EXHIBIT 10.5
EXECUTION COPY
_____________________________________
SOUTH AMERICAN CROSSING
_____________________________________
PROJECT DEVELOPMENT
AND
CONSTRUCTION CONTRACT
BETWEEN
ALCATEL SUBMARINE NETWORKS
AND
SOUTH AMERICAN CROSSING LTD.
_____________________________________
Dated as of July 30, 1999
_____________________________________
TABLE OF CONTENTS
GENERAL TERMS AND CONDITIONS
Article PAGE
------- ----
1 Provision of System.......................................................... 1
2 Documents Forming the Entire Contract........................................ 1
3 Definitions.................................................................. 2
4 Contract Price............................................................... 17
5 Terms of Payment by Purchaser................................................ 21
6 Contract Variations.......................................................... 24
6A Optional Upgrades............................................................ 25
6B *............................................................................ 29
6C *............................................................................ 30
7 Responsibilities for Permits; Compliance with Laws; Purchaser Access Rights.. 30
8 Route Survey................................................................. 32
9 Acceptance................................................................... 33
10 Warranty..................................................................... 37
11 Contractor Support; Use of Segment for Restoration Protection................ 42
12 Purchaser's Obligations...................................................... 43
13 Termination for Default...................................................... 44
14 Termination for Convenience.................................................. 46
15 Suspension................................................................... 48
16 Title and Risk of Loss....................................................... 49
17 Force Majeure................................................................ 49
18 Intellectual Property........................................................ 50
19 Infringement................................................................. 56
20 Safeguarding of Information and Technology................................... 57
21 Export Control............................................................... 58
22 Liquidated Damages........................................................... 58
23 Limitation of Liability/Indemnification...................................... 60
24 Counterparts................................................................. 61
25 Design and Performance Responsibility; Subcontractors........................ 61
26 Product Changes.............................................................. 63
27 Risk and Insurance........................................................... 63
28 Plant and Work Rules......................................................... 66
29 Right of Access and Review................................................... 66
30 Quality Assurance; First Application......................................... 67
31 Documentation................................................................ 68
32 Training..................................................................... 68
33 Settlement of Disputes/Arbitration........................................... 68
34 Applicable Law............................................................... 70
35 Notices...................................................................... 71
36 Publicity and Confidentiality................................................ 71
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
-i-
37 Assignment................................................................... 72
38 Relationship of the Parties.................................................. 73
39 Successors Bound............................................................. 73
40 Article Captions; Joint Drafting............................................. 73
41 Severability................................................................. 73
42 *............................................................................ 74
43 Survival of Obligations...................................................... 74
44 Non-Waiver................................................................... 74
45 Language..................................................................... 74
46 Entire Agreement............................................................. 74
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
-ii-
Exhibit A Route Segments
Exhibit B *
Exhibit C *
Exhibit D Forms of Opinion for Contractor and *
Exhibit E Form of Payment Escrow Agreement
Exhibit F First Use System Elements and Subsystems and Deliverable Software
Exhibit G Subcontractors
Exhibit H Intellectual Property
Exhibit I Landing Licenses
Exhibit J Examples of Contractor Permits
Exhibit K Examples of Owner Permits
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
-iii-
PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
This Project Development and Construction Contract "Contract") is
made as of the 30th day of July, 1999 between Alcatel Submarine Networks, a
corporation organized and existing under the laws of France, and having its
principal office in Clichy Cedex, France, (hereinafter "Contractor") and (ii)
----------
South American Crossing Ltd., a corporation organized and existing under the
laws of Bermuda, and having its principal office in Hamilton, Bermuda
(hereinafter "Purchaser").
---------
WHEREAS, Purchaser desires to establish a fiber optic cable system, to
be known as the South American Crossing Cable System (hereinafter, and as more
fully defined herein, the "System"), which will be used to provide service among
the Segments as described in Exhibit A hereto;
WHEREAS, Contractor is in the business of designing, constructing,
installing, supplying, delivering and manufacturing fiber optic cable systems
and is familiar with the general business of the fiber optic cable system
industry;
WHEREAS, Purchaser seeks to purchase and own the System and wishes to
engage Contractor to perform the Work and Upgrade Work; and
WHEREAS, Contractor is willing to perform the Work and Upgrade Work on
a turn-key, fixed-price basis in accordance with and subject to the terms
hereof.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable considerations, receipt of which is hereby acknowledged, it has
been agreed as follows:
Article 1 Provision of System
------------------------------
In consideration of the Contract Price and the Upgrade Prices, the
Contractor hereby agrees to perform the Work and the Upgrade Work, on a turn-
key, fixed price basis, and to provide the Purchaser with the System meeting the
System Performance Requirements on or before the Scheduled RFS Date(s) and the
System Upgrades meeting the requirements of Article 6A, all in accordance with
the terms hereof.
Contractor understands that a part of the System comprising portions
of the Trans-Andean Crossing is intended to be installed by another
contractor(s). The Contractor agrees to reasonably cooperate with Purchaser and
such other contractor(s), as necessary, including with respect to (i)
formulating and carrying out installation and (ii) Contractor's and each such
other contractor's obligation to formulate testing procedures.
Article 2 Documents Forming the Entire Contract
------------------------------------------------
This Contract consists of these commercial Terms and Conditions,
Exhibits A through K, and the following documents (in the form of attachments,
including appendices, attached hereto), which shall be read and construed as
part of the Contract:
2
Commercial Volume
. Provisioning Schedule, Section 2
. Upgrade Provisioning Schedule, Section 3
. Billing Schedule, Section 4
. Upgrade Billing Schedule, Section 5
. Plan of Work, Section 6
. Upgrade Plan of Work, Section 7
. Invoice Format, Section 8
. Form of Contractor's certificate, Section 9
. Progress Schedule, Section 10
. Upgrade Progress Schedule, Section 11
Technical Volume (includes Route Information)
In the event of any inconsistency between the Terms and Conditions and
the above listed documents, the Terms and Conditions shall prevail. The
documents listed above have no order of precedence.
Article 3 Definitions
----------------------
Terms used herein which are not defined herein, but which have common
meanings when used in the telecommunications industry, shall have such common
meanings when used herein. Definitions are as described in the specific
Articles. Except as otherwise defined the following definitions shall apply
throughout the Contract:
AAA has the meaning set forth in Sub-Article 33(B).
Acceptance Testing means (i) with respect to a Segment, a Phase or the
System, the tests described in the System Commissioning and Acceptance section
of the Technical Volume or developed pursuant to such section by mutual
agreement of the Parties and designed to verify that such Segment, such Phase or
the System meets the applicable Performance Requirements and (ii) with respect
to any System Upgrade, the tests described in the System Commissioning and
Acceptance section of the Technical Volume or developed pursuant to such section
by mutual agreement of the Parties and designed to verify that the System
Upgrade meets the applicable Performance Requirements.
Access Rights means all ownership, easement, wayleaves and/or other
property rights, from both private and governmental entities, both on land and
below the surface of the water (including, without limitation, agreements to use
borepipes, conduits and ducts, install manholes and to lease space in cable
stations) necessary to access, use and occupy cable stations and the sites for
cable stations (including, without limitation, to land and install the submarine
cable and related equipment and to bring such cable from the ocean to the cable
stations) in order for the Purchaser to own, operate and maintain the System.
3
Actual Knowledge means the actual knowledge of any executives with
management responsibility for the Contract.
Assignment has the meaning set forth in Sub-Article 37(A).
Bank Escrow Agent means The Chase Manhattan Bank, in its capacity as
escrow agent under the Payment Escrow Agreement, and its successors in such
capacity.
Bankruptcy Event means an event specified in Sub-Article 13(A)(3) or
13(A)(4) with Contractor as the "other Party".
Billing Milestones means the billing milestones set forth in the
Technical Volume.
Billing Schedule means a billing schedule attached hereto as Section 4
to the Commercial Volume.
Buenos Aires Telehouse means a telehouse located in Buenos Aires,
Argentina in which Purchaser has obtained Purchaser Access Rights.
Certificate of Commercial Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(D) to Contractor certifying that a
Segment, the System or a System Upgrade is Ready for Commercial Acceptance.
Certificate of Final Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(E) to Contractor certifying that a
Phase; the System or a System Upgrade is Ready for Final Acceptance.
Certificate of Provisional Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(C) to Contractor certifying that a
Segment, the System or a System Upgrade is Ready for Provisional Acceptance.
CIF means cost, insurance and freight, as defined in Incoterms.
*
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.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
4
Confidential Information has the meaning set forth in Sub-Article
36(B).
Contract means this agreement, specifically consisting of the
documents described in Article 2, and shall be deemed to include any amendments
thereto or Contract Variations pursuant to Article 6 (Contract Variations).
Contract Countries means U.S. Virgin Islands, Brazil, Argentina,
Chile, Peru, Colombia, Panama and Uruguay or any political subdivision thereof
or taxing authority therein.
Contract Price means the Initial Contract Price, plus any variations
pursuant to Article 6 (Contract Variations), Article 6B *, Article 6C *, Taxes
as set forth in Sub-Article 4(B) and other adjustments to the Contract Price
provided for in this Contract.
Contract Taxes has the meaning set forth in Sub-Article 4(B)(1).
Contract Variation has the meaning set forth in Sub-Article 6(A).
Contractor means the entity that executed this Contract as the
Contractor and that will be responsible for the performance of the Work (and if
applicable, Upgrade Work) under this Contract and shall include its permitted
successors and/or assigns.
Contractor Permits means (i) all permits that the Contractor needs to
conduct its business, (ii) all Permits which the Contractor must obtain in order
to carry out its operations to perform the Work and (iii) minor and routine
construction and building Permits such as licenses to install electricity and
plumbing. Exhibit J hereto contains a list of sample Contractor Permits;
provided that such list is not meant to be complete or exclusive.
--------
Xxxx'x Crossing means (i) the Supplies contained in the Ft. Xxxxxx
(PAC) Cable Station, and the St. Croix (SAC) Cable Station, and (ii) the
transmission facility (owned by an affiliate of purchaser) connecting the Ft.
Xxxxxx (PAC) Cable Station, the St. Croix (PAC) Cable Station, and the Venezuela
(PAC) Cable Station; designed and constructed by TSSL for an affiliate of
Purchaser as a fully integrated and working Segment of the System.
Xxxx'x Crossing Upgrade shall have the meaning set forth in Sub-
Article 6A(A).
Dark Fiber shall mean fiber optic cable meeting the criteria of ITU
G.655 and having the ability to connect to associated repeaters, regeneration
equipment, transmission equipment, terminal equipment or other Supplies,
consisting of four fiber pairs, installed in all or any portion designated by
Purchaser (with notice to Contractor) of the Purchaser Access Rights, which
cable shall not come with any associated repeaters,
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
5
regeneration equipment, transmission equipment, terminal equipment or other
supplies, all as more fully described in the Technical Volume.
Date of Commercial Acceptance, Provisional Acceptance or Final
Acceptance means the date set forth in the Certificate of Commercial Acceptance,
Certificate of Provisional Acceptance or Certificate of Final Acceptance, as the
case may be; provided, that for purposes of Article 21 (Liquidated Damages)
only, such date shall be deemed to be the date that Purchaser receives a
complete Commissioning Report or an Upgrade Commissioning Report, as the case
may be, demonstrating that a Segment, a Phase, the System or a System Upgrade,
as the case may be, is Ready for Commercial Acceptance, Ready for Provisional
Acceptance or Ready for Final Acceptance in accordance with Article 9
"cceptance).
Default means an Event of Default or any event, condition or
occurrence which with the giving of notice or passage of time or both would be
an Event of Default.
Deliverable Software has the meaning set forth in Sub-Article 18(C).
Deliverable Software Escrow has the meaning set forth in Sub-Article
18(H).
Deliverable Technical Material has the meaning set forth in Sub-
Article 18(B).
Dispute Account means the Dispute Account to be created under the
Payment Escrow Agreement.
Event of Default has the meaning set forth in Sub-Article 13(A).
Excluded Tax means a Tax described in any of the following clauses:
(i) any franchise, excess profits, net worth, capital or capital gains
Tax, as well as any Tax on doing business or imposed on net or gross income or
receipts (including minimum and alternative minimum Taxes measured by any items
of Tax preference), but in each case excluding Taxes that are or are in the
nature of sales, use, excise, license, stamp, rental, ad valorem, value added or
property Taxes (other than property taxes on property owned by the Contractor
and not intended to be incorporated into the System);
(ii) any Taxes imposed by a jurisdiction other than one in which (a)
the Contractor is or is treated as engaged in activities contemplated by or in
fulfillment of the Contract or (b) the Purchaser or its affiliates has a nexus
to such jurisdiction and the Tax imposed is attributable to that nexus;
(iii) Taxes imposed on the Contractor as a result of Contractor's
gross negligence or willful misconduct; or
(iv) any import duty, other import related charges, sales or use tax,
VAT or property tax imposed by any Non-Contract Country in respect of Supplies
brought into
6
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) is Ready for Final Acceptance and has passed all Acceptance Testing and
all other acceptance and performance requirements set forth in the System
Commissioning and Acceptance section of the Technical Volume.
