that set
forth in the Provisioning Schedule, such
fact shall not cause any change in the
Initial Contract Price.
(b) At its discretion, the Purchaser may direct
the Contractor to deliver either Universal
Joints conforming to qualified Universal
Jointing Consortium Technology or Contractor
proprietary joints as spares, in such
quantities as provided in the Provisioning
Schedule; such direction may be given during
the course of the Work, but not later than
such date as the Parties shall mutually
agree, and such direction, whichever spare
joint type is selected, shall not cause any
change in the Initial Contract Price.
4. Without the prior written consent of the Purchaser,
which consent shall not be unreasonably withheld or
delayed, the Contractor shall not arrange for any
(a) Access Right which requires payments to be
made by the Purchaser or made after the
System is Ready for Provisional Acceptance,
or
(b) Permit which requires aggregate payments in
excess of $250,000 to be made by Purchaser
or made after the System is Ready for
Provisional Acceptance.
5. The Contractor and the Purchaser will share equally
the costs and expenses of the Payment Escrow Agent.
B. Taxes, Levies and Duties
1. The Initial Contract Price and each Initial Upgrade
Price, as stated in Sub-Article 4(A) above, excludes
any Tax. The Contract Price and each Upgrade Price
shall without duplication be adjusted for any Tax
imposed on or in connection with this Contract
(including, without limitation, the execution and
delivery of this Contract, the Work, the Upgrade Work
and the Supplies, but excluding any Excluded Taxes)
(any such Taxes, other than Excluded Taxes, are
hereinafter referred to as "Contract Taxes").
Contractor has provided a good faith estimate of the
Contract Taxes payable by the Purchaser; it being
understood that the Contractor shall have no
liability under this Contract or otherwise to the
Purchaser for any errors or omissions in such
estimate or any losses arising therefrom. The
Contractor shall be responsible for any Excluded Tax
that might be incurred by the Contractor as well as
any Tax described in clause (iv) of the definition of
Excluded Tax.
<PAGE> 21
18
2. The Purchaser will be ultimately responsible for the
payment of all Contract Taxes (including, without
limitation, Contract Taxes that are VAT, octroi
duties relating to Contract items and fiscal stamps,
etc. connected with Contract legalizations to the
authorities in their countries). In the case of any
Contract Taxes paid by the Contractor, the Contractor
shall submit payment on the Purchaser's behalf and
Contractor will be reimbursed by the Purchaser in
accordance with Article 5 (Terms of Payment by
Purchaser).
3. The Contractor agrees to use reasonable efforts,
including, without limitation, by registering for VAT
and any applicable sales Taxes in any country, state
or other jurisdiction where legally required, to
cooperate with and assist Purchaser in its efforts
(i) to have Supplies which are the subject of this
Contract made exempt from Contract Taxes, whether in
the manufacture of the Supplies or related to the
importation or location or installation of the
Supplies, (ii) to request revisions, drawbacks,
remissions, reclassifications or the like to the
jurisdictions identified by the Purchaser; or (iii)
to reduce or eliminate Contract Taxes (including the
provision of applicable certifications and forms) and
to obtain any available refunds of Contract Taxes,
provided that the Contractor shall not be required to
act other than in accordance with the relevant Laws
then in force. The Purchaser shall reimburse the
Contractor, in accordance with Article 5, for any
reasonable costs (including the reasonable fees and
expenses of legal counsel, accountants and other
advisors) incurred by the Contractor under this
Sub-Article 4(B)(3), provided that Purchaser was
notified and has consented to the incurrence of such
costs, fees and expenses. Contractor shall not be
required to cooperate with and assist Purchaser in
its efforts under this Sub-Article 4(B)(3) or to take
any action hereunder which in the Contractor's good
faith judgment would incur any costs or if in
Contractor's good faith judgment it would be
advisable to obtain the advice of counsel,
accountants or other advisors prior to cooperating
with or assisting purchaser or taking any action,
unless in each case, Purchaser has agreed to
reimburse Contractor under the foregoing proviso.
4. Prior to the Date of Provisional Acceptance with
respect to a Phase, the System or any System Upgrade,
the Contractor shall provide evidence of having made
all payments for Taxes included in the Contract Price
or Upgrade Price or described in clause (iv) of the
definition of Excluded Taxes, other than VAT due on
payments of the Contract Price or Upgrade Price made
on or after the Date of Provisional Acceptance of the
System or System Upgrade, which evidence shall be
provided within sixty (60) days of the date of each
such payment.
5. As part of Work or any Upgrade Work, the Contractor
shall obtain at its expense, on Purchaser's behalf,
any import license or other official
<PAGE> 22
19
authorization and carry out all customs formalities
necessary for the importation or exportation of goods
in connection with such Work or Upgrade Work. With
respect to each Contract Country, the Purchaser
agrees to be the Importer or Exporter of Record or
designate an Importer or Exporter of Record/Consignee
on its behalf, unless, in either case, in the
Purchaser's reasonable opinion such action could
expose the Purchaser to a possible material burden or
risk, in which case Contractor or an affiliate shall
be the Importer or Exporter of Record; provided that
if Contractor or an affiliate is not legally
permitted by the laws of the relevant jurisdiction to
be Importer or Exporter of Record, Purchaser and
Contractor agree to discuss a mutually agreeable
solution. Purchaser must provide a Letter of
Authorization from any third party designate stating
it agrees to be the Importer or Exporter of Record on
Purchaser's behalf and identify the name and address
of the designated Importer or Exporter of Record.
6. The Supplies to be installed or held on land shall be
delivered to the agreed point at the named place of
destination and shall be consigned to the Purchaser.
C. Withholding Tax
1. If withholding for any Tax is required in respect of
any payment to the Contractor, the Purchaser shall
(i) withhold the appropriate amount from such
payment, (ii) pay such amount to the relevant
authorities in accordance with the applicable Laws
and (iii) in the case of any such withholding in
respect of a Contract Tax (other than any withholding
that would not have been required if the Contractor
had satisfied its other Tax payment obligations) and
subject to the Contractor's satisfying the
obligations set forth in the last sentence of this
Sub-Article 4(C)(1), pay the Contractor an additional
amount such that the net amount received by the
Contractor is the amount the Contractor would have
received in the absence of such withholding. In such
a case, the Purchaser shall provide to the
Contractor, as soon as reasonably practicable, a
certified copy of an official tax receipt for any Tax
which is retained from any payment due to the
Contractor or for any Tax which is paid on behalf of
the Contractor. All such receipts shall be in the
name of the Contractor. The Contractor agrees to
complete accurately and timely provide to the
Purchaser or, if required, to the applicable Taxing
authority, such forms, certifications or other
documents as may be requested in timely manner by
Purchaser, in order to allow it to make payments to
the Contractor without any deduction or withholding
on account of withholding Taxes (or at a reduced rate
thereof) or to receive a refund of any amounts
deducted or withheld on account of withholding Taxes.
2. If the Contractor shall become aware that it is
entitled to receive a refund or credit from a
relevant taxing or governmental authority in respect
of a
<PAGE> 23
20
Contract Tax as to which the Purchaser has paid an
additional amount pursuant to Sub-Article 4(C)(1)
above, the Contractor shall promptly notify the
Purchaser of the availability of such refund or
credit and shall, within 30 days after receipt of a
request by the Purchaser (whether as a result of
notification that it has made to the Purchaser or
otherwise), make a claim to such taxing or
governmental authority for such refund or credit at
the Purchaser's expense. If the Contractor receives a
refund or credit in respect of a Contract Tax as to
which the Purchaser has paid an additional amount
pursuant to Sub-Article 4(C)(1) above, or if, as a
result of the Purchaser's payment of such additional
amounts, the Contractor or any other member of an
affiliated group, as defined in section 1504(a) of
the Code, of which the Contractor is a member,
receives a credit against Taxes imposed on its income
or franchise taxes imposed on it by the country under
the laws of which it is organized or any political
subdivision thereof, the Contractor shall promptly
notify the Purchaser of such refund or credit and
shall within 30 days from the date of receipt of such
refund or benefit of such credit pay over the amount
of such refund or benefit of such credit (including
any interest paid or credited by the relevant taxing
or governmental authority with respect to such refund
or credit) to the Purchaser (but only to the extent
of the additional payments made by the Purchaser
under Sub-Article 4(C)(1) above with respect to the
Contract Tax giving rise to such refund or credit),
net of all out-of-pocket expenses of the Contractor
which it would not have incurred but for the
application of this paragraph; provided, however,
that the Purchaser, upon the request of the
Contractor agrees to repay the amount paid over to
the Purchaser (plus penalties, interest or other
charges due to the appropriate authorities in
connection therewith) to the Contractor in the event
the Contractor is required to repay such refund or
credit to such relevant authority.
ARTICLE 5 TERMS OF PAYMENT BY PURCHASER
A. General Conditions of Payment
1. All payments shall be made and all invoices shall be
rendered in US Dollars (US$). The Purchaser shall be
responsible for and shall pay all costs and fees for
payment, as well as the banking and wiring costs. All
banking documents and correspondence must be in
English.
B. Invoice Procedures
1. All invoices for Work shall be submitted according to
the Billing Schedule, provided, that the appropriate
Billing Milestones have been achieved. All invoices
for Work shall have a certificate in the form of
Appendix 4A attached.
<PAGE> 24
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2. Any Contract Variations shall be invoiced and paid in
accordance with the terms of the Contract Variation
as specified in Article 6 (Contract Variations).
3. Invoices for Upgrade Work shall be submitted
according to the Upgrade Billing Schedule and shall
be paid in accordance with this Article 5.
4. Invoices for amounts not described in Sub-Sections 1
through 3 above, which may become payable hereunder,
shall be submitted after applicable costs have been
incurred or such other time as may be specified in
this Contract, and shall be accompanied by a
certificate of the Contractor explaining such amount
and certifying that it is payable.
5. The Contractor shall render all invoices to the
following address or facsimile number:
Asia Global Crossing Ltd.
Wessex House, 2nd Floor
45 Reed Street
Hamilton, HM12, Bermuda
Facsimile: (441) 296-8606
Telephone: (441) 296-8600
Attn: Robert Klug
with a copy to the Independent Engineer.
C. Payment Procedures
1. The Purchaser shall pay the Contractor, and the
Contractor shall accept payment, in accordance with
this Article 5 (Terms of Payment by Purchaser).
Purchaser agrees to pay an initial payment to
Contractor in the amount of * . Within three
business days of the later of the time (i) this
Contract is executed and delivered by all Parties and
(ii) the conditions set forth in Article 42 hereof
are fulfilled by the Parties, the first portion of
the initial payment, in the amount of * ,
shall be paid by Purchaser to Contractor. Failure to
receive this payment shall entitle Contractor, upon 5
business days' notice to Purchaser of intent to
suspend, to immediately suspend Work hereunder. The
second portion of the initial payment, in the amount
of * , shall be paid by Purchaser 56 days
after payment of the first portion of the initial
payment.
2. Invoices given to the Purchaser (and the Independent
Engineer) on or before the last day of any month
shall, subject to Sub-Article 5(C)(5) below, be due
and payable on the last day of the next month or such
other time as may be specified in this Contract.
*Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 25
22
3. Invoices not paid when due shall accrue late payment
charges from the day, following the day, on which
payment was due until the day on which it is paid.
Invoices for such late payment charges shall not be
issued for an amount less than U.S. $1,000. Late
payment charges shall be computed at the rate of one
percent (1%) per month calculated on a daily basis.
4. In the event that the Purchaser has an objection to
any invoice or other payment obligation or any amount
owing by Contractor to Purchaser shall not have been
paid when due, the Purchaser shall promptly notify
the Contractor of such objection and such amount, and
the Purchaser and Contractor shall make every
reasonable effort to settle promptly the dispute
concerning the payment(s) in question. In the event
such dispute is not settled within ninety (90) days
of notification of objection, the Contractor and the
Purchaser will promptly execute and deliver a Payment
Escrow Agreement substantially in the form of Exhibit
E hereto, with such changes therein as the Bank
Escrow Agent may reasonably request, and the
Purchaser will have the right to withhold payment of
the disputed amount(s) (or withhold from the invoice
amount a sum equal to the amount purportedly owing by
Contractor) so long as it deposits, in full, such
disputed amount(s) into the Dispute Account.
(a) Provided such disputed amount is placed into
the Dispute Account in a timely manner, the
Purchaser shall not be deemed to be in
breach of or in default for failing to pay
Contractor and the Contractor shall continue
to perform all of its obligations hereunder.
(b) The Bank Escrow Agent will distribute the
disputed amount in accordance with the terms
of the Payment Escrow Agreement.
(c) In addition, the prevailing Party shall be
entitled to receive from the Dispute Account
an amount equal to the interest earned by
the Bank Escrow Agent on the distributed,
disputed amount, which shall be distributed
by the Bank Escrow Agent under clause (b)
above.
The Contractor and the Purchaser will share equally
the costs and expenses of the Bank Escrow Agent.
5. The Purchaser shall make timely payments for that
portion of the invoice not in dispute in accordance
with Sub-Article 5(C) or such payments will be
assessed extended payment charges as set forth in
Sub-Article 5(C)(4). Pending resolution of the
dispute, the Purchaser may not withhold payment
(unless also subject to dispute) on any other invoice
concerning different goods and/or services submitted
by Contractor.
<PAGE> 26
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6. The Retainage for the System, or any System Upgrade
shall be invoiced on the Date of Final Acceptance of
the System, or such System Upgrade, as the case may
be and shall be payable as set forth in Sub-Article
5(C)(2).
ARTICLE 6 CONTRACT VARIATIONS
A. Either Party may request, during construction of the System or any
System Upgrade, by written order, a contract variation ("Contract Variation")
requiring additions or alterations to, deviations or deductions from the System
or System Upgrade. If the other Party consents, in its sole discretion, this
change will be formalized as an amendment to this Contract by a Contract
Variation; provided, that the Contractor will not unreasonably withhold its
consent to a Contract Variation requested by the Purchaser; and provided
further, that Purchaser will not unreasonably withhold its consent to a Contract
Variation requested by the Contractor so long as such Contract Variation does
not affect the Contract Price, any Upgrade Price, any Scheduled RFS Date, any
Scheduled Upgrade Date, any warranties or the Performance Standards.
B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension of time
and all other terms have been mutually agreed upon by the Parties (and the
Parties shall act reasonably and in good faith in connection with all such
terms) and such Contract Variation is signed by an authorized representative of
each Party. Each Contract Variation shall be incorporated as an amendment to the
Contract.
C. Contractor may seek a Contract Variation for any change, after the
date hereof, of any Law (except those, and to the extent, affecting only Taxes
or wages) which requires a change in the Work or the Upgrade Work or affects the
costs (other than wages) incurred or to be incurred by the Contractor or any
combination of the foregoing and Purchaser shall agree to any such change in
Work or Upgrade Work as may be required and to an equitable adjustment to the
Contract Price or the applicable Upgrade Price; provided, that the Contractor
shall not be entitled to any increase in the Contract Price for any change of
Law resulting from any act or omission of Contractor. As of the date hereof,
neither Party has Actual Knowledge of any proposed change in any Law that would
require a change in the Work or the Upgrade Work.
D. The Initial Contract Price is based on the assumption that the SDH
low speed interconnect configuration shall be as set forth in the System
Description section of the Technical Volume. Purchaser may elect to change such
configuration by eliminating, replacing or adding optical interfaces and SDH
equipment each with respect to one or more Segments, where all such elections
(i.e. eliminations, replacements or additions of optical interfaces) to such
interconnect configuration shall be implemented using equipment as listed in the
Provisioning Schedule or as otherwise mutually agreed by the Parties. If
Purchaser makes any such election, both Parties shall agree to an equitable
adjustment, up or down, based on the prices set forth in the Provisioning
Schedule, to the Contract Price and/or the Scheduled RFS Date, as necessary for
each such election. The equitable adjustment shall take into account the actual
costs incurred by Contractor, including but not limited to, costs associated
with canceling firm commitments.
<PAGE> 27
24
E. The Initial Contract Price is based on the assumption that the land
provided by Purchaser for the Ajigaura Cable Station is adequate for the
construction of a cable station. If Contractor and Purchaser determine that such
land is not adequate for construction of a cable station, Contractor and
Purchaser agree to negotiate, in good faith, a Contract Variation, which will
provide for Contractor to acquire suitable land in the near vicinity of the
existing PC-1 cable station in Ajigaura so that such PC-1 cable station and the
proposed Ajigaura Cable Station may be appropriately connected by Contractor at
a reasonable cost. Such Contract Variation will provide for an equitable
adjustment to the Contract Price and/or the Scheduled Phase 1B RFS Date, as
necessary.
F. The Initial Contract Price is based on the configuration set forth
in Exhibit A. Purchaser, at its option, may elect to change such configuration,
including but not limited to, for example, by eliminating any landing in
mainland China and the Qingdao Cable Station, by the Purchaser provision of the
Taean Cable Station, or by moving the Phase 1B landing site in Japan from
Ajigaura to Maruyama. If Purchaser makes any such election, both Parties shall
agree to an equitable adjustment, up or down, based on the prices set forth in
the Provisioning Schedule, to the Contract Price and/or the Scheduled RFS Date,
as necessary for each such election. The equitable adjustment shall take into
account the actual costs incurred by Contractor, including but not limited to,
costs associated with canceling firm commitments.
G. The Initial Contract Price is based on the assumption that
conventional Forward Error Correction ("FEC"), as more fully described in the
Technical Volume, will initially be used for Phase 1A if the development of high
gain FEC ("Super FEC"), as more fully described in the Technical Volume, is not
completed in time, in the reasonable judgment of Contractor and Purchaser, to be
used for Phase 1A. Conventional FEC may also be used for up to 80Gb/s capacity
in Phase 1B, if Super FEC is not available at the time. Conventional FEC
equipment provided either in Phase 1A or Phase 1B will be replaced with Super
FEC equipment, as required to meet Performance Requirements, when such equipment
becomes available within a time frame to be mutually agreed upon by Purchaser
and Contractor. The replacement of conventional FEC with Super FEC, on Phase 1A
and/or Phase 1B if required, will be at Contractor's sole cost and expense. In
implementing Super FEC, as required, Contractor will not impair service of
existing System traffic. If necessary, Contractor, upon receiving authorization
from Purchaser, will arrange for the rerouting of traffic on a service path on
the installed System to a protection path on the installed System in order to
implement the System Upgrade so as not to incur traffic disruption. Contractor
will remove and will retain all Conventional FEC equipment that is replaced with
Super FEC.
H. This Contract contemplates that Contractor will acquire all Access
Rights for the System (except for the land used for the Other Facilities and for
the Ajigaura Cable Station) and upon acceptance of the Segment or Phase
containing such Access Rights pursuant to Article 9 hereof, title to such Access
Rights will vest in Purchaser and risk of loss shall transfer, all in accordance
with Article 9(F) hereof. If Purchaser reasonably determines that for any reason
it is advantageous to Purchaser (for example, for tax or regulatory reasons) for
Purchaser to acquire ownership of any Access Rights (which may be as owner,
lessee or easement holder, etc.) prior to such acceptance, then Contractor shall
cause such ownership to be transferred to Purchaser rather than acquired or held
by Contractor. In each such case Contractor shall deliver an Indemnity and
<PAGE> 28
25
Confirmation Agreement substantially in the form attached as Exhibit M hereto.
If Contractor obtains Actual Knowledge that such ownership would be advantageous
to Purchaser, Contractor will promptly so notify Purchaser.
ARTICLE 6A OPTIONAL UPGRADES
A. This Article includes the terms and conditions governing an option
for future upgrades to the System (each a "System Upgrade") that may be
exercised by Purchaser during the Upgrade Option Period.
B. The option period ("Upgrade Option Period") during which Purchaser
may place orders to upgrade the System shall end * years after the Date of
Final Acceptance of the System and shall commence with respect to System
Upgrades on June 16, 2001; provided that Contractor will not be required to
complete a System Upgrade prior to the Date of Commercial Acceptance of the
System or Date of Provisional Acceptance of the System, whichever is earlier.
C. Purchaser may from time to time exercise an option, during the
Upgrade Option Period, to upgrade the System, in accordance with the terms and
conditions contained in this Article, by providing notice pursuant to Article
35.
Each System Upgrade shall consist of an incremental increase
in the System capacity in integral multiples of *
around the ring network. Each System Upgrade shall increase the capacity of all
Segments by equal increments for service and protection capacity and shall
include all necessary spares, documentation and training attendant to such
System Upgrade. For each System Upgrade, the System capacity shall be *
except at Taean, Korea,
where the System capacity shall be *
Purchaser shall provide a separate notice
pursuant to Article 35 for each System Upgrade.
D. While Contractor only anticipates the need for dry plant
modifications to achieve each System Upgrade, Contractor reserves the right to
replace or supplement wet plant equipment, including repeaters and cable, if
Contractor determines that such replacement or supplement is reasonably
necessary to provide a particular System Upgrade that meets the Performance
Requirements.*
E. In implementing each System Upgrade, Contractor will not impair
service of existing System traffic. Contractor, upon receiving authorization
from Purchaser, may reroute traffic on a service path on the installed System to
a protection path on the installed System in order to implement the System
Upgrade so as not to incur traffic disruption.
F. The performance of the System, at the end of each Upgrade Period,
shall be consistent with *
*Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 29
26
G. The System Upgrades shall be provided by Contractor at the following
fixed prices payable as set forth in the Upgrade Billing Schedule, Appendix 2A:
<TABLE>
<CAPTION>
Each Upgrade of System Fixed Initial Upgrade Price(s)
Capacity * : for *
-------------------- ----------------------------
<S> * <C> *
</TABLE>
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 30
<TABLE>
<CAPTION>
Each Upgrade of System Fixed Initial Upgrade Price(s)
Capacity of * : for *
-------------------- ----------------------------
<S> * <C> *
</TABLE>
Amounts payable for System Upgrades in increments of more than *
will be increased in accordance with the foregoing schedule. For example, if the
first System Upgrade is for * , the Price would be * . An
initial payment may be invoiced at the time a System Upgrade is ordered in the
amount of * of the fixed Initial Upgrade Price for such Upgrade plus, if
applicable, the additional amounts set forth below. * Such initial payment,
including any additional payment described above shall be part of the Initial
Upgrade Price stated above for such System Upgrade and shall not be an increase
to such System Upgrade's Initial Upgrade Price.
H. The plan of work for any System Upgrade is included in the Upgrade
Plan of Work, Appendix 3A.
I. The provisioning schedule for any System Upgrade is included in the
Upgrade Provisioning Schedule, Appendix 1A.
J. Contractor shall have no obligation to perform a System Upgrade (and
no liability for failure to perform a System Upgrade) if Purchaser, its
representatives, employees or agents (other than Contractor) shall have modified
the System in such a way as to make it more difficult (unless there is an
equitable adjustment to the Upgrade Work) or more costly (unless such cost is
provided for by Purchaser) for Contractor to perform such System Upgrade,
provided that Contractor shall be relieved of its obligation to perform such
System Upgrade (and shall have no liability for failure to perform such System
Upgrade) if such modification makes it impossible for Contractor to perform such
System Upgrade.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 31
28
K. Contractor agrees that the installation, testing and acceptance of
each System Upgrade will occur not later than the date (the "Scheduled Upgrade
Date") which is * after notice in the case of a requested System
Upgrade of not more than * per fiber pair for all four fiber pairs and
* after notice in the case of a requested System Upgrade of not
more than * per fiber pair for all four fiber pairs. In each case, such
period shall begin upon the giving of notice pursuant to paragraph C of this
Article 6A and shall be subject to the proviso contained in Sub-Article 6A(B).
Purchaser will use reasonable efforts to try to forecast its System Upgrade
capacity requirements so as to give earlier notice of an estimated time of
upgrade to Contractor. The Parties agree that where overlapping occurs because
the Purchaser exercises an option for a System Upgrade prior to the completion
of a previously elected System Upgrade, the Parties will agree in good faith to
a mutually acceptable delivery schedule and price adjustment. Should a need for
a special upgrade (in addition to the foregoing, for example, a System Upgrade
of more than * ) arise, the Parties will negotiate in good faith to meet
Purchaser's needs.
