Indefeasible Right of Use Agreement

INDEFEASIBLE RIGHT OF USE AGREEMENT AND FINANCING AGREEMENT


BETWEEN


TELEGLOBE USA INC.


WORLDXCHANGE COMMUNICATIONS


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THIS AGREEMENT, made and entered into as of October 5, 1998 (the "EFFECTIVE DATE").


BY AND BETWEEN: TELEGLOBE USA INC. a Delaware corporation
having its principal office at 1751 Pinnacle Drive,
Suite 1600, McLean, Virginia 22102 hereinafter
referred to as "TELEGLOBE";


AND: WORLDXCHANGE COMMUNICATIONS, a corporation
incorporated under the laws of California, having
its principal office at 4350 La Jolla Village
Drive, Suite 100, San Diego, California 92122,
hereinafter referred to as "WORLDXCHANGE".


WHEREAS, Teleglobe has acquired certain rights to trans-atlantic fiber optic capacity on the AC-1 Submarine Cable System and to associated backhaul capacity which will connect such trans-atlantic capacity to inland termination points as described in the Atlantic Crossing/AC-1 Submarine Cable System Capacity Purchase Agreement dated January 21, 1998 (the "Teleglobe Cable System"); and


WHEREAS, WorldxChange desires to take and pay for the right to use certain capacity in the Teleglobe Cable System as more fully set forth herein.


NOW, THEREFORE, the Parties agree as follows:


ARTICLE 1
INTERPRETATION


1.1 DEFINITIONS. This Section 1.1 lists defined terms used in this Agreement. Capitalized terms used in any provision of this Agreement and not otherwise defined therein shall have the following meanings, respectively, unless the context otherwise requires.


(A) "AGREEMENT" shall mean this Agreement and the schedule attached
hereto, as amended from time to time;


(B) "DOLLAR" and "DOLLARS" and the symbol "$" shall mean lawful money of
the United States of America;


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(C) "EFFECTIVE DATE" shall mean the date that the obligations arising
under this Agreement shall be deemed to be in full force and effect
notwithstanding the formal date of its execution by the Parties;


(D) "MIU" shall mean a unit designated as the minimum unit of
investment in the Teleglobe Cable System and shall consist of a
Virtual Container 12 (VC-12), allowing the use of 2,048,000 bits
per second (nominal 2 Mbit/s) digital stream. A MIU may be
expressed in terms of whole or half-MIUs.


(E) "OPERATION AND MAINTENANCE" or "O&M" shall mean the operation and
maintenance of the submarine trans-atlantic cable capacity
contained in the Teleglobe Cable System between the United States
and the United Kingdom. Such operation and maintenance activities
may include testing, adjustment, and storage of plant and
equipment, repairs, maintenance, and reburial and replacement of
plant;


(F) "PARTIES" shall mean all of the parties hereto collectively; and
"PARTY" shall mean any one of them;


(G) "PERSON" shall mean an individual, corporation, company,
cooperative, partnership, trust or unincorporated association and
pronouns have a similarly extended meaning;


(H) "RELEVANT C&MA" shall refer collectively the following agreements
which are attached hereto and are incorporated herein by reference
as the same may be amended from time to time:


(1) That certain Capacity Purchase Agreement ("Capacity
Purchase Agreement") (including attachments and annexes)
dated January 21, 1998 between Global Telesystems, Ltd.
and Teleglobe.


(2) That certain Indefeasible Right of Use Agreement in Inland
Capacity dated March 6, 1998 between GT Landing Corp. and
Teleglobe.


(3) That certain Broadbend Services Agreement dated March 20,
1998 between Racal Telecommunications Limited and Teleglobe.


(I) "SERVICE DATE" shall mean the date of completion of installation,
acceptance testing, and implementation of the Capacity and the
Backhaul Capacity to provide a full circuit from 60 Hudson Street,
New York, New York to Telehouse, London, England, the completion of
which shall be confirmed in writing by Teleglobe to the
WorldxChange. Subject to the compliance of both Parties of their
respective obligations hereunder, it is anticipated that the
Service Date will occur on or about July 31, 1998. Should the
Service Date not occur prior to October 30, 1998, WorldxChange
shall have the right, upon written notice to Teleglobe, to cancel
this Agreement without any liability and Teleglobe shall promptly
return any payments made by WorldxChange pursuant to this Agreement.


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(J) "TELEGLOBE CABLE SYSTEM" shall mean the Teleglobe's interest in that
certain Atlantic Crossing/AC-1 Submarine Cable System trans-atlantic
capacity between Brookhaven, New York and White Sands, United
Kingdom, plus backhaul capacity between Brookhaven, New York and
60 Hudson Street, New York, New York, and between White Sands, UK and
Telehouse, London, England, as more fully described in the relevant
C&MA.


1.2 GENDER. Any reference in this Agreement to any gender shall include all genders and words used herein importing the singular number only shall include the plural and vice versa.


1.3 HEADINGS. The division of this Agreement into Articles, Sections, Subsections and other Subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in the construction or interpretation hereof.


1.4 SEVERABILITY. Any Article, Section, Subsection or other Subdivision of this Agreement or any other provision of this Agreement which is proven to be illegal, invalid or unenforceable shall be severed herefrom and shall be ineffective to the extent of such illegality, invalidity or unenforceability and shall not affect or impair the remaining provisions hereof, which provisions shall be severed from any illegal, invalid or unenforceable Article, Section, Subsection or other subdivision of this Agreement or any other provision of this Agreement and shall otherwise remain in full force and effect.