Final Survey Report means the final survey report described in the
Technical Volume.
FOB means free on board as defined in the International Chamber of
Commerce, Guide to Incoterms (1990).
Ft. Xxxxxx (PAC) Cable Station (or the Panama (PAC) Cable Station)
means the cable station located in Ft. Xxxxxx, Panama which is part of the Pan
American Crossing submarine cable system, which is owned by an affiliate of
Purchaser.
Force Majeure has the meaning set forth in Sub-Article 17(A).
*
Incoterms means the International Chamber of Commerce, Guide to
Incoterms (1990).
Information has the meaning set forth in Sub-Article 20(A).
Initial Contract Price has the meaning set forth in Sub-Article
4(A)(1).
Initial Upgrade Price has the meaning set forth in Sub-Article
4(A)(2).
Intellectual Property has the meaning set forth in Sub-Article 18(A).
Landing Country(ies) means each country in which the System connects
to a cable station.
Landing Licenses means, in the United States, a License to Land and
Operate a Submarine Cable System pursuant to the Submarine Cable Landing Act, 47
U.S.C. 34-39
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
7
and in the other Landing Countries, the comparable licenses, which licenses are
specifically described in Exhibit I hereto.
Las Toninas Cable Station means the System cable station to be located
in Las Toninas, Argentina.
Laws means any laws, ordinances, regulations, rules, orders,
proclamations, requirements of governmental authorities or treaties.
Manufacturing Materials has the meaning set forth in Sub-Article
13(B).
Non-Contract Countries means all countries, or any political
subdivision thereof or taxing authority therein, other than the Contract
Countries.
Non-Ship Costs has the meaning set forth in Sub-Article 10(A)(2).
Notice of Termination has the meaning set forth in Sub-Article 14(A).
*
Owner Permits means all Permits required to be obtained from
governmental authorities pursuant to Laws that the Purchaser needs to own and
operate the System and which the Purchaser would have had to obtain if it were
constructing the System itself. Exhibit K contains a sample list of Owner
Permits; provided that such list is not meant to be complete or exclusive.
Party(ies) means either of the Purchaser and/or the Contractor, as
appropriate.
Payment Escrow Agreement means that escrow agreement to be entered
into among the Contractor, Purchaser, and the Bank Escrow Agent, substantially
in the form of Exhibit E hereto, with such changes therein as are reasonably
requested by the Bank Escrow Agent, as amended modified or supplemented from
time to time.
Performance Requirements means (i) with respect to a Segment, a Phase
or the System, the applicable System Performance Requirements set forth or to be
developed by mutual agreement pursuant to the Transmission Performance section
of the System Description section of the Technical Volume, (ii) with respect to
any System Upgrade, the System Performance Requirements set forth in or to be
developed by mutual agreement pursuant to the Technical Volume or (iii) in each
case, such other Segment,
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
8
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 Xxxxxxx.
Xxxxx 0 means Segments C and D * all as more fully described in the
Technical Volume hereto.
*
Phase 2 means Segments A, B and Xxxx'x Crossing* as more fully
described in the Technical Volume hereto.
*
Phase 3 means Segments E-1, E-2, E-3, F, G and H, * as more fully
described in the Technical Volume.
Plan of Work means the Plan of Work attached as Section 6 to the
Commercial Volume.
Provisioning Schedule means the price schedule attached hereto in
Section 2 to the Commercial Volume.
Purchaser means South American Crossing Ltd. and shall include its
permitted successors and assigns.
Purchaser Access Rights means, with respect to the Trans-Andes
Crossing, the rights of way, duct space, and space and infrastructure in both
equipment huts and telehouses obtained by Purchaser or its affiliates necessary
for Contractor to install the Supplies, all as more fully described in the
Technical Volume.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
9
Purchaser Hindrance has the meaning set forth in Article 12 hereof.
Purchaser Permits means, collectively, all Landing Licenses.
Ready for Commercial Acceptance means
(i) for any Segment, that
(a) if the Phase including such Segment is not at the same time
also Ready for Commercial Acceptance, the Purchaser has
consented, in its sole discretion, to accept such Segment as
Ready for Commercial Acceptance,
(b) such Segment has been substantially completed and has the
ability to carry commercial traffic between the two landing
points of such Segment meeting performance criteria of ITU-T
G.826 as defined in the System Performance section of the
Technical Volume and has line monitoring and protection
switching capability,
(c) Contractor has tested and provided for STM-1
interconnectivity capability to the Segment terminal
equipment according to ITU-T G.826 or, if a different
interface rate is used, an equivalent standard,
(d) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it, and
(e) all Permits are obtained for such Segment, and
(ii) for any Phase, that
(a) such Phase has been substantially completed and has the
ability to carry commercial traffic operating at 20 Gb/s per
fiber pair on two fiber pair between the various landing
points of such Phase meeting performance criteria of ITU-T
G.826 as defined in the System Performance section of the
Technical Volume, has line monitoring and per Segment
protection switching capability and has network management
capability,
(b) Contractor has tested and provided for STM-1
interconnectivity capability to the System terminal
equipment according to ITU-T G.826 or if a different
interface rate is used, an equivalent standard,
(c) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it;
10
(d) all Permits are obtained for such Phase; and
(e) in the case of Phase 3, the System is also ready for
Commercial Acceptance; and
(iii) for the System, that
(a) the System has been substantially completed and has the
ability to carry commercial traffic throughout the System
(operating at 20 Gb/s per fiber pair on two fiber pair)
meeting performance criteria of ITU-T G.826 as defined in
the System Performance section of the Technical Volume, has
line monitoring and per Segment protection switching
capability and has network management capability,
(b) Contractor has tested and provided for STM-1
interconnectivity capability to the System terminal
equipment according to ITU-T G.826, or, if a different
interface rate is used, an equivalent standard,
(c) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it,
(d) all Permits are obtained for such Phase, and
(e) in the case of Phase 3, the System is also ready for
Commercial Acceptance, and
(iv) for any System Upgrade, the System is Ready for Commercial
Acceptance at the capacity specified for such System Upgrade.
11
Ready for Final Acceptance means
(i) for any Phase, that
(a)(I) such Phase has successfully and continuously (other than
by reason of Force Majeure in which case the test period
shall be extended for a time period agreed between the
Parties) functioned in compliance with the System
Performance Requirements during the period of ninety (90)
consecutive days after the Date of Provisional Acceptance,
or
(II) if such Phase shall have failed to meet the System
Performance Requirements at any time during such period
(other than by reason of Force Majeure), the Contractor has
corrected such failure and such Phase has successfully and
continuously (other than by reason of Force Majeure in which
case the test period shall be extended for a time period
agreed between the Parties) functioned in compliance with
the System Performance Requirements for such additional
period of time not to exceed ninety (90) days (and not to
end prior to the date ninety (90) days after the Date of
Provisional Acceptance) as reasonably determined by the
Purchaser as being sufficient to confirm that such failure
has been corrected and that no other failures are likely to
appear, and
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor
deficiencies which will not affect the operation of such
Phase, in respect of which an equitable adjustment to the
Contract Price will be made),
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property), and
(d) in the case of Phase 3 the System is also Ready for Final
Acceptance and meets the criteria of clause (ii) below, and
(ii) for the System, that
(a)(I) the System has successfully and continuously (other than
by reason of Force Majeure in which case the test period
shall be extended for a time period agreed between the
Parties) functioned in compliance with the System
Performance Requirements during the period of ninety (90)
consecutive days after the Date of Provisional Acceptance,
or
12
(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 the System has successfully and
continuously (other than by reason of Force Majeure in which
case the test period shall be extended for a time period
agreed between the Parties) functioned in compliance with
the System Performance Requirements for such additional
period of time not to exceed ninety (90) days (and not to
end prior to the date ninety (90) days after the Date of
Provisional Acceptance) as reasonably determined by the
Purchaser as being sufficient to confirm that such failure
has been corrected and that no other failures are likely to
appear,
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor
deficiencies which will not affect the operation of the
System, in respect of which an equitable adjustment to the
Contract Price will be made), and
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property), and
(iii) for any System Upgrade, that
(a)(I) the System Upgrade has successfully functioned in
compliance with the System Performance Requirements during
the period of ninety (90) days after the Date of Provisional
Acceptance of the System Upgrade, or
(II) if the System Upgrade shall have failed to meet the System
Performance Requirements during such period, the Contractor
has corrected such failure and the System Upgrade has
successfully functioned in compliance with the System
Performance Requirements for such additional period of time
not to exceed ninety (90) days as reasonably determined by
the Purchaser as sufficient to confirm that such failure has
been corrected, and
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected (other than minor
deficiencies which will not affect the operation of the
System, in respect of which an equitable adjustment of the
Contract Price will be made), and
(c) Contractor has complied in all material respects with
Article 18 (Intellectual Property).
Ready for Provisional Acceptance means
13
(i) with respect to any Segment,
(a) if the Phase including such Segment is not, at the same
time, also Ready for Provisional Acceptance, the Purchaser
has consented, in its sole discretion, to accept such
Segment as Ready for Provisional Acceptance,
(b) such Segment is complete in all material respects (and in
any event is Ready for Commercial Acceptance),
(c) the results of Acceptance Testing of such Segment
demonstrate that such Segment has satisfied the System
Performance Requirements,
(d) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be
performed by it,
(e) all Permits are obtained for such Segment, and
(ii) with respect to any Phase, such Phase is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments of such Phase are Ready for Provisional
Acceptance with per Segment protection capability, line
monitoring and network management capability, and, in the case of
Phase 3, the System is also Ready for Provisional Acceptance,
(iii) with respect to the System, the System is complete in all
material respects (and in any event is Ready for Commercial
Acceptance), all Segments are Ready for Provisional Acceptance
with per Segment protection capability, line monitoring and
network management capability and self-healing ring protection
capability, and
(iv) with respect to any System Upgrade, the results of Acceptance
Testing of such System Upgrade demonstrate that such System
Upgrade is complete in all material respects and is sufficient to
realize the Performance Requirements.
Representatives has the meaning set forth in Article 36(B).
Retainage means (a) in the case of the System, an amount equal to *
of the Initial Contract Price and (b) in the case of each System Upgrade, an
amount equal to * of the Initial Upgrade Price.
Retesting has the meaning set forth in Sub-Article 9(B)(3).
Route Survey means the route survey described in the Technical Volume.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
14
Santiago Telehouse means a telehouse located in Santiago, Chile in
which Purchaser has obtained Purchaser Access Rights.
Scheduled Phase 1 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Phase 2 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Phase 3 RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled RFS Date(s) means any of the Scheduled Phase 1 RFS Date,
Phase 2 RFS Date and/or Scheduled System RFS Date.
Scheduled System RFS Date has the meaning set forth in Sub-Article
9(A).
Scheduled Upgrade Date means for any System Upgrade, the date by which
the Contractor agrees such System Upgrade will be Ready for Provisional
Acceptance or Commercial Acceptance.
Segment means any of Segments A through I and Xxxx'x Crossing.
Segment A means the four fiber pair Segment of the System from the St.
Croix (SAC) Cable Station to Fortaleza, Brazil and landing in Fortaleza in a
location capable of interconnecting with major telecommunications carriers.
Segment B means the four fiber pair Segment of the System from
Fortaleza, Brazil to Rio de Janeiro, Brazil and landing in Rio de Janeiro in a
location capable of interconnecting with major telecommunications carriers.
Segment C means the four fiber pair Segment of the System from Rio de
Janeiro, Brazil to Xxxxxx, Brazil and landing in Xxxxxx in a location capable of
interconnecting with major telecommunications carriers.
Segment D means the four fiber pair Segment of the System from Xxxxxx,
Brazil to the Las Toninas Cable Station and, if elected, the Optional Branching
Unit.
*
Segment E-1 means the four fiber pair Segment from the Las Toninos
Cable Station connecting to the Buenos Aires Telehouse.
Segment E-2 means the four fiber pair Segment from the Buenos Aires
Telehouse connecting to the Santiago Telehouse.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
15
Segment E-3 means the four fiber pair Segment connecting the Santiago
Telehouse to the Valparaiso Cable Station.
Segment F means the four fiber pair Segment of the System from the
Valparaiso Cable Station to Lurin, Peru and landing in Lurin in locations
capable of interconnecting with major telecommunications carriers.
Segment G means the four fiber pair Segment of the System from Lurin,
Peru to the Colombia Branching Unit.
Segment H means the four fiber pair Segment of the System from the
Colombia Branching Unit to Buenaventura, Columbia and landing in Buenaventura in
a location capable of interconnecting with major telecommunications carriers.