L. 1 In addition to, and apart from the other provisions of this
Article 6A, Contractor agrees that unless and until instructed otherwise by
Purchaser, Contractor will (at no cost or expense to Purchaser, except as set
forth in this Sub-Article) at all times (except during the Installation Interval
defined below) from the date the System is Ready for Provisional Acceptance
until the end of the Upgrade Option Period, cause to be substantially installed
at each cable station, sufficient equipment so as to be able to cause testing
and acceptance of the Expedited Upgrade within * of Purchaser's upgrade
election, sufficient equipment to provide Purchaser with a System Upgrade of 20
Gb/s of fully protected capacity (10 Gb/s of service on each of two Fiber Pair
and 10 Gb/s of protection on each of the remaining two Fiber Pair) (an
"Expedited Upgrade"). An Expedited Upgrade will include 10 Gb/s on each Fiber
Pair, as more fully described in the Technical Volume. Upon Purchaser's Upgrade
Election, the Contractor will in good faith develop with the Purchaser a plan to
most expeditiously finish installation and test such equipment. Purchaser agrees
that it will not place such substantially installed Expedited Upgrade Equipment
into service without prior written consent of the Contractor. The fixed price
payable for each Expedited Upgrade (fully installed, tested and accepted) will
be * of the price of the next scheduled System Upgrade
which may be ordered for Expedited Upgrades. Notwithstanding any other provision
to the contrary contained herein, title (free and clear of all liens other than
those deriving through or from the Purchaser) and risk of loss to such Expedited
Upgrade equipment shall vest in the Purchaser when it is substantially
installed. All relevant Taxes with respect to the installation and transfer of
title to such Expedited Upgrade shall be invoiced by Contractor and paid by
Purchaser in accordance with this Contract. Such price shall be payable on a
similar basis as the System Upgrade Billing Schedule. Purchaser will accept the
Factory acceptance test report on Expedited Upgrades, but such report must show
that the equipment left the Factory working as a unit. Whenever Purchaser orders
an Expedited Upgrade, Contractor shall replace the equipment used for such
Upgrade so that it substantially installs the equipment for the next Expedited
Upgrade within * of testing and acceptance of the ordered
Expedited Upgrade. "Installation Interval" is any period during which Contractor
is not obligated to have Expedited Upgrade Equipment substantially installed
pursuant to this Sub-Article 6A(L)(1). Expedited Upgrades may be ordered during
the periods when Purchaser is waiting for a System Upgrade pursuant to
Sub-Article 6A(K) above. Expedited Upgrades shall be in addition to System
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 32
29
Upgrades and shall not affect the schedule set forth in Sub-Article 6A(G) above,
except that Contractor shall not be obligated to install more than * of
capacity in the System. The capacity of all Expedited Upgrades installed will be
subtracted from the System Upgrade schedule in inverse order and the Price of
such reduced System Upgrades shall be adjusted accordingly based upon the prices
set forth in the Upgrade Provisioning Schedule. Expedited Upgrades shall be
considered "Upgrade Work" for all purposes of this Contract. The provisions of
Sub-Articles 6A (B), (C) (first paragraph only), (D), (E), (F) and (J) shall
apply to Expedited Upgrades. * If requested by Purchaser, at any time during the
six (6) month period immediately preceding the expiration of the Upgrade Option
Period, Contractor shall use reasonable efforts to sell (at Purchaser's cost)
any equipment for an Expedited Upgrade which has been substantially installed
but not activated, to other customers. Notwithstanding the foregoing sentence,
if, at the end of the Upgrade Option Period, equipment for an Expedited Upgrade
has been installed in accordance with this Sub-Article, but not activated,
Purchaser shall pay Contractor for such equipment in accordance with the Payment
terms of this Contract, provided that if Contractor has sold such equipment in
accordance with the foregoing sentence, the proceeds of such sale (less
Contractor's costs in connection with its efforts to sell) shall be deducted
from the price owed by Purchaser to Contractor.
2. The Expedited Upgrade Price and supporting equipment
availability are based on * being provided for
interconnectivity. With respect to any Expedited Upgrade, Purchaser may elect
(i) to exclude from such Expedited Upgrade some or all *
and/or (ii) to include other *
. If Purchaser elects (i) and/or (ii), both Parties shall agree to
an equitable adjustment, up or down, based on the prices set forth in the
Provisioning Schedule, to the Expedited Upgrade Price and the supporting
equipment availability and an equitable adjustment in the schedule for the
Expedited Upgrade, as needed in the event Purchaser elects (ii) above.
ARTICLE 7 RESPONSIBILITIES FOR PERMITS; COMPLIANCE WITH LAWS; HONG KONG
CABLE STATION.
A. Upon written request of the Contractor, the Purchaser shall
reasonably cooperate with and assist the Contractor to obtain all Permits, to
the extent that Purchaser's cooperation and assistance are necessary for
Contractor to expeditiously and cost-efficiently obtain such Permits. The
Purchaser agrees to respond reasonably promptly to any such request from
Contractor; provided, that, the failure of Purchaser to comply with such request
shall not give rise to a Purchaser Hindrance unless (i) the requested
cooperation was required by Law and (ii) Purchaser failure is due to gross
negligence or willful misconduct. Contractor shall reimburse reasonable outside
counsel fees, reasonable independent consultant fees and other reasonable
out-of-pocket expenses incurred by Purchaser in connection with such
cooperation. Further, the Purchaser agrees that it will not impede or interfere
with Contractor's abilities to perform its obligations under paragraph B of this
Article 7. Upon notice from Contractor with respect to a Permit or receipt by
Purchaser of a copy of a Permit, Purchaser shall fulfill all conditions of such
Permit
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 33
30
and perform all responsibilities thereunder, except to the extent that such
conditions or responsibilities are those of the Contractor under the Work.
Contractor will inform Purchaser as to any such conditions or responsibilities
that are not ordinary and routine (based on industry standards) and obtain
Purchaser's consent thereto prior to arranging for any such Permit. Purchaser
(and its representatives and lawyers) may, at its sole option and expense,
participate with Contractor in the process of obtaining any Permits to the
extent it deems reasonably necessary; provided, that any such participation
shall not relieve or alter any of Contractor's obligations under this Contract
with respect to obtaining all Permits and shall not, by itself, be deemed to
impede or interfere with Contractor.
B. Subject to paragraph C below, the Contractor shall have the
responsibility for obtaining, at the Contractor's sole cost and expense, all
Permits on Purchaser's behalf. The Contractor will cause all Permits ultimately
required to be held by Purchaser but not initially issued in the name of
Purchaser to be assignable to Purchaser, and to be assigned to Purchaser at the
time title to the System (or any Segment) is transferred to Purchaser pursuant
to this Contract. Contractor shall be responsible to pay any transfer fees in
connection with any such assignment. Subject to Sub-Article 4(A)(4), Purchaser
shall be responsible for payment of all Permit fees and other costs and expenses
due with respect to any Permit after the Date of Provisional Acceptance of the
System.
C. The Contractor shall not be responsible for obtaining Purchaser
Permits, but the Contractor will cooperate with the Purchaser in connection
therewith. Purchaser shall reimburse reasonable outside counsel fees, reasonable
independent consultant fees and other reasonable out-of-pocket expenses incurred
by Contractor in connection with such cooperation.
D. Any delay in obtaining or failure to obtain any Owner Permit shall
constitute a Force Majeure and be treated as described in Article 17 (Force
Majeure), except to the extent such delay is a result of Contractor's negligence
or willful misconduct. No Force Majeure shall be granted with respect to
Contractor Permits.
E. Except with respect to variations necessitated by complying with any
changes, enacted after the date hereof, in any Laws (the costs with respect to
which shall be borne by the Purchaser unless such change is a result of any act
or omission by Contractor), the Contractor shall be responsible for the payment
of any and all costs incurred as a result of the need to vary design, drawings,
plans or procedures to comply with any of the circumstances set forth in this
Article. The Contractor shall, before making any variations from the designs,
drawings, plans or procedures that may be necessitated by so complying with any
Laws and that would represent a material change to the overall design of the
System, give to the Purchaser written notice, specifying the variations proposed
to be made, and the reasons for making them. As of the date hereof, neither
Party has Actual Knowledge of any proposed changes in the Laws which would
necessitate any such variation.
F. The Contractor shall comply with all applicable Laws in performing
the Work, (ii) give all notices required by any Laws to be given to any
authority and (iii) perform or permit the performance by authorized persons of
any inspection required by the said Laws. All Work and the Project, upon
completion, will comply with all applicable Laws.
<PAGE> 34
31
G. As part of the Initial Contract Price, the Contractor shall obtain,
at its own risk and expense, any export and import license and other official
authorization and carry out all customs formalities for the exportation and
importation of goods and, where necessary, for their transit through another
country.
H. Within 30 days after the date of execution of this Contract, the
Contractor will prepare and deliver to the Purchaser a detailed list of Permits
that to its knowledge are required to be obtained under current law in order to
complete the Work and shall update such list from time to time if it becomes
aware of changes in Permit requirements. Such list, as updated from time to
time, shall set forth the projected dates of filing for such Permits and an
estimate of when such Permits are expected to be obtained. Without limiting
Contractor's liabilities in respect of Sub-Articles 7(B), Contractor shall have
no liability in respect of the accuracy of the information furnished under this
Sub-Article, except in the case of gross negligence or willful misconduct.
I. Upon written request of the Contractor, the Purchaser shall
reasonably cooperate with and assist the Contractor in the Contractor's
obtaining land for, and constructing, the Hong Kong Cable Station to the extent
that Purchaser's cooperation and assistance are necessary for Contractor to
obtain land for, and construct, such station in accordance with the time frame
set forth in the Plan of Work. The Purchaser agrees to respond reasonably
promptly to any such request from Contractor; provided, that the failure of
Purchaser to comply with such request shall not give rise to a Purchaser
Hindrance unless (i) the requested cooperation was required by Law and (ii)
Purchaser's failure is due to gross negligence or willful misconduct. Contractor
shall reimburse reasonable outside counsel fees, reasonable independent
consultant fees and other reasonable out-of-pocket expenses incurred by
Purchaser in connection with such cooperation. Purchaser's cooperation pursuant
to this paragraph I of Article 7 shall not relieve or alter any of Contractor's
obligations under this Contract with respect to obtaining land for, and
constructing, the Hong Cable Station, and shall not, by itself, be deemed to
impede or interfere with Contractor.
ARTICLE 8 ROUTE SURVEY
A. The Contractor shall produce a Desk Top Study, the Route Survey and,
where prudent, a Burial Assessment Survey, and select the cable route for the
System in accordance with the information in the Final Route Survey Report and
such Burial Assessment Survey. Contractor shall be permitted to make changes, at
its discretion, to the route selection, if necessary for operational reasons,
without additional cost to Purchaser. The Contractor shall review with the
Purchaser the route for the System, and the results of the Burial Assessment
Survey, within 20 business days of the presentation of the Final Route Survey
Report, which Report must include the results of such Burial Assessment Survey.
B. Any changes to the route selection requested by Purchaser shall be
treated as a Contract Variation in accordance with Article 6 (Contract
Variations).
<PAGE> 35
32
C. Any changes to any aspect of the Work due to any Desk Top Study,
Route Survey, Burial Assessment Survey or Final Route Survey Report will not
result in any change to the Initial Contract Price.
D. The Contractor will perform the Desktop Study, Route Survey and
Burial Assessment Survey, and engineer and design the cable route, using
generally accepted practices in the industry. In the engineering and design of
the cable route the Contractor will give due consideration to the interests of
the Purchaser and shall in good faith try to satisfy such interests,
particularly (but without limitation) regarding survivability, maintainability
and tax consequences, in each case arising from the location of the cable.
ARTICLE 9 ACCEPTANCE
A. General
1. The Acceptance Testing shall be performed by the
Contractor. The Purchaser and its designated
representatives (including the Independent Engineer)
may observe, at their own expense, the Contractor's
tests and review the test results. Purchaser may
request the Contractor to conduct and/or may itself
conduct any additional tests that are commercially
reasonable under the circumstances to demonstrate
compliance with the provisions of this Agreement and
the specifications in the Technical Volume. If such
additional tests do demonstrate that the provisions
of this Agreement and the specifications in the
Technical Volume have been complied with, then the
Purchaser shall be responsible for paying the costs
(which, for the avoidance of doubt, shall include the
reasonable travel and living expenses of Contractor's
additional personnel, if any, required by such tests)
of such additional tests, and any delay beyond the
Contractor's schedule for completion of its tests
caused by such process shall be a Force Majeure. If,
however, such additional tests demonstrate that the
provisions of this Agreement or the specifications in
the Technical Volume have not been complied with,
then it shall be the Contractor's responsibility to
pay the costs (which, for the avoidance of doubt,
shall include the reasonable travel and living
expenses of Purchaser's additional personnel, if any,
required by such tests) of such additional tests, and
any delay caused by such process shall not be a Force
Majeure.
2. Until the Date of Final Acceptance of the System or
if a System Upgrade is requested by Purchaser, the
Date of Final Acceptance of such System Upgrade, the
Purchaser agrees to allow Contractor access to all
Segments of the System.
3. The Purchaser shall issue a Certificate of Commercial
Acceptance in accordance with the provisions of
Sub-Article 9(D)(1).
<PAGE> 36
33
4. Once a Segment of the System, a Phase of the System,
the System, or a System Upgrade is Ready for
Provisional Acceptance, the Purchaser shall issue a
Certificate of Provisional Acceptance, provided, that
it is within the Purchaser's sole discretion as to
whether to accept a Segment.
5. Once the System or a System Upgrade is Ready for
Final Acceptance, the Purchaser shall issue a
Certificate of Final Acceptance.
6. The Purchaser shall not unreasonably withhold or
delay issuance of a Certificate of Commercial
Acceptance, a Certificate of Provisional Acceptance
or a Certificate of Final Acceptance.
7. The Contractor agrees that the Date of Provisional
Acceptance or Commercial Acceptance of Phase 1A of
the System will occur by December 31, 2000 (as such
date may be extended under Article 6 (Contract
Variations), Article 17 (Force Majeure) or otherwise
under this Contract or by agreement of the Parties,
the "Scheduled Phase 1A
RFS Date").
8. The Contractor agrees that the Date of Provisional
Acceptance or Commercial Acceptance of Phase 1B of
the System and of the System will occur by June 15,
2001 (as such date may be extended under Article 6
(Contract Variations), Article 17 (Force Majeure) or
otherwise under this Contract or by agreement of the
Parties, the "Scheduled Phase 1B RFS Date" and the
"Scheduled System RFS Date").
9. The Date of Commercial Acceptance, Provisional
Acceptance and Final Acceptance, as the case may be,
shall be deemed to have occurred with respect to a
Segment, a Phase, the System or a System Upgrade if a
Certificate of Commercial Acceptance, a Certificate
of Provisional Acceptance or a Certificate of Final
Acceptance, as the case may be, is issued with
respect thereto.
B. Notice of Acceptance or Rejection
1. Within thirty (30) days of receipt by Purchaser and
Independent Engineer of a complete Commissioning
Report or Upgrade Commissioning Report, as the case
may be, the Purchaser must issue notification to the
Contractor of the following:
(a) issuance of a Certificate of Provisional
Acceptance in accordance with Sub-Article
9(C); or
(b) rejection of a Certificate of Provisional
Acceptance, but instead issuance of a
Certificate of Commercial Acceptance in
accordance with Sub-Article 9(D) below; or
<PAGE> 37
34
(c) rejection of the Segment, the Phase, the
System or the System Upgrade in its existing
condition and issuance of neither a
Certificate of Provisional Acceptance nor a
Certificate of Commercial Acceptance, and in
the case of the System or the System
Upgrade, a written explanation of reasons
for rejection (it being understood that
acceptance of a Segment is at the sole
discretion of the Purchaser).
If the Purchaser (or the Independent Engineer on its
behalf) fails to respond with such notification
within thirty (30) days, then the Date of Provisional
Acceptance of the Segment (subject to Purchaser's
consent), the Phase, the System or System Upgrade
shall be deemed to be the date occurring thirty (30)
days after such Commissioning Report or Upgrade
Commissioning Report, as the case may be, was
received by the Purchaser.
2. On receipt of a notice from the Purchaser pursuant to
Sub-Articles 9(B)(1)(b) or (c) above, the Contractor
shall be entitled to address any disputes and explain
any discrepancies to the Purchaser. Unless Purchaser,
for good cause, rejects such explanation, it shall
issue a new notice pursuant to Sub-Article 9(B)(1)
above, which shall be deemed to have been issued on
the date of the original notice.
3. In case of rejection, and if the explanation by the
Contractor as in Sub-Article 9(B)(2) above is not
accepted, for good cause, by the Purchaser, the
Contractor shall carry out the necessary corrective
actions and will effect a new series of Acceptance
Testing ("Retesting"). After receipt by Purchaser and
Independent Engineer of the new Commissioning Report
or Upgrade Commissioning Report, as the case may be,
describing the corrective action and the results of
Retesting, the Purchaser will be granted a new period
of thirty (30) days to analyze the new Report
according to the provisions of Sub-Article 9(B)(1)
and any new notice of the Purchaser shall apply from
the date the Purchaser receives such new
Commissioning Report or Upgrade Commissioning Report,
as the case may be.
C. Provisional Acceptance
1. The Certificate of Provisional Acceptance may have
annexed to it a list of any outstanding deficiencies
to be corrected by the Contractor.
2. The Contractor shall, as soon as reasonably
practicable, correct, at its sole cost and expense,
such deficiencies and complete the Work or Upgrade
Work indicated on all such listed items so as to
comply in all material respects with the requirements
of this Contract, provided that the Purchaser allows
Contractor the necessary access to the Segment(s) as
the
<PAGE> 38
35
Contractor needs to correct such deficiencies and
complete the Work or Upgrade Work. The Contractor
shall give the Purchaser reasonable notice of its
requirement for such access.
D. Commercial Acceptance
1. A Certificate of Commercial Acceptance shall be
issued by Purchaser with respect to a Segment, a
Phase, the System or a System Upgrade if the results
of the Acceptance Testing demonstrate that such
Segment, such Phase, the System or such System
Upgrade does not justify the issuance of a
Certificate of Provisional Acceptance, but
nevertheless, such Segment, such Phase, the System or
such System Upgrade is Ready for Commercial
Acceptance; provided, that acceptance of a Segment
shall be in the sole discretion of the Purchaser.
2. Each Certificate of Commercial Acceptance shall have
annexed to it a list of all outstanding items to be
completed by the Contractor.
3. The Contractor shall, as soon as reasonably
practicable, remedy, at its sole cost and expense,
the outstanding items, provided that the Purchaser
allows Contractor the necessary access to the
Segment(s) as the Contractor needs to remedy such
outstanding items. The Contractor shall give the
Purchaser reasonable notice of its requirement for
such access. Notwithstanding the above, provided that
Contractor has been allowed access to the Segment(s)
as required in Sub-Article 9(A)(2), the Contractor
shall continue to carry the risk of loss for any
outstanding item until such item is no longer
outstanding.
4. When the outstanding items referenced in Sub-Article
9(D)(3) above have been remedied, and the Segment(s),
the Phase, the System or the System Upgrade is
otherwise Ready for Provisional Acceptance, the
Purchaser will promptly issue a Certificate of
Provisional Acceptance; provided, that acceptance of
a Segment shall be in the sole discretion of the
Purchaser.
5. The issuance of a Certificate of Commercial
Acceptance with respect to a Segment, a Phase, the
System or a System Upgrade shall in no way relieve
the Contractor from its obligation to provide a
Segment, a Phase, the System or System Upgrade
conforming with the Performance Requirements at the
time of the issuance of a Certificate of Commercial
Acceptance.
E. Final Acceptance
1. Within thirty (30) days of the date of receipt by
Purchaser and Independent Engineer of the Final
Commissioning Report or Final Upgrade Commissioning
Report, as the case may be, the Purchaser shall issue
a
<PAGE> 39
36
Certificate of Final Acceptance or reject such
Report. If the Purchaser neither issues a Certificate
of Final Acceptance nor rejects such Report within
such thirty (30) day period, then the Date of Final
Acceptance of the System or the System Upgrade shall
be deemed to be the date occurring thirty (30) days
after such Final Commissioning Report or Final
Upgrade Commissioning Report, as the case may be, was
received by the Purchaser.
F. Title and Risk of Loss
1. If the Purchaser, in its sole discretion, chooses to
accept a Segment prior to accepting a Phase or the
System, then upon the issuance of a Certificate of
Commercial Acceptance or a Certificate of Provisional
Acceptance with respect to such Segment by the
Purchaser in accordance with this Contract, title
(free and clear of all liens other than those
deriving through or from the Purchaser) to such
Segment shall vest in the Purchaser. A statement of
the time of passage of title in such Certificate
shall be final and conclusive.
2. Upon the issuance of a Certificate of Commercial
Acceptance or a Certificate of Provisional Acceptance
with respect to a Phase or the System by the
Purchaser in accordance with this Contract, title
(free and clear of all liens other than those
deriving through or from the Purchaser) to such Phase
or the System shall vest in the Purchaser. A
statement of the time of passage of title in such
Certificate shall be final and conclusive.
3. Upon the issuance of a Certificate of Commercial
Acceptance or a Certificate of Provisional Acceptance
with respect to a System Upgrade by the Purchaser in
accordance with this Contract, title to such System
Upgrade shall vest in the Purchaser. A statement of
the time of passage of title in such Certificate
shall be final and conclusive.
4. As from the date of vesting of title in a Segment, a
Phase, the System or a System Upgrade, the Purchaser
shall, except as set forth in the following sentence,
assume the risk of loss in respect of all parts of
such Segment, such Phase, the System or System
Upgrade and responsibility for its maintenance. As
stated in Sub-Article 9(A)(2), the Contractor will be
allowed access to such Segment(s), and, so long as
the Contractor has been allowed access to such
Segment(s) as may be required, the Contractor shall
continue to carry the risk of loss with respect of
each item outstanding under Sub-Article 9(C)(1) and
9(D)(2) until such item is no longer outstanding.
ARTICLE 10 WARRANTY
A. The Contractor warrants that the System and each System Upgrade,
including its spares, shall be free from defects in supplies, workmanship and
design for a period of five (5) years
<PAGE> 40
37
from the Date of Provisional Acceptance of the System or such System
Upgrade, as the case may be, (hereinafter "Warranty Period" and "Upgrade
Warranty Period"), with Ship Costs being covered for the first two (2) years of
the Warranty Period (the "Ship Period") and the Purchaser being responsible for
all Ship Costs thereafter; provided, that (i) if the Scheduled System RFS Date
is extended because of a Purchaser Hindrance or because of an affirmative
decision by the Purchaser to extend such RFS Date, the Warranty Period and the
Ship Period with respect to Phase 1A shall terminate on the date that is five
(5) years and two (2) years, respectively, after the Scheduled System RFS Date
(without giving effect to extensions because of a Purchaser Hindrance or because
of an affirmative decision by Purchaser to extend such RFS Date) and (ii) if the
construction of Phase 1B is terminated by the Purchaser for its convenience,
such that Phase 1A becomes the entire System, the Warranty Period and the Ship
Period with respect to Phase 1A shall terminate on the date that is five (5)
years and two (2) years, respectively, after the Scheduled Phase 1A RFS Date
(for purposes of this Article 10, "Adjusted Date of System Provisional
Acceptance").
1. During the Warranty Period for the System or the
Upgrade Warranty Period for a System Upgrade, the
Contractor shall make good, by repair or replacement,
at its sole option, any defects in the System or such
System Upgrade, as the case may be, including any
spares, which may become apparent or be discovered
due to imperfect workmanship, faulty design or faulty
material supplied by the Contractor, or any act,
neglect or omission on the Contractor's part.
(a) If at any time within the Warranty Period or
the Upgrade Warranty Period for a System
Upgrade any defect occurs which causes the
System or such System Upgrade, as the case
may be, to fail to meet its overall
Performance Requirements, the Contractor
shall repair or replace such part or parts.
In making such repairs, Contractor may make
changes to the System or such System
Upgrade, as the case may be, or substitute
equipment of later or comparable design,
provided the changes, modifications, or
substitutions under normal and proper use do
not cause the System or such System Upgrade
as the case may be to fail to meet the
Performance Requirements.
(b) The Contractor shall use reasonable efforts
to minimize the period of time that any
Segment or the System is out of service for
testing and repair. The Purchaser agrees to
cooperate with the Contractor to facilitate
the Contractor's repair activity.
(c) It is understood that if there is a problem
on the System, the Purchaser may immediately
dispatch the maintenance authority to effect
repairs. If and to the extent that such
problem is determined to be caused by a
defect in the System covered by this
warranty, the Contractor shall reimburse the
Purchaser for its actual Non-Ship Costs
incurred and, with respect to any such
repair relating to a defect identified in
good faith by Purchaser in writing prior to
the
<PAGE> 41
38
end of the Ship Period, actual Ship Costs
incurred. If the Purchaser has entered into
arrangements whereby maintenance is all or
partially covered by a "lump sum" payment
covering a specific period (e.g., an annual
fixed fee operations and maintenance
contract), then Contractor understands that
Purchaser may not actually incur costs with
respect to any particular warranty repair.
In such a case, Contractor agrees that the
Purchaser is still entitled to a payment
from Contractor in connection with such
warranty repair. The Contractor and
Purchaser will agree in good faith to an
equitable method of determining the industry
standard typical costs for such a repair
based upon what the repair would have
actually cost had it been paid under a
specific maintenance agreement and such
typical costs shall be reimbursed to
Purchaser.
(i) The Contractor shall be given
advance notice and be entitled to
have a representative on board ship
to observe at sea repairs and shall
be given the earliest possible
notice of any such repair.
(ii) Subject to the foregoing and to
Sub-Article 10(D), any repair by the
Purchaser shall not in any way
diminish the Contractor's obligation
under the warranty. Any equipment
discovered to be defective or faulty
and recovered during a warranty
repair shall be returned to the
Contractor at its request.
(d) In the event that the Contractor fails to
make the repair or to make reasonable
efforts to minimize the period of time that
the System is out of service for repair, the
Purchaser may repair the System or the
System Upgrade and the Contractor shall
reimburse the Purchaser for Non-Ship Costs
and, with respect to any such repair
relating to a defect identified in good
faith by Purchaser in writing prior to the
end of the Ship Period, Ship Costs.
(i) The Contractor shall be given
advance notice and be entitled to
have a representative on board ship
to observe at sea repairs and shall
be given the earliest possible
notice of any such repair.
(ii) Subject to the foregoing, any repair
by the Purchaser shall not in any
way diminish the Contractor's
obligation under the warranty. Any
equipment discovered to be defective
or faulty and recovered during a
warranty repair shall be returned to
the Contractor at its request.
<PAGE> 42
39
2. Contractor shall bear the Ship Costs of only those repairs of
the defects identified in good faith by Purchaser in writing
prior to the end of the Ship Period. However, the Contractor
shall bear the Non-Ship Costs of each repair, replacement or
improvement required during the Warranty Period.