1.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement by and between the Parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. Except as provided for herein, this Agreement may be amended only by an instrument in writing signed by both Parties.


1.6 GOVERNING LAW. This Agreement shall be interpreted and construed in accordance with the laws of Virginia, without giving effect to the laws of such state governing conflicts of laws.


1.7 OWNERSHIP. EXCEPT FOR THE RIGHTS SPECIFICALLY GRANTED TO WORLDXCHANGE UNDER THIS AGREEMENT, nothing in this Agreement shall vary the existing rights of ownership in those segments of the Teleglobe Cable System in which IRUs have been granted to WorldxChange. Ownership of all segments of the Teleglobe Cable System shall remain with Teleglobe and the other signatories to the Relevant C&MA as applicable.


ARTICLE 2
GRANTING OF IRU AND BACKHAUL CAPACITY


2.1 GRANTING. Subject to WorldxChange making all payments to Teleglobe when due hereunder, as of and from the Service Date, Teleglobe grants to WorldxChange, on an IRU basis, an interest in one (1) STM-1 (155.52 Mbps) of capacity (the "Capacity") on the Teleglobe Cable System, with termination points at the beachhead cable station of the Teleglobe Cable System in


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Brookhaven, New York on the west end, and at the beachhead cable station of the Teleglobe Cable System in White Sands, United Kingdom on the east end.


2.2 BACKHAUL CAPACITY. In addition to the grant of Capacity hereunder, subject to WorldxChange making all payments to Teleglobe when due hereunder, Teleglobe shall provide WorldxChange as of and from the Service Date with access to and use of one (1) STM-1 (15552 Mbps) of backhaul capacity (the "Backhaul Capacity") between the beachhead cable station of the Teleglobe Cable System in the United States and Teleglobe's point of presence at 60 Hudson Street, New York, NY, and between the beachhead cable station of the Teleglobe Cable Station in the United Kingdom and Teleglobe's point of presence at Telehouse, 5th Floor, Corriander Avenue, East India Docks, London, England, all of which shall be provided per the terms of this Agreement and for a term consistent with the IRU in the Capacity granted hereunder. The Backhaul Capacity is provided by Teleglobe as a service, and not on an IRU basis and is provided upon the same terms and conditions upon which Teleglobe has acquired it under its Atlantic Crossing/AC-1 Submarine Cable System Indefeasible Right of Use Agreement in Inland Capacity (United States) and Racal Telecommunications Limited Broadband Services Agreement (UK), which are attached hereto.


2.3 O&M. Subject to WorldxChange making the required payments set forth in Articles 3 and 4 hereof, Teleglobe shall use reasonable efforts to ensure that the trans-atlantic submarine fiber optic cable capacity contained in the Teleglobe Cable System and the Backhaul Capacity is maintained in accordance with the Relevant C&MA between Teleglobe or its affiliate(s) and the owners of such capacity. Any charges incurred by Teleglobe relating to the operation and maintenance of the Backhaul Capacity, if any, shall be fully reimbursed by WorldxChange upon demand by Teleglobe, provided however, such charges shall not exceed the pro-rata amount of the total charges incurred by Teleglobe with respect to all equivalent capacity controlled by Teleglobe (including the Backhaul Capacity); and provided further that WorldxChange shall be permitted to take advantage of any periodic payment terms that Teleglobe receives.


2.4 SUBMARINE CABLE RESTORATION. Restoration will not be available on the trans-atlantic capacity contained in the Teleglobe Cable System until a complete loop is constructed between the US and UK beachhead cable stations, which is estimated to be complete by March 31, 1999. When such restoration becomes available to Teleglobe, Teleglobe agrees to provide such restoration to WorldxChange on a non-discriminatory basis with the capacity in the Atlantic Crossing/AC-1 Submarine Cable System retained by Teleglobe for its own use. Additionally, until such time as restoration on the trans-Atlantic capacity becomes available, Teleglobe agrees to permit WorldxChange to participate in any interim restoration arrangements available to Teleglobe pursuant to paragraph 2(j) of the Atlantic Crossing/AC-1 Submarine Cable System Capacity Purchase Agreement, at the same price and on the same terms as such interim restoration arrangements are obtained by Teleglobe.


ARTICLE 3
IRU GRANTING PRICE AND PRICE FOR BACKHAUL CAPACITY


3.1 IRU FEE AND BACKHAUL FEE. In consideration of the grant of the Capacity by Teleglobe to WorldxChange, WorldxChange agrees to pay to Teleglobe an IRU fee of Eight Million Two Hundred Fifty Thousand


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Dollars (US$8,250,000) (the "IRU and Backhaul Fee") which Teleglobe shall finance over five (5) years at 12% per annum on a declining balance basis.


3.2 PAYMENT OF IRU FEE AND BACKHAUL FEE. WorldxChange hereby agrees and covenants to pay the IRU and Backhaul Fee over a five (5) year term on a monthly basis by pay the sum of One Hundred Eighty Three Thousand Five Hundred Seventeen Dollars ($183,517) by wire transfer, certified cheque, commencing on the first day of the month immediately after the Effective Date of this Agreement and continuing on the first day of each successive month until fully paid.


3.3 TAXES. All prices and charges due hereunder are exclusive of all applicable taxes, including value added tax, sales taxes, and duties or levies imposed by any authority, government or government agency (except income tax or other corporate taxes attributable to Teleglobe), all of which shall be ...