Segment I means the four fiber pair Segment of the System from the
Colombia Branching Unit to the Ft. Xxxxxx (PAC) Cable Station.
Ship Costs has the meaning set forth in Sub-Article 10(A)(2).
Ship Period has the meaning set forth in Sub-Article 10(A).
Software Escrow Agreement has the meaning set forth in Sub-Article
18(H).
St. Croix (PAC) Cable Station means the cable station located in St.
Croix, Virgin Islands which is connected to the Pan American Crossing submarine
cable system, which is owned by an affiliate of Purchaser.
St. Croix (SAC) Cable Station means the cable station to be
provisioned in St. Croix, Virgin Islands by the Contractor and which will be
located adjacent to the St. Croix (PAC) Cable Station and interconnected to it.
Subcontractor means a contractor, vendor, supplier, licensor or other
person having a direct or indirect contract with the Contractor or with any
other Subcontractor of the Contractor who has been hired specifically to assist
the Contractor in certain specified areas of its performance of its obligations
under this Contract including, without limitation, performance of any part of
the Work.
Supplies means any and all materials, plant, machinery, equipment,
hardware and items supplied by the Contractor under this Contract.
Suspension means a suspension in all or part of the Work pursuant to
Sub-Article 15(A) or 15(B).
System means the fiber optic cable system as described in Exhibit A
and the Technical Volume.
16
System Performance Requirements has the meaning set forth in the
Technical Volume.
System Upgrade has the meaning set forth in Sub-Article 6A(A).
*
TAC Segments means Segments * E-1, E-2 and E-3, as the case may be.
Tax means any tax, duty, levy, charge or custom (including, without
limitation, any sales or use tax, VAT or octroi duty relating to the Contract
items and fiscal stamps connected with Contract legalization) imposed or
collected by any taxing authority or agency (domestic or foreign).
Technical Volume means the Technical Volume attached hereto.
Trans-Andes Crossing means that portion of the System that connects
the Las Toninas Cable Station, the Buenos Aires Telehouse, the Santiago
Telehouse and the Valparaiso Cable Station, as more fully described in the
Technical Volume.
Transferee means any entity to which purchaser assigns rights
hereunder pursuant to Sub-Article 37(C) hereof.
TSSL means Tyco Submarine Systems Ltd., a Delaware corporation.
Upgrade Billing Schedule means the billing schedule attached hereto as
Section 5 to the Commercial Volume.
Upgrade Commissioning Report means a written report from Contractor
demonstrating that a System Upgrade is Ready for Commercial Acceptance or
Provisional Acceptance, as the case may be, and has passed all Acceptance
Testing and all other acceptance and performance requirements set forth in the
System Commissioning and Acceptance section of the Technical Volume.
Upgrade Option Period has the meaning set forth in Sub-Article 6A(B).
Upgrade Period has the meaning set forth in Sub-Article 6A(E).
Upgrade Plan of Work means the plan of work attached hereto as Section
7 to the Commercial Volume.
Upgrade Price means, for any System Upgrade, the Initial Upgrade Price
for such System Upgrade, plus any variations pursuant to Article 6 (Contract
Variations),
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
17
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 Section 3 to the Commercial Volume.
Upgrade Warranty Period has the meaning set forth in Sub-Article
10(A).
Upgrade Work means the activities and services to be performed or
provided by Contractor under Article 6A (Optional Upgrades).
*
Valparaiso Cable Station means the System cable station located in
Valparaiso, Chile.
Venezuela (PAC) Cable Station means the cable station located in
Venezuela which is part of the Pan American Crossing submarine cable system,
which is owned by an affiliate of Purchaser.
Warranty Period has the meaning set forth in Sub-Article 10(A).
Work means all activities and services (other than the activities and
services specified in this Contract to be provided by Purchaser) necessary to be
performed or provided in developing, planning, engineering, designing,
manufacturing, constructing, delivering, installing and testing the System until
the System is Ready for Final Acceptance, including without limitation,
designating, coordinating and obtaining all Permits, except for the Purchaser
Permits, provided that Work shall not include obtaining Purchaser Access Rights.
Whether or not used in conjunction with the term ASupplies", the term AWork"
shall always be deemed to include the provision of the relevant Supplies, unless
the context requires otherwise.
Year 2000 Compliant means, when used with respect to any software or
materials, that such software or materials will operate accurately and, without
interruption, accept, possess and in all manner retain full functionality when
referring to, or involving, any year or date in the twentieth or twenty first
centuries.
Article 4 Contract Price
-------------------------
A. Contract Price
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
18
1. The initial Contract Price for the Work, in United States Dollars
(US$) is a fee of * (the "Initial Contract Price") which is
composed of the Phase 1 price of * the Phase 2 price of * and the
Phase 3 price of * The Initial Contract price may also be reduced
pursuant to the provisions of paragraph C of Article 6B. The
Initial Contract Price does not include the cost of optional
upgrades which are described in Article 6A (Optional Upgrades),
Article 6B *, Article 6C *, any contract variations as provided
for in Article 6 (Contract Variations) or any Taxes. The Initial
Contract Price includes all charges for CIF and all costs and
expenses incurred in obtaining all Permits (including Access
Rights but not including Purchaser Access Rights).
2. The initial Upgrade Price for any Upgrade Work, in United States
Dollars (US$) is the fixed fee set forth in Sub-Article 6A(G),
payable as set forth in Section 5 of the Commercial Volume (the
"Initial Upgrade Price"). No Initial Upgrade Price includes the
cost of any contract variations as provided for in Article 6
(Contract Variations) or any Taxes.
3. (a) The Provisioning Schedule sets forth the Contractor's
breakdown of the Initial Contract Price among various
aspects of the Work. If the actual cost of any aspect of
the Work is greater or less than that set forth in the
Provisioning Schedule, such fact shall not cause any change
in the Initial Contract Price.
(b) At its discretion, the Purchaser may direct the
Contractor to deliver either Universal Joints conforming to
qualified Universal Jointing Consortium Technology or
Contractor proprietary joints as spares, in such quantities
as provided in the Provisioning Schedule; such direction may
be given during the course of the Work, but not later than
such date as the Parties shall mutually agree, and such
direction, whichever spare joint type is selected, shall not
cause any change in the Initial Contract Price.
4. Without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or delayed, the Contractor
shall not arrange for any
(a) Access Right which requires payments to be made by the
Purchaser or made after the System is Ready for Provisional
Acceptance, or
(b) Permit which requires aggregate payments in excess of
$250,000 to be made by Purchaser or made after the System
is Ready for Provisional Acceptance.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
19
5. The Contractor and the Purchaser will share equally the costs and
expenses of the Payment Escrow Agent.
B. Taxes, Levies and Duties
1. The Initial Contract Price and each Initial Upgrade Price, as
stated in Sub-Article 4(A) above, excludes any Tax. The Contract
Price and each Upgrade Price shall without duplication be
adjusted for any Tax imposed on or in connection with this
Contract (including, without limitation, the execution and
delivery of this Contract, the Work, the Upgrade Work and the
Supplies, but excluding any Excluded Taxes) (any such Taxes,
other than Excluded Taxes, are hereinafter referred to as
"Contract Taxes"). Contractor has provided a good faith estimate
of the Contract Taxes payable by the Purchaser; it being
understood that the Contractor shall have no liability under this
Contract or otherwise to the Purchaser for any errors or
omissions in such estimate or any losses arising therefrom. The
Contractor shall be responsible for any Excluded Tax that might
be incurred by the Contractor as well as any Tax described in
clause (iv) of the definition of Excluded Tax.
2. The Purchaser will be ultimately responsible for the payment of
all Contract Taxes (including, without limitation, Contract Taxes
that are VAT, octroi duties relating to Contract items and fiscal
stamps, etc. connected with Contract legalizations to the
authorities in their countries). In the case of any Contract
Taxes paid by the Contractor, the Contractor shall submit payment
on the Purchaser's behalf and Contractor will be reimbursed by
the Purchaser in accordance with Article 5 (Terms of Payment by
Purchaser).
3. The Contractor agrees to use reasonable efforts, including,
without limitation, by registering for VAT and any applicable
sales Taxes in any country, state or other jurisdiction where
legally required, to cooperate with and assist Purchaser in its
efforts (i) to have Supplies which are the subject of this
Contract made exempt from Contract Taxes, whether in the
manufacture of the Supplies or related to the importation or
location or installation of the Supplies, (ii) to request
revisions, drawbacks, remissions, reclassifications or the like
to the jurisdictions identified by the Purchaser; or (iii) to
reduce or eliminate Contract Taxes (including the provision of
applicable certifications and forms) and to obtain any available
refunds of Contract Taxes, provided that the Contractor shall not
---------
be required to act other than in accordance with the relevant
Laws then in force. The Purchaser shall reimburse the Contractor,
in accordance with Article 5, for any reasonable costs (including
the reasonable fees and expenses of legal counsel, accountants
and other advisors) incurred by the Contractor under this Sub-
Article 4(B)(3), provided that Purchaser was
--------
20
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 authorization and carry out all customs
formalities necessary for the importation or exportation of goods
in connection with such Work or Upgrade Work. With respect to
each Contract Country, the Purchaser agrees to be the Importer or
Exporter of Record or designate an Importer or Exporter of
Record/Consignee on its behalf, unless, in either case, in the
Purchaser's reasonable opinion such action could expose the
Purchaser to a possible material burden or risk. Purchaser must
provide a Letter of Authorization from any third party designate
stating it agrees to be the Importer or Exporter of Record on
Purchaser's behalf and identify the name and address of the
designated Importer or Exporter of Record.
6. The Supplies to be installed or held on land shall be delivered
to the agreed point at the named place of destination and shall
be consigned to the Purchaser.
C. Withholding Tax
1. If withholding for any Tax is required in respect of any payment
to the Contractor, the Purchaser shall (i) withhold the
appropriate amount from such payment, (ii) pay such amount to the
relevant authorities in accordance with the applicable Laws and
(iii) in the case of any such withholding in respect of a
Contract Tax (other than any withholding that would not have been
required if the Contractor had satisfied its other Tax payment
obligations) and subject to the Contractor's satisfying the
obligations set forth in the last sentence of this Sub-Article
4(C)(1), pay
21
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 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.
22
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 Section 9 of the Commercial Volume attached.
2. Any Contract Variations shall be invoiced and paid in accordance
with the terms of the Contract Variation as specified in Article
6 (Contract Variations).
3. Invoices for Upgrade Work shall be submitted according to the
Upgrade Billing Schedule and shall be paid in accordance with
this Article 5.
4. Invoices for amounts not described in Sub-Sections 1 through 3
above, which may become payable hereunder, shall be submitted
after applicable costs have been incurred or such other time as
may be specified in this Contract, and shall be accompanied by a
certificate of the Contractor explaining such amount and
certifying that it is payable.
5. The Contractor shall render all invoices to the following address
or facsimile number:
South American Crossing Ltd.
Wessex House
00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Xxxxxxxxx: 000-000-0000/8606
Attn: Xxxxxx Xxxx
C. Payment Procedures
23
1. The Purchaser shall pay the Contractor, and the Contractor shall
accept payment, in accordance with this Article 5 (Terms of
Payment by Purchaser). Purchaser agrees to pay an initial payment
to Contractor in the amount of * Within three business days of
the time the conditions set forth in Article 42 hereof are
fulfilled by all Parties, the first portion of the initial
payment, in the amount of *, shall be paid by Purchaser to
Contractor. Failure to receive this payment shall entitle
Contractor, upon 5 business days' notice to Purchaser of intent
to suspend, to immediately suspend Work hereunder. The second
portion of the initial payment, in the amount of *, shall be paid
by Purchaser within 30 days. The third portion of the initial
payment in the amount of *, shall be paid by Purchaser within 56
days.
2. Invoices given to the Purchaser on or before the last day of any
month shall, subject to Sub-Article 5(C)(5) below, be due and
payable on the last day of the next month or such other time as
may be specified in this Contract.
3. Invoices not paid when due shall accrue late payment charges from
the day, following the day, on which payment was due until the
day on which it is paid. Invoices for such extended payment
charges shall not be issued for an amount less than U.S. $1,000.
Extended payment charges shall be computed at the rate of one
percent (1%) per month.
4. In the event that the Purchaser has an objection to any invoice
or other payment obligation or any amount owing by Contractor to
Purchaser shall not have been paid when due, the Purchaser shall
promptly notify the Contractor of such objection and such amount,
and the Purchaser and Contractor shall make every reasonable
effort to settle promptly the dispute concerning the payment(s)
in question. In the event such dispute cannot be settled within
60 days, the Contractor and the Purchaser will promptly execute
and deliver a Payment Escrow Agreement substantially in the form
of Exhibit E hereto, with such changes therein as the Bank Escrow
Agent may reasonably request, and the Purchaser will have the
right to withhold payment of the disputed amount(s) (or withhold
from the invoice amount a sum equal to the amount purportedly
owing by Contractor) so long as it deposits, in full, such
disputed amount(s) into the Dispute Account.