As used herein, "Ship Cost" means the costs of operating a
vessel, including but not limited to running and standing
charges for the vessel (including but not limited to labor
charges for the vessel's crew, at sea insurance, port charges,
fuel and lube oils, consumables, cable loading, cable
unloading, navigation and maritime communications) as well as
the costs associated with the use and operation of a remotely
operated vehicle and the tracked self propelled burial tool
and "Non-Ship Costs" means the costs of making a repair,
including the cost of components, equipment or materials
requiring replacement, the cost of any additional equipment
necessary to effect the repair, the cost of making the repair,
including the cost of reburying any previously buried portion,
the cost of labor and engineering assistance or development
required to make the repair and all necessary associated
costs, such as, but not limited to, shipping and customs and
services that may be required to make the repair, but
excluding any of the foregoing which are Ship Costs.
3. The Contractor shall effect all warranty repairs of the System
and shall supply all necessary repair materials. However, the
Contractor may use, with the consent of the Purchaser, which
shall not be unreasonably withheld, the materials needed to
effect a repair from the Purchaser's available spare
materials. The Contractor shall promptly replace in kind such
materials supplied from the Purchaser's spare materials or at
the option of the Purchaser, reimburse the Purchaser for such
materials at its original purchase price. The replacement of
or reimbursement for such materials shall be made at a time
mutually agreed to by the Purchaser and the Contractor.
4. The Contractor warrants that services furnished hereunder will
be performed in a workmanlike manner using materials free from
defects except when such materials are provided by the
Purchaser (it being understood that all materials arranged for
directly by Contractor, whether or not purchased in the name
of Purchaser, are not materials provided by the Purchaser). If
such services prove to be not so performed and Purchaser
notifies the Contractor within six (6) months from the
completion of the service or before the end of the Warranty
Period, whichever is later, the Contractor will promptly
correct the defect.
5. Any part which replaces a defective part during the applicable
Warranty Period or Upgrade Warranty Period, shall be covered
by these warranties for the remaining Warranty Period and Ship
Period, if any, or Upgrade Warranty Period, as the case may
be, of the part which was replaced or, if
<PAGE> 43
40
longer, six months from the date of replacement. The foregoing
is not meant to limit any separate warranty that may apply to
the replacement part. However, the Warranty Period shall never
exceed five (5) years from the Date of Provisional Acceptance
of the System and the Upgrade Warranty Period for any System
Upgrade shall never exceed five (5) years from the Date of
Provisional Acceptance of such System Upgrade, in each such
Warranty Period, such Date of Provisional Acceptance shall be
defined to include the first proviso contained in Sub-Article
10(A). Further, Ship Costs shall be included only with respect
to defects identified by Purchaser in writing during the first
two (2) years from the Date of Provisional Acceptance of the
System or Adjusted Date of System Provisional Acceptance, as
the case may be, and shall be included with respect to such
defect until it is repaired.
B. The Contractor represents and warrants that the Design Life of the
System is twenty-five (25) years. The Contractor warrants that (i) the System
shall be designed so that during the Design Life Period no pattern of failure
shall develop that causes the System (as upgraded from time to time by System
Upgrades) to fail to meet its reliability as set forth in the System Performance
Requirements (as upgraded from time to time by System Upgrades) over the Design
Life Period and (ii) the System shall be designed with sufficient transmission
margin to be upgradable to a capacity of 640 Gb/s per fiber pair. Contractor
shall have no liability with respect to the design warranty set forth in clause
(ii) of this Sub-Article unless and until Contractor shall have failed to
perform a System Upgrade requested by Purchaser. The Design Life Period shall
run for twenty-five (25) years from the Date of Provisional Acceptance of the
System (whether or not any System Upgrades are done). In the event the System is
not so designed as provided in the first two sentences of this Sub-Article,
Contractor shall effect such reengineering and redesign and make such repairs or
replace such parts as may be necessary to correct such deficiency. The
Contractor shall bear the costs of all repairs and parts and of the
reengineering and redesign necessary to effect such repairs and replacements and
the Ship Costs incurred in connection with such repairs and replacements. The
Contractor warrants that all Supplies, Deliverable Software and Deliverable
Technical Materials are Year 2000 Compliant.
C. The warranties provided above in Sub-Articles 10(A) and (B) by the
Contractor shall not apply to defects or failures of performance, which result
from damage caused by acts or omissions of the Purchaser or its agents,
employees or representatives or third parties (other than the Contractor or its
Subcontractors), or which result from modifications, misuse, neglect, accident
or abuse, repair, storage or maintenance by other than the Contractor or its
Subcontractors or, use in a manner not in accordance with the System Description
or other causes set forth in Article 17 (Force Majeure).
D. THE FOREGOING WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER EXPRESS
AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED.
<PAGE> 44
41
E. The Contractor shall, in accordance with its normal operating
practices, investigate any defective part or parts repaired or replaced pursuant
to this Article 10 to determine the type of defect and the cause of failure of
the part or parts. The Contractor shall provide a written report to the
Purchaser on the results of the investigation, if any.
F. The Contractor agrees that the foregoing provisions of this Article 10
may be enforced, on behalf of Purchaser, by the entity or entities performing
operation, administration or maintenance services for the System.
ARTICLE 11 CONTRACTOR SUPPORT; USE OF SEGMENT FOR RESTORATION PROTECTION
A. For a period of ten (10) years from the applicable Date of Provisional
Acceptance or Date of Commercial Acceptance of the System whichever is earlier,
the Contractor will make available to the Purchaser replacement parts and repair
service for the System as may be reasonably necessary for its operation,
maintenance or repair. Where identical parts cannot be supplied, the Contractor
shall provide fully compatible parts with characteristics equal or superior to
those originally provided by the Contractor. Such parts and services shall be
provided under commercially reasonable conditions of price and delivery.
B. Notwithstanding Sub-Article 11(A), if for any reason the Contractor or
Contractor's suppliers intend to cease or ceases manufacturing or having
manufactured identical or fully compatible replacement parts, the Contractor
shall use reasonable efforts to give one year's prior written notice to the
Purchaser to allow the Purchaser to order from the Contractor any required
replacement parts and shall provide full details of the arrangements to provide
equivalents.
C. Once the Purchaser has accepted a Segment of the System, the Purchaser
shall be entitled to use, without charge, any other unaccepted Segment or
Segments of the System solely for purposes of instituting restoration protection
in the System (a "Restoration Segment"); provided that:
1. Contractor shall be relieved from its obligations pursuant to
Article 22, to pay liquidated damages with respect to any
Restoration Segment for any delays in the Contractor's Work
directly resulting from, and only to the extent of,
Purchaser's usage of such Restoration Segment or Segments for
restoration protection purposes;
2. Contractor shall be compensated for any payment milestones
delayed or made unachievable arising out of or as a result of
Purchaser's use of such Restoration Segment or Segments for
restoration protection purposes; and
3. Purchaser shall be responsible for all maintenance costs that
would not have been incurred but for Purchaser's use of such
Restoration Segment or Segments for restoration protection
purposes.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 45
42
The Purchaser's use of any unaccepted Segment or Segments for
restoration protection purposes shall in no way obligate the Purchaser to accept
such other Segment or Segments, nor shall it be deemed to constitute an
acceptance by the Purchaser of any such other Segment or Segments, and the title
and any risk of loss associated with any such other Segment or Segments shall
remain with the Contractor.
ARTICLE 12 PURCHASER'S OBLIGATIONS
A. If the Purchaser's failure to perform any of its express obligations
under this Contract directly results in an increase in the costs of performance
or the time required for performance of any of the Contractor's duties or
obligations under this Contract, such failure shall be deemed a "Purchaser
Hindrance." In the event of a Purchaser Hindrance, the Contractor shall be
entitled, as appropriate, to (i) an equitable extension of time for completion
of its Work or the Upgrade Work if the Purchaser Hindrance meets the
requirements for a Force Majeure delay, (ii) reimbursement for all such
additional costs incurred, and (iii) to the extent necessary in light of
Purchaser's failure and the adjustments made in accordance with clauses (i) and
(ii) above, an equitable adjustment of the Work and/or Upgrade Work. The
Contractor shall not be entitled to any other right or remedy with respect to a
Purchaser Hindrance.
1. The Contractor's remedies described in clauses (i), (ii) and
(iii) above are conditioned upon the Contractor informing the
Purchaser promptly of any potential Purchaser Hindrance, and
using reasonable efforts to minimize any such additional costs
or delay.
2. The Contractor shall promptly provide to the Purchaser an
estimate of the anticipated additional costs and time required
to complete the Work or Upgrade Work and request relief from
contractual obligations or duties, as appropriate. Purchaser
shall, upon notification, make advance payment to Contractor
for the estimated amount of anticipated additional costs;
provided that Purchaser may deposit such amount into the
Dispute Account and Sub-Article 5(C)(4) shall apply.
Contractor shall without limiting Purchaser's obligations in
the foregoing sentence, discuss such costs with Purchaser upon
Purchaser's request.
3. As soon as reasonably practicable after the actual costs
become known to the Contractor, the Contractor shall provide a
statement of such actual costs to the Purchaser.
4. If the estimated amount is greater than the amount of actual
costs, then the Contractor shall reimburse the Purchaser. If
the amount of actual costs incurred is greater than the
estimated amount, then the Purchaser shall reimburse the
Contractor for any shortfall in accordance with Article 5
(Terms of Payment of Purchaser).
<PAGE> 46
43
ARTICLE 13 TERMINATION FOR DEFAULT
A. Either Party may, by written Notice of Termination for Default,
effective fifteen (15) days after receipt or such later date as specified in the
notice, terminate the whole or any part of this Contract if any one of the
following circumstances continues after such notice (each an "Event of
Default"):
1. In the case of the Purchaser, (a) if Contractor fails to
comply in any material respect with any of the terms and
conditions of this Contract and such failure shall continue
for thirty (30) days after written notice from Purchaser to
Contractor specifying the failure and demanding that the same
be remedied; provided that, if such default cannot be
reasonably corrected within such thirty (30) day period, an
Event of Default with respect to Contractor shall not be
deemed to occur until the expiration of such further period,
not to exceed ninety (90) days, as reasonably required to
correct such failure, if the Contractor commences, within such
thirty (30) day period, and continues diligently at all times
thereafter, to take reasonable steps to correct the failure as
soon as possible, or (b) any representation or warranty made
by Contractor herein or in any certificate, statement or
document given pursuant to the terms hereof shall prove to be
false, incorrect or misleading in any material respect as of
the date on which it was made and any material adverse
consequences to Purchaser caused thereby shall not have been
remedied within thirty (30) days after written notice thereof
shall have been given to Contractor by Purchaser; or (c) the
Contractor fails to cause the System to be Ready for
Provisional Acceptance within 200 days after the Scheduled
System RFS Date;
2. If the other Party defaults on any of its payment obligations
and does not cure such default within a period of thirty (30)
days (or such longer period as the non-breaching Party may
authorize in writing) after receipt of written notice
demanding cure (subject to dispute provisions);
3. If the other Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit
of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize
any of the foregoing;
4. If an involuntary case or other proceeding shall be commenced
against the other Party seeking liquidation, reorganization or
other relief with respect
<PAGE> 47
44
to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the other Party;
5. The Guaranty shall for any reason cease to be in full force
and effect or the Guarantor shall repudiate any of its
obligations thereunder.
B. If this Contract is terminated by the Purchaser as provided in
Sub-Article 13(A), the Purchaser, in addition to any other rights provided in
this Article, and upon payment to Contractor of all monies due and owing as set
forth in Sub-Article 13(C) below, may require the Contractor to transfer title
and deliver to the Purchaser in the manner and to the extent directed by the
Purchaser any completed equipment, material or supplies, and such partially
completed cable and materials, parts, tools, dies, jigs, fixtures, plans,
drawings, information, and contract rights (hereinafter collectively
"Manufacturing Materials") as the Contractor has had specifically produced or
specifically acquired for the performance of such part of this Contract as has
been terminated and which, if this Contract had been completed, would have been
required to be furnished to the Purchaser; and the Contractor shall, upon the
direction of the Purchaser, protect and preserve property in the Contractor's
possession in which the Purchaser has an interest.
C. If the Contract is terminated by Contractor as provided in Sub-Article
13(A), the Purchaser shall pay, in addition to any other damages payable
pursuant to Sub-Article 13(E) below, the total of:
1. the cost of settling and paying claims arising out of the
termination of Work under the contracts and orders, as
provided in Sub-Article 14(B)(3) below which are properly
chargeable to the terminated portion of this Contract; and
2. the reasonable costs of settlement including accounting,
legal, clerical and other expenses necessary for the
preparation of settlement claims and supporting data with
respect to the terminated portion of this Contract and for
termination and settlement of contracts thereunder, together
with reasonable storage, transportation and other costs
incurred in connection with the protection, preservation and
disposition of property proper to this Contract.
D. Force Majeure or Purchaser Hindrance events shall not constitute a
default or provide a basis for termination under this Article.
E. Regardless of any termination of this Contract as provided in
Sub-Article 13(A), neither Party shall be relieved from any liability for
damages or otherwise which may have been incurred by reason of any breach of
this Contract.
<PAGE> 48
45
F. Without limitation to the foregoing, in the event that Purchaser
terminates this Contract pursuant to Sub-Article 13(A), the Contractor shall be
liable to Purchaser (without duplication) for the total of all costs and
expenses reasonably incurred by Purchaser in completing the Work or in
correcting deficiencies in the Work to the extent that the payments made to
Contractor pursuant to this Contract, together with such costs and expenses,
exceed the Contract Price.
ARTICLE 14 TERMINATION FOR CONVENIENCE
A. The performance of Work under this Contract may be terminated by the
Purchaser in whole, or in part, at its discretion. The Purchaser shall deliver
to the Contractor a written notice specifying the extent to which performance of
Work under this Contract is terminated, and the date upon which such termination
becomes effective (a "Notice of Termination"). Upon termination, the Purchaser
will make payment to Contractor of all monies due and owing as set forth in
Sub-Article 14(D) below.
B. After receipt of such Notice of Termination, and except as otherwise
directed by the Purchaser, the Contractor shall:
1. Stop Work under this Contract on the date and to the extent
specified in the Notice of Termination;
2. Place no further orders or contracts for materials, services
or facilities except as may be necessary for completion of
such portion of Work under this Contract as is not terminated;
3. Use reasonable efforts to terminate all orders and contracts
to the extent that they relate to the performance of Work
terminated by the Notice of Termination;
4. Assign to the Purchaser, in the manner, at the time, and to
the extent directed by the Purchaser, all of the Contractor's
rights, title and interest under the orders and contracts so
terminated;
5. Use reasonable efforts to settle all outstanding liabilities
and all claims arising out of such termination of orders and
contracts, with the Purchaser's approval or ratification to
the extent required;
6. Transfer title and deliver to the Purchaser in the manner, at
the time and to the extent (if any) directed for the
fabricated or unfabricated parts, work in process, completed
work, supplies and other material produced as a part of, or
acquired in connection with, the performance of the Work
terminated by the Notice of Termination;
7. Use reasonable efforts to sell, in the manner, at the time, to
the extent and at the price or prices directed or authorized
by the Purchaser, any property
<PAGE> 49
46
of the types referred to in Sub-Article 14(B)(6) above
provided, however, that the Contractor:
(a) shall not be required to extend credit to any buyer; and
(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;
and provided further that the net proceeds of any such
transfer or disposition shall be applied in reduction of any
payments to be made by the Purchaser to the Contractor under
this Contract or, if no such payments are due, paid in such
other manner as the Purchaser may direct;
8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the Contractor's
possession and in which the Purchaser has acquired or may
acquire an interest.
C. After such Notice of Termination, the Contractor shall submit to the
Purchaser a written termination claim. Such claim shall be submitted promptly,
but, unless otherwise extended, in no event later than six months from the
effective date of termination.
D. In the settlement of any such partial or total termination claim, the
Purchaser shall pay to the Contractor the total of:
1. all amounts invoiced in accordance with the Contract plus, for
Work or Supplies which have been done, provided or are in
progress, but which have not been invoiced, an amount
calculated by reference to the prices set forth in the
Provisioning Schedule and to the amount of such Work or
Supplies done or provided;
2. the cost of settling and paying claims arising out of the
termination of Work under the contracts in orders, as provided
in Sub-Article 14(D)(3) below which are properly chargeable to
the terminated portion of this Contract; and
3. the reasonable costs of settlement including accounting,
legal, clerical and other expenses necessary for the
preparation of settlement claims and supporting data with
respect to the terminated portion of this Contract and for
termination and settlement of contracts thereunder, together
with reasonable storage, transportation and other costs
incurred in connection with the protection and disposition of
property proper to this Contract.
<PAGE> 50
47
E. In arriving at the amount due to the Contractor under this Article 14,
all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.
F. The Purchaser may, from time to time, under such terms and conditions
as they prescribe approve partial payments and payments on account against costs
incurred by the Contractor in connection with the terminated portion of this
Contract. If such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall be refunded, upon
demand, by the Contractor to the Purchaser.
G. For a period of one year after final settlement under this Contract,
the Contractor shall preserve and make available to the Purchaser at reasonable
times at the Contractor's office, but without direct charge to the Purchaser,
all supporting books, records and documents required to be kept relating to the
terminated Work.
ARTICLE 15 SUSPENSION
A. The Purchaser may, at its convenience, order the Contractor to suspend
all or part of the Work for such period of time as the Purchaser determines to
be appropriate. If, as a result of such Suspension, the Contractor incurs
additional costs or losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule in Appendix 1 and an equitable
extension in the time required for performance.
B. Upon the occurrence of:
(i) an Event of Default by the Purchaser;
(ii) any transfer prior to the Date of Final Acceptance of any
portion of the System except in accordance with Article 37; or
(iii) any supplement executed by a Transferee shall not be in full
force and effect;
the Contractor, in addition to any other rights provided in Article 14, may
suspend performance of its obligations and all Work and (in the case of clause
(i)) Upgrade Work.
C. Every forty-five (45) days, during the period of Suspension, the
Parties shall meet formally and review the circumstances surrounding the
Suspension including without limitation, the anticipated date of re-commencing
Work.
D. Thereafter, if the Suspension continues for a total of one hundred and
eighty (180) days, the Contractor may terminate the Contract by notice to the
Purchaser and the Contract shall
<PAGE> 51
48
be deemed to have been terminated by Purchaser, effective on the date of
Contractor's notice, in accordance with Sub-Article 14(A) and the remaining
provisions of Article 14 shall apply.
ARTICLE 16 TITLE AND RISK OF LOSS
A. Except as provided in Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology) and Article 21 (Export Control),
title to all Supplies provided by the Contractor hereunder for incorporation in
or attachment to a Segment shall pass to and vest in the Purchaser in accordance
with Article 9 (Acceptance). Risk of loss or damage to all Supplies provided by
the Contractor for incorporation in or attachment to such Segment shall pass to
and vest in the Purchaser in accordance with Article 9. Upon termination of this
Contract pursuant to Article 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment of all amounts due
thereunder (provided that, without limiting Purchaser's obligation to make any
such payment, if this Contract is terminated by Purchaser because of a
Bankruptcy Event full payment shall not be required prior to the transfer of
title), that title to the equipment, materials and supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances other than those deriving through
Purchaser.
B. Upon the passage of title in accordance with the terms of Article 13
(except a transfer described in the proviso of the last sentence of Sub-Article
16(A)), the Contractor warrants that all parts, materials, and equipment to
which title has passed will be free and clear of all liens, claims, charges and
other encumbrances other than those deriving through the Purchaser.
ARTICLE 17 FORCE MAJEURE
A. The Contractor shall not be responsible for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control ("Force Majeure"), including but not limited to:
delay in obtaining or failure to obtain any Owner Permits (subject to the
provisions of Sub-Article 7(D)); acts of God or of the public enemy; acts or
failures to act (other than with respect to Contractor Permits) of any
governmental authority unless resulting from any act or omission of Contractor;
war or warlike operations, civil war or commotion, mobilizations or military
call-up, and acts of similar nature; revolution, rebellions, sabotage, and
insurrections or riots; fires, floods, epidemics quarantine restrictions;
strikes, and other labor actions; freight embargoes; unworkable weather (so long
as Contractor shall have taken reasonably foreseeable unworkable weather into
account when planning its Work schedule; trawler or anchor damage caused by
other marine activity such as fishing, marine research and marine development;
acts or omissions of transporters; or a Purchaser Hindrance, but only to the
extent that the obligation underlying such Hindrance is not performed at the
time contemplated by the Plan of Work, provided that the following shall not
constitute Force Majeures: (i) a loss by Contractor of employees (other than by
reason of Force Majeure), (ii) strikes and other labor actions involving the
Contractor's own work force, (iii) the first 5 days of unworkable weather
(unless any such day occurs during the 30 days immediately preceding the then
Scheduled RFS Date), (iv) the failure (other than by reason of Force Majeure) of
any subcontractor, supplier or transporter to perform its obligations to
Contractor (including on
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account of insolvency), (v) the unavailability of any raw materials or
components, unless such raw materials or components are generally unavailable in
the marketplace at the time Contractor should have ordered them or are
unavailable by reason of force majeure or (vi) any increase in Contractor's
costs.
B. If any such Force Majeure causes an increase in the time or costs
required for performance of any of its duties or obligations, the Contractor
shall be entitled to an equitable extension of time for completion of the Work
or the Upgrade Work, as the case may be, but not any adjustment in the Contract
Price nor any reimbursement for any such additional costs incurred.
C. Increase in cost due to Purchaser Hindrance will be as provided for in
Article 12 (Purchaser's Obligations).
D. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases within fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional delays. The Contractor shall
promptly provide an estimate of the anticipated time required to complete the
Work or the Upgrade Work. Contractor shall be entitled to an equitable extension
of time resulting from the Force Majeure condition, but only to the extent that
such Force Majeure actually causes a delay in the timely completion of the Work
or Upgrade Work after all reasonable efforts to minimize such a delay have been
made.
E. Within thirty (30) days of receipt of such a notice from Contractor,
the Purchaser and the Independent Engineer may provide a written response. The
absence of a response shall not be deemed as acceptance of Contractor's notice
and request for additional time.
F. If a Force Majeure continues for a total of two hundred (200) days,
either Party may terminate the Contract by notice to the other and the Contract
shall be deemed to have been terminated by Purchaser, effective on the date of
the terminating Party's notice, in accordance with Sub-Article 14(A) and the
remaining provisions of Article 14 shall apply to such termination.
G. Every 45 days during the period of Force Majeure, the Parties shall
meet and review the circumstances surrounding the Force Majeure, including,
without limitation, the anticipated date of recommencing work.
ARTICLE 18 INTELLECTUAL PROPERTY
A. Ownership
All right, title, and interest in and to all Intellectual Property
(excluding Project Patent Rights) created or developed by Contractor in the
course of its performance under this Contract that is (a) specifically and
exclusively applicable to the System or a System Upgrade; and (b) either (i)
embodied in Deliverable Technical Material (as that term is defined in
Sub-Article 18(B) below) or (ii) embodied in the System or a System Upgrade (the
"Project
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Intellectual Property"), is and shall remain the sole property of Purchaser.
Contractor represents that as of the date of this Contract, no software is
planned to be developed that would be included as Project Intellectual
Property.* All right, title and interest in and to all Intellectual Property
created or developed by Contractor before commencing its performance under this
Contract, or created or developed by Contractor exclusively in connection with
activities other than its performance under this Contract, or created or
developed by Contractor in the course of its performance under this Contract
that is not Project Intellectual Property, and all Project Patent Rights
(collectively, the "Contractor Intellectual Property"), is and shall remain the
sole property of Contractor. Unless otherwise expressed in this Contract, no
license is implied or granted herein to Purchaser to any Contractor Intellectual
Property by virtue of this Contract, nor by the transmittal or disclosure of any
such Contractor Intellectual Property to Purchaser. Any Contractor Intellectual
Property disclosed, furnished, or conveyed to Purchaser that is marked as
"Proprietary" or "Confidential" (or if transmitted orally is identified as being
proprietary or confidential in a subsequent writing) shall be treated in
accordance with the provisions of Article 20 (Safeguarding of Information and
Technology). As used herein, "Intellectual Property" means any information,
computer or other apparatus programs, software, specifications, drawings,
designs, sketches, tools, market research or operating data, prototypes,
records, documentation, works of authorship or other creative works, ideas,
concepts, methods, inventions, discoveries, improvements, or other business,
financial and/or technical information (whether or not protectable or
registrable under any applicable intellectual property law). As used herein,
"Project Patent Rights" means all inventions, discoveries, methods and
improvements of a patentable nature created or developed by Contractor in the
course of its performance under this Contract. Project Intellectual Property
will include the materials to be listed in Exhibit H, to be created mutually by
the Parties within thirty (30) days of execution of this Contract, as it may be
amended from time to time by mutual agreement of the Parties.
B. Licenses
Contractor shall furnish to Purchaser, upon the transfer of title to
any portion of the System or a System Upgrade pursuant to Article 9, copies of
all technical information, specifications, drawings, designs, sketches, tools,
operating data, records, documentation and/or other types of engineering or
technical data or information reasonably relating to the operation, maintenance
or repair of each component of such portion of the System or System Upgrade as
delivered by Contractor (the "Deliverable Technical Material"). Deliverable
Technical Material shall not be deemed to include Deliverable Software.