(a) Provided such disputed amount is placed into the Dispute
Account in a timely manner, the Purchaser shall not be
deemed to be in breach of or in default for failing to pay
Contractor and the Contractor shall continue to perform all
of its obligations hereunder.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
24
(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.
6. The Retainage for the System, or any System Upgrade shall be
invoiced on the Date of Final Acceptance of the System, or such
System Upgrade, as the case may be and shall be payable as set
forth in Sub-Article 5(C)(2).
Article 6 Contract Variations
------------------------------
A. Either Party may request, during construction of the System or any
System Upgrade, by written order, a contract variation "Contract Variation")
requiring additions or alterations to, deviations or deductions from the System
or System Upgrade. If the other Party consents, in its sole discretion, this
change will be formalized as an amendment to this Contract by a Contract
Variation; provided, that the Contractor will not unreasonably withhold its
--------
consent to a Contract Variation requested by the Purchaser; and provided
--------
further, that Purchaser will not unreasonably withhold its consent to a Contract
-------
Variation requested by the Contractor so long as such Contract Variation does
not affect the Contract Price, any Upgrade Price, the Scheduled System RFS Date,
the Scheduled Phase 1 RFS Date, the Scheduled Phase 2 RFS Date, any Scheduled
Upgrade Date, any warranties or the Performance Standards.
B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension of time
and all other terms have been mutually agreed upon by the Parties (and the
Parties shall act reasonably and in good faith in connection with all such
terms) and such Contract Variation is signed by an authorized representative of
each Party. Each Contract Variation shall be incorporated as an amendment to the
Contract.
C. Contractor may seek a Contract Variation for any change, after the
date hereof, of any Law (except those, and to the extent, affecting only Taxes
or wages) which requires a change in the Work or the Upgrade Work or affects the
costs (other than wages) incurred or to be incurred by the Contractor or any
25
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 one or more of the Scheduled RFS Dates,
as necessary for each such election. The equitable adjustment shall take into
account the actual costs incurred by Contractor, including but not limited to,
costs associated with canceling firm commitments.
Article 6A Optional Upgrades
-----------------------------
A. This Article includes the terms and conditions governing options for
future upgrades to the System (each a "System Upgrade") that may be exercised by
Purchaser during the Upgrade Option Period. *
B. *
C. *
D. *
E. *
F. *
G. *
H. *
I. *
J. *
K. *
L. *
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
26
*
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
27
*
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
28
*
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
29
Article 6B *
A. *
B. *
C. *
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
30
Article 6C *
Article 7 Responsibilities for Permits; Compliance with Laws; Purchaser
---------------------------------------------------------------------------
Access Rights
-------------
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
31
A. Upon written request of the Contractor, the Purchaser shall reasonably
cooperate with and assist the Contractor to obtain all Permits (except those
specified in paragraph C below), to the extent that Purchaser's cooperation and
assistance are necessary for Contractor to expeditiously and cost-efficiently
obtain such Permits. The Purchaser agrees to respond reasonably promptly to any
such request from Contractor; provided, that, the failure of Purchaser to comply
--------
with such request shall not give rise to a Purchaser Hindrance unless (i) the
requested cooperation was required by Law and (ii) Purchaser failure is due to
gross negligence or willful misconduct. Contractor shall reimburse reasonable
outside counsel fees, reasonable independent consultant fees and other
reasonable out-of-pocket expenses incurred by Purchaser in connection with such
cooperation. Further, the Purchaser agrees that it will not impede or interfere
with Contractor's abilities to perform its obligations under paragraph B of this
Article 7. Upon notice from Contractor with respect to a Permit or receipt by
Purchaser of a copy of a Permit, Purchaser shall fulfill all conditions of such
Permit and perform all responsibilities thereunder, except to the extent that
such conditions or responsibilities are those of the Contractor under the Work.
Contractor will inform Purchaser as to any such conditions or responsibilities
that are not ordinary and routine (based on industry standards) and obtain
Purchaser's consent thereto prior to arranging for any such Permit. Purchaser
(and its representatives and lawyers, whose services shall be paid by Purchaser)
may, at its sole option and cost, participate with Contractor in the process of
obtaining any Permits to the extent it deems reasonably necessary; provided,
--------
that any such participation shall not relieve or alter any of Contractor's
obligations under this Contract with respect to obtaining all Permits and shall
not, by itself, be deemed to impede or interfere with Contractor.
B. Subject to paragraph C below, the Contractor shall have the
responsibility for obtaining, at the Contractor's sole cost and expense, all
Permits on Purchaser's behalf. The Contractor will cause all Permits ultimately
required to be held by Purchaser but not initially issued in the name of
Purchaser to be assignable to Purchaser, and to be assigned to Purchaser at the
time title to the System (or a Phase or any Segment) is transferred to Purchaser
pursuant to this Contract. Contractor shall be responsible to pay any transfer
fees in connection with any such assignment. Subject to Sub-Article 4(A)(4),
Purchaser shall be responsible for payment of all Permit fees and other costs
and expenses due with respect to any Permit after the Date of Provisional
Acceptance of the System.
C. The Contractor shall not be responsible for obtaining Purchaser Permits
or Purchaser Access Rights, but the Contractor will cooperate with the Purchaser
in connection therewith. Purchaser shall reimburse reasonable outside counsel
fees, reasonable independent consultant fees and other reasonable out-of-pocket
expenses incurred by Contractor in connection with such cooperation.
D. Any delay in obtaining or failure to obtain any Owner Permit shall
constitute a Force Majeure and be treated as described in Article 17 (Force
Majeure), except to the extent such delay is a result of Contractor's negligence
or willful misconduct. No Force Majeure shall be granted with respect to
Contractor Permits, except for Force Majeure events which are unrelated to the
process by which such Contractor Permits are obtained. For example, a delay in
32
issuance of a Contractor Permit because of a change in administration or rules
is not a Force Majeure, but such a delay caused by a war or an earthquake may be
a Force Majeure.
E. Except with respect to variations necessitated by complying with any
changes, enacted after the date hereof, in any Laws (the costs with respect to
which shall be borne by the Purchaser unless such change is a result of any act
or omission by Contractor), the Contractor shall be responsible for the payment
of any and all costs incurred as a result of the need to vary design, drawings,
plans or procedures to comply with any of the circumstances set forth in this
Article. The Contractor shall, before making any variations from the designs,
drawings, plans or procedures that may be necessitated by so complying with any
Laws and that would represent a material change to the overall design of the
System, give to the Purchaser written notice, specifying the variations proposed
to be made, and the reasons for making them. As of the date hereof, neither
Party has Actual Knowledge of any proposed changes in the Laws which would
necessitate any such variation.
F. The Contractor shall (i) comply with all applicable Laws in performing
the Work, (ii) give all notices required by any Laws to be given to any
authority and (iii) perform or permit the performance by authorized persons of
any inspection required by the said Laws. All Work and the Project, upon
completion, will comply with all applicable Laws.
G. As part of the Initial Contract Price, the Contractor shall obtain, at
its own risk and expense, any export and import license and other official
authorization and carry out all customs formalities for the exportation and
importation of goods and, where necessary, for their transit through another
country.
H. Within 30 days after the date of execution of this Contract, the
Contractor will prepare and deliver to the Purchaser a detailed list of Permits
that to its knowledge are required to be obtained under current law in order to
complete the Work and shall update such list from time to time if it becomes
aware of changes in Permit requirements. Such list, as updated from time to
time, shall set forth the projected dates of filing for such Permits and an
estimate of when such Permits are expected to be obtained. Without limiting
Contractor's liabilities in respect of Sub-Articles 7(B), Contractor shall have
no liability in respect of the accuracy of the information furnished under this
Sub-Article, except in the case of gross negligence or willful misconduct.
Article 8 Route Survey
-----------------------
A. The Contractor shall conduct a Desk Top Study, the Route Survey and,
where prudent, a Burial Assessment Survey, and select the cable route for the
System in accordance with the information in the Final Route Survey Report and
such Burial Assessment Survey. Contractor shall be permitted to make changes, at
its discretion, to the route selection, if necessary for operational reasons,
without additional cost to Purchaser. The Contractor shall review with the
Purchaser the route for the System, and the results of the Burial Assessment
Survey, within 20 business days of the presentation of the Final Route Survey
Report, which Report must include the results of such Burial Assessment Survey.
33
B. Any changes to the route selection requested by Purchaser shall be
treated as a Contract Variation in accordance with Article 6 (Contract
Variations).
C. Any changes to any aspect of the Work due to any Desk Top Study, Route
Survey, Burial Assessment Survey or Final Route Survey Report will not result in
any change to the Initial Contract Price.
D. The Contractor will perform the Desktop Study, Route Survey and Burial
Assessment Survey, and engineer and design the cable route, using generally
accepted practices in the industry. In the engineering and design of the cable
route the Contractor will give due consideration to the interests of the
Purchaser and shall in good faith try to satisfy such interests, particularly
(but without limitation) regarding survivability, maintainability and tax
consequences, in each case arising from the location of the cable.
Article 9 Acceptance
---------------------
A. General
1. The Acceptance Testing shall be performed by the Contractor. The
Purchaser and its designated representatives may observe, at
their own expense, the Contractor's tests and review the test
results. Purchaser may request the Contractor to conduct and/or
may itself conduct any additional tests to demonstrate compliance
with the provisions of this Agreement and the specifications in
the Technical Volume. If such additional tests do demonstrate
that the provisions of this Agreement and the specifications in
the Technical Volume have been complied with, then the Purchaser
shall be responsible for paying the costs of such additional
tests, and any delay beyond the Contractor's schedule for
completion of its tests caused by such process shall be a
Purchaser Hindrance. If, however, such additional tests
demonstrate that the provisions of this Agreement or the
specifications in the Technical Volume have not been complied
with, then it shall be the Contractor's responsibility to pay the
costs of such additional tests, and any delay caused by such
process shall not be a Force Majeure.
2. Until the Date of Final Acceptance of the System or if a System
Upgrade is requested by Purchaser, the Date of Final Acceptance
of such System Upgrade, the Purchaser agrees to allow Contractor
access to all Segments of the System.
3. The Purchaser shall issue a Certificate of Commercial Acceptance
in accordance with the provisions of Sub-Article 9(D)(1).
4. Once a Segment of the System, a Phase of the System, or a System
Upgrade is Ready for Provisional Acceptance, the Purchaser shall
issue a Certificate of Provisional Acceptance, provided, that it
is within the
34
Purchaser's sole discretion as to whether to accept a Segment
instead of a Phase of the System.
5. Once a Phase of the System or a System Upgrade is Ready for Final
Acceptance, the Purchaser shall issue a Certificate of Final
Acceptance.
6. The Purchaser shall not unreasonably withhold or delay issuance
of a Certificate of Commercial Acceptance, a Certificate of
Provisional Acceptance or a Certificate of Final Acceptance.
7. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Phase 1 of the System will occur by
August 15, 2000 (as such date may be extended under Article 6
(Contract Variations), Article 17 (Force Majeure) or otherwise
under this Contract or by agreement of the Parties, the
"Scheduled Phase 1 RFS Date").
8. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Phase 2 of the System will occur by
September 30, 2000 (as such date may be extended under Article 6
(Contract Variations), Article 17 (Force Majeure) or otherwise
under this Contract or by agreement of the Parties, the
"Scheduled Phase 2 RFS Date").
9. The Contractor agrees that the Date of Provisional Acceptance or
Commercial Acceptance of Phase 3 of the System and of the System
will occur by March 31, 2001 (as such date may be extended under
Article 6 (Contract Variations), Article 17 (Force Majeure) or
otherwise under this Contract or by agreement of the Parties, the
AScheduled Phase 3 RFS Date" and the "Scheduled System RFS
Date").
10. The Date of Commercial Acceptance, Provisional Acceptance and
Final Acceptance, as the case may be, shall be deemed to have
occurred with respect to a Segment, the System or a System
Upgrade if a Certificate of Commercial Acceptance, a Certificate
of Provisional Acceptance or a Certificate of Final Acceptance,
as the case may be, is issued with respect thereto.
B. Notice of Acceptance or Rejection
1. Within thirty (30) days of receipt by Purchaser of a complete
Commissioning Report or Upgrade Commissioning Report, as the case
may be, the Purchaser must issue notification to the Contractor
of the following:
(a) issuance of a Certificate of Provisional Acceptance in
accordance with Sub-Article 9(C); or
35
(b) rejection of a Certificate of Provisional Acceptance, but
instead issuance of a Certificate of Commercial Acceptance
in accordance with Sub-Article 9(D) below; or
(c) rejection of the Segment, the Phase; the System or the
System Upgrade in its existing condition and issuance of
neither a Certificate of Provisional Acceptance nor a
Certificate of Commercial Acceptance, and in the case of the
Phase; the System or the System Upgrade, a written
explanation of reasons for rejection (it being understood
that acceptance of a Segment instead of a Phase or the
System is at the sole discretion of the Purchaser).
If the Purchaser fails to respond with such notification within
thirty (30) days, then the Date of Provisional Acceptance of the
Segment (subject to Purchaser's consent), the Phase; the System
or System Upgrade shall be deemed to be the date occurring thirty
(30) days after such Commissioning Report or Upgrade
Commissioning Report, as the case may be, was received by the
Purchaser.
2. On receipt of a notice from the Purchaser pursuant to Sub-
Articles 9(B)(1)(b) or (c) above, the Contractor shall be
entitled to address any disputes and explain any discrepancies to
the Purchaser. Unless Purchaser, for good cause, rejects such
explanation, it shall issue a new notice pursuant to Sub-Article
9(B)(1) above, which shall be deemed to have been issued on the
date of the original notice.
3. In case of rejection, and if the explanation by the Contractor as
in Sub-Article 9(B)(2) above is not accepted, for good cause, by
the Purchaser, the Contractor shall carry out the necessary
corrective actions and will effect a new series of Acceptance
Testing "Retesting"). After receipt by Purchaser of the new
Commissioning Report or Upgrade Commissioning Report, as the case
may be, describing the corrective action and the results of
Retesting, the Purchaser will be granted a new period of thirty
(30) days to analyze the new Report according to the provisions
of Sub-Article 9(B)(1) and any new notice of the Purchaser shall
apply from the date the Purchaser receives such new Commissioning
Report or Upgrade Commissioning Report, as the case may be.
C. Provisional Acceptance
1. The Certificate of Provisional Acceptance may have annexed to it
a list of any outstanding deficiencies to be corrected by the
Contractor.
2. The Contractor shall, as soon as reasonably practicable, correct,
at its sole cost and expense, such deficiencies and complete the
Work or Upgrade Work indicated on all such listed items so as to
comply in all material
36
respects with the requirements of this Contract, provided that
the Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to correct such deficiencies
and complete the Work or Upgrade Work. The Contractor shall give
the Purchaser reasonable notice of its requirement for such
access.
D. Commercial Acceptance
1. A Certificate of Commercial Acceptance shall be issued by
Purchaser with respect to a Segment, a Phase, the System or a
System Upgrade if the results of the Acceptance Testing
demonstrate that such Segment, such Phase, the System or such
System Upgrade does not justify the issuance of a Certificate of
Provisional Acceptance, but nevertheless, such Segment, such
Phase, the System or such System Upgrade is Ready for Commercial
Acceptance; provided, that acceptance of a Segment instead of a
--------
Phase or the System shall be in the sole discretion of the
Purchaser.
2. Each Certificate of Commercial Acceptance shall have annexed to
it a list of all outstanding items to be completed by the
Contractor.
3. The Contractor shall, as soon as reasonably practicable, remedy,
at its sole cost and expense, the outstanding items, provided
that the Purchaser allows Contractor the necessary access to the
Segment(s) as the Contractor needs to remedy such outstanding
items. The Contractor shall give the Purchaser reasonable notice
of its requirement for such access. Notwithstanding the above,
provided that Contractor has been allowed access to the
Segment(s) as required in Sub-Article 9(A)(2), the Contractor
shall continue to carry the risk of loss for any outstanding item
until such item is no longer outstanding.
4. When the outstanding items referenced in Sub-Article 9(D)(3)
above have been remedied, and the Segment(s), the Phase, the
System or the System Upgrade is otherwise Ready for Provisional
Acceptance, the Purchaser will promptly issue a Certificate of
Provisional Acceptance; provided, that acceptance of a Segment
--------
instead of the System shall be in the sole discretion of the
Purchaser.
5. The issuance of a Certificate of Commercial Acceptance with
respect to a Segment, a Phase, the System or a System Upgrade
shall in no way relieve the Contractor from its obligation to
provide a Segment, a Phase, the System or System Upgrade
conforming with the Performance Requirements at the time of the
issuance of a Certificate of Commercial Acceptance.
E. Final Acceptance
37
1. Within thirty (30) days of the date of receipt by Purchaser of
the Final Commissioning Report, the Purchaser shall issue a
Certificate of Final Acceptance or reject such Report. If the
Purchaser neither issues a Certificate of Final Acceptance nor
rejects such Report within such thirty (30) day period, then the
Date of Final Acceptance of the System shall be deemed to be the
date occurring thirty (30) days after such Final Commissioning
Report was received by the Purchaser.
F. Title and Risk of Loss
1. If the Purchaser, in its sole discretion, chooses to accept a
Segment prior to accepting the System, then upon the issuance of
a Certificate of Commercial Acceptance or a Certificate of
Provisional Acceptance with respect to such Segment by the
Purchaser in accordance with this Contract, title (free and clear
of all liens other than those deriving through or from the
Purchaser) to such Segment shall vest in the Purchaser. A
statement of the time of passage of title in such Certificate
shall be final and conclusive.
2. Upon the issuance of a Certificate of Commercial Acceptance or a
Certificate of Provisional Acceptance with respect to a Phase or
the System by the Purchaser in accordance with this Contract,
title (free and clear of all liens other than those deriving
through or from the Purchaser) to such Phase or the System shall
vest in the Purchaser. A statement of the time of passage of
title in such Certificate shall be final and conclusive.
3. Upon the issuance of a Certificate of Commercial Acceptance or a
Certificate of Provisional Acceptance with respect to a System
Upgrade by the Purchaser in accordance with this Contract, title
to such System Upgrade shall vest in the Purchaser. A statement
of the time of passage of title in such Certificate shall be
final and conclusive.
4. As from the date of vesting of title in a Segment, a Phase, the
System or a System Upgrade, the Purchaser shall, except as set
forth in the following sentence, assume the risk of loss in
respect of all parts of such Segment, such Phase, the System or
System Upgrade and responsibility for its maintenance. As stated
in Sub-Article 9(A)(2), the Contractor will be allowed access to
such Segment, and, so long as the Contractor has been allowed
access to such Segment as may be required, the Contractor shall
continue to carry the risk of loss with respect of each item
outstanding under Sub-Article 9(C)(1) and 9(D)(2) until such item
is no longer outstanding.
38
Article 10 Warranty
--------------------
A. The Contractor warrants that the System and each System Upgrade,
including its spares, shall be free from defects in supplies, workmanship and
design for a period of * years commencing from the Date of Provisional
Acceptance of the System or such System Upgrade, as the case may be,
(hereinafter "Warranty Period" and "Upgrade Warranty Period"), with Ship Costs
being covered for the first * years of the Warranty Period (the "Ship
Period") and the Purchaser being responsible for all Ship Costs thereafter.
1. During the Warranty Period for the System or the Upgrade Warranty
Period for a System Upgrade, the Contractor shall make good, by
repair or replacement, at its sole option, any defects in the
System or such System Upgrade, as the case may be, including any
spares, which may become apparent or be discovered due to
imperfect workmanship, faulty design or faulty material supplied
by the Contractor, or any act, neglect or omission on the
Contractor's part.
(a) If at any time within the Warranty Period or the Upgrade
Warranty Period for a System Upgrade any defect occurs which
causes the System or such System Upgrade, as the case may
be, to fail to meet its overall Performance Requirements,
the Contractor shall repair or replace such part or parts.
In making such repairs, Contractor may make changes to the
System or such System Upgrade, as the case may be, or
substitute equipment of later or comparable design, provided
the changes, modifications, or substitutions under normal
and proper use do not cause the System or such System
Upgrade as the case may be to fail to meet the Performance
Requirements.
(b) The Contractor shall use reasonable efforts to minimize the
period of time that any Segment or the System is out of
service for testing and repair. The Purchaser agrees to
cooperate with the Contractor to facilitate the Contractor's
repair activity.
(c) It is understood that if there is a problem on the System,
the Purchaser may immediately dispatch the maintenance
authority to effect repairs. If and to the extent that such
problem is determined to be caused by a defect in the System
covered by this warranty, the Contractor shall reimburse the
Purchaser for its actual Non-Ship Costs incurred and, with
respect to any such repair relating to a defect identified
in good faith by Purchaser in writing prior to the end of
the Ship Period, actual Ship Costs incurred. If the
Purchaser has entered into arrangements whereby maintenance
is all or partially covered by a Alump 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
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
39
repair. In such a case, Contractor agrees that the Purchaser
is still entitled to a payment from Contractor in connection
with such warranty repair. The Contractor and Purchaser will
agree in good faith to an equitable method of determining
the industry standard typical costs for such a repair based
upon what the repair would have actually cost had it been
paid under a specific maintenance agreement and such typical
costs shall be reimbursed to Purchaser. The Purchaser will
provide the Contractor with all reasonably requested
information, data or invoices available with respect to such
warranty repair to enable the Contractor to recover its
costs from its insurers. The unavailability or denial of any
such insurance shall in no way relieve the Contractor of its
obligations under this clause (c).
(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.
(ii) Subject to the foregoing and to Sub-Article 10(D), any
repair by the Purchaser shall not in any way diminish
the Contractor's obligation under the warranty. Any
equipment discovered to be defective or faulty and
recovered during a warranty repair shall be returned to
the Contractor at its request.
(d) In the event that the Contractor fails to make the repair or
to make reasonable efforts to minimize the period of time
that the System is out of service for repair, the Purchaser
may repair the System or the System Upgrade and the
Contractor shall reimburse the Purchaser for Non-Ship Costs
and, with respect to any such repair relating to a defect
identified in good faith by Purchaser in writing prior to
the end of the Ship Period, Ship Costs.
(i) The Contractor shall be given advance notice and be
entitled to have a representative on board ship to
observe at sea repairs and shall be given the earliest
possible notice of any such repair.
(ii) Subject to the foregoing, any repair by the Purchaser
shall not in any way diminish the Contractor's
obligation under the warranty. Any equipment discovered
to be defective or faulty and recovered during a
warranty repair shall be returned to the Contractor at
its request.
40
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 ANon-Ship Costs" means the costs
of making a repair, including the cost of components, equipment
or materials requiring replacement, the cost of any additional
equipment necessary to effect the repair, the cost of making the
repair, including the cost of reburying any previously buried
portion, the cost of labor and engineering assistance or
development required to make the repair and all necessary
associated costs, such as, but not limited to, shipping and
customs and services that may be required to make the repair, but
excluding any of the foregoing which are Ship Costs.
3. The Contractor shall effect all warranty repairs of the System
and shall supply all necessary repair materials. However, the
Contractor may use, with the consent of the Purchaser, which
shall not be unreasonably withheld, the materials needed to
effect a repair from the Purchaser's available spare materials.
The Contractor shall promptly replace in kind such materials
supplied from the Purchaser's spare materials or at the option of
the Purchaser, reimburse the Purchaser for such materials at its
original purchase price. The replacement of or reimbursement for
such materials shall be made at a time mutually agreed to by the
Purchaser and the Contractor.
4. The Contractor warrants that services furnished hereunder will be
performed in a workmanlike manner using materials free from
defects except when such materials are provided by the Purchaser
(it being understood that all materials arranged for directly by
Contractor, whether or not purchased in the name of Purchaser,
are not materials provided by the Purchaser). If such services
prove to be not so performed and Purchaser notifies the
Contractor within six (6) months from the completion of the
service or before the end of the Warranty Period, whichever is
later, the Contractor will promptly correct the defect.
5. Any part which replaces a defective part during the applicable
Warranty Period or Upgrade Warranty Period, shall be covered by
these warranties for the remaining Warranty Period and Ship
Period, if any, or Upgrade Warranty Period, as the case may be,
of the part which was replaced or, if
41
longer, six months from the date of replacement. The foregoing is
not meant to limit any separate warranty that may apply to the
replacement part. However, the Warranty Period shall never exceed
* years from the Date of Provisional Acceptance of the System and
the Upgrade Warranty Period for any System Upgrade shall never
exceed * years from the Date of Provisional Acceptance of such
System Upgrade. Further, Ship Costs shall be included only with
respect to defects identified by Purchaser in writing during the
first * years from the Date of Provisional Acceptance of the
System, and shall be included with respect to such defect until
it is repaired.
B. *
C. The warranties provided above in Sub-Articles 10(A) and (B) by the
Contractor shall not apply to defects or failures of performance, which result
from damage caused by acts or omissions of the Purchaser or its agents,
employees or representatives or third parties (other than the Contractor or its
Subcontractors), or which result from modifications, misuse, neglect, accident
or abuse, repair, storage or maintenance by other than the Contractor or its
Subcontractors or, use in a manner not in accordance with the System Description
or other causes set forth in Article 17 (Force Majeure).
D. THE FOREGOING WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER EXPRESS
AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED.