Contractor grants to Purchaser a perpetual, royalty-free, non-transferable
(except under the circumstances specified in Sub-Article 18(F) below) license to
use and reproduce those Deliverable Technical Materials owned, controlled, or
developed by Contractor and all Contractor Intellectual Property included in or
necessary to use all the Deliverable Technical Materials for purposes of
fulfilling Purchaser's obligations under this Contract and using and operating
the System (as upgraded by any System Upgrades) supplied by Contractor with the
right to employ third parties (under appropriate written
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
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obligations respecting confidentiality) to assist Purchaser in fulfilling its
obligations under this Contract and in using and operating the System (as
upgraded by any System Upgrades), but with no right to sublicense. Contractor
grants to Purchaser a perpetual, royalty-free, non-transferable (except under
the circumstances specified in Sub-Article 18(F) below) license to use and
reproduce those portions of Deliverable Technical Materials owned or controlled
by third parties (but only to the extent of any rights which may have been
granted to Contractor by such third parties) for the purpose of fulfilling
Purchaser's obligations under this Contract and using and operating the System
supplied by Contractor with the right to employ third parties (under appropriate
written obligations respecting confidentiality) to assist Purchaser in
fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
Except as set forth in this provision, no license under Contractor's patents,
copyrights, trade or service marks, trade secrets or other intellectual property
rights protectable under law in the United States or any foreign country is
granted to Purchaser. It is expressly understood that it shall not be a
violation of this license for Purchaser, on its own behalf or through third
parties (under appropriate written obligations respecting confidentiality)
specifically employed for the purpose, to use and reproduce Deliverable
Technical Material that is not Project Intellectual Property to modify the
System (as upgraded by any System Upgrades) or connect the System (as upgraded
by any System Upgrades) to other systems, provided that Purchaser may not use
the Deliverable Technical Materials that is not Project Intellectual Property in
achieving such modification or interconnection for any purpose other than
determining the technical configuration, systems interface and/or
interoperability requirements of the System (as upgraded by any System Upgrades)
as delivered by Contractor (subject to the rights of third parties therein and
thereto), and subject to the limitations on Contractor's obligations as set
forth in Articles 10(D) and 19(A) concerning any such modification or
interconnection.
C. Deliverable Software
Contractor shall furnish to the Purchaser, upon transfer of title to
any portion of the System or System Upgrade pursuant to Article 9, copies of all
computer or other apparatus programs and software, in executable form, and
related documentation relating to the operation, maintenance, or repair of the
computer systems of such portion of the System or System Upgrade, as the case
may be, as delivered by Contractor (the "Deliverable Software"). In the case of
Contractor Intellectual Property, such copies of programs and software shall
consist solely of executable code provided in offline media (e.g., tapes, or
diskettes) for restoration purposes, sufficient to operate, maintain or repair
the computer systems of such portion of the System or System Upgrade, as the
case may be, as delivered by Contractor, and in the case of Project Intellectual
Property, such programs and software shall be delivered in both source and
object code forms. Contractor shall furnish to Purchaser, from time to time
during the Warranty Period or any Upgrade Warranty Period, copies of all
computer or other apparatus programs and software, in executable form (and in
the case of Project Intellectual Property, in source code form), and related
documentation that Contractor may develop to correct errors or to maintain
Deliverable Software previously furnished to Purchaser, which shall also be
treated as Deliverable Software for purposes of this Contract upon delivery
thereof to Purchaser. Contractor grants to Purchaser a perpetual, royalty-free,
non-transferable (except under the circumstances specified in Sub-Article 18(F)
below) license to use and reproduce the Deliverable Software
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Materials owned, controlled, or developed by Contractor for the purpose of
fulfilling Purchaser's obligations under this Contract and using and operating
the System (as upgraded by any System Upgrades) supplied by Contractor with the
right to employ third parties (under appropriate written obligations respecting
confidentiality) to assist Purchaser in fulfilling its obligations under this
Contract and in using and operating the System (as upgraded by any System
Upgrades), but with no right to sublicense. Contractor grants to Purchaser a
perpetual, royalty-free, non-transferable (except under the circumstances
specified in Sub-Article 18(F) below) license to use and reproduce those
portions of Deliverable Software owned or controlled by third parties (but only
to the extent of any rights which may have been granted to Contractor by such
third parties) for the purpose of fulfilling Purchaser's obligations under this
Contract and using and operating the System (as upgraded by any System Upgrades)
supplied by Contractor with the right to employ third parties (under appropriate
written obligations respecting confidentiality) to assist Purchaser in
fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
These licenses shall be limited to the right to use Deliverable Software that is
not Project Intellectual Property only with the particular type of computer
equipment or substantially similar replacement equipment for which such
Deliverable Software was provided in the System (as upgraded by any System
Upgrades) as supplied by Contractor.
1. Confidentiality
Purchaser shall keep the Deliverable Software that is not
Project Intellectual Property confidential in accordance with
Article 20 (Safeguarding of Information and Technology) and
Article 21 (Export Control) and agrees to use its best efforts
to see that its employees, consultants, and agents, and other
users of such software, comply with the provisions of this
Contract. Purchaser also agrees to refrain from taking any
steps, such as reverse assembly or decompilation, to derive a
source code equivalent of any object code that is furnished by
Contractor; provided that Contractor is willing when requested
by Purchaser and is able to maintain the Deliverable Software
that is not Project Intellectual Property in accordance with
the terms of a support and maintenance agreement to be entered
into on such terms to be agreed upon by the Parties, which
terms shall in all events contain assurances of support and
maintenance that are commercially reasonable and in any event
at least as favorable as those provided by Contractor to other
licensees, or Contractor is willing and able to enter into an
agreement to maintain the Deliverable Software upon terms
reasonably comparable to the pertinent terms of the initial
agreement to be entered into by the Parties with regard to
support and maintenance after the expiration or termination
thereof or does not go insolvent or bankrupt to thereby
trigger a software escrow event in accordance with Article
18(G) (Escrow). In the case of insolvency or bankruptcy of
Contractor, Purchaser shall limit any derivation of a source
code equivalent to that portion of the Deliverable Software
that is Contractor Intellectual Property. Purchaser shall not
under any circumstances take any steps to derive a source code
equivalent from that
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portion of the Deliverable Software comprising commercial,
off-the-shelf software developed or provided by third parties.
2. Backup Copies
Purchaser may make and retain two archive copies in executable
form of the Deliverable Software that is not Project
Intellectual Property. Any copy will contain the same
copyright notice and proprietary markings as are on the
original software and shall be subject to the same
restrictions as the originals.
3. Termination of Software Licenses
In the event of (i) use by the Purchaser of Deliverable
Software that is not Project Intellectual Property in a manner
other than that permitted in Sub-Article 18(C) or (ii) any
other material breach of this Article 18 by Purchaser that in
either event is not cured within sixty (60) days from receipt
by Purchaser of written notice of such impermissible use or
breach, Contractor, at its option, may terminate the rights
granted to Purchaser pursuant to this Article, upon written
notice to Purchaser, which termination shall take effect no
sooner than sixty (60) days following receipt by Purchaser of
a subsequent written notice of termination. Upon termination,
Purchaser shall either return or destroy, at Contractor's
option, all copies of Deliverable Software that is not Project
Intellectual Property furnished under this Contract.
4. Indemnification
In the event of (i) use by Purchaser of Deliverable Software
that is not Project Intellectual Property furnished hereunder
other than that permitted in Sub-Article 18(C) or (ii) any
other material breach of this Article 18 by Purchaser, the
Purchaser shall indemnify and hold Contractor harmless from
any and all third party claims resulting therefrom whether
arising from a defect in the software or otherwise.
D. Trademarks, Tradenames, etc.
No rights are granted herein to either Party to use any
identification (such as, but not limited to tradenames, trademarks, service
marks or symbols, and abbreviations, contractions, or simulations thereof) owned
or used by the other Party or its parent company or its affiliates to identify
itself or its affiliates or any of its products or services. Each Party agrees
that it will not, without the prior written permission of the other Party, use
such identification in advertising, publicity, packaging, labeling, or in any
other manner to identify itself or any of its products, services, or
organizations, or represent directly or indirectly that any product, service, or
organization of it is a product, service, or organization of the other Party or
its affiliates, or that any product or service of a Party is made in accordance
with or utilizes any intellectual property of the other Party or its affiliates.
E. DISCLAIMER, LIMITATION OF LIABILITY
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CONTRACTOR REPRESENTS THAT ANY INFORMATION OR INTELLECTUAL PROPERTY
FURNISHED IN CONNECTION WITH THIS CONTRACT SHALL BE TRUE AND ACCURATE TO THE
BEST OF ITS KNOWLEDGE AND BELIEF, BUT CONTRACTOR SHALL NOT BE HELD TO ANY
LIABILITY FOR UNINTENTIONAL ERRORS OR OMISSIONS THEREIN. EXCEPT AS EXPRESSLY
PROVIDED, CONTRACTOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSLY OR
IMPLIEDLY. BY WAY OF EXAMPLE, BUT NOT OF LIMITATION, CONTRACTOR AND ITS PARENT
COMPANY AND AFFILIATES MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF INFORMATION OR
INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY. EXCEPT AS
OTHERWISE PROVIDED IN THIS CONTRACT, CONTRACTOR AND ITS PARENT AND AFFILIATES
SHALL NOT BE HELD TO ANY LIABILITY WITH RESPECT TO ANY CLAIM BY PURCHASER OR ANY
THIRD PARTY CLAIM AGAINST PURCHASER ON ACCOUNT OF, OR ARISING FROM, PURCHASER'S
USE OF INFORMATION OR INTELLECTUAL PROPERTY DISCLOSED OR PROVIDED BY CONTRACTOR.
F. Transferability
The licenses granted to Purchaser by Contractor in the Deliverable
Technical Materials and Deliverable Software are personal and non-transferable,
except that Purchaser may assign or transfer such licenses to an affiliated
entity under common control with the Purchaser or to any entity succeeding to
Purchaser's entire interest in the System (as upgraded by any System Upgrades)
as a result of reorganization or restructuring of the Purchaser or in the event
of a change of control of the Purchaser.
G. Deliverable Software Escrow
Within sixty (60) days of the Date of Provisional Acceptance or
Commercial Acceptance of any portion of the System or any System Upgrade,
Contractor shall deliver copies of source code and related documentation for
that portion of Deliverable Software that is Contractor Intellectual Property
(but not that portion of Deliverable Software comprising commercial,
off-the-shelf software, or software developed or provided by third parties) to a
third party commercial software escrow service, and from time to time as it
becomes available, copies of source code for updates, maintenance releases, or
other new versions of the Deliverable Software that is Contractor Intellectual
Property that is reasonably relating to the operation, maintenance or repair of
the computer systems of any portion of the System or any System Upgrade as
delivered by Contractor during the System's twenty-five (25) year Design Life
Period.
A detailed listing of commercial, off-the-shelf software, or
software developed or provided by third parties to be included in the
Deliverable Software shall be delivered by Contractor to Purchaser within sixty
(60) days of the Date of Provisional Acceptance of any portion of the System or
any System Upgrade, as the case may be.
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The escrow service shall be authorized by Contractor to release the
escrowed software to Purchaser within five (5) business days after the receipt
of notice by Purchaser that (i) a Bankruptcy Event has occurred, (ii) that the
Contractor is no longer engaged in the business of operating or maintaining, or
providing support for other parties in operating or maintaining, systems
comparable to the System (as modified by System Upgrades) or (iii) that
Purchaser has terminated the Contract pursuant to Article 12 (Termination for
Default) due to Contractor's default, unless Contractor agrees to continue to
support Purchaser with respect to Deliverable Software.
ARTICLE 19 INFRINGEMENT
A. The Contractor agrees to defend or settle at its own expense all suits
for infringement of any patent, copyright, trademark or other form of
intellectual property right in any country of the world, for the use and
operation of the System (as upgraded by any System Upgrades) as supplied by
Contractor and for any component part thereof or material or equipment used
therein (or the manufacture of any material or the normal use thereof) provided
by the Contractor or on its behalf pursuant to this Contract and will hold the
Purchaser harmless from all expense of defending any such suit and all payments
for final judgment assessed on account of such infringement, except such
infringement or claim arising from:
1. The Contractor's adherence to the Purchaser's directions in
the design and configuration of the System (as upgraded by any
System Upgrades) or to use materials, parts or equipment of
the Purchaser's selection; or
2. Such material, parts or equipment furnished to the Contractor
by the Purchaser, other than in each case, items of the
Contractor's design or selection or the same as any of the
Contractor's commercial merchandise or in processes or
machines of the Contractor's design or selection used in the
manufacture of such standard products or parts; or
3. Use of the System (as upgraded by any System Upgrades) or the
materials, parts or equipment furnished by Contractor other
than for the purposes indicated in, or reasonably to be
inferred from, this Contract or in conjunction with other
products; or
4. Modification of the System (as upgraded by any System
Upgrades) or the materials, parts or equipment furnished by
the Contractor, or connection of the System to another system
by any person or entity other than Contractor, without prior
expressed written approval by Contractor.
B. The Purchaser will, at its own expense, defend all suits against the
Contractor for such excepted infringement and hold the Contractor harmless from
all expense of defending any such suit and from all payments by final judgment
assessed against the Contractor on account of such excepted infringement.
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C. The Contractor and the Purchaser agree to give each other prompt
written notice of claims and suits for infringement, full opportunity and
authority to assume the sole defense, including appeals and, upon request and at
its own expense, the other agrees to furnish all information and assistance
available to it for such defense.
D. If all or any portion of the System (as upgraded by any System
Upgrades) or any material, part or equipment provided by the Contractor or on
its behalf is held to constitute an infringement (excluding such excepted
infringements specified in Sub-Article 19(A)) and is subject to an injunction
restraining its use or any order providing for its delivery up to or
destruction, or if in respect of any such claim of infringement the Contractor
deems it advisable to do so, the Contractor shall at its own expense either:
1. Procure for the Purchaser the right to retain and continue to
use the System, the affected portion thereof, or any such
material, part or equipment without interruption for the
Purchaser;
2. Replace or modify the System, the affected portion thereof, or
any material, part or equipment so that it becomes
noninfringing while continuing to meet the Performance
Requirements or
3. If the remedies specified in Sub-Articles 19(D)(1) an 19(D)(2)
are not feasible, refund to the Purchaser the full purchase
price paid for the System, the affected portion thereof, or
any material, part or equipment found to be infringing.
E. In no event shall the Purchaser make any admission or settle any claim
in relation with any claim for infringement without Contractor's consent.
ARTICLE 20 SAFEGUARDING OF INFORMATION AND TECHNOLOGY
A. In performance of this Contract, it may be mutually advantageous to the
Parties hereto to share certain specifications, designs, plans, drawings,
software, market research or operating data, prototypes, or other business,
financial, and or/technical information related to products, services, or
systems which are proprietary to the disclosing Party or its affiliates (and in
the case of Contractor, Contractor's parent company) (together with this
Contract and related documents, "Information"). The Parties recognize and agree
that Information includes information that was supplied in contemplation hereof
prior to execution of this Contract, and further agree that Information includes
information in both tangible and intangible form.
B. Unless such Information was previously known to the Party receiving
such Information free of any obligation to keep it confidential, or such
Information has been or is subsequently made public through other than
unauthorized disclosure by the receiving Party or is independently developed by
the receiving Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such Information, shall be
disclosed only in the performance of this Contract, and may not be disclosed for
any other purposes except upon such terms as may be agreed upon in writing by
the Party owning such Information. The
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receiving Party may disclose such Information to other persons, upon the
furnishing Party's prior written authorization, but solely to perform acts which
this Article expressly authorizes the receiving Party to perform itself and
further provided such other person agrees in writing (a copy of which writing
will be provided to the furnishing Party at its request) to the same conditions
respecting disclosure and use of Information contained in this Article and to
any other reasonable conditions requested by the furnishing Party. Nothing
herein shall prevent a Party from disclosing Information (a) upon the order of
any court or administrative agency, (b) upon the request or demand of, or
pursuant to any regulation of, any regulatory agency or authority, (c) to the
extent reasonably required in connection with the exercise of any remedy
hereunder and (d) to a Party's legal counsel or independent auditors.
C. The Purchaser may disclose Information to its lenders and their
representatives in connection with obtaining financing for the System, provided
that each such lender or their representative is informed in writing of and
agrees to abide by the confidentiality terms contained in this Contract. Any
such disclosure of Information shall be subject to the restrictions in
Sub-Article 20(B).
ARTICLE 21 EXPORT CONTROL
The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of the United States and the destination country(ies) and any use or
transfer of such products, software and technical information must be authorized
under those Laws. The Parties agree that they will not use, distribute, transfer
or transmit the products, software or technical information (even if
incorporated into other products) except in compliance with export Laws. If
requested by either Party, the other Party agrees to sign all necessary
export-related documents as may be required to comply with export Laws.
ARTICLE 22 LIQUIDATED DAMAGES
A. If Phase 1A of the System is not Ready for Commercial Acceptance or
Provisional Acceptance within fourteen (14) days (the "Grace Period") following
the Scheduled Phase 1A RFS Date, as it may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay following the
expiration of the Grace Period for up to 200 days or, if earlier, to the day
Contractor begins making payments under
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Paragraph B of this Article 22, by way of pre-estimated and liquidated damages
for the delay and not as a penalty, an amount equal to 0.05% of the Phase 1A
Price for the System, subject to the maximum aggregate amount set forth in
paragraph D of this Article 22.
B. If the System is not Ready for Commercial Acceptance or Provisional
Acceptance by the Scheduled System RFS Date, as it may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay, for up to 200
days, by way of preestimated and liquidated damages for the delay and not as a
penalty, an amount equal to 0.05% of the Initial Contract Price for the System,
less, if the Date of Commercial Acceptance or Date of Provisional Acceptance of
Phase 1A and/or Phase 1B has occurred, the Phase 1A Price and/or the Phase 1B
Price, as the case may be, subject to the maximum aggregate amount set forth in
paragraph D of this Article 22.
C. If a System Upgrade is not Ready for Commercial Acceptance or
Provisional Acceptance by the Scheduled Upgrade Date, as it may have been
extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay, for up to 90 days,
by way of preestimated and liquidated damages for the delay and not as a
penalty, an amount equal to .05% of the Initial Upgrade Contract Price.
D. In no event will the aggregate amount of Liquidated Damages exceed 10%
of the Initial Contract Price.
ARTICLE 23 LIMITATION OF LIABILITY/INDEMNIFICATION
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND IRRESPECTIVE
OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO EVENT SHALL
EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE
FOR ANY CONSEQUENTIAL,
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INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL (INCLUDING PUNITIVE) DAMAGES,
INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF BUSINESS OPPORTUNITY OR
THE COSTS ASSOCIATED WITH THE USE OF RESTORATION FACILITIES RESULTING FROM ITS
FAILURE TO PERFORM PURSUANT TO THE TERMS AND CONDITIONS OF THIS CONTRACT.
B. EXCEPT AS SET FORTH BELOW IN THE LAST TWO SENTENCES OF THIS SUB-ARTICLE
23(B), THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT, CONTRACT
OR OTHERWISE, EXCEPT FOR CLAIMS RELATING TO SYSTEM UPGRADES, SHALL NOT EXCEED
ONE HUNDRED PERCENT (100%) OF THE CONTRACT PRICE. THE CONTRACTOR'S MAXIMUM
AGGREGATE LIABILITY FOR CLAIMS RELATING TO SYSTEM UPGRADES (IF CONTRACTOR CAN
PROVE THAT THE SYSTEM WAS DESIGNED WITH SUFFICIENT TRANSMISSION MARGIN AND THUS
SUCH CLAIMS DO NOT ARISE UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B)) SHALL NOT
EXCEED ONE HUNDRED PERCENT (100%) OF THE APPLICABLE UPGRADE PRICE. THE FOREGOING
LIMITATION SHALL NOT APPLY TO CLAIMS UNDER SUB-ARTICLES 19(A) AND 23(C). IF
CONTRACTOR CANNOT PROVE THAT THE SYSTEM WAS DESIGNED WITH SUFFICIENT
TRANSMISSION MARGIN FOR A SYSTEM UPGRADE, THE CONTRACTOR'S MAXIMUM AGGREGATE
LIABILITY FOR CLAIMS ARISING UNDER CLAUSE (ii) OF SUB-ARTICLE 10(B) SHALL NOT
EXCEED ONE HUNDRED PERCENT (100%) OF THE UPGRADEABILITY LIABILITY LIMIT.
C. Contractor, at its expense, shall defend, indemnify and hold harmless
Purchaser, its affiliates, agents, subcontractors and employees (collectively,
the "Indemnitees") against any and all claims, proceedings, demands, costs,
expenses, liabilities (including without limitation, reasonable legal fees), and
judgements for losses (collectively, "Liabilities") asserted against or incurred
by any Indemnitee, arising out of, or in connection with (a) this Contract,
and/or the performance thereof by Contractor or any of its subcontractors, or
(b) the operation and maintenance of the System prior to the risk of loss
passing to Purchaser, resulting from acts or omissions of Contractor or any
Subcontractor, regardless of whether involving errors, negligence or willful
misconduct or resulting from, strict liability or statutory liability, except to
the extent that such Liabilities were caused by the negligent acts or willful
misconduct of Purchaser. The defense, indemnification and save harmless
obligation is specifically conditioned on the following: (i) Purchaser providing
prompt notification in writing of any such Liability when it obtains Actual
Knowledge thereof, unless such failure shall not have materially impaired
Contractor's ability to defend against such claim; (ii) Contractor having
control of the defense of any such action, claim or demand and of all
negotiations for its settlement or compromise; and (iii) Purchaser cooperating,
at Contractor's expense, in a reasonable way to facilitate the defense of such
claim or demand or the negotiations for its settlement. The Purchaser, at its
option, shall be entitled to participate, at its own expense, in any proceeding,
claim or demand involving an Indemnitee.
D. Purchaser, at its expense, shall defend, indemnify and hold harmless
Contractor, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, after risk of loss passes to Purchaser, the
operation or maintenance of the System, to the extent such losses
<PAGE> 63
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were caused by the negligence or willful misconduct of the Purchaser, its
subcontractors, employees or agents (other than Contractor). The defense,
indemnification and save harmless obligation is specifically conditioned on the
following (i) Contractor providing prompt notification in writing of any such
claim or demand when it obtains Actual Knowledge thereof, unless such failure
shall not have materially impaired Purchaser's ability to defend against such
claim; (ii) Purchaser having control of the defense of any such action, claim or
demand and of all negotiations for its settlement or compromise; and (iii)
Contractor cooperating, at Purchaser's expense, in a reasonable way to
facilitate the defense of such claim or demand or the negotiations for its
settlement.
ARTICLE 24 COUNTERPARTS
This Contract may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
ARTICLE 25 DESIGN AND PERFORMANCE RESPONSIBILITY; SUBCONTRACTORS
A. The Contractor shall be solely responsible for the engineering and
design of and for all details of the System and the System Upgrades and for the
adequacy thereof.
B. The Contractor's responsibility for engineering and designing of the
System and the System Upgrades shall not in any way be diminished, nor shall the
Contractor's design approach be restricted or limited by, the Purchaser's
acceptance of the Contractor's guidance or recommendations as to engineering
standards and design specifications, or by the Purchaser's approval, suggestions
or recommendations on any aspect of the engineering or design.
C. Purchaser shall use reasonable efforts in assisting the Contractor, at
Contractor's expense, to obtain in a timely manner accurate information required
for the Contractor to perform the Work and the Upgrade Work, which Contractor
cannot expeditiously and cost-effectively obtain from any source other than the
Purchaser.
D. The Contractor will select Subcontractors in connection with the
performance of the Work such that all Work provided by any such Subcontractors
meet the System specifications set out in the Technical Volume hereto and the
reliability and performance requirements set forth in this Contract. Regardless
of whether or not the Contractor obtains approval from the Purchaser of a
Subcontractor or whether the Contractor uses a Subcontractor recommended or
designated by the Purchaser, use by the Contractor of a Subcontractor will not,
under any circumstances: (i) give rise to any claim by the Contractor against
the Purchaser if such Subcontractor breaches its subcontract or contract with
the Contractor; (ii) give rise to any claim by such Subcontractor against the
Purchaser; (iii) create any contractual obligation by the Purchaser to the
Subcontractor; (iv) give rise to a waiver by the Purchaser of its rights to
reject any defects or deficiencies or defective Work; or (v) in any way release
the Contractor from being solely responsible to the Purchaser for the Work to be
performed under this Contract.
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E. The Contractor is the general contractor for the Work and remains
responsible for all of its obligations under this Contract, including the Work,
regardless of whether a subcontract or supply agreement is made or whether the
Contractor relies upon any Subcontractor to any extent. The Contractor's use of
Subcontractors for any of the Work will in no way increase the Contractor's
rights or diminish the Contractor's liabilities to the Purchaser with respect to
this Contract, and in all events the Contractor's rights and liabilities
hereunder with respect to the Purchaser will be as though the Contractor had
itself performed such Work. The Contractor will be liable for any delays caused
by any Subcontractor as if such delays were caused by the Contractor.
F. The terms of this Contract will in all events be binding upon the
Contractor regardless of and without regard to the existence of any inconsistent
terms in any agreement between the Contractor and any Subcontractor whether or
not and without regard to the fact that the Purchaser may have directly and/or
indirectly had notice of any such inconsistent term.
G. The Contractor must make all payments to all Subcontractors (except in
the case of legitimate disputes between the Contractor and any such
Subcontractor arising out of the agreement between the Contractor and such
Subcontractor) in accordance with the respective agreements between the
Contractor and its Subcontractors such that Subcontractors will not be in a
position to enforce liens and/or other rights against the Purchaser, the System
or any part thereof.