E. The Contractor shall, in accordance with its normal operating
practices, investigate any defective part or parts repaired or replaced pursuant
to this Article 10 to determine the type of defect and the cause of failure of
the part or parts. The Contractor shall provide a written report to the
Purchaser on the results of the investigation, if any.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
42
F. Contractor warrants that the System and the Optional Branching Unit, as
applicable, shall be designed in a manner (i) adequate to support, without
modification to the System, any extension constructed by Contractor from such
branching unit and (ii) such that any extension will have performance equal to
or better than the System, provided that (i) and (ii) are contingent upon each
such extension falling within the applicable distance parameters set forth in
the Technical Volume.
G. The Contractor agrees that the foregoing provisions of this Article 10
may be enforced, on behalf of Purchaser, by the entity or entities performing
operation, administration or maintenance services for the System.
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.
43
4. At the time Purchaser makes a request for a Restoration Segment,
for such Restoration Segment and, as a result, cause the
Contractor to incur additional insurance premium costs, which
notice shall set forth the amount of such premiums. Upon receipt
of such notice, Purchaser shall determine, in its sole
discretion, whether it will utilize the Restoration Segment and
therefore compensate Contractor for such additional insurance
premium costs.
The Purchaser's use of any unaccepted Segment or Segments for
restoration protection purposes shall in no way obligate the Purchaser to accept
such other Segment or Segments, nor shall it be deemed to constitute an
acceptance by the Purchaser of any such other Segment or Segments, and the title
and any risk of loss associated with the any such other Segment or Segments
shall remain with the Contractor.
Article 12 Purchaser's Obligations
-----------------------------------
A. If the Purchaser's failure to perform any of its express obligations
under this Contract directly results in an increase in the costs of performance
or the time required for performance of any of the Contractor's duties or
obligations under this Contract, such failure shall be deemed a APurchaser
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.
44
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).
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,
45
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any
of the foregoing;
4. If an involuntary case or other proceeding shall be commenced
against the other Party seeking liquidation, reorganization or
other relief with respect to 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 * shall for any reason cease to be in full force and
effect or the * 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
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
46
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.
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;
47
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 of the types referred to in Sub-
Article 14(B)(6) above provided, however, that the Contractor:
-------- -------
(a) shall not be required to extend credit to any buyer; and
(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;
and provided further that the net proceeds of any such transfer
-------- -------
or disposition shall be applied in reduction of any payments to
be made by the Purchaser to the Contractor under this Contract
or, if no such payments are due, paid in such other manner as the
Purchaser may direct;
8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the Contractor's
possession and in which the Purchaser has acquired or may acquire
an interest.
C. After such Notice of Termination, the Contractor shall submit to the
Purchaser a written termination claim. Such claim shall be submitted promptly,
but, unless otherwise extended, in no event later than six months from the
effective date of termination.
D. In the settlement of any such partial or total termination claim, the
Purchaser shall pay to the Contractor the total of:
1. all amounts invoiced in accordance with the Contract plus, for
Work or Supplies which have been done or is in progress or
provided but which have not been invoiced, an amount calculated
by reference to the prices set forth in the Provisioning Schedule
and to the amount of such Work or Supplies done or provided;
48
2. the cost of settling and paying claims arising out of the
termination of Work under the contracts in orders, as provided in
Sub-Article 14(D)(4) below which are properly chargeable to the
terminated portion of this Contract; and
3. the reasonable costs of settlement including accounting, legal,
clerical and other expenses necessary for the preparation of
settlement claims and supporting data with respect to the
terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection and disposition of property proper to this
Contract.
E. In arriving at the amount due to the Contractor under this Article 14,
all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.
F. The Purchaser may, from time to time, under such terms and conditions
as they prescribe approve partial payments and payments on account against costs
incurred by the Contractor in connection with the terminated portion of this
Contract. If such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall be refunded, upon
demand, by the Contractor to the Purchaser.
G. For a period of one year after final settlement under this Contract,
the Contractor shall preserve and make available to the Purchaser at reasonable
times at the Contractor's office, but without direct charge to the Purchaser,
all supporting books, records and documents required to be kept relating to the
terminated Work.
Article 15 Suspension
----------------------
A. The Purchaser may, at its convenience, order the Contractor to suspend
all or part of the Work for such period of time as the Purchaser determines to
be appropriate. If, as a result of such Suspension, the Contractor incurs
additional costs or losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule and an equitable extension in the
time required for performance.
B. Upon the occurrence of:
(i) an Event of Default by the Purchaser;
(ii) any transfer prior to the Date of Final Acceptance of any
portion of the System except in accordance with Article 37; or
49
(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 be deemed to have been terminated by Purchaser,
effective on the date of Contractor's notice, in accordance with Sub-Article
14(A) and the remaining provisions of Article 14 shall apply.
Article 16 Title and Risk of Loss
----------------------------------
A. Except as provided in Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology) and Article 21 (Export Control),
title to all Supplies provided by the Contractor hereunder for incorporation in
or attachment to a Segment shall pass to and vest in the Purchaser in accordance
with Article 9 (Acceptance). Risk of loss or damage to all Supplies provided by
the Contractor for incorporation in or attachment to such Segment shall pass to
and vest in the Purchaser in accordance with Article 9. Upon termination of this
Contract pursuant to Article 13 (Termination for Default) or 14 (Termination for
Convenience), the Purchaser may require, upon full payment of all amounts due
thereunder (provided that, without limiting Purchaser's obligation to make any
--------
such payment, if this Contract is terminated by Purchaser because of a
Bankruptcy Event full payment shall not be required prior to the transfer of
title), that title to the equipment, materials and supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances other than those deriving through
Purchaser.
B. Upon the passage of title in accordance with the terms of Article 13
(except a transfer described in the proviso of the last sentence of Sub-Article
16(A)), the Contractor warrants that all parts, materials, and equipment to
which title has passed will be free and clear of all liens, claims, charges and
other encumbrances other than those deriving through the Purchaser.
Article 17 Force Majeure
-------------------------
A. The Contractor shall not be responsible for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control "Force Majeure"), including but not limited to:
delay in obtaining or failure to obtain any Owner Permits (subject to the
provisions of Sub-Article 7(D)); acts of God or of the public enemy; acts or
failures to act (other than with respect to Permits) of any governmental
authority unless resulting from any act or omission of Contractor; war or
warlike operations, civil war or commotion, mobilizations or military call-up,
and acts of similar nature; revolution, rebellions,
50
sabotage, and insurrections or riots; fires, floods, epidemics quarantine
restrictions; strikes, and other labor actions; freight embargoes; unworkable
weather (so long as Contractor shall have taken reasonably foreseeable
unworkable weather into account when planning its Work schedule; trawler or
anchor damage caused by other marine activity such as fishing, marine research
and marine development; acts or omissions of transporters; or a Purchaser
Hindrance, but only to the extent that the obligation underlying such Hindrance
is not performed at the time contemplated by the Plan of Work, provided that the
--------
following shall not constitute Force Majeures: (i) a loss by Contractor of
employees (other than by reason of Force Majeure), (ii) strikes and other labor
actions involving the Contractor's own work force, (iii) the first 5 days of
unworkable weather (unless any such day occurs during the 30 days immediately
preceding the then Scheduled RFS Date), (iv) the failure (other than by reason
of Force Majeure) of any subcontractor, supplier or transporter to perform its
obligations to Contractor (including on account of insolvency), (v) the
unavailability of any raw materials or components, unless such raw materials or
components are generally unavailable in the marketplace at the time Contractor
would customarily have placed orders therefore or are unavailable by reason of
force majeure or (vi) any increase in Contractor's costs.
B. If any such Force Majeure causes an increase in the time or costs
required for performance of any of its duties or obligations, the Contractor
shall be entitled to an equitable extension of time for completion of the Work
or the Upgrade Work, as the case may be, but not any adjustment in the Contract
Price nor any reimbursement for any such additional costs incurred.
C. Increase in cost due to Purchaser Hindrance will be as provided for in
Article 12 (Purchaser's Obligations).
D. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases within fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional delays. The Contractor shall
promptly provide an estimate of the anticipated time required to complete the
Work or the Upgrade Work. Contractor shall be entitled to an equitable
extension of time resulting from the Force Majeure condition, but only to the
extent that such Force Majeure actually causes a delay in the timely completion
of the Work or Upgrade Work after all reasonable efforts to minimize such a
delay have been made.
E. Within thirty (30) days of receipt of such a notice from Contractor,
the Purchaser may provide a written response. The absence of a response shall
not be deemed as acceptance of Contractor's notice and request for additional
time.
F. If a Force Majeure continues for a total of two hundred (200) days,
either Party may terminate the Contract by notice to the other and the Contract
shall be deemed to have been terminated by Purchaser, effective on the date of
the terminating Party's notice, in accordance with Sub-Article 14(A) and the
remaining provisions of Article 14 shall apply to such termination.
51
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
Subject to the provisions of the next two sentences, all right, title,
and interest in and to all Intellectual Property (excluding Project Patent
Rights) created or developed by Contractor in the course of its performance
under this Contract that is (a) specifically and exclusively applicable to the
System or a System Upgrade; and (b) either (i) embodied in Deliverable Technical
Material (as that term is defined in Sub-Article 18(B) below) or (ii) embodied
in the System or a System Upgrade (the "Project Intellectual Property"), is and
shall remain the sole property of Purchaser. Contractor represents that as of
the date of this Contract, no software is planned to be developed that would be
included as Project Intellectual Property. * All right, title and interest in
and to all Intellectual Property created or developed by Contractor before
commencing its performance under this Contract, or created or developed by
Contractor exclusively in connection with activities other than its performance
under this Contract, or created or developed by Contractor in the course of its
performance under this Contract that is not Project Intellectual Property, and
all Project Patent Rights (collectively, the "Contractor Intellectual
Property"), is and shall remain the sole property of Contractor. Unless
otherwise expressed in this Contract, no license is implied or granted herein to
Purchaser to any Contractor Intellectual Property by virtue of this Contract,
nor by the transmittal or disclosure of any such Contractor Intellectual
Property to Purchaser. Any Contractor Intellectual Property disclosed,
furnished, or conveyed to Purchaser that is marked as "Proprietary" or
"Confidential" (or if transmitted orally is identified as being proprietary or
confidential in a subsequent writing) shall be treated in accordance with the
provisions of Article 20 (Safeguarding of Information and Technology). As used
herein, "Intellectual Property" means any information, computer or other
apparatus programs, software, specifications, drawings, designs, sketches,
tools, market research or operating data, prototypes, records, documentation,
works of authorship or other creative works, ideas, concepts, methods,
inventions, discoveries, improvements, or other business, financial and/or
technical information (whether or not protectable or registrable under any
applicable intellectual property law). As used herein, "Project Patent Rights"
means all inventions, discoveries, methods and improvements of a patentable
nature created or developed by Contractor in the course of its performance under
this Contract. Project Intellectual Property will include the materials to be
listed in a Schedule (to be attached as Exhibit H hereto) to be created mutually
by the Parties within thirty (30) days of execution of this Contract, as it may
be amended from time to time by mutual agreement of the Parties.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
52
B. Licenses
Contractor shall furnish to Purchaser, upon the transfer of title to
any portion of the System or a System Upgrade pursuant to Article 9, copies of
all technical information, specifications, drawings, designs, sketches, tools,
operating data, records, documentation and/or other types of engineering or
technical data or information reasonably relating to the operation, maintenance
or repair of each component of such portion of the System or System Upgrade as
delivered by Contractor (the "Deliverable Technical Material"). Contractor
grants to Purchaser a perpetual, royalty-free, non-transferable (except under
the circumstances specified in Sub-Article 18(F) below) license to use and
reproduce those Deliverable Technical Materials owned, controlled, or developed
by Contractor and all Contractor Intellectual Property included in or necessary
to use all the Deliverable Technical Materials for purposes of fulfilling
Purchaser's obligations under this Contract and using and operating the System
(as upgraded by any System Upgrades) supplied by Contractor with the right to
employ third parties (under appropriate written obligations respecting
confidentiality) to assist Purchaser in fulfilling its obligations under this
Contract and in using and operating the System (as upgraded by any System
Upgrades), but with no right to sublicense. Contractor grants to Purchaser a
perpetual, royalty-free, non-transferable (except under the circumstances
specified in Sub-Article 18(F) below) license to use and reproduce those
portions of Deliverable Technical Materials owned or controlled by third parties
(but only to the extent of any rights which may have been granted to Contractor
by such third parties) for the purpose of fulfilling Purchaser's obligations
under this Contract and using and operating the System supplied by Contractor
with the right to employ third parties (under appropriate written obligations
respecting confidentiality) to assist Purchaser in fulfilling its obligations
under this Contract and in using and operating the System (as upgraded by any
System Upgrades), but with no right to sublicense. Except as set forth in this
provision, no license under Contractor's patents, copyrights, trade or service
marks, trade secrets or other intellectual property rights protectable under law
in the United States or any foreign country is granted to Purchaser. It is
expressly understood that it shall not be a violation of this license for
Purchaser, on its own behalf or through third parties (under appropriate written
obligations respecting confidentiality) specifically employed for the purpose,
to use and reproduce Deliverable Technical Material that is not Project
Intellectual Property to modify the System (as upgraded by any System Upgrades)
or connect the System (as upgraded by any System Upgrades) to other systems,
provided that Purchaser may not use the Deliverable Technical Materials that is
not Project Intellectual Property in achieving such modification or
interconnection for any purpose other than determining the technical
configuration, systems interface and/or interoperability requirements of the
System (as upgraded by any System Upgrades) as delivered by Contractor (subject
to the rights of third parties therein and thereto), and subject to the
limitations on Contractor's obligations as set forth in Articles 10(D) and 19(A)
concerning any such modification or interconnection.