H. If a proposed Subcontractor of major Supplies is not listed on Exhibit
G hereto, Contractor shall obtain approval thereof from Purchaser, which
approval will not be unreasonably withheld. Contractor will not terminate any
such listed or approved subcontractor except for good cause (taking into account
the interests of Purchaser) and after consultation with Purchaser;*
I. Purchaser shall have the option to designate Global Marine as the
Subcontractor that will perform all (or such portion designated by Purchaser) of
the marine installation work for the System and Contractor shall utilize such
company for such purpose if so requested by Purchaser.
J. Contractor hereby explicitly waives and agrees not to assert any
defense or claim it may have against Purchaser based upon the fact that
Purchaser is an affiliate of Global Marine unless Purchaser and Global Marine
have acted together in bad faith toward Contractor under and in connection with
this Contract.
ARTICLE 26 PRODUCT CHANGES
The Contractor may at any time make changes to the System or System
Upgrades furnished pursuant to this Contract, or modify the drawings and
published specifications relating thereto, or substitute equipment of later
design, provided the changes, modifications, or substitutions under normal and
proper use do not impact upon the form, fit, expected life or function of the
System as provided in the System Performance Requirements.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
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ARTICLE 27 RISK AND INSURANCE
A. The Contractor shall at all times maintain, and upon request, the
Contractor shall furnish the Purchaser with certificates, or other reasonable
evidence, that Contractor maintains, the following insurance or has adequate
self-insurance (other than as required to comply with any statutory insurance
requirements); provided, that the following insurance coverages may be combined
or in different form so long as Contractor maintains insurance consistent with
the following requirements:
1. Workmen's Compensation and Employers Liability Insurance (with
a limit of not less than * for any one incident or
series of incidents arising from one event or such higher
limit as may be required by the laws of any jurisdiction)
covering the officers and employees of the Contractor for all
compensation or other benefits required of the Contractor by
the laws of any nation or political sub-division thereof to
which the Contractor and its operations under this Contract
are subject in respect of injury of death of any such
employee.
2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less than * for claims of injury or
death of any persons or loss of or damage to property
resulting from any one accident. This insurance to be extended
to provide Marine Comprehensive General Liability including
liabilities arising out of the operation of subsea equipment.
3. Comprehensive Automobile Liability insurance covering all
vehicles and automotive equipment owned, hired, or in the
custody and control of Contractor and complying with all
applicable legislation with limits not less than *
combined single limit for the death or injury of any person
per accident and not less than * for the loss or
damage to property resulting from any one accident.
4. Excess Liability Coverage over that required in Sub-Articles
27(A)(1), (2) and (3) with minimum limits of * for
any one accident or occurrence.
5. All Risk Insurance in respect of all property of Contractor,
its respective officers, agents and employees connected with
the performance of the Work against all loss or damage from
whatever cause.
6. Conventional Marine Hull and Machinery Insurance including War
Risks or any vessel(s) owned, operated or chartered by the
Contractor, in an amount equal to the full value thereof. In
the event of damage to or loss of such vessel(s), the
Contractor agrees to look to its insurance carrier for payment
of such loss or damage and hereby releases the Purchaser and
waives any claims against the Purchaser for the loss of such
vessel(s)
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
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unless due to the negligence of Purchaser, its agent or
representatives (other than Contractor).
7. All vessels are to be entered in a Mutual Protection and
Indemnity Association with a full and unlimited entry or to
have Marine Protection and Indemnity Insurance with a limit of
not less than * including coverage for illness,
injury or death of crew members (unless covered under
Workmen's Compensation Insurance), Contractual Liability
Coverage, Collision and Tower's Liability, Removal of Wreck
and Debris and Third Party Liability.
8. Specialist Operations Insurance with a limit of not less than
* as per London Wording 1993 or equivalent.
9. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all
risks 1.1.63, Institute War Clauses, London Malicious Damage
Clause, and Institute Strikes Riots and Civil Commotion
Clauses
or their equivalent.
10. Marine Cargo or equivalent is required to protect, for full
cost, against all risks of physical loss or damage to the
plant, equipment and supplies to be included in the System
(other than War Risks) beginning with when each such item is
ready for shipping and ending when the submersible plant and
equipment are placed overside the cable laying vessel and when
the equipment and supplies are delivered to the cable
stations, central offices, or network operation center. The
coverage continues to cover cable lying on the seabed.
11. Sea Bed or equivalent coverage (including an Old Mines and
Torpedoes Clause, including other derelict weapons of War) is
required to protect, for full cost, against all risks of
physical loss or damage to the submersible plant and equipment
described in Sub-Article 27(A)(10) above. See last paragraph.
12. War Risks or equivalent coverage is required to protect
against damage to, seizure by and/or destruction of the System
by means of war, piracy, takings at sea and other warlike
operations until discharge of the submersible plant and
equipment. For the purposes of this Article "discharge of the
submersible plant and equipment" shall be deemed to take place
when the plant and equipment reaches the sea bottom, as far as
the submersible plant and equipment is concerned, and when the
plant is off-loaded in the respective terminal country, as far
as non-submersible plant is concerned.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
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13. Pollution Liability (EIL) insurance for installation
operations and as arising from the use of vessels in an amount
not less than * or such higher sum as may be
required to meet any legal requirement in area of operations.
The Comprehensive General Liability Insurance required pursuant to
Sub-Article 27(A)(2) above, shall include Contractual Liability Coverage which
shall specifically apply to the obligations assumed by the Contractor under the
Terms and Conditions of this Contract.
B. 1. All the foregoing insurances shall be effected with a
creditworthy insurer and shall be endorsed to provide
Purchaser with at least thirty (30) days prior written notice
of cancellation or material change.
2. All the foregoing insurances shall name Purchaser and its
lenders as an additional insured as to operations hereunder,
in which event the Contractor's insurance shall be primary to
any insurance carried by Purchaser.
3. The limits specified herein are minimum requirements and shall
not be construed in any way as limits of liability or as
constituting acceptance by Purchaser of such responsibility
for financial liabilities in excess of such limits. The
Contractor shall bear all deductibles applicable to any
insurance.
4. If it is judicially determined that the monetary limits of
insurance required hereunder or of any indemnity voluntarily
assumed under the Terms and Conditions of this Contract which
the Contractor agrees will be supported either by available
liability insurance or voluntarily self-insured, in part or
whole, exceeds the maximum limits permitted under applicable
law, it is agreed that said insurance requirements or
indemnity shall automatically be amended to conform to the
maximum monetary limits permitted under such law.
5. Contractor shall take reasonable steps to provide that any
sub-contractor engaged by it has in effect or will effect
Employer's Liability, Workmen's Compensation, Hull and
Machinery and Protection and Indemnity insurances and any
other insurances required by law, together with such other
insurances as the Contractor may consider necessary.
6. If the Contractor fails to effect or keep in force any of the
insurances required under this Contract, Purchaser may effect
and keep in force any such insurances and pay such premiums as
may be necessary for that purpose and from time to time deduct
the amount so paid by Purchaser from any money due or which
may become due to the Contractor hereunder or recover the same
as a debt due from the Contractor, provided that Purchaser is
not in Default.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
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7. Each Party shall give the other prompt notification of any
claim with respect to any of the insurances to be provided
hereunder, accompanied by full details giving rise to such
claim. Each Party shall afford the other all such assistance
as may be required for the preparation and negotiation of
insurance claims.
8. Contractor shall report to Purchaser as soon as practicable
all accidents or occurrences resulting in injuries to
Contractor's employees or third parties, or damage to property
of third parties, arising out of our during the course of
services for Purchaser by Contractor.
C. The Contractor may organize such reasonable levels of deductibles,
excesses and self-insurance as it considers appropriate and which are within
prudent industry standards.
D. The insurance requirements of this Article 27 will remain in place with
respect to each Segment, each Phase, the System or System Upgrade, as the case
may be, and will not in any way be diminished or reduced until the transfer of
title and risk of loss shall have passed to Purchaser of such Segment, such
Phase, System or System Upgrade, as the case may be, even in the event of the
sale of substantially all the assets of the Contractor by way of a merger,
consolidation or sale of assets.
ARTICLE 28 PLANT AND WORK RULES
Employees and agents of each Party shall, while on the premises of
the other or its subcontractors, comply with all plant rules and governmental
regulations.
ARTICLE 29 RIGHT OF ACCESS AND REVIEW
A. The Contractor shall permit access by the Purchaser or its quality
assurance (QA) Representatives (other than a competitor of the Contractor or any
affiliate of a competitor) to the Contractor's premises where the work will be
performed, including factories, cable stations and other such facilities, and
will use its best endeavors to secure rights of access to premises of its
subcontractors where the work will be performed, having subcontracts or orders
in the amount of, or equivalent to U.S. $125,000 or more, in accordance with the
Contractor's contractual arrangements with its Subcontractors, and allow the
Purchaser or its QA Representative to:
1. audit the Contractor's quality assurance system and its
application to the Work and Upgrade Work, including
manufacture, development and raw materials and components
provision;
2. inspect all parts of the Work and Upgrade Work to the extent
reasonably practicable to ensure that their quality meets the
Specification; and
3. perform activities with respect to cable stations and other
civil works such as, but not limited to, survey, installation,
commissioning, acceptance and other construction and/or
operational activities.
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Each of the foregoing rights of access shall be conditional upon (i) Purchaser
giving Contractor reasonable notice, (ii) exercising such rights of access
during normal business hours and (iii) the Purchaser and/or the QA
Representatives accessing factories, cable stations and other such facilities in
a manner that avoids disruption of the work that is being performed on such
premises. The Purchaser shall provide the name(s) of each such visitor prior to
the visit. The Contractor shall not be responsible for any costs, including
travel and accommodation costs, of the Purchaser or its representatives.
B. The right of access shall also allow for the Purchaser and/or its QA
Representatives to be aboard the vessel(s) during installation and the route
survey, provided accommodations are available. The Contractor shall not be
responsible for any costs of the Purchaser or its representatives, except for
living expenses on board the vessel which includes one (1) daily telex or fax,
all other travel and accommodation costs for the Purchaser or its QA
Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any obligation
requiring the Contractor or its subcontractors to disclose trade secrets or
proprietary information. Further, such right of access may be conditioned on the
execution of a confidentiality and non-disclosure agreement and/or subject to
routine building or security rules, regulations or procedures.
D. Any exercise of any right of the Purchaser under this Contract to
inspect, audit, visit or to observe or to review or approve any part of the Work
or System Upgrades shall not be construed as limiting any obligation of
Contractor hereunder, including without limitation, under Articles 1 and 10
hereof.
E. Contractor will have access to the System as necessary to accomplish
its responsibilities under this Contract and in order to make repairs and to
make System Upgrades. Contractor will provide reasonable notice of its need for
access and will take reasonable steps to minimize disruptions to the operation
of the System.
F. Contractor shall give the Purchaser reasonable prior written notice of
each monthly project management review meeting with respect to the status of the
construction and/or installation of the System, and Purchaser's representatives
and the Independent Engineer shall at their cost be permitted to attend and
participate in such meetings.
ARTICLE 30 QUALITY ASSURANCE; FIRST APPLICATION
A. All equipment, material and supplies provided under this Contract shall
be inspected and tested by representatives designated by the Contractor to the
extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with commercial practices
normally employed by the Contractor in the construction of submarine cable
systems. The foregoing shall not be construed as limiting any of the
Contractor's obligations under this Contract.
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B. The Contractor represents that the list in Exhibit F identifies (i) all
major System elements and subsystems and (ii) all Deliverable Software, which
have not been used, as of the date hereof, in any other currently operating
submarine cable system, the qualification plans for which are more fully
described in the First Office Application section of the Quality Plan section of
the Technical Volume.
ARTICLE 31 DOCUMENTATION
The Contractor shall furnish to the Purchaser one set of the
standard documentation in the English language for the System provided
hereunder. Such documentation shall be provided prior to the Acceptance testing.
Additional copies of the documentation are available at additional cost.
ARTICLE 32 TRAINING
The Contractor will provide, as part of the Initial Contract Price,
any and all training, as more particularly described in the training section of
Appendix 6, necessary for the operation and maintenance of the System. Any
person who is to receive such training, prior to the receipt of such training,
shall be obligated to execute a confidentiality and non-disclosure agreement
containing terms substantially similar to Article 36.
ARTICLE 33 SETTLEMENT OF DISPUTES/ARBITRATION/LITIGATION
A. The Parties shall endeavor to settle amicably by mutual discussions any
disputes, differences, or claims whatsoever related to this Contract.
B. Failing such amicable settlement, any controversy, claim or dispute
arising under or relating to this Contract, including the existence, validity,
interpretation, performance, termination or breach thereof, shall, if both
Parties agree in writing thereto, finally be settled by arbitration in
accordance with the International Arbitration Rules of the American Arbitration
Association ("AAA"), taking into account the Japan American Trade Arbitration
Agreement, dated as of September 16, 1952. Unless the Parties agree to a sole
arbitrator, there shall be three (3) arbitrators, with each Party appointing one
arbitrator, who collectively will select a third. The language of the
arbitration shall be English. The Arbitrator will not have authority to award
punitive damages to either Party. Each Party shall bear its own expenses, but
the Parties shall share equally the fees and expenses of the Arbitration
Tribunal and the AAA. This Contract shall be enforceable, and any arbitration
award shall be final, and judgment thereon may be entered in any court of
competent jurisdiction. In any such arbitration, the decision in any prior
arbitration under this Contract shall not be deemed conclusive of the rights as
among themselves of the Parties hereunder. The arbitration shall be held in New
York, New York, U.S.A.
C. 1. If both Parties do not agree to arbitration pursuant to
paragraph (B) above, then either Party may institute suit in
the Supreme Court of the State of New York sitting in New York
County or the United States District Court of the Southern
District of New York, or any appellate court from any thereof.
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2. Each Party hereby irrevocably and unconditionally submits to
the non-exclusive jurisdiction of any New York State or
Federal court sitting in The City of New York, and any
appellate court from any thereof, in any action or proceeding
arising out of or relating to this Contract, and each Party
hereby irrevocably and unconditionally agrees that all claims
in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent
permitted by law, in such Federal court. Each Party hereby
irrevocably and unconditionally waives, to the fullest extent
it may effectively do so, any defense of an inconvenient forum
to the maintenance of such action or proceeding in any such
court and any right of jurisdiction on account of the place of
residence or domicile of either Party. The Contractor hereby
irrevocably and unconditionally appoints CT Corporation System
(the "New York Process Agent"), with an office on the date
hereof at 111 Eighth Avenue, 13th Floor, New York, New York
10011, as its agent to receive on behalf of the Contractor and
its respective property service of copies of the summons and
complaint and any other process which may be served in any
such action or proceeding in any such New York State or
Federal court and agrees promptly to appoint a successor New
York Process Agent in The City of New York (which successor
Process Agent shall accept such appointment in a writing prior
to the termination for any reason of the appointment of the
initial New York Process Agent). In any such action or
proceeding in such New York State or Federal court sitting in
The City of New York, such service may be made on the
Contractor by delivering a copy of such process to the
Contractor in care of the appropriate Process Agent at such
Process Agent's above address and by depositing a copy of such
process in the mails by certified or registered air mail,
addressed to the Contractor at its address referred to in
Article 35 of this Contract (such service to be effective upon
such receipt by the appropriate Process Agent and the
depositing of such process in the mails as aforesaid). The
Contractor hereby irrevocably and unconditionally authorizes
and directs such Process Agent to accept such service on its
behalf. As an alternate method of service, the Contractor also
irrevocably and unconditionally consents to the service of any
and all process in any such action or proceeding in such New
York State or Federal court sitting in The City of New York by
mailing of copies of such process to the Contractor, as the
case may be, by certified or registered air mail at its
address referred to in Article 35 of this Contract. The
Contractor agrees that, to the fullest extent permitted by
applicable law, a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law.
3. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY
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ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS PARAGRAPH.
D. THE OBLIGATIONS OF EACH PARTY IN RESPECT OF THIS CONTRACT DUE TO ANY
PARTY SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE "JUDGMENT
CURRENCY") OTHER THAN DOLLARS, BE DISCHARGED ONLY TO THE EXTENT THAT ON THE
BUSINESS DAY FOLLOWING RECEIPT BY SUCH PARTY OF ANY SUM ADJUDGED TO BE SO DUE IN
THE JUDGMENT CURRENCY SUCH PARTY MAY IN ACCORDANCE WITH NORMAL BANKING
PROCEDURES PURCHASE DOLLARS WITH THE JUDGMENT CURRENCY; IF THE AMOUNT OF DOLLARS
SO PURCHASED IS LESS THAN THE SUM ORIGINALLY DUE TO SUCH PARTY IN DOLLARS, EACH
PARTY AGREES, AS A SEPARATE OBLIGATION AND NOTWITHSTANDING ANY SUCH JUDGMENT, TO
INDEMNIFY SUCH PARTY AGAINST SUCH LOSS, AND IF THE AMOUNT OF DOLLARS SO
PURCHASED EXCEEDS THE SUM ORIGINALLY DUE TO ANY PARTY TO THIS CONTRACT, EACH
PARTY AGREES TO REMIT TO SUCH PARTY, SUCH EXCESS.
ARTICLE 34 APPLICABLE LAW
THIS CONTRACT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, UNITED STATES, EXCLUDING ITS CONFLICTS OF LAW
PROVISIONS AND EXCLUDING THE CONVENTION FOR THE INTERNATIONAL SALE OF GOODS.
ARTICLE 35 NOTICES
A. Any notices, consent, approval, or other communication pursuant to this
Contract shall be in writing, in the English language, and shall be deemed to be
duly given or served on a Party if sent to the Party at the address stipulated
in Sub-Article 35(B) and if sent by any one of the following means only:
1. Sent by hand: Such communication shall be deemed to have been
received on the day of delivery provided receipt of delivery
is obtained.
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2. Sent by facsimile: Such communication shall be deemed to have
been received, under normal service conditions, twenty-four
(24) hours following the time of dispatch or on confirmation
by the receiving Party, whichever is earlier.
3. Sent by an internationally recognized courier service: Such
communication shall be deemed to have been received, under
normal service conditions, on the day it was received or on
the third day after it was dispatched, whichever is earlier.
B. For purposes of this Article, the names, addresses and fax numbers of
the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.
Contractor:
KDD Submarine Cable Systems Inc.
KDD Building, 3-2, Nishi-shinjuku 2-chome
Shinjuku-ku, Tokyo 163-8525, Japan
Facsimile: 81-3-3347-7237
81-3-3347-8462
Telephone: 81-3-3347-8460
Attn: Tatsuhide Nagasawa, Managing Director, EAC Project Manager
Purchaser:
Asia Global Crossing Ltd.
Wessex House, 2nd Floor
45 Reed Street
Hamilton, HM12, Bermuda
Facsimile: (441) 296-8606
Telephone: (441) 296-8600
Attn: S. Wallace Dawson, Jr.
with a copy to the Independent Engineer.
ARTICLE 36 PUBLICITY AND CONFIDENTIALITY
A. No information relating to this Contract shall be released by either
Party to any newspaper, magazine, journal or other written, oral or visual
medium without the prior written approval of an authorized representative of the
other Party; provided that, subject to Article 20 (Safeguarding of Information
and Technology) and the following Sub-Article, this Article shall not restrict
either Party from (i) responding to customary press inquiries or otherwise
making public or private statements in the normal course of business, so long as
consistent with a mutually agreed press-release and (ii) assisting in the
obtaining of financing in accordance with Sub-Article 37(C), including the
publication of a financial tombstone.
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B. This Contract and any non-public information, written or oral, with
respect to this Contract, "Confidential Information", will be kept confidential
and shall not be disclosed, in whole or in part, to any person other than
affiliates, officers, directors, employees, agents or representatives of a Party
(collectively, "Representatives") who need to know such Confidential Information
for the purpose of negotiating and executing this Contract. Each Party agrees to
inform each of its Representatives of the non-public nature of the Confidential
Information and to direct such persons to treat such Confidential Information in
accordance with the terms of this Article. Nothing herein shall prevent a Party
from disclosing Confidential Information (a) upon the order of any court or
administrative agency, (b) upon the request or demand of, or pursuant to any
regulation of, any regulatory agency or authority, (c) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (d) to a
Party's legal counsel or independent auditors, (e) prospective lenders to the
Purchaser or Purchaser's parent or affiliate companies, (f) to the extent
required, to any actual or proposed person or entity which will provide any
operation, administrative or maintenance services with respect to the System or
any part thereof and (g) to any actual or proposed assignee of all or part of
its rights hereunder provided that such actual or proposed assignee agrees in
writing to be bound by the provisions of this Article.
ARTICLE 37 ASSIGNMENT
A. Except as provided in this Article, neither Party shall assign this
Contract or any right or interest under this Contract, nor delegate any work or
obligation to be performed under this Contract ("Assignment"), without the other
Party's prior written consent which shall not be unreasonably withheld (it being
understood that it shall be deemed to be reasonable to withhold consent to the
assignment of this Contract or any rights, interest or obligations hereunder to
a competitor of Contractor or an affiliate of a competitor or uncreditworthy
party).
B. The Contractor has the right to assign all or any part of its rights
under this Contract, or to delegate all or any part of its duties hereunder at
any time without the Purchaser's consent to a successor to substantially all the
assets of the Contractor by way of a merger, consolidation or sale of assets;
provided that in the case of any assignment or delegation pursuant to this
Sub-Article 37(B), such assignee or delegee shall assume in writing all
liabilities, warranties, representations and obligations of Contractor under
this Contract. The Contractor shall give the Purchaser written notice 30 days
prior to any assignment or delegation. Contractor shall remain jointly and
severally liable with any assignee or delegee described in this paragraph.
C. The Parties acknowledge that Purchaser may finance construction of the
System on a "project finance" basis and that in connection therewith the
financing parties will require that such financing be secured by certain assets
of Purchaser (including but not limited to this Contract). The Purchaser may, in
connection with any such project financing grant a collateral assignment of the
System and/or its rights and obligations under this Contract to any such
financing parties, and in connection therewith, the Contractor will execute and
deliver a Consent, substantially in the form of Exhibit C hereto; provided that
Contractor agrees to make such changes or additions to such form as may be
reasonably requested by such financing parties and Purchaser, and such financing
parties may transfer in accordance with such Consent. Contractor will also
deliver an Opinion in the form of Exhibit D hereto, and a similar opinion of
Guarantor's
<PAGE> 75
72
counsel with respect to the Guaranty, to Purchaser and such financing parties
and such other documents as are reasonably requested by such financing parties.
D. The Purchaser has the right to assign all of its rights and delegate
all of its duties under this Contract to any other entity to whom all of
Purchaser's rights and interests in the System have been transferred. Purchaser
also has the right (i) to assign all of its rights hereunder with respect to any
particular Landing Assets to any Transferee, including the right to receive
invoices relating thereto, (ii) to assign Permits with respect to such Landing
Assets, or have Permits with respect to such Landing Assets issued in the name
of, such Transferee and (iii) to transfer such Landing Assets or have such
Landing Assets transferred directly to, such Transferee; provided that such
Transferee shall execute a supplement to this Contract whereby it becomes
jointly and severally liable, together with Purchaser, for all of Purchaser's
obligations under this Contract. "Landing Assets" means, with respect to each
jurisdiction where a portion of the System is located, all or part of such
portion of the System located therein. It is understood that the Purchaser, at
its option, may assign and transfer rights with respect to Landing Assets in
different jurisdictions to different Transferees. Purchaser contemplates
effecting the foregoing assignment pursuant to a Supplement substantially in the
form of Exhibit L hereto, and the Contractor agrees to execute and deliver such
Supplement. Purchaser shall not transfer any of its rights under this Contract
or the System except in accordance with the foregoing. Any assignment or
transfer by Purchaser not expressly permitted by Sub-Article 37(C) or (D) shall
be of no force and effect. Any assignment or transfer by Purchaser which results
in any increase in costs or any loss, damage, delay or failure of performance
shall constitute a Force Majeure, and, without limiting the applicability of
Article 17 (Force Majeure), Purchaser shall be responsible for any increase in
costs resulting therefrom.
*
ARTICLE 38 RELATIONSHIP OF THE PARTIES
All work performed by a Party under this Contract shall be performed
as an independent contractor and not as an agent of the other and no persons
furnished by a Party shall be considered the employees or agents of the other.
Each Party shall be responsible for its employees' compliance with all Laws
while performing under this Contract. This Contract shall not form a joint
venture or partnership between the Parties.
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 76
73
ARTICLE 39 SUCCESSORS BOUND
This Contract shall be binding on the Contractor and the Purchaser
and their respective successors and permitted assigns.
ARTICLE 40 ARTICLE CAPTIONS; JOINT DRAFTING
A. The captions of the Articles do not form part of this Contract and
shall not have any effect on the interpretation thereof.
B. This Contract has been fully negotiated between, and jointly drafted
by, the Parties hereto.
ARTICLE 41 SEVERABILITY
If any of the provisions of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions and the rights and obligations of the Contractor and the
Purchaser shall be construed and enforced accordingly. In the event such invalid
or unenforceable provision is an essential and material element of this
Contract, the Parties shall promptly negotiate a replacement provision.
ARTICLE 42 GUARANTOR
The Contractor agrees to cause the Guarantor to execute and deliver
the Guaranty to Purchaser within ten (10) days of the execution of this
Agreement.
ARTICLE 43 SURVIVAL OF OBLIGATIONS
The Parties' rights and obligations, which, by their nature would
continue beyond the termination, cancellation or expiration of this Contract,
including, but not limited to, those contained in Sub-Article 4(B) (Taxes,
Levies and Duties) and Sub-Article 4(C) (Withholding Tax), Article 18
(Intellectual Property), Article 20 (Safeguarding of Information and
Technology), Article 21 (Export Control) and Article 23 (Limitation of
Liability/Indemnification) shall survive termination, cancellation or expiration
hereof. Article 10 (Warranty) and Article 11 (Contractor Support), shall survive
termination, cancellation or expiration hereof, if and only if, this Contract is
terminated by Purchaser pursuant to Sub-Article 13(A).