C. Deliverable Software
Contractor shall furnish to the Purchaser, upon transfer of title to
any portion of the System or System Upgrade pursuant to Article 9, copies of all
computer or other apparatus programs and software, in executable form, and
related documentation relating to the operation, maintenance, or repair of the
computer systems of such portion of the System or System
53
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 owned, controlled, or developed by Contractor for the
purpose of fulfilling Purchaser's obligations under this Contract and using and
operating the System (as upgraded by any System Upgrades) supplied by Contractor
with the right to employ third parties (under appropriate written obligations
respecting confidentiality) to assist Purchaser in fulfilling its obligations
under this Contract and in using and operating the System (as upgraded by any
System Upgrades), but with no right to sublicense. Contractor grants to
Purchaser a perpetual, royalty-free, non-transferable (except under the
circumstances specified in Sub-Article 18(F) below) license to use and reproduce
those portions of Deliverable Software owned or controlled by third parties (but
only to the extent of any rights which may have been granted to Contractor by
such third parties) for the purpose of fulfilling Purchaser's obligations under
this Contract and using and operating the System (as upgraded by any System
Upgrades) supplied by Contractor with the right to employ third parties (under
appropriate written obligations respecting confidentiality) to assist Purchaser
in fulfilling its obligations under this Contract and in using and operating the
System (as upgraded by any System Upgrades), but with no right to sublicense.
These licenses shall be limited to the right to use Deliverable Software that is
not Project Intellectual Property only with the particular type of computer
equipment or substantially similar replacement equipment for which such
Deliverable Software was provided in the System (as upgraded by any System
Upgrades) as supplied by Contractor.
1. Confidentiality
Purchaser shall keep the Deliverable Software that is not Project
Intellectual Property confidential in accordance with Article 20
(Safeguarding of Information and Technology) and Article 21
(Export Control) to the extent that such Deliverable Software is
designated as Confidential Information by its owner and agrees to
use its best efforts to see that its employees, consultants, and
agents, and other users of such software, comply with the
provisions of this Contract. Purchaser also agrees to refrain
from taking any steps, such as reverse assembly or decompilation,
to derive a source code equivalent of any object code that is
furnished by Contractor, provided that Contractor continues to
maintain the Deliverable Software that is not Project
Intellectual Property in accordance with the terms of a support
and maintenance agreement to be
54
entered into on such terms to be agreed upon by the Parties,
which terms shall in all events contain assurances of support and
maintenance similar to those otherwise available to Purchaser at
such time through any other third party operations and
maintenance service provider or is willing and able to enter into
an agreement to maintain the Deliverable Software upon terms
reasonably comparable to the pertinent terms of the initial
agreement to be entered into by the Parties with regard to
support and maintenance after the expiration or termination
thereof or does not go insolvent or bankrupt to thereby *
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 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.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
55
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
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. *
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
56
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
57
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.
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
58
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, AInformation"). The Parties
recognize and agree that Information includes information that was supplied in
contemplation hereof prior to execution of this Contract, and further agree that
Information includes information in both tangible and intangible form.
B. Unless such Information was previously known to the Party receiving
such Information free of any obligation to keep it confidential, or such
Information has been or is subsequently made public through other than
unauthorized disclosure by the receiving Party or is independently developed by
the receiving Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such Information, shall be
used only in the performance of this Contract, and may not be used for any other
purposes except upon such terms as may be agreed upon in writing by the Party
owning such Information. The receiving Party may disclose such Information to
other persons, upon the furnishing Party's prior written authorization, but
solely to perform acts which this Article expressly authorizes the receiving
Party to perform itself and further provided such other person agrees in writing
(a copy of which writing will be provided to the furnishing Party at its
request) to the same conditions respecting disclosure and use of Information
contained in this Article and to any other reasonable conditions requested by
the furnishing Party. Nothing herein shall prevent a Party from disclosing
Information (a) upon the order of any court or administrative agency, (b) upon
the request or demand of, or pursuant to any regulation of, any regulatory
agency or authority, (c) to the extent reasonably required in connection with
the exercise of any remedy hereunder and (d) to a Party's legal counsel or
independent auditors.
C. The Purchaser may disclose Information to its lenders and their
representatives in connection with obtaining financing for the System, provided
that each such lender or their representative enters into a confidentiality
agreement containing terms and conditions similar to those in this Contract. Any
such disclosure of Information shall be subject to the restrictions in Sub-
Article 20(B).
Article 21 Export Control
--------------------------
The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of the United States and the destination country(ies) and any use or
transfer of such products, software and technical information must be authorized
under those Laws. The Parties agree that they will not use, distribute, transfer
or transmit the products, software or technical information (even if
incorporated into other products) except in compliance with export Laws. If
requested by either Party, the other Party agrees to sign all necessary export-
related documents as may be required to comply with export Laws.
Article 22 Liquidated Damages
------------------------------
59
A. If Phase 1 of the System is not Ready for Commercial Acceptance or
Provisional Acceptance * the Scheduled Phase 1 System RFS Date, as it may have
been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay following * for up
to 200 days or, if earlier, to the day Contractor begins making payments under
paragraph C of this Article 22, by way of pre-estimated and liquidated damages
for the delay and not as a penalty, an amount equal to * of the Phase 1 portion
of the Initial Contract Price for the System, subject to the maximum aggregate
amount set forth in Paragraph E of this Article 22.
B. If Phase 2 of the System is not Ready for Commercial Acceptance or
Provisional Acceptance * of the Scheduled Phase 2 RFS Date, as it may have been
extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure);
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor;
then Contractor shall pay to Purchaser for each day of delay following * for up
to 200 days or, if earlier, to the day Contractor begins making payments under
paragraph C of this Article 22, by way of pre-estimated and liquidated damages
for the delay and not as a penalty, an amount equal to * of the Phase 2 portion
of the Initial Contract Price for the System, subject to the maximum aggregate
amount set forth in Paragraph E of this Article 22.
C. If the System is not Ready for Commercial Acceptance or Provisional
Acceptance by the Scheduled RFS Date, as it may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
60
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay, for up
to 200 days, by way of pre-estimated and liquidated damages for the delay and
not as a penalty, an amount equal to * of the Initial Contract Price for the
System, * subject to the maximum aggregate amount set forth in Paragraph E of
this Article 22.
D. If a System Upgrade is not Ready for Commercial Acceptance or
Provisional Acceptance by the Scheduled Upgrade Date, as it may have been
extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Article 15 (Suspension); or
4. Other arrangements as agreed between the Purchaser and the
Contractor; then Contractor shall pay to Purchaser for each day of delay, for up
to 90 days, by way of pre-estimated and liquidated damages for the delay and not
as a penalty, an amount equal to * of the Initial Upgrade Contract Price.
E. In no event shall the aggregate amount payable with respect to Phases
and/or the System pursuant to Paragraphs A, B and/or C above exceed * of the
Initial Contract Price.
Article 23 Limitation of Liability/Indemnification
---------------------------------------------------
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND IRRESPECTIVE
OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO EVENT SHALL
EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE
FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL (INCLUDING
PUNITIVE) DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF
BUSINESS OPPORTUNITY OR THE COSTS ASSOCIATED WITH THE USE OF RESTORATION
FACILITIES RESULTING FROM ITS FAILURE TO PERFORM PURSUANT TO THE TERMS AND
CONDITIONS OF THIS CONTRACT.
B. EXCEPT AS SET FORTH BELOW IN THE LAST TWO SENTENCES OF THIS SUB-ARTICLE
23(B), THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT, CONTRACT
OR OTHERWISE, EXCEPT FOR CLAIMS RELATING TO SYSTEM UPGRADES, SHALL NOT EXCEED
* OF THE CONTRACT PRICE. THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
61
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 * 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 *
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 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
------------------------
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
62
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.
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
63
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, *
Article 26 Product Changes
---------------------------
The Contractor may at any time make changes to the System or System
Upgrades furnished pursuant to this Contract, or modify the drawings and
published specifications relating thereto, or substitute equipment of later
design, provided the changes, modifications, or substitutions under normal and
proper use do not impact upon the form, fit, expected life or function of the
System as provided in the System Performance Requirements.
Article 27 Risk and Insurance
------------------------------
A. The Contractor shall at all times maintain, and upon request, the
Contractor shall furnish the Purchaser with certificates, or other reasonable
evidence, that Contractor maintains, the following insurance or has adequate
self-insurance (other than as required to comply with any statutory insurance
requirements); provided, that the following insurance coverages may be combined
--------
or in different form so long as Contractor maintains insurance consistent with
the following requirements:
1. Workmen's Compensation and Employers Liability Insurance (with a
limit of not less than * for any one incident or series of
incidents arising from one event or such higher limit as may be
required by the laws of any jurisdiction) covering the officers
and employees of the Contractor for all compensation or other
benefits required of the Contractor by the laws of any nation or
political sub-division thereof to which the Contractor and its
operations under this Contract are subject in respect of injury
of death of any such employee.
2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
64
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) unless due
to the negligence of Purchaser, its agent or representatives
(other than Contractor).
7. All vessels are to be entered in a Mutual Protection and
Indemnity Association with a full and unlimited entry or to have
Marine Protection and Indemnity Insurance with a limit of not
less than * including coverage for illness, injury or death of
crew members (unless covered under Workmen's Compensation
Insurance), Contractual Liability Coverage, Collision and Tower's
Liability, Removal of Wreck and Debris and Third Party Liability,
except that the foregoing shall not apply to small craft which
are not customarily so insured; provided, that such small craft
--------
will be insured to the limits customary for such commercial small
craft vessels.
8. Specialist Operations Insurance with a limit of not less than
* as per London Wording 1993 or equivalent.
9. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all risks
1.1.63, Institute War Clauses, London Malicious
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
65
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 Adischarge of the submersible plant and
equipment" shall be deemed to take place when the plant and
equipment reaches the sea bottom, as far as the submersible plant
and equipment is concerned, and when the plant is off-loaded in
the respective terminal country, as far as non-submersible plant
is concerned.
13. Pollution Liability (EIL) insurance for installation operations
and as arising from the use of vessels in an amount not less than
* or such higher sum as may be required to meet any legal
requirement in area of operations.
The Comprehensive General Liability Insurance required pursuant to
Sub-Article 27(A)(2) above, shall include Contractual Liability Coverage which
shall specifically apply to the obligations assumed by the Contractor under the
Terms and Conditions of this Contract.
B. 1. All the foregoing insurances shall be effected with a
creditworthy insurer and shall be endorsed to provide Purchaser
with at least thirty (30) days prior written notice of
cancellation or material change.
2. The foregoing insurances, where relevant, shall name Purchaser
and its lenders as an additional insured as to operations
hereunder, in which event the Contractor's insurance shall be
primary and non-contributory to any insurance carried by
Purchaser.
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
66
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.
7. Each Party shall give the other prompt notification of any claim
with respect to any of the insurances to be provided hereunder,
accompanied by full details giving rise to such claim. Each Party
shall afford the other all such assistance as may be required for
the preparation and negotiation of insurance claims.
8. Contractor shall report to Purchaser as soon as practicable all
accidents or occurrences resulting in injuries to Contractor's
employees or third parties, or damage to property of third
parties, arising out of our during the course of services for
Purchaser by Contractor.
C. The Contractor may organize such reasonable levels of deductibles,
excesses and self-insurance as it considers appropriate and which are within
prudent industry standards.
D. The insurance requirements of this Article 27 will remain in place
with respect to each Segment, the System or System Upgrade, as the case may be,
and will not in any way be diminished or reduced until the transfer of title and
risk of loss shall have passed to Purchaser of
67
such Segment, System or System Upgrade, as the case may be, even in the event of
the sale of substantially all the assets of the Contractor by way of a merger,
consolidation or sale of assets.
Article 28 Plant and Work Rules
--------------------------------
Employees and agents of each Party shall, while on the premises of the
other or its subcontractors, comply with all plant rules and governmental
regulations.