ARTICLE 44 NON-WAIVER
A waiver of any of the terms and conditions of this Contract, or the
failure of either Party strictly to enforce any such term or condition, on one
or more occasions shall not be
<PAGE> 77
74
construed as a waiver of the same or of any other term or condition of this
Contract on any other occasion.
ARTICLE 45 LANGUAGE
This Contract has been executed in the English language and English
will be the controlling language for interpretation of this Contract.
ARTICLE 46 ENTIRE AGREEMENT
This Contract supersedes all prior oral or written understanding
between the Parties and constitutes the entire agreement with respect to the
subject matter herein. Such terms and conditions shall not be modified or
amended except by a writing signed by authorized representatives of all Parties.
<PAGE> 78
75
This Contract is executed as of the date first set forth above in
the location set forth below the signature of the duly authorized representative
of each Party, as set forth below.
KDD SUBMARINE CABLE SYSTEMS INC.
By:______________________________________
Name:
Title:
ASIA GLOBAL CROSSING LTD.
By:______________________________________
Name:
Title:
<PAGE> 79
EXHIBIT A
TO CONSTRUCTION CONTRACT
* Material omitted and separately filed with the Commission under an
application for confidential treatment.
<PAGE> 80
EXHIBIT B
TO
CONSTRUCTION CONTRACT
FORM OF PARENT GUARANTY
------------------------------------------------------------------------------
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------------------------------
GUARANTY
by
[ ]
in favor of
[NAME OF GLOBAL CROSSING SUB]
------------------------------
Dated as of [ ]
------------------------------
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------------------------------------------------------------------------------
<PAGE> 81
This GUARANTY, made as of [ ], 1999 by [_________________], a
[________] corporation (the "Guarantor"), in favor of [NAME OF GLOBAL CROSSING
SUB], a Bermuda corporation (the "Purchaser").
R E C I T A L S
(A) Pursuant to the Project Development and Construction Contract
(as the same may from time to time be amended, modified or supplemented, the
"Contract") dated as of [
] between [ ], a [ ] corporation (together with any successor or
assignee under the Contract, the "Contractor"), and the Purchaser, the
Contractor has agreed to design, build and install the System.
(B) The Purchaser has required, as a condition precedent to entering
into the Contract, that the Guarantor execute and deliver this Guaranty. The
Purchaser would not enter into the Contract with the Contractor but for the
execution and delivery of this Guaranty by the Guarantor.
(C) In furtherance of the business purposes of the Guarantor, the
Guarantor desires to guaranty all of the obligations of the Contractor under the
Contract as provided herein.
(D) The Guarantor is the owner either directly or indirectly of all
of the capital stock of the Contractor.
NOW, THEREFORE, based upon the foregoing, and in order to induce the
Purchaser to enter into the Contract, the Guarantor hereby agrees as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. Capitalized terms not otherwise defined in
this Guaranty shall have the meanings ascribed to them in the Contract. As used
in this Guaranty, the following terms have the following meanings unless the
context otherwise requires:
"Guarantied Obligations" has the meaning ascribed to such term in
Section 2.1.
"Guaranty" means this Guaranty, as it may be amended, supplemented
or otherwise modified from time to time in writing signed by the Guarantor and
the Purchaser.
ARTICLE 2
The Guaranty
Section 2.1. The Guaranty. Except as expressly set forth herein, the
Guarantor hereby unconditionally guarantees to Purchaser the full and punctual
performance by Contractor
<PAGE> 82
2
(i) of the Work required under the Contract (including Upgrade Work, when and if
an upgrade is ordered) and/or the payment of damages which become due, owing or
incurred under or in connection with the Contract (including, without
limitation, liquidated damages), for Contractor's failure to perform such Work,
(or Upgrade Work as the case may be) in each case subject to the limitations on
liability therefor expressly set forth in the Contract and (ii) of the covenants
and other obligations of the Contractor under the Contract (including all
warranties) (collectively, the "Guarantied Obligations"). The Guarantor and the
Purchaser expressly acknowledge that (i) subject to Section 2.5 below, default
by the Contractor or the failure of the Contractor to perform any Guarantied
Obligation in the time required in each case under the Contract is a condition
of the exercise of this Guaranty and (ii) in no event shall the Guarantied
Obligations exceed the Contractor's obligations and liabilities under the
Contract. If the Purchaser requests the Guarantor to perform any Guarantied
Obligation (other than the payment of money) the Guarantor may undertake to
satisfy such obligation by causing another qualified person to perform such
Guarantied Obligation or, in its sole discretion, by assigning such obligation
to a qualified party; provided, that such assignment shall not relieve the
Guarantor of any liability for the performance of such obligation unless and
until such obligation has been completely performed. The Guarantied Obligations
shall conclusively be deemed to have been created in reliance upon this
Guaranty.
Section 2.2. Termination of Guaranty. Except as expressly set forth
herein, (a) this Guaranty shall remain in full force and effect with respect to
the Guarantied Obligations, including, without limitation, all obligations such
as covenants and warranties which survive completion of the Work and all
obligations under any supplements, extensions, amendments, Upgrades or Contract
Variations, until terminated in accordance with paragraph (b) below.
(b) This Guaranty shall terminate with respect to each of the
Guarantied Obligations described below on the respective dates described below
(each a "Termination Date") subject to the survival of certain obligations and
liabilities as expressly described in the last paragraph (c) below:
(i) with respect to all Guarantied Obligations (except for any
longer periods for those Guarantied Obligations described in clauses
(b)(ii) and (b)(iii) below) on the date occurring ten (10) years after the
Date of Provisional Acceptance of the System;
(ii) with respect to all Guaranteed Obligations relating to or
in connection with Contractor's obligation to implement System Upgrades
(including, without limitation, Contractor's warranties as to
Upgradeability contained in Article 10(B)(ii) of the Contract), on the
earlier of (A) the last date of the Upgrade Option Period or (B) the Date
of Final Acceptance of the last possible System Upgrade provided for in
the Contract; provided, that such Termination Date shall not limit any
longer period with respect to any elected System Upgrade in accordance
with clause (b)(iii) below; and
<PAGE> 83
3
(iii) with respect to all Guarantied Obligations relating to
or in connection with each System Upgrade elected during the Upgrade
Option Period, on the date occurring ten (10) years after the Date of
Provisional Acceptance of such System Upgrade.
(c) If a Guarantied Obligation has become due, owing or performable
prior to the Termination Date relating to such Guarantied Obligation, then this
Guaranty shall continue only with respect to such Guarantied Obligation until
fully performed. For example:
(i) pursuant to Article 10(A) of the Contract, if a defect
covered by the Warranty Period is identified in good faith just prior to
the Termination Date set forth in clause (b)(i) above, the Guarantor's
obligations under this Guaranty shall continue with respect to such
Guarantied Obligation, not withstanding such Termination Date, until
Contractor performs all of its obligations under the Contract with respect
to such defect, or
(ii) if Purchaser elects a System Upgrade just prior to the
Termination Date set forth in clause (b)(ii) above, Guarantor's obligation
under this Guaranty shall continue with respect to such Guarantied
Obligation, not withstanding such Termination Date, until Contractor
performs all its obligations under the Contract with respect to such
System Upgrade.
(d) The Guarantor's performance or payment of a portion, but not
all, of the Guarantied Obligations shall in no way limit, affect, modify or
abridge the Guarantor's liability, as set forth herein, for any portion of the
Guarantied Obligations that has not been completely performed or paid in full.
Section 2.3. Guaranty Unconditional. Except as expressly set forth
herein, the Guarantor agrees that the obligations of the Guarantor hereunder
shall be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by any of the
following, whether with or without notice to or assent by the Guarantor:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Contractor under the
Contract, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to the
Contract;
(iii) any release, impairment, non-perfection or invalidity of
any direct or indirect security for any obligation of the Contractor
under the Contract;
(iv) any change in the corporate existence, structure or
ownership of the Contractor, or any insolvency, bankruptcy,
reorganization or other similar proceeding
<PAGE> 84
4
affecting the Contractor or its assets or any resulting release or
discharge of any obligation of the Contractor contained in the Contract;
(v) the existence of any claim, set-off or other rights which
the Guarantor may have at any time against the Contractor, the
Purchaser, or any other corporation or person, whether in connection
herewith or any unrelated transactions, provided that nothing herein
shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Contractor for any reason of the Contract, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Contractor of any other amount payable by the Contractor under the
Contract; or
(vii) any other act or omission to act or delay of any kind by
the Contractor, the Purchaser, or any other corporation or person or any
other circumstance whatsoever which might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of or defense
to the Guarantor's obligations hereunder.
Notwithstanding any provision of this Guaranty to the contrary, the Guarantor
shall be entitled to assert as a defense to any claim for payment or performance
of the Guarantied Obligations, that (i) such Guarantied Obligations are not
currently due under the terms of the Contract or (ii) that such Guarantied
Obligations have previously been paid or performed in full.
Section 2.4. Waivers of Notices and Defenses. The Guarantor hereby
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any corporation or person against the Contractor or any other
corporation or person.
Section 2.5. Stay. The Guarantor agrees that, notwithstanding
anything to the contrary herein, if the Purchaser is stayed upon the insolvency,
bankruptcy, or reorganization of the Contractor from exercising its rights to
enforce or exercise any right or remedy with respect to the Guarantied
Obligations, or is prevented from giving any notice or demand for payment or
performance or taking any action to realize on any security or collateral or is
prevented from collecting any of the Guarantied Obligations, in any such case,
by such proceeding or action, the Guarantor shall pay or render to the Purchaser
upon demand therefor the amount or performance that would otherwise have been
due had such rights and remedies been permitted to be exercised by the
Purchaser.
Section 2.6. No Enforcement of Subrogation. Upon making any payment
or performance with respect to any Guarantied Obligation hereunder, the
Guarantor shall be subrogated to the rights of the Purchaser against the
Contractor with respect to such payment or performance; provided that the
Guarantor shall not enforce any payment or performance right by way of
subrogation until all Guarantied Obligations been paid and performed in full.
<PAGE> 85
5
ARTICLE 3
Representations and Warranties
The Guarantor hereby represents and warrants to the Purchaser that
the following statements are true and correct:
Section 3.1. Binding Obligation. This Guaranty has been duly and
validly executed and delivered by the Guarantor and constitutes the legal, valid
and binding obligations of the Guarantor enforceable against the Guarantor in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by equitable principles relating to the
availability of equitable remedies.
Section 3.2. Relationship to the Contractor. As of the date hereof,
the Guarantor is the owner, directly or through one or more wholly-owned
subsidiaries, of all of the issued and outstanding capital stock of the
Contractor; the agreement of the Purchaser to enter into the Contract with the
Contractor is of substantial and material benefit to the Guarantor; and the
Guarantor has reviewed and approved copies of the Contract and all other related
documents and is fully informed of the remedies the Purchaser may pursue upon
the occurrence of a default under the Contract. This Guaranty will remain in
full force and effect if Contractor ceases to be a direct or indirect subsidiary
of Guarantor.
Section 3.3. Status. Guarantor is a corporation duly organized and
existing under the laws of Bermuda.
ARTICLE 4
Miscellaneous
Section 4.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission, telex or similar writing) and shall be given to such party at its
address, telecopy number or telex number set forth, in the case of the
Guarantor, on the signature pages hereof, or in the case of the Purchaser, in
the Contract, or such other address or telecopy number or telex number as such
party may hereafter specify for the purpose by notice to the other party. Each
such notice, request or other communication shall be effective (i) if given by
facsimile transmission, when such telecopy is transmitted to the telecopy number
specified in this Section, (ii) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (iii) if given by mail, three business days after such
communication is deposited in the mails with first class (or, in the case of
international mail, airmail) postage prepaid, addressed
<PAGE> 86
6
as aforesaid, or (iv) if given by any other means, when delivered at the address
specified in this Section.
Section 4.2. No Waivers. No failure or delay by the Purchaser in
exercising any right, power or privilege hereunder or under the Contract shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 4.3. Amendments and Waivers. This Guaranty constitutes the
complete agreement of the Purchaser and the Guarantor with respect to the
subject matter hereof and supersedes all prior or contemporaneous negotiations,
promises, covenants, agreements or representations. No amendment, modification,
termination or waiver of any provision of this Guaranty, shall in any event be
effective without the written consent of the Purchaser and Guarantor.
Section 4.4. Successors and Assigns; Beneficiaries. This Guaranty is
a continuing Guaranty and shall be binding upon the Guarantor and its successors
and assigns, provided, however, that the Guarantor may not assign this Guaranty
or transfer any of the rights or obligations of the Guarantor hereunder without
the prior written consent of the Purchaser and a majority of the lenders
referred to below. This Guaranty shall inure to the benefit of (i) the Purchaser
and its successors and assigns permitted under the Contract, (ii) any
"Transferee" under Article [ ] of the Contract and its successors and assigns
permitted under the Contract, (iii) any lenders participating in the financing
of the System to which the Purchaser assigns its rights hereunder and (iv) any
of the successors, assigns and transferees of such lenders to whom the Contract
has also been assigned in accordance with the terms of any consent to the
assignment of the Contact executed by Contractor. Nothing contained in this
Guaranty shall be deemed to confer upon anyone other than the parties hereto and
the other beneficiaries described in the preceding sentence any right to insist
upon or to enforce the performance or observance of any of the obligations
contained herein. If requested by the Purchaser, the Guarantor will execute and
deliver a consent, in a form reasonably requested by such lenders, to such
assignment in favor of such lenders.
Section 4.5. Limitation on Liability. Notwithstanding anything to
the contrary contained or implied herein, except as otherwise agreed by
Guarantor and Purchaser, the aggregate liability for payment by Guarantor
hereunder shall not in any event exceed the maximum aggregate liability set
forth in Sub-Article 23(B) of the Contract, as such amount may be increased or
decreased pursuant to such Article, less amounts previously paid as damages
under the Contract to the Purchaser and/or its successors and assigns by
Contractor.
Section 4.6. Applicable Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York.
<PAGE> 87
7
SECTION 4.7. JURISDICTION.
(a) ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR RELATING
IN ANY WAY TO THIS GUARANTY MAY BE BROUGHT AND ENFORCED
IN THE COURTS OF THE STATE AND CITY OF NEW YORK OR THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
THE GUARANTOR IRREVOCABLY CONSENTS TO THE JURISDICTION
OF EACH SUCH COURT IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING. THE GUARANTOR IRREVOCABLY APPOINTS [ ],
WHICH CURRENTLY MAINTAINS AN OFFICE IN THE CITY OF NEW
YORK, AS ITS AGENT TO RECEIVE SERVICE OF PROCESS OR
OTHER LEGAL SUMMONS FOR PURPOSES OF ANY SUCH ACTION OR
PROCEEDING. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO THE GUARANTOR AT ITS ADDRESS AS
PROVIDED FOR NOTICES HEREUNDER. THE FOREGOING SHALL NOT
LIMIT THE RIGHT OF THE PURCHASER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING, OR TO OBTAIN EXECUTION OF ANY JUDGMENT, IN
ANY OTHER JURISDICTION.
(b) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY ACTION OR PROCEEDING ARISING UNDER THIS GUARANTY
IN ANY COURT LOCATED IN THE STATE AND CITY OF NEW YORK
AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY
COURT LOCATED IN THE STATE OF NEW YORK IS NOT A
CONVENIENT FORUM FOR ANY SUCH ACTION OR PROCEEDING.
SECTION 4.8. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED UPON, OR ARISING OUT OF, THIS GUARANTY OR ANY OTHER RELATED DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF THE PURCHASER
OR THE GUARANTOR RELATING THERETO.
Section 4.9. Judgment. The obligations of the Guarantor in respect
of this Guaranty due to any party hereto shall, notwithstanding any judgment in
a currency (the "judgment currency") other than Dollars, be discharged only to
the extent that on the Business
<PAGE> 88
8
Day following receipt by such party of any sum adjudged to be so due in the
judgment currency such party may in accordance with normal banking procedures
purchase Dollars with the judgment currency; if the amount of Dollars so
purchased is less than the sum originally due to such party in Dollars, the
Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such party against such loss, and if the amount of
Dollars so purchased exceeds the sum originally due to any party to this
Guaranty, such party agrees to remit to the Guarantor, such excess.
Section 4.10. Severability. If any provision in or obligation under
this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 4.11. Interpretation. Section headings in this Guaranty are
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
Section 4.12. Further Assurances. At any time or from time to time,
upon the request of the Purchaser, the Guarantor shall execute and deliver such
further documents and do such other acts and things as the Purchaser may
reasonably request in order to effect fully the purposes of this Guaranty. The
Guarantor agrees to be liable for any reasonable expenses incurred by Purchaser
and/or its successors and assigns with respect to any action or proceeding to
enforce this Guaranty. The Guarantor agrees to deliver an opinion of counsel
satisfactory to the Purchaser, addressed to the Purchaser and the lenders
described in Section 4.4(iii) hereof substantially in the form of Exhibit [ ] to
the Contract.
<PAGE> 89
9
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of
the date first above written.
[__________________________]
By ________________________
Name:
Title:
Address: ___________________
<PAGE> 90
EXHIBIT C
TO
CONSTRUCTION CONTRACT
FORM OF CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of _________ __, 1999 (this
"Consent"), among [___________________], a [corporation] organized and existing
under the laws of ___________ (together with its successors and assigns, the
"Contractor"), [ADMINISTRATIVE AGENT], as administrative agent for the Lenders
referred to below (in such capacity, the "Administrative Agent"),
[________________] [a [corporation] organized and existing under the laws of
Bermuda (the "Borrower") and [Terminal Party(ies)] (together with the Borrower,
the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Borrower proposes to develop, construct, own, provide,
operate and sell capacity on a fiber optic cable system consisting of
[______________] and such other connections as the Supply Contract allows the
Borrower to elect (the "System") and, in connection therewith, the Borrower has
requested the Contractor to design, construct and install all components of the
System in accordance with the terms and conditions contained in the Project
Development and Construction Contract, dated as of _____ __, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Supply Contract"),
between the Contractor and the Purchasers;
[Describe any other assigned agreements and define them, together
with the Supply Contract, as the "Assigned Agreements"]
WHEREAS, in order to finance the construction and installation of
the System, the Borrower is entering into a Credit Agreement, dated as of
____________ __, 1999 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the Administrative Agent,
and the banks and financial institutions from time to time parties thereto as
lenders (collectively, the "Lenders");
WHEREAS, as collateral security for all obligations of the Borrower
to the Lenders, the Borrower, and the other Purchasers, among other things, have
assigned or will assign all of their right, title and interest (the "Assigned
Interest") in, to and under the Assigned Agreements to the Administrative Agent
pursuant to the Borrower Security Agreement, dated as of ___________ __, 1999
(as amended, supplemented or otherwise modified from time to time, the "Security
Agreement"), made by the Borrower in favor of the Administrative Agent and the
other Security Agreements (as defined in the Credit Agreement); and
<PAGE> 91
11
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement that the Contractor and the other parties hereto shall have
executed and delivered this Consent;
NOW, THEREFORE, in consideration of the foregoing premises and for
good and valuable consideration, the receipt of which is hereby acknowledged,
and intending to be legally bound, the parties hereto hereby agree,
notwithstanding anything to the contrary contained in the Assigned Agreements,
as follows:
1. Consent to Assignment. The Contractor (a) consents to the
assignment as collateral security to the Administrative Agent, for the benefit
of the Lenders, of the Assigned Interest and (b) acknowledges the right of the
Administrative Agent in the exercise of its rights and remedies under the
Security Agreements to make all demands, give all notices, take all actions and
exercise all rights of the Borrower under the Assigned Agreements; provided,
that insofar as the Administrative Agent exercises any of its rights under the
Assigned Agreements or makes any claims with respect to payments or other
obligations under the Assigned Agreements, the terms and conditions of the
Assigned Agreements applicable to such exercise of rights or claims shall apply
to the Administrative Agent to the same extent as to each Purchaser.
2. Borrower's Acknowledgment. Each Purchaser acknowledges and agrees
that the Contractor is authorized to act in accordance with the Administrative
Agent's exercise of the Borrower's rights in accordance with this Consent, and
that the Contractor shall bear no liability to any Purchaser in connection
therewith.
3. Subsequent Transferee. The Contractor agrees that, if the
Administrative Agent shall notify the Contractor in writing (a copy of which
notice the Administrative Agent agrees to deliver simultaneously to the
Purchasers) that an Event of Default under the Credit Agreement has occurred and
is continuing and that the Administrative Agent has elected to exercise its
rights and remedies pursuant to the Security Agreements with respect to the
foreclosure or sale of the Assigned Interest, then the Administrative Agent or
any purchaser of the Assigned Interest, if the Administrative Agent or such
purchaser, as the case may be, has elected to assume all of the rights and
obligations of the Purchasers under the Assigned Agreements (a "Subsequent
Transferee"), shall (whether or not the Administrative Agent shall have
delivered a copy of the above-mentioned notice to the Purchasers and without
relieving the Administrative Agent of its obligation to do so) be substituted
for the Purchasers under such Assigned Agreements; provided that in the case of
a purchaser of the Assigned Interest, such purchaser (i) if such Event of
Default shall have occurred prior to the Date of Final Acceptance of the System,
is not and is not an affiliate of any entity engaged in the business of
designing or constructing undersea cable systems for telecommunications;
provided that such purchaser shall not request any System Upgrades, and (ii) if
such Event of Default shall have occurred prior to the Date of Final Acceptance
of the System, is sufficiently creditworthy to fulfill the obligations under the
Assigned Agreements. Upon any transfer by the Administrative Agent of the
Assigned Interest to a Subsequent Transferee, the Administrative Agent and the
Lenders shall have no
<PAGE> 92
12
obligations under the Assigned Agreements, except to the extent any such entity
is a Subsequent Transferee.
4. Right to Cure. In the event of a default by the Purchasers in the
performance of any of their obligations under any Assigned Agreement, or upon
the occurrence or non occurrence of any event or condition under such Assigned
Agreement which would immediately or with the passage of any applicable grace
period or the giving of notice, or both, enable the Contractor to terminate such
Assigned Agreement (hereinafter, a "default"), the Contractor will not terminate
such Assigned Agreement until it first gives written notice of such default to
the Administrative Agent and affords the Administrative Agent a period of at
least 45 days from receipt of such notice to cure such default.
5. Replacement Agreement. In the event any Assigned Agreement is
terminated as a result of any bankruptcy or insolvency proceeding affecting the
Purchasers, the Contractor will, at the option of the Administrative Agent
exercised within 45 days after such termination, provided that all defaults
under the Assigned Agreements (other than such insolvency event) shall have been
cured, enter into a new agreement with the Administrative Agent or its
transferee or nominee having identical terms other than as necessitated by the
substitution of parties and other changes as the parties may agree; provided
that in the case of a transferee or nominee, such transferee or nominee (i) if
such termination shall have occurred prior to the Date of Final Acceptance of
the System, is not and is not an affiliate of any entity engaged in the business
of designing or constructing undersea cable systems for telecommunications;
provided that such transferee or nominee shall not request any System Upgrades
and (ii) if such termination shall have occurred prior to the Date of Final
Acceptance of the System, is sufficiently creditworthy to fulfill the
obligations under the Assigned Agreements.
6. No Liability. The Contractor acknowledges and agrees that neither
the Administrative Agent nor any Lender (nor any other representative of any
Lender) shall have any liability or obligation under the Assigned Agreements as
a result of this Consent, the Security Agreements or the Credit Agreement, nor
shall the Administrative Agent, any Lender or any other representative of any
Lender (except during any period in which such person has elected to become a
Subsequent Transferee pursuant to Sections 3 and 5) be obligated or required to
perform any of the Purchasers' obligations under the Assigned Agreements or to
take any action to collect or enforce any claim for payment assigned under the
Security Agreements.
7. Representations and Warranties. The Contractor hereby represents
and warrants, for the benefit of the Administrative Agent and the Lenders, that:
(a) this Consent and each Assigned Agreement is in full force and
effect, has been duly executed and delivered on behalf of the Contractor,
and constitutes a valid and binding obligation of the Contractor
enforceable against the Contractor in accordance with its terms except as
enforceability may be limited by general principles of equity and by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally;
<PAGE> 93
13
(b) no consent, license, approval or authorization of, or filing,
registration or declaration with, or exemption by, any governmental body,
bureau or agency or any other person is required in connection with the
execution, delivery and performance by the Contractor of this Consent or
any of the Assigned Agreements, except as provided in the express terms of
the Assigned Agreements and other than those which have been duly obtained
and are in full force and effect;
(c) except pursuant to this Consent and as expressly set forth in
the Assigned Agreements, the Contractor has not consented to any pledge,
assignment or other transfer of any interest in the Assigned Agreements;
and
(d) the Contractor has the corporate power and is duly authorized to
enter into this Consent and the Assigned Agreements and the execution,
delivery and performance of this Consent and each of the Assigned
Agreements does not violate the charter or bylaws of the Contractor or any
law applicable to the Contractor or any contract material to the
Contractor or the Assigned Agreements.
8. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED
STATES OF AMERICA.
9. Submission to Jurisdiction. The parties hereto submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this Consent
or the transactions contemplated hereby. The parties hereto irrevocably waive,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
10. Counterparts. This Consent may be executed in any number of
counterparts, all of which together shall constitute a single instrument, and it
shall not be necessary that any counterpart be signed by all the parties hereto.
11. Severability. Any provision of this Consent that may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. Amendment, Waiver. Neither this Consent nor any of the terms
hereof may be terminated, amended, supplemented, waived or modified except by an
instrument in writing signed by the Contractor, the Purchasers and the
Administrative Agent.
<PAGE> 94
14
13. Notices. All notices and other communications required or
permitted by the terms hereof shall be in writing and shall be given in person
or by means of telecopy (promptly followed by delivery in person, by mail or by
courier in the case of a notice of default) or other wire transmission, or
mailed by registered or certified mail, or sent by courier, in each case
addressed as follows or to such other address as any party may designate by
written notice to the other parties:
The Borrower and the Purchasers:
[----------------------]
Wessex House
45 Reid Street
Hamilton HM12
Bermuda
Fax: 441-296-6749/8606
Attn: Corporate Counsel
The Contractor:
[----------------------]
Fax:
The Administrative Agent:
[ADMINISTRATIVE AGENT],
as Administrative Agent
[Address]
Attn:
Fax:
Any such communication shall become effective when delivered by hand, or three
days after being deposited in the mail, first class postage prepaid, or, in the
case of an internationally recognized overnight courier service, one Business
Day after delivery to such courier service, or, in the case of transmission by
telecopier, when confirmation of receipt is obtained.
14. Third Party Beneficiaries. This Consent and the representations,
covenants and agreements contained herein are and shall be held to be for the
sole benefit of the parties hereto and the Lenders, and the respective
successors and assigns of the Lenders.
<PAGE> 95
15
IN WITNESS WHEREOF, the parties have caused this Consent to be duly
executed and delivered by their officers thereunto duly authorized as of the
date first above written.
[CONTRACTOR]
By:
Name:
Title:
[ADMINISTRATIVE AGENT], as Administrative
Agent
By:
Name:
Title:
By:
Name:
Title:
[PURCHASER]
By:
Name:
Title:
[TERMINAL PARTY(IES)]
By:
Name:
Title:
<PAGE> 96
EXHIBIT D-1
TO
CONSTRUCTION CONTRACT
FORM OF CONTRACTOR OPINION(1)
DATE
Re: [____________] Crossing Cable System
Asia Global Crossing Ltd.
Wessex House, 2nd Floor
45 Reed Street
Hamilton, HM12, Bermuda
[Administrative Agent],
as Administrative Agent, and the banks
listed on Schedule A hereto
Dear Sirs:
We have participated in the preparation of the Project Development
and Construction Contract dated ______ __, 1999 between [________________] (the
"Contractor") and [________________] (the "Purchaser"), and the Consent and
Agreement dated as of ________ __, 1999 among the Contractor, [Administrative
Agent], as Administrative Agent, and the Purchaser (collectively, the
"Agreements"), and have acted as counsel for Contractor for the purpose of
rendering this opinion.
Upon the basis of the foregoing and subject to the qualifications
set forth below, we are of the opinion that:
1. The Contractor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
[________________].
2. The Agreements have been duly authorized, executed and delivered
by the Contractor.
3. Each of the Agreements constitutes a valid and binding agreement
of the Contractor, enforceable against the Contractor in accordance with
its terms, subject to the
--------
(1) Counsel may include usual, standard qualifications.
<PAGE> 97
2
effect of applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and equitable principles of general
applicability.
4. The execution, delivery and performance by the Contractor of each
of the Agreements and the consummation of the transactions contemplated
thereby by the Contractor will not violate or conflict with any laws,
rules or regulations applicable to the Contractor or any provision of the
Certificate of Incorporation or the Bylaws of the Contractor or, to my
knowledge without independent investigation, any agreement binding on the
Contractor.
5. The execution and delivery of the Agreements by the Contractor,
the consummation by the Contractor of the transactions provided for in the
Agreements and the performance of or compliance with the obligations
specified in the Agreements do not result in or constitute a violation of
or default pursuant to any orders, judgments or decrees of which we have
knowledge to which the Contractor is a party or by which the Contractor or
its assets are bound.
[The foregoing opinion is subject to the following qualifications:
1. We express no opinion as to any indemnification or exculpation
provisions in any of the Agreements that purport to indemnify any person
or entity for or relieve any person or entity of responsibility for its
own gross negligence or willful misconduct or insofar as any of said
provisions contravene public policy.
2. We express no opinion as to any provision in any of the
Agreements providing for liquidated damages or extended payment charges to the
extent any such provision is determined to be a penalty provision.
3. In rendering the foregoing opinion, we have, with your consent
and without independent investigation, assumed that the Agreements have been
duly authorized, executed and delivered by the each of the parties thereto and
constitute valid and binding agreements of each of the parties thereto (other
than the Contractor).
[The foregoing opinion or opinions should cover the laws of Japan,
New York and the Federal laws of the United States of America. Two separate
opinions are acceptable.]
<PAGE> 98
3
This opinion is being rendered to Asia Global Crossing Ltd.,
[Administrative Agent], as Administrative Agent, and the banks listed on
Schedule A hereto and may not, except as may be required by law or regulatory
authority, be distributed to any other person or entity and may not be relied
upon by any other person or entity without our prior written consent.
Very truly yours,
[CONTRACTOR'S COUNSEL]
<PAGE> 99
Schedule A
to
Contractor's Opinion
[To be provided.]
<PAGE> 100
EXHIBIT D-2
TO
CONSTRUCTION CONTRACT
FORM OF GUARANTOR OPINION(1)
DATE
Re: [____________] Crossing Cable System
Asia Global Crossing Ltd.
Wessex House, 2nd Floor
45 Reed Street
Hamilton, HM12, Bermuda
[Administrative Agent],
as Administrative Agent, and the banks
listed on Schedule A hereto
Dear Sirs:
We have participated in the preparation of the Guaranty dated as of
________ __, 1999 among the Contractor, the Guarantor and the Purchaser (the
"Guaranty"), and have acted as counsel for the Guarantor for the purpose of
rendering this opinion.
Upon the basis of the foregoing and subject to the qualifications
set forth below, we are of the opinion that:
1. The Guarantor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Japan.
2. The Guaranty has been duly authorized, executed and delivered by
the Guarantor.
3. The Guaranty constitutes a valid and binding agreement of the
Guarantor, enforceable against the Guarantor in accordance with its terms,
subject to the effect of applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and equitable principles of general
applicability.
_________
(1) Counsel may include usual, standard qualifications.
<PAGE> 101
2
4. The execution, delivery and performance by the Guarantor of the
Guaranty and the consummation of the transactions contemplated thereby by
the Guarantor will not violate or conflict with any laws, rules or
regulations applicable to the Guarantor or any provision of the
Certificate of Incorporation or the Bylaws of the Guarantor or, to my
knowledge without independent investigation, any agreement binding on the
Guarantor.
5. The execution and delivery of the Guaranty by the Guarantor, the
consummation by the Guarantor of the transactions provided for in the
Guaranty and the performance of or compliance with the obligations
specified in the Guaranty do not result in or constitute a violation of or
default pursuant to any orders, judgments or decrees of which we have
knowledge to which the Guarantor is a party or by which the Guarantor or
its assets are bound.
[The foregoing opinion is subject to the following qualifications:
1. We express no opinion as to any indemnification or exculpation
provisions in Guaranty that purport to indemnify any person or entity for
or relieve any person or entity of responsibility for its own gross
negligence or willful misconduct or insofar as any of said provisions
contravene public policy.
2. We express no opinion as to any provision in any of the Guaranty
providing for liquidated damages or extended payment charges to the extent
any such provision is determined to be a penalty provision.
3. In rendering the foregoing opinion, we have, with your consent
and without independent investigation, assumed that the Guaranty has been
duly authorized, executed and delivered by each of the parties thereto and
constitutes a valid and binding agreement of each of the parties thereto
(other than the Guarantor).
[The foregoing opinion or opinions should cover the laws of Japan,
New York and the Federal laws of the United States of America. Two
separate opinions are acceptable.]
<PAGE> 102
3
This opinion is being rendered to Asia Global Crossing Ltd.,
[Administrative Agent], as Administrative Agent, and the banks listed on
Schedule A hereto and may not, except as may be required by law or regulatory
authority, be distributed to any other person or entity and may not be relied
upon by any other person or entity without our prior written consent.
Very truly yours,
[GUARANTOR'S COUNSEL]
<PAGE> 103
Schedule A
to
Guarantor's Opinion
[To be provided.]
<PAGE> 104
EXHIBIT E
TO
CONSTRUCTION CONTRACT
FORM OF ESCROW AGREEMENT
[________________] CROSSING
ESCROW AGREEMENT dated as of ______ __, 1999 by and among
[________________ Crossing Ltd.], a [corporation] organized and existing under
the laws of Bermuda (the "Purchaser"), [________________], a [corporation]
organized and existing under the laws of [________________], and having an
office in [________________] (the "Contractor") and [________________] (the
"Escrow Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Project Development and Construction
Contract, dated as of ________ ___, 1999 (said agreement, as the same may be
amended, modified or supplemented from time to time, the "Supply Contract"),
between the Purchaser and the Contractor, there is required to be deposited by
Purchaser in escrow certain payments to be held by the Escrow Agent subject to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
The Purchaser and the Contractor do hereby appoint and designate the
Escrow Agent as escrow agent for the purposes set forth herein, and the Escrow
Agent does hereby accept such appointment under the terms and conditions set
forth herein.
1. Establishment of Dispute Account. The Purchaser and the
Contractor hereby establish and, at all times until this Escrow Agreement is
terminated, shall maintain, with the Escrow Agent an escrow account (the
"Dispute Account"), in the name of and under the control of [________________]
as Escrow Agent, in which the Purchaser shall deposit payments (if and when)
made pursuant to Sub-Articles 5(C)(4) of the Supply Contract (the "Disputed
Payments"). Such funds shall be delivered to, and held by the Escrow Agent in,
the Escrow Agent's account set forth in Exhibit C hereto. The Escrow Agent shall
hold, subject to the terms and conditions hereof, such cash and such investments
and reinvestments as may be permitted pursuant to Section 2 hereof (which,
together with the income from such investments, are hereinafter, referred to as
the "Dispute Fund"). If any withholding tax is required to be paid from amounts
in the Dispute Fund, the Contractor and the Purchaser shall deliver to the
Escrow Agent any necessary and appropriate forms instructing the Escrow Agent as
to the amount and timing of such payments.
<PAGE> 105
2
2. Investment of Dispute Fund. During the term of this Escrow
Agreement, the Dispute Fund shall be invested and reinvested by the Escrow Agent
in interest-bearing or money market bank accounts of the Escrow Agent and such
other investments as the Contractor and the Purchaser may mutually agree upon
from among the Permitted Investments described on Exhibit D. In the absence of
any instruction, the Escrow Agent shall invest and reinvest the Dispute Fund in
its sole discretion in interest-bearing or money market bank accounts of the
Escrow Agent. All interest or other income earned under the Escrow Agreement
shall be allocated and paid as provided herein and reported by the recipient to
the Internal Revenue Service as having been so allocated and paid.
In addition, the Escrow Agent shall have the right to liquidate any
investments held in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent in its capacity as escrow agent
hereunder shall not have any liability for any loss sustained as a result of any
investment made pursuant to the instructions of the parties hereto or as a
result of any liquidation of any investment prior to its maturity or for the
failure of the parties to give the Escrow Agent instructions to invest or
reinvest the Dispute Fund or any earnings thereon. Costs incurred by the Escrow
Agent in connection with the making or liquidation of any investment of the
Dispute Fund may be charged by the Escrow Agent against amounts in the Dispute
Fund if such costs are not paid when due.
3. Dispositions. All or a portion of the Dispute Fund shall be paid
to (i) the Contractor account as set forth in Exhibit A upon the receipt by the
Escrow Agent of a written instruction from the Contractor to do so and
countersigned by the Purchaser, (ii) the Purchaser's account as set forth in
Exhibit B upon the receipt by the Escrow Agent of a written instruction from the
Purchaser to do so and countersigned by the Contractor, (iii) the account of the
prevailing party, if the dispute underlying the Disputed Payments is submitted
to arbitration in accordance with the Supply Contract, and upon receipt by the
Escrow Agent of a written instruction of the arbitrators directing the Escrow
Agent to do so or (iv) the account of the prevailing party, if the dispute
underlying the Disputed Payments is submitted to a court of competent
jurisdiction in accordance with the Supply Contract, and upon receipt by the
Escrow Agent of a final order or determination (no longer capable of being
appealed) from such court (or appellate court) setting forth the resolution of
such dispute and directing the Escrow Agent to do so. The Escrow Agent shall pay
amounts to the Contractor or the Purchaser, as the case may be, in accordance
with such written instruction, order or determination on (A) the business day
that such instruction, order or determination is received in the case of an
instruction, order or determination received by the Escrow Agent by no later
than 12:00 noon, New York City time or (B) the next business day in the case of
an instruction, order or determination received by the Escrow Agent after 12:00
noon, New York City time. All written instructions, orders or determinations may
be delivered by facsimile transmission to the Escrow Agent.
4. The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, order, determination,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper
<PAGE> 106
3
party or parties. The Escrow Agent shall be under no duty to inquire into or
investigate the validity, accuracy or content of any such document. The Escrow
Agent shall have no duty to solicit any payments which may be due it hereunder.
5. The Escrow Agent shall not be liable for any action taken by it
in good faith and believed by it to be authorized or within the rights or powers
conferred upon it by this Agreement, and may consult with counsel of its own
choice and shall have full and complete authorization and protection for any
action taken or suffered by it hereunder in good faith and in accordance with
the opinion of such counsel unless a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct was the cause of
any loss to the Contractor or the Purchaser. In the administration of the
Dispute Account hereunder, the Escrow Agent may execute any of its powers and
perform its duties hereunder directly or through agents or attorneys and may
consult with counsel, accountants and other skilled persons to be selected and
retained by it.
6. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice to the Contractor and the Purchaser in
writing of such resignation specifying a date when such resignation shall take
effect except that the Escrow Agent shall hold the Dispute Fund until it is paid
in accordance with the joint written instructions of Contractor and Purchaser.
If no such instructions are received within 30 days, the resigning Escrow Agent
may, upon notice to Contractor and Purchaser, arrange for a successor escrow
agent which shall be a national banking institution or trust company located in
New York City, New York. The Escrow Agent shall have the right to withhold an
amount equal to the amount due and owing to the Escrow Agent, plus any costs and
expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow
Agent in connection with the termination of the Escrow Agreement.
7. The Purchaser and Contractor hereby agree to pay to the Escrow
Agent upon execution of this agreement compensation for the services to be
rendered hereunder as described in Exhibit E hereto, in advance, and will pay or
reimburse the Escrow Agent upon request for all expenses, disbursements and
advances, including reasonable attorneys' fees, incurred or made by it in
connection with carrying out its duties hereunder (including, without
limitation, in connection with the making or liquidation of any investments
under Section 2).
8. The Purchaser and the Contractor hereby agree to jointly and
severally indemnify the Escrow Agent for, and to hold it harmless against any
loss, liability or expense incurred without gross negligence or bad faith on the
part of the Escrow Agent, arising out of or in connection with its entering into
this Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability and with respect to
any investigation. The Escrow Agent may charge against all property in the
Dispute Account any amounts owed to it under the foregoing indemnity if not paid
when due or may withhold payment of such property as security for any
unliquidated claims. Notwithstanding anything in this Escrow Agreement to the
contrary, in no event shall the Escrow Agent be liable
<PAGE> 107
4
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
9. The duties and responsibilities of the Escrow Agent hereunder
shall be determined solely by the express provisions of this Escrow Agreement,
and no other or further duties or responsibilities shall be implied.
10. The Escrow Agent hereby expressly acknowledges and agrees that
it shall have neither a lien nor any other right or claim on any amounts
deposited in the Dispute Account on its own account (excepting its fees and
expenses under this Agreement to the extent not paid after demand upon
Purchaser).
11. All notices and communications hereunder shall be in writing and
shall be deemed to be duly given when received if sent by registered mail,
return receipt requested, or when delivered if sent by personal hand or by
facsimile transmission, as follows:
If to Escrow Agent:
[_________________]
Attn:
Fax:
If to Purchaser:
[________________ Crossing Ltd.]
Wessex House
45 Reid Street
Hamilton HM12
Bermuda
Attn: Robert Klug
Tel: 441-296-8600
Fax: 441-296-8606
Tax Identification Number:
If to Contractor:
[_________________]
Tel:
Fax:
Tax Identification Number:
<PAGE> 108
5
or at such other address as any of the above may have furnished to the other
parties in writing as set forth above and any such notice or communication given
in the manner specified in this Paragraph 11. A copy of any notice or
communication under this Escrow Agreement which is given by any party shall be
given by such party to each of the parties hereto.
12. (a) In the event funds transfer instructions are given (other
than in writing at the time of execution of the Escrow Agreement), whether in
writing, by telecopier or otherwise, the Escrow Agent is authorized to seek
confirmation of such instructions by telephone call-back to the person or
persons designated in Exhibit F hereto, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated.
The persons and telephone numbers for call-backs may be changed only in a
writing actually received and acknowledged by the Escrow Agent. The parties to
this Escrow Agreement acknowledge that such security procedure is commercially
reasonable.
(b) It is understood that the Escrow Agent and the beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the parties hereto to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The
Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank, or an intermediary bank designated.
13. The provisions of this Escrow Agreement may be waived, altered,
amended or supplemented, in whole or in part, only by a writing signed by all of
the parties hereto.
14. It is understood and agreed that the Escrow Agent makes no
representations or warranties hereunder.
15. Neither this Escrow Agreement nor any right or interest
hereunder may be assigned in whole or in part by any party without the prior
consent of the other parties[; provided that Purchaser may grant a security
interest in its rights hereunder to the senior lenders participating in the
financing of its cable system].
16. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
17. The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto.
<PAGE> 109
6
18. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any provision of this
Agreement, it shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties hereto or by final
order or judgment of a court of competent jurisdiction.
19. Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Escrow Agreement without further act.
20. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby. Nothing contained in this Agreement shall be deemed to confer
upon anyone other than the parties hereto (and their permitted successors and
assigns) any legal right or equitable right, remedy or claim under or by reason
of this Agreement.
21. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK AND ANY ACTION BROUGHT HEREUNDER SHALL BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, LOCATED IN THE COUNTY OF NEW
YORK. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION ON THE GROUND OF VENUE,
FORUM NON-CONVENIENS OR ANY SIMILAR GROUNDS AND IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS BY MAIL OR IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW AND
CONSENTS TO THE JURISDICTION OF SAID COURTS.
<PAGE> 110
7
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the day and year first above written.
[PURCHASER]
By:
Name:
Title:
[CONTRACTOR]
By:
Name:
Title:
[ESCROW AGENT]
By:
Name:
Title:
<PAGE> 111
EXHIBIT A TO ESCROW AGREEMENT
Contractor's Account
Account Name:
Account Number:
Bank Name:
ABA No.:
Reference:
Attn:
<PAGE> 112
EXHIBIT B TO ESCROW AGREEMENT
Purchaser's Account
Account Name [_________ Crossing Ltd.]
Account Number:
Bank Name:
ABA No.:
[Reference: __________________]
[Attn: __________________]
<PAGE> 113
EXHIBIT C TO ESCROW AGREEMENT
Escrow Agent's Account
Account Name:
Account Number:
Bank Name:
ABA Number:
Attention:
<PAGE> 114
EXHIBIT D TO ESCROW AGREEMENT
Permitted Investments
(a) Direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within one
year from the date of acquisition thereof; and
(b) Investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and overnight sweep accounts, money
market deposit accounts issued or offered by, (i) the Escrow Agent or any of its
affiliates or (ii) any of Purchaser's senior lenders and/or any other bank
which, in each case, has a combined capital and surplus and undivided profits of
not less than $250,000,000.
<PAGE> 115
EXHIBIT E TO ESCROW AGREEMENT
Compensation To Be Paid To Escrow Agent
<PAGE> 116
EXHIBIT F TO ESCROW AGREEMENT
Persons Authorized To Confirm Transfer Instructions
Purchaser: S. Wallace Dawson, Tel: 441-296-8600
Robert Klug, Tel: 441-296-8600
Ian McLean, Tel: 441-296-8600
Contractor:
<PAGE> 117
EXHIBIT F
TO
CONSTRUCTION CONTRACT
FIRST OFFICE APPLICATIONS
1. 64 WDM Submarine Repeater (high power and wide bandwidth)
2. 0.3 nm spacing WTU (Wavelength Terminating Unit)
3. High gain FEC (Forward Error Correction) in LTU (Line Terminating Unit)
4. Automatic pre-emphasis control function in MC (Maintenance Controller)
5. CORBA interface to the upper management system in MC
6. BWM Release Schedule and Feature Sets are as shown in the Technical Volume
<PAGE> 118
EXHIBIT G
TO
CONSTRUCTION CONTRACT
LIST OF MAJOR SUBCONTRACTORS
- Cables: Ocean Cable Co., Ltd., Hitachi Cable Co., Ltd.,
Pirelli Cavi e Sistemi S.p.A.
- Repeaters: Fujitsu Ltd., Mitsubishi Electric Corp., NEC Corp.
- Terminal Equipment: Lucent Technologies, Inc., Mitsubishi
Electric Corp., Toshiba Corp., NEC Corp.
- Marine Operation Services: Global Marine Systems Ltd., as prime
subcontractor (other vessels which may be used
by prime subcontractor are ASEAN Cableship
Pte. Ltd., Caldwell Cable Ventures, Inc.,
Fuguro, Kokusai Cable Ship Co., Ltd., Kokusai
Marine Engineering Corp. Korea Submarine Cable
Systems, S.B. Submarine Systems Co., Ltd.)
- Site Selection and Cable Station Construction: Parsons Brinckerhoff,
Toa Corporation
<PAGE> 119
EXHIBIT H
TO
CONSTRUCTION CONTRACT
INTELLECTUAL PROPERTY
<PAGE> 120
EXHIBIT I
TO
CONSTRUCTION CONTRACT
LANDING LICENSES
[To be obtained by Purchaser within ninety days of the date of execution of this
Contract.]
<PAGE> 121
EXHIBIT J
TO
CONSTRUCTION CONTRACT
EXAMPLES OF CONTRACTOR PERMITS
- Permission of entry to EEZ
- Permission of entry to harbor
- Notification of operations
- Visas
- Work permits
- Import licenses
- Customs clearances
- Export licenses
<PAGE> 122
EXHIBIT K
TO
CONSTRUCTION CONTRACT
EXAMPLES OF OWNER PERMITS
- Land and building permits for cable stations
(e.g., certificates of occupancy, fire agency code, building code,
architectural code, permit for temporary use of site/Hong Kong and
Singapore)
- Permits to land cables
- Government permission for entry to EEZ for surveying operations
(e.g., permits, approvals, and authorizations necessary for performing
surveying operations)
- Government approvals, consents, authorizations, and licenses that give
approval for route survey activities
- Permits to lay cables on land and in the water
(e.g., route permits, seabed occupancy permits, jurisdictional permits)
- Crossing agreements with government authorities
(e.g., pipeline (oil, gas, water), power cable, and other
telecommunications cable)
- Government licenses for terminal station earth ground beds
- Environmental or conservation permits
(e.g., development restrictions, tree preservation, clearance
requirements, wetlands, endangered species, cultural and architectural
sites)
- Government wayleaves for duct route construction
- Government right-of-ways
(e.g., land crossings, beach manhole, conduit, national park, shore and
coastal, sea wall, easements)
- Agreements with fishermen's unions
- Government excavation and road access permits
<PAGE> 123
EXHIBIT L
TO CONSTRUCTION CONTRACT
EAST ASIAN CROSSING
CONSTRUCTION CONTRACT
SUPPLEMENT NO. 1
Supplement No. 1, dated as of _________, ____ (this "Supplement"), to
the Project Development and Construction Contract described below, among KDD
Submarine Cable Systems Inc. (the "Contractor"), Asia Global Crossing Ltd. (the
"Purchaser"), [___], a [___] corporation (the "China Subsidiary"), [___], a
[___] corporation (the "Hong Kong Subsidiary"), [___], a [___] corporation (the
"Japan Subsidiary"), [___], a [___] corporation (the "Korea Subsidiary"), [___],
[___], a [___] corporation (the "Taiwan Subsidiary")(the China Subsidiary, the
Hong Kong Subsidiary, the Japan Subsidiary, the Korea Subsidiary and the Taiwan
Subsidiary, collectively the "Assignees").**
W I T N E S S E T H
WHEREAS, unless otherwise defined herein, capitalized terms used herein
shall have the meanings given to them in the Contract;
WHEREAS, Contractor and Purchaser have entered into the Project
Development and Construction Contract, dated as of ________, 1999 (as the same
may from time to time be amended, modified or supplemented, the "Contract"),
pursuant to which the Contractor has agreed to design, manufacture, construct,
install and deliver a fiber optic cable system connecting the People's Republic
of China, Hong Kong, Japan, the Republic of Korea and Taiwan, as more fully
described in the Contract;
WHEREAS, the China Subsidiary, the Hong Kong Subsidiary, the Japan
Subsidiary, the Korea Subsidiary and the Taiwan Subsidiary were formed for the
purpose of owning and/or providing capacity on certain Landing Assets and
Rights;
WHEREAS, the Purchaser wishes to transfer all rights under the Contract
(i) with respect to the China Landing Assets and Rights to the China Subsidiary,
(ii) with respect to the Hong Kong Landing Assets and Rights to the Hong Kong
Subsidiary, (iii) with respect to the Japan Landing Assets and Rights to the
Japan Subsidiary, (iv) with respect to the Korea Landing Assets and Rights to
the Korea Subsidiary and (v) with respect to the Taiwan Landing Assets and
Rights to the Taiwan Subsidiary;
--------------
**It is the agreement of the Parties that the Purchaser may form a subsidiary
with respect to each jurisdiction where the cable system lands. To the extent
that the configuration changes, the Purchaser shall have the option to add new
assignees.