Article 29 Right of Access and Review
--------------------------------------
A. The Contractor shall, upon reasonable notice during normal business
hours and in a manner to avoid any disruption of the work on the premises
including performance of other contracts, permit access by the Purchaser or its
Quality Assurance (QA) Representatives (other than a competitor of the
Contractor or any affiliate of a competitor) to the Contractor's premises where
the work will be performed, and will use its best endeavors to secure rights of
access to premises of its subcontractors where the work will be performed,
having subcontracts or orders in the amount of, or equivalent to U.S. $125,000
or more, in accordance with the Contractor's contractual arrangements with its
Subcontractors, and allow the Purchaser or its QA Representative to:
1. audit the Contractor's quality assurance system and its
application to the Work and Upgrade Work, including manufacture,
development and raw materials and components provision;
2. inspect all parts of the Work and Upgrade Work to the extent
reasonably practicable to ensure that their quality meets the
Specification.
This right of access shall allow for the Purchaser and/or its QA
representatives. The Purchaser shall provide the name(s) of each such visitor
prior to the visit. The Contractor shall not be responsible for any costs,
including travel and accommodation costs, of the Purchaser or its
representatives.
B. The right of access shall also allow for the Purchaser and/or
representatives to be aboard the vessel(s) during installation and the route
survey, provided accommodations are available. The Contractor shall not be
responsible for any costs of the Purchaser or its representatives, except for
living expenses on board the vessel which includes one (1) daily telex or fax,
all other travel and accommodation costs for the Purchaser or its QA
Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any obligation
requiring the Contractor or its subcontractors to disclose trade secrets or
proprietary information. Further, such right of access may be conditioned on the
execution of a confidentiality and non-disclosure agreement and/or subject to
routine building or security rules, regulations or procedures.
D. Any exercise of any right of the Purchaser under this Contract to
inspect, audit, visit or to observe or to review or approve any part of the Work
or System Upgrades shall not be
68
construed as limiting any obligation of Contractor hereunder, including without
limitation, under Articles 1 and 10 hereof.
E. Contractor will have access to the System as necessary to accomplish
its responsibilities under this Contract and in order to make repairs and to
make System Upgrades. Contractor will provide reasonable notice of its need for
access and will take reasonable steps to minimize disruptions to the operation
of the System.
F. Contractor shall give the Purchaser reasonable prior written notice of
each monthly project management review meeting with respect to the status of the
construction and/or installation of the System, and Purchaser's representatives
shall at their cost be permitted to attend and participate in such meetings.
Article 30 Quality Assurance; First Application
---------- -------------------------------------
A. All equipment, material and supplies provided under this Contract shall
be inspected and tested by representatives designated by the Contractor to the
extent reasonably practical to assure that the quality of the equipment,
materials and supplies being incorporated is sufficient to realize the System
Performance Requirements. The inspection and test program established for such
equipment, materials and supplies shall be consistent with commercial practices
normally employed by the Contractor in the construction of submarine cable
systems. The foregoing shall not be construed as limiting any of the
Contractor's obligations under this Contract.
B. The Contractor represents that the list in Exhibit F identifies (i) all
major System elements and subsystems and (ii) all Deliverable Software, which
have not been used, as of the date hereof, in any other currently operating
submarine cable system, the qualification plans for which are more fully
described in the First Office Application section of the Quality Plan section of
the Technical Volume.
Article 31 Documentation
-------------------------
The Contractor shall furnish to the Purchaser one copy of the standard
documentation in the English language for the System provided hereunder. Such
documentation shall be provided prior to the Acceptance testing. Additional
copies of the documentation are available at additional cost. The Contractor
agrees to reformat the Commercial Volume and the Technical Volume in a manner
that is consistent with Purchaser's guidelines within four weeks of the
execution of this Contract.
Article 32 Training
--------------------
The Contractor will provide, as part of the Initial Contract Price,
any and all training, as more particularly described in the training section of
the Technical Volume, necessary for the operation and maintenance of the System.
Article 33 Settlement of Disputes/Arbitration/Litigation
---------------------------------------------------------
69
A. The Parties shall endeavor to settle amicably by mutual discussions any
disputes, differences, or claims whatsoever related to this Contract.
B. Failing such amicable settlement, any controversy, claim or dispute
arising under or relating to this Contract, including the existence, validity,
interpretation, performance, termination or breach thereof, shall, if both
Parties agree in writing thereto, finally be settled by arbitration in
accordance with the International Arbitration Rules of the American Arbitration
Association "AAA"). Unless the Parties agree to a sole arbitrator, there shall
be three (3) arbitrators, with each Party appointing one arbitrator, who
collectively will select a third. The language of the arbitration shall be
English. The Arbitrator will not have authority to award punitive damages to
either Party. Each Party shall bear its own expenses, but the Parties shall
share equally the fees and expenses of the Arbitration Tribunal and the AAA.
This Contract shall be enforceable, and any arbitration award shall be final,
and judgment thereon may be entered in any court of competent jurisdiction. In
any such arbitration, the decision in any prior arbitration under this Contract
shall not be deemed conclusive of the rights as among themselves of the Parties
hereunder. The arbitration shall be held in New York, New York, U.S.A.
C. 1. If both Parties do not agree to arbitration pursuant to paragraph
(B) above, then either Party may institute suit in the Supreme
Court of the State of New York sitting in New York County or the
United States District Court of the Southern District of New
York, or any appellate court from any thereof.
2. Each Party hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of any New York State or Federal court
sitting in The City of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Contract, and each Party hereby irrevocably and
unconditionally agrees that all claims in respect of such action
or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court.
Each Party hereby irrevocably and unconditionally waives, to the
fullest extent it may effectively do so, any defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on
account of the place of residence or domicile of either Party.
The Contractor hereby irrevocably and unconditionally appoints CT
Corporation System with an office on the date hereof at 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, as its agent and Purchaser hereby
irrevocably appoints Global Crossing Ltd., with an office at 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as its agent (collectively, the
"New York Process Agents"), in the case of each, to receive on
behalf of each such Party and its respective property service of
copies of the summons and complaint and any other process which
may be served in any such action or proceeding in any such New
York State or Federal court and agrees promptly to appoint a
successor New York Process Agent in The City of New York (which
successor Process Agent
70
shall accept such appointment in a writing prior to the
termination for any reason of the appointment of the initial New
York Process Agent). In any such action or proceeding in such New
York State or Federal court sitting in The City of New York, such
service may be made on a Party by delivering a copy of such
process to such Party in care of the appropriate Process Agent at
such Process Agent's above address and by depositing a copy of
such process in the mails by certified or registered air mail,
addressed to such Party at its address referred to in Article 35
of this Contract (such service to be effective upon such receipt
by the appropriate Process Agent and the depositing of such
process in the mails as aforesaid). Each Party hereby irrevocably
and unconditionally authorizes and directs such Process Agent to
accept such service on its behalf. As an alternate method of
service, each Party also irrevocably and unconditionally consents
to the service of any and all process in any such action or
proceeding in such New York State or Federal court sitting in The
City of New York by mailing of copies of such process to such
Party, as the case may be, by certified or registered air mail at
its address referred to in Article 35 of this Contract. Each
Party agrees that, to the fullest extent permitted by applicable
law, a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
3. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
--------------------
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
D. THE OBLIGATIONS OF EACH PARTY IN RESPECT OF THIS CONTRACT DUE TO ANY
PARTY SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE AJUDGMENT
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;
71
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 XX XXX XXXXX XX XXX XXXX, XXXXXX XXXXXX, 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.
2. Sent by facsimile: Such communication shall be deemed to have
been received, under normal service conditions, twenty-four (24)
hours following the time of dispatch or on confirmation by the
receiving Party, whichever is earlier.
3. Sent by registered or certified mail: Such communication shall be
deemed to have been received, under normal service conditions, on
the day it was received or on the tenth day after it was
dispatched, whichever is earlier.
B. For purposes of this Article, the names, addresses and fax numbers of
the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.
Alcatel Submarine Networks
00, xxx Xxxxxx Xxxxxxxxx
00000 Clichy Cedex
France
Facsimile: 00-(0)-0-0000-0000
Attn: Xxxxxxx X. Xxxxxxxx
72
South American Crossing Ltd.
Wessex House
00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Xxxxxxxxx: 000-000-0000/8606
Attn: Xxxxxx Xxxx
Article 36 Publicity and Confidentiality
-----------------------------------------
A. No information relating to this Contract shall be released by either
Party to any newspaper, magazine, journal or other written, oral or visual
medium without the prior written approval of an authorized representative of the
other Party; provided that, subject to Article 20 (Safeguarding of Information
--------
and Technology) and the following Sub-Article, this Article shall not restrict
either Party from responding to customary press inquiries or otherwise making
public or private statements in the normal course of business, so long as
consistent with a mutually agreed press-release.
B. This Contract and any non-public information, written or oral, with
respect to this Contract, AConfidential 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, ARepresentatives") 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,
73
consolidation or sale of assets; provided that in the case of any assignment or
--------
delegation pursuant to this Sub-Article 37(B), such assignee or delegee shall
assume in writing all liabilities, warranties, representations and obligations
of Contractor under this Contract. The Contractor shall give the Purchaser
written notice 30 days prior to any assignment or delegation. Contractor shall
remain jointly and severally liable with any assignee or delegee described in
clause (i) of this paragraph.
C. The Purchaser has the right to assign all of its rights and delegate
all of its duties under this Contract to any other entity to whom all of
Purchaser's rights and interests in the System have been transferred. Purchaser
also has the right (i) to assign all of its rights hereunder with respect to any
particular Landing Assets to any Transferee, (ii) to assign Permits with respect
to such Landing Assets, or have Permits with respect to such Landing Assets
issued in the name of, such Transferee and (iii) to transfer such Landing Assets
or have such Landing Assets transferred directly to, such Transferee; provided
--------
that such Transferee shall execute a supplement to this Contract whereby it
becomes jointly and severally liable, together with Purchaser, for all of
Purchaser's obligations under this Contract. ALanding 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 hereto
and the Contractor agrees to execute and deliver such Supplement. Purchaser
shall not transfer any of its rights under this Contract or the System except in
accordance with the foregoing. Any assignment or transfer by Purchaser not
expressly permitted by Sub-Article 37(C) shall be of no force and effect. Any
assignment or transfer by Purchaser which results in any increase in costs or
any loss, damage, delay or failure of performance shall constitute a Force
Majeure, and, without limiting the applicability of Article 17 (Force Majeure),
Purchaser shall be responsible for any increase in costs resulting therefrom.
Article 38 Relationship of the Parties
---------------------------------------
All work performed by a Party under this Contract shall be performed
as an independent contractor and not as an agent of the other and no persons
furnished by a Party shall be considered the employees or agents of the other.
Each Party shall be responsible for its employees' compliance with all Laws
while performing under this Contract. This Contract shall not form a joint
venture or partnership between the Parties.
Article 39 Successors Bound
----------------------------
This Contract shall be binding on the Contractor and the Purchaser and
their respective successors and permitted assigns.
Article 40 Article Captions; Joint Drafting
--------------------------------------------
A. The captions of the Articles do not form part of this Contract and
shall not have any effect on the interpretation thereof.
74
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 *
----------
Article 43 Survival of Obligations
-----------------------------------
The Parties' rights and obligations, which, by their nature would
continue beyond the termination, cancellation or expiration of this Contract,
including, but not limited to, those contained in Sub-Article 4(B) (Taxes,
Levies and Duties) and Sub-Article 4(C) (Withholding Tax), Article 18
(Intellectual Property), Article 20 (Safeguarding of Information and
Technology), Article 21 (Export Control) and Article 23 (Limitation of
Liability/Indemnification) shall survive termination, cancellation or expiration
hereof. Article 10 (Warranty) and Article 11 (Contractor Support), shall survive
termination, cancellation or expiration hereof, if and only if, this Contract is
terminated by Purchaser pursuant to Sub-Article 13(A).
Article 44 Non-Waiver
----------------------
A waiver of any of the terms and conditions of this Contract, or the
failure of either Party strictly to enforce any such term or condition, on one
or more occasions shall not be construed as a waiver of the same or of any other
term or condition of this Contract on any other occasion.
Article 45 Language
--------------------
This Contract has been executed in the English language and English
will be the controlling language for interpretation of this Contract.
Article 46 Entire Agreement
----------------------------
* Material omitted and separately filed with the Commission under an application
for confidential treatment.
75
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.
76
This Contract is executed as of the date first set forth above in the
location set forth below the signature of the duly authorized representative of
each Party, as set forth below.
ALCATEL SUBMARINE NETWORKS
By: /s/ Xxx X. Xxxxxx
----------------------------
Name: Xxx X. Xxxxxx
Title: Contracting Director
Signed In:
SOUTH AMERICAN CROSSING LTD.
By: /s/ S. Xxxxxxx Xxxxxx, Xx.
----------------------------
Name:
Title:
Signed In: The Netherlands