<PAGE> 124
2
WHEREAS, the Purchaser will own and control all of the System other
than the Landing Assets and Rights provided that the Purchaser remains jointly
and severally liable to pay and perform all obligations with respect to the
Landing Assets and Rights;
WHEREAS, Sub-Article 37(D) of the Contract contemplates the assignment
by the Purchaser to a Transferee or Transferees of its rights under the Contract
with respect to any particular Landing Assets;
WHEREAS, Sub-Article 37(D) of the Contract requires that, in connection
with such assignment by Purchaser, the Transferees, the Purchaser and the
Contractor shall execute a supplement to the Contract describing their
respective rights and obligations; and
WHEREAS, the Contractor, the Purchaser, the China Subsidiary, the Hong
Kong Subsidiary, the Japan Subsidiary, the Korea Subsidiary, and the Taiwan
Subsidiary wish to supplement the provisions of the Contract to reflect their
agreement with respect to the Landing Assets;
NOW THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized
terms which are defined in the Contract are used herein as therein defined.
(b) The Contract is hereby amended by deleting the definition of
"Landing Assets" appearing in the third sentence of Sub-Article 37(D) of the
Contract, and by inserting a new definition of "Landing Assets" in Article 3 of
the Contract as follows:
"Landing Assets" means, with respect to each Landing Country where a
portion of the System is located, all real and personal property (including
leasehold interests therein) comprising the System from time to time and
located within the territory of such Country, including both the portions of
such property on the land of such Country and the portion of such property
under the territorial seas of such Country.
(c) Article 3 of the Contract is hereby amended to add the following
definitions:
"China Landing Assets and Rights" means all Landing Assets and Rights
located in China, including, without limitation, the property to be listed
on Schedule 1 to Supplement No. 1.
"China Landing Assets and Rights Price" has the meaning given such term
in Section 4(a) of Supplement No. 1.
"China Subsidiary" has the meaning given such term in Supplement No. 1.
<PAGE> 125
3
"Hong Kong Landing Assets and Rights" means all Landing Assets and
Rights located in Hong Kong, including, without limitation, the property to be
listed on Schedule 2 to Supplement No. 1.
"Hong Kong Landing Assets and Rights Price" has the meaning given such
term in Section 4(b) of Supplement No. 1.
"Hong Kong Subsidiary" has the meaning given such term in Supplement
No. 1.
"Japan Landing Assets and Rights" means all Landing Assets and Rights
located in Japan, including, without limitation, the property to be listed
on Schedule 3 to Supplement No. 1.
"Japan Landing Assets and Rights Price" has the meaning given such term
in Section 4(c) of Supplement No. 1.
"Japan Subsidiary" has the meaning given such term in Supplement No. 1.
"Korea Landing Assets and Rights" means all Landing Assets and Rights
located in the Republic of Korea, including, without limitation, the
property to be listed on Schedule 5 to Supplement No. 1.
"Korea Landing Assets and Rights Price" has the meaning given such term
in Section 4(d) of Supplement No. 1.
"Korea Subsidiary" has the meaning given such term in Supplement No. 1.
"Landing Assets and Rights" means, with respect to each Landing
Country, the Landing Assets in such Landing Country together with all
Permits necessary to own or lease, operate and maintain such Landing Assets
and all rights or licenses under Articles 18, 19 and 20 of the Contract
relating to such Landing Assets, including all Deliverable Software, Project
Intellectual Property and Deliverable Technical Material relating to such
Landing Assets.
"Landing Countries" means the People's Republic of China, Hong Kong,
Japan, Korea and Taiwan.
"Supplement No. 1" means Supplement No. 1, dated as of __________,
2000, to the Contract, among Purchaser, Contractor, the China Subsidiary,
the Hong Kong Subsidiary, the Japan Subsidiary, the Korea Subsidiary and the
Taiwan Subsidiary and such other subsidiaries or affiliates of the Purchaser
as may be added thereafter.
"Taiwan Landing Assets and Rights" means all Landing Assets and Rights
located in Taiwan, including without limitation, the property to be listed
on Schedule 5 to Supplement No. 1.
<PAGE> 126
4
"Taiwan Landing Assets and Rights Price" has the meaning given such
term in Section 4(e) of Supplement No. 1 .
"Taiwan Subsidiary" has the meaning given such term in Supplement No.
1.
2. Assignments of Rights. (a) The Purchaser hereby assigns and
transfers all of its right, title and interest under the Contract with respect
to the China Landing Assets and Rights to the China Subsidiary and the China
Subsidiary hereby accepts such assignment and transfer and assumes all of the
obligations and liabilities of the Purchaser under the Contract with respect to
the China Landing Assets and Rights.
(b) The Purchaser hereby assigns and transfers all of its right, title
and interest under the Contract with respect to the Hong Kong Landing Assets and
Rights to the Hong Kong Subsidiary and the Hong Kong Subsidiary hereby accepts
such assignment and transfer and assumes all of the obligations and liabilities
of the Purchaser under the Contract with respect to the Hong Kong Landing Assets
and Rights.
(c) The Purchaser hereby assigns and transfers all of its right, title
and interest under the Contract with respect to the Japan Landing Assets and
Rights to the Japan Subsidiary and the Japan Subsidiary hereby accepts such
assignment and transfer and assumes all of the obligations and liabilities of
the Purchaser under the Contract with respect to the Japan Landing Assets and
Rights.
(d) The Purchaser hereby assigns and transfers all of its right, title
and interest under the Contract with respect to the Korea Landing Assets and
Rights to the Korea Subsidiary and the Korea Subsidiary hereby accepts such
assignment and transfer and assumes all of the obligations and liabilities of
the Purchaser under the Contract with respect to the Korea Landing Assets and
Rights.
(e) The Purchaser hereby assigns and transfers all of its right, title
and interest under the Contract with respect to the Taiwan Landing Assets and
Rights to the Taiwan Subsidiary and the Taiwan Subsidiary hereby accepts such
assignment and transfer and assumes all of the obligations and liabilities of
the Purchaser's under the Contract with respect to the Taiwan Landing Assets and
Rights.
(f) The Contractor hereby acknowledges, consents and agrees to the
assignments and assumptions referred to in paragraphs (a) through (e) of this
Section 2 subject to the provisions of Section 3 below.
(g) For purposes of determining the submerged Landing Assets subject to
the foregoing transfer, it is assumed that under the current law of each Landing
Country, the territorial seas of such Country (including for such Country's tax
purposes) extend twelve nautical miles seaward from the coast of such Country.
If such assumption shall prove to be incorrect, or if a law or a formal
declaration by applicable tax authority shall change such
<PAGE> 127
5
assumption and in fact the territorial seas of any country extend beyond twelve
nautical miles, the parties shall adjust the Landing Assets subject to this
Agreement.
(h) Without limiting the generality of the foregoing, each of the China
Subsidiary, the Hong Kong Subsidiary, the Japan Subsidiary, the Korea Subsidiary
and the Taiwan Subsidiary acknowledges and agrees that it will be subject to the
same restrictions on the transfer of its Landing Assets and Rights as the
Purchaser under Sub-Article 37(D) of the Contract (the "Transfer Restrictions")
and further agrees that it will cause each direct or indirect transferee of any
of its Landing Assets and Rights to acknowledge and agree that such transferee
is also subject to the Transfer Restrictions.
(i) the Purchaser represents and warrants that the China Subsidiary,
the Hong Kong Subsidiary, the Japan Subsidiary, the Korea Subsidiary and the
Taiwan Subsidiary are each direct or indirect wholly-owned subsidiaries and
acknowledges and agrees that any transfer of any interest in the China
Subsidiary, the Hong Kong Subsidiary, the Japan Subsidiary, the Korea Subsidiary
and the Taiwan Subsidiary (or any other person or entity with any Landing Assets
and Rights) will be subject to the Transfer Restrictions to the same extent as a
transfer of Landing Assets and further agrees that it will cause each direct or
indirect transferee of any such interest to acknowledge and agree that such
transferee is also subject to the Transfer Restrictions with respect to such
interest.
3. Joint and Several Liability. (a) Notwithstanding the assignments and
assumptions set forth in Section 2 above, the Purchaser shall remain liable to
pay and perform all of the obligations and liabilities under the Contract with
respect to the assigned Landing Assets and Rights, including, without
limitation, the payment obligations under Section 4 hereof.
4. Amounts Payable under the Contract. (a) The China Subsidiary agrees
to pay to Contractor, and/or the designated affiliate of Contractor to which
portions of the Contract are assigned, all amounts payable under the Contract,
when and as due thereunder, with respect to the China Landing Assets and Rights
(the "China Landing Assets and Rights Price"). The portion of the Initial
Contract Price with respect to the China Landing Assets and Rights is to be set
forth on Schedule 1 and is subject to adjustment as provided in Section 4(f)
hereof.
(b) The Hong Kong Subsidiary agrees to pay to Contractor, and/or the
designated affiliate of Contractor to which portions of the Contract are
assigned, all amounts payable under the Contract, when and as due thereunder,
with respect to the Hong Kong Landing Assets and Rights (the "Hong Kong Landing
Assets and Rights Price"). The portion of the Initial Contract Price with
respect to the Hong Kong Landing Assets and Rights is to be set forth on
Schedule 2 and is subject to adjustment as provided in Section 4(f) hereof.
(c) The Japan Subsidiary agrees to pay to Contractor, and/or the
designated affiliate of Contractor to which portions of the Contract are
assigned, all amounts payable under the Contract, when and as due thereunder,
with respect to the Japan Landing Assets and Rights (the "Japan Landing Assets
and Rights Price"). The portion of the Initial Contract Price with
<PAGE> 128
6
respect to the Japan Landing Assets and Rights is to be set forth on Schedule 3
and is subject to adjustment as provided in Section 4(f) hereof.
(d) The Korea Subsidiary agrees to pay to Contractor, and/or the
designated affiliate of Contractor to which portions of the Contract are
assigned, all amounts payable under the Contract, when and as due thereunder,
with respect to the Korea Landing Assets and Rights (the "Korea Landing Assets
and Rights Price"). The portion of the Initial Contract Price with respect to
the Korea Landing Assets and Rights is to be set forth on Schedule 4 and is
subject to adjustment as provided in Section 4(f) hereof.
(e) The Taiwan Subsidiary hereby agrees to pay to Contractor, and/or
the designated affiliate of Contractor to which portions of the Contract are
assigned, all amounts payable under the Contract, when and as due thereunder,
with respect to the Taiwan Landing Assets and Rights (the "Taiwan Landing Assets
and Rights Price"). The portion of the Initial Contract Price with respect to
the Taiwan Landing Assets and Rights is to be set forth on Schedule 5 and is
subject to adjustment as provided in Section 4(f) hereof.
(f) The amounts set forth in Schedules 1, 2, 3, 4 and 5 represent the
portions of the Initial Contract Price attributable to the respective Landing
Assets and Rights are not in addition to the Initial Contract Price, and are
subject to adjustments and additions pursuant to the Contract to the same extent
as the Initial Contract Price.
(g) The Contractor and/or its applicable affiliate(s) will send
separate appropriate invoices to the China Subsidiary, the Hong Kong Subsidiary,
the Japan Subsidiary, the Korea Subsidiary and the Taiwan Subsidiary for payment
for Landing Assets and Rights and accept payment from such Subsidiaries. All
invoices and payments will be in U.S. Dollars.
5. Delivery of Landing Assets. (a) The Contractor and/or its applicable
affiliate(s) hereby agree to deliver, transfer and assign, or cause to be
delivered, transferred and assigned (a) all right, title and interest in the
China Landing Assets and Rights to the China Subsidiary, (b) all right, title
and interest in the Hong Kong Landing Assets and Rights to the Hong Kong
Subsidiary, (c) all right, title and interest in the Japan Landing Assets and
Rights to the Japan Subsidiary, (d) all right, title and interest in the Korea
Landing Assets and Rights to the Korea Subsidiary and (e) all right, title and
interest in the Taiwan Landing Assets and Rights to the Taiwan Subsidiary.
(b) The Purchaser and each of its direct and indirect assignees and
transferees shall act collectively under the Contract and through the Purchaser
as its agent with respect to Consents, Performance Requirements, Acceptance
Testing, Contract Variations, System Upgrades, termination and suspension of all
or any part of the Contract and acceptance of the System, any Phase or any
Segment (including, without limitation, the issuance of Certificates of
Commercial Acceptance, Provisional Acceptance and Final Acceptance), and any
notices, certificates or requests by the Purchaser with respect to any of the
foregoing shall be deemed to have been given by the Purchaser and its direct and
indirect transferees and assignees and any notices, certificates or requests by
any other person with respect to the foregoing shall have no
<PAGE> 129
7
force or effect. Without limiting the foregoing, the parties acknowledge and
agree that no title to any portion of a Segment, a Phase or the System shall be
transferred to the Purchaser or any of its assignees or transferees unless all
requirements under the Contract for transfer of the entire Segment, entire Phase
or the System, as the case may be, have been satisfied in full.
(c) The Purchaser shall act as agent for its direct and indirect
assignees and transferees for the receipt of notices (excluding invoices),
reports and information (including the copies of the documentation provided
under Article 31 of the Contract) from the Contractor, and notices, reports and
information delivered to the Purchaser by the Contractor shall be deemed to have
been delivered to the Purchaser and its direct and indirect transferees. The
Purchaser shall furnish copies of all such notices, reports and information to
the China Subsidiary, the Hong Kong Subsidiary, the Japan Subsidiary, the Korea
Subsidiary and the Taiwan Subsidiary
6. Insurance. The Contractor hereby agrees to amend its insurance
policies maintained pursuant to Sub-Article 27(A) of the Contract to name each
Assignee as an additional insured, to the same extent as the Purchaser is so
named pursuant to Sub-Article 27(B) of the Contract, as to operations under the
Contract with respect to the Landing Assets and Rights transferred to such
Assignee hereunder, in which event the Contractor's insurance shall be primary
to any insurance carried by such Assignee.
7. Schedules. (a) The China Subsidiary, the Purchaser and the
Contractor agree to use their best efforts to complete Schedule 1 hereto as soon
as is practicable.
(b) The Hong Kong Subsidiary, the Purchaser and the Contractor agree to
use their best efforts to complete Schedule 2 hereto as soon as is practicable.
(c) The Japan Subsidiary, the Purchaser and the Contractor agree to use
their best efforts to complete Schedule 3 hereto as soon as is practicable.
(d) The Korea Subsidiary, the Purchaser and the Contractor agree to use
their best efforts to complete Schedule 4 hereto as soon as is practicable.
(e) The Taiwan Subsidiary, the Purchaser and the Contractor agree to
use their best efforts to complete Schedule 5 hereto as soon as is practicable.
8. Notices. Any notices, consent, approval, or other communication
pursuant to this Supplement shall be in writing, in the English language, and
shall be effected in the manner provided for in Sub-Article 35(A) of the
Contract, and in the case of the China Subsidiary, the Hong Kong Subsidiary, the
Japan Subsidiary, the Korea Subsidiary and the Taiwan Subsidiary at the address
specified below its signature hereto or to the Purchaser as its agent for
notices.
9. Parties. As between the Contractor, the Purchaser and each Assignee
that becomes a party hereto, this Supplement shall be treated as, and shall be
enforceable as, an agreement between the Contractor, the Purchaser and such
Assignee and therefor it is not
<PAGE> 130
8
necessary for all Assignees to become parties hereto in order for this
Supplement to become valid and enforceable as between the Contractor, the
Purchaser and each Assignee which does become a party hereto.
10. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED
STATES.
11. Miscellaneous. Except as expressly amended or supplemented herein,
the Contract shall continue to be, and shall remain, in full force and effect in
accordance with its terms. This Supplement may be executed by the parties in any
number of separate counterparts (including by facsimile transmission) and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
<PAGE> 131
9
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement
to be duly executed and delivered in the location set forth below its signature
by its proper and duly authorized officer as of the date hereof.
KDD SUBMARINE CABLE SYSTEMS INC.
By:_____________________________
Title:
Signed in:
ASIA GLOBAL CROSSING LTD.
By:_____________________________
Title:
Signed in:
[CHINA SUBSIDIARY]
By:_____________________________
Title:
Signed in:
[HONG KONG SUBSIDIARY]
By:_____________________________
Title:
Signed in:
[JAPAN SUBSIDIARY]
By:_____________________________
Title:
Signed in:
<PAGE> 132
10
[KOREA SUBSIDIARY]
By:_____________________________
Title:
Signed in:
[TAIWAN SUBSIDIARY]
By:_____________________________
Title:
Signed in:
<PAGE> 133
11
The undersigned, the Guarantor of the Contract (i) acknowledges receipt of a
copy of, and hereby consents to the matters set forth in, the foregoing
Supplement No. 1 and (ii) ratifies and confirms in all respects its obligations
under the Guaranty, dated as of __________, ____, which Guaranty remains in full
force and effect with regard to Purchaser and to each of Purchaser's assignees.
KDD CORPORATION
By: ________________________
Title:
<PAGE> 134
SCHEDULE 1
Part 1
China Landing Amounts Payable
Assets and Rights $
<PAGE> 135
SCHEDULE 2
Hong Kong Landing
Assets and Rights Amounts Payable
$
<PAGE> 136
SCHEDULE 3
Japan Landing
Assets and Rights Amounts Payable
$
<PAGE> 137
SCHEDULE 4
Korea Landing
Assets and Rights Amounts Payable
$
<PAGE> 138
SCHEDULE 5
Taiwan Landing
Assets and Rights Amounts Payable
$
<PAGE> 139
EXHIBIT M
TO CONSTRUCTION CONTRACT
EAST ASIAN CROSSING
INDEMNITY AND CONFIRMATION AGREEMENT
INDEMNITY AND CONFIRMATION AGREEMENT, dated as of December __, 1999
(this "Agreement"), between KDD SUBMARINE CABLE SYSTEMS INC., a corporation
organized and existing under the laws of Japan (the "Indemnitor"), [Local EAC
Company] a corporation organized and existing under the laws of [Local EAC
Jurisdiction] (the "Local Subsidiary"), and Asia Global Crossing Ltd., a
corporation organized and existing under the laws of Bermuda (the "Company" and
together with the Local Subsidiary, the "Indemnitees").
W I T N E S S E T H :
WHEREAS, the Indemnitees and the Indemnitor have entered into the
Project Development and Construction Contract, dated as of December 17, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Construction
Contract"), pursuant to which the Indemnitor has agreed on a fixed-price,
turnkey basis, to design, manufacture, construct, install and deliver a fiber
optic cable system around East Asia (the "System");
WHEREAS, as a part of its obligations under the Construction Contract,
the Indemnitor is obligated to acquire land and build a cable station in
[proposed Location of Cable Station] (the "Cable Station") which satisfies the
requirements of the Construction Contract and provide the same to the Local
Subsidiary upon completion of the System;
WHEREAS, the Indemnitor has identified land (the "Land"), upon which it
desires to build the Cable Station, which Land Indemnitor believes is suitable
for such purpose and which Land has been described to the Indemnitees;
WHEREAS, in accordance with the Construction Contract, the Indemnitor
will pay the purchase price of the Land;
WHEREAS, the owner(s) of the Land is willing to transfer the Land to
the Local Subsidiary on the terms and conditions set forth in a conveyance
document(s), the form(s) of which has been delivered to the Indemnitees (the
"Deed");
WHEREAS, as an accommodation, the Indemnitor has requested that the
Local Subsidiary enter into, and/or accept, the Deed in its own name now,
notwithstanding that neither of the Indemnitees is obligated to accept any
property or to assume any obligations with respect to the System until the date
or dates specified under the terms of the Construction Contract;
WHEREAS, the parties hereto wish to make it clear that the undertaking
of such accommodation by the Indemnitees is not intended to relieve the
Indemnitor of its obligations
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2
under the Construction Contract, nor is it intended to act as a waiver of any
rights of the Indemnitees under the Construction Contract or otherwise
disadvantage the Indemnitees in any way;
WHEREAS, the Indemnitor has agreed to indemnify the Indemnitees for any
losses suffered as a result of the acceptance of, and/or execution of, the Deed,
and/or the ownership of the Land, by the Local Subsidiary and the transactions
contemplated thereby, to the extent such losses arise out of the circumstances
described below;
NOW, THEREFORE, the parties hereto, in consideration of the premises,
hereby agree as follows:
Section 1. Indemnity; Confirmation
(a) The Indemnitor agrees to indemnify each Indemnitee against, and
agrees to protect, defend, save and keep harmless each Indemnitee from, any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs, disbursements and expenses (including legal fees and expenses and
all costs and expenses relating to amendments, supplements, adjustments,
consents, and waivers under the Deed) of every kind and nature (collectively,
the "Liabilities"), which may be imposed on, incurred or suffered by or asserted
against it as a result of, in connection with or related to, the acceptance by,
and/or the execution by, the Local Subsidiary of the Deed and/or the ownership
of the Land, to the extent such Liabilities either (a) arise from circumstances
occurring prior to the date on which the Local Subsidiary would have been
required to take possession of the Land pursuant to the Construction Contract
(the "Contract Possession Date"), unless such Liabilities would have been
incurred by such Indemnitees whether or not the Local Subsidiary accepted or
executed the Deed and/or owned the Land prior to the Contract Possession Date
(that is, the Liability would have been incurred even if the Local Subsidiary
had accepted or executed the Deed and/or taken ownership of the Land on the
Contract Possession Date, as opposed to an earlier date) or (b) would not have
been incurred by any of the Indemnitees if the Local Subsidiary had taken
possession on the Contract Possession Date as opposed to an earlier date;
provided, that the Indemnitor shall not be responsible for Liabilities arising
solely from either Indemnitee's gross negligence or willful misconduct; provided
further, that neither Indemnitee shall be deemed to have any duty or obligation
arising out of or relating to the ownership of the Land. This defense,
indemnification and save harmless obligation is specifically conditioned on the
following: (i) Purchaser providing prompt notification in writing of any such
Liabilities when it obtains Actual Knowledge thereof, unless such failure shall
not have materially impaired Contractor's ability to defend against such claim;
(ii) Contractor having control of the defense of any such action, claim or
demand and of all negotiations for its settlement or compromise, provided that
if any of such Liabilities affects the business or interest of Purchaser aside
from solely the possible payment therefor, then such defense and negotiations
shall be joint; and (iii) Purchaser cooperating, at Contractor's expense, in a
reasonable way to facilitate the defense of such claim or demand or the
negotiations for its settlement. The Purchaser, at its option, shall be entitled
to participate, at its own expense, in any proceeding, claim or demand involving
an Indemnitee. For all purposes hereof, the term "Indemnitee" includes all
officers, directors, affiliates and agents.
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3
(b) The Indemnitor hereby confirms that (i) all of the provisions
(including all warranties and damage provisions) of the Construction Contract
shall remain in full force and effect and be unaffected by the date of the
execution and delivery of the Deed and the ownership of the Land, (ii) all of
the rights and remedies of the Indemnitees under the Construction Contract may
be enforced by the Indemnitees as if they had not accepted and/or entered into
the Deed prior to the Contract Possession Date and (iii) the Indemnitor will not
raise any act or omission of the Indemnitees under the Deed or with respect to
the Land as a defense to any claim by the Indemnitees under the Construction
Contract.
Section 2. Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, UNITED STATES.
Section 3. Severability
If any provision of this Agreement is found by an arbitral, judicial or
regulatory authority having jurisdiction to be void or unenforceable, such
provision shall be deemed to be deleted from this Agreement and the remaining
provisions shall continue in full force and effect.
Section 4. Headings
The Section headings of this Agreement are for convenience of reference
only and are not intended to restrict, affect or influence the interpretation or
construction of provisions of such Section.
Section 5. Counterparts
This Agreement may be executed in counterparts, each of which when
executed and delivered shall be deemed an original. Such counterparts shall
together (as well as separately) constitute one and the same instrument.
Section 6. Submission to Jurisdiction
Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement or for recognition and enforcement of
any judgement in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such
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4
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to it at its address set forth in Section 7 or at such other
address of which the other parties shall have been notified pursuant
thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
Section 7. Notices
Any notice, consent, approval or other communication pursuant to this
Agreement shall be in writing, in the English language, and shall be effected in
the manner provided for in Sub-Article 35(A) of the Construction Contract,
addressed as follows, or to such other address as may be hereafter notified by
the respective parties hereto:
Indemnitor: KDD Submarine Cable Systems Inc.
KDD Building, 3-2, Nishi-shinjuku 2-chome
Shinjuku-ku, Tokyo 163-8525, Japan
Facsimile: 81-3-3347-7237
81-3-3347-8462
Telephone: 81-3-3347-8460
Attn: Tatsuhide Nagasawa, Managing Director,
EAC Project Manager
Company: Asia Global Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM 12 Bermuda
Attention: President
Telecopy: (441) 296-8606/6749
Local Subsidiary: [name Local Subsidiary]
c/o Asia Global Crossing Ltd.
as set forth above.
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5
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered in the jurisdiction set forth below its
signature by its proper and duly authorized officer as of the date first above
written.
ASIA GLOBAL CROSSING LTD.
By__________________________
Title:
Signed in:
[NAME LOCAL SUBSIDIARY]
By___________________________
Title:
Signed in:
KDD SUBMARINE CABLE
SYSTEMS INC.
By___________________________
Title:
Signed in:
