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EXHIBIT 4(b)
CELLULAR SYSTEM AGREEMENT
BETWEEN
TELE NORTE CELULAR PARTICIPACOES S.A.
AND
ERICSSON TELECOMUNICACOES S.A.
1. DEFINITIONS
Capitalized terms used within this Agreement or within an Exhibit to this
Agreement are have the meaning set forth in this Section, or elsewhere in this
Agreement.
ACCEPTANCE TESTS (AT) means the mutually agreed methods of testing and
procedures that will be used to measure the performance of the Cellular System,
Network Elements or Products, as administered in accordance with Exhibit B of
this Agreement.
ACCOUNT MANAGER means Ericsson's account manager responsible for TeleNorte's
account.
AGREEMENT means this Cellular System Purchase and Sale Agreement, and the
following Exhibits attached hereto:
A - Unit Prices and Commercial Conditions
B - Cellular System Acceptance
C - Software License
D - Technical Assistance and Services Support
E - Documentation
F - Purchase Process
G - Warranty Support Procedures
H - Training
1 - Environmental Conditions
J - Financing Term Sheet
AMPS means Advanced Mobile Phone System technology as described in interim
standard IS-3 (800 MHz) of the Telecommunications Industry Association.
ANATEL (AGENCIA NACIONAL DE TELECOMUNICACOES) means the regulatory agency of the
government of the Federative Republic of Brazil, or any successor thereof
charged with licensing Cellular Mobile Service networks.
RBS means the Radio Base Station, which is the Cellular TDMA/AMPS Base Station.
CELLULAR NETWORK means the EFRC/TDMA-IS136/AMPS mobile cellular telephone
network (operating in the 800 MHz ) to be operated by TeleNorte within the
Territory to provide the Cellular Service and consisting of networks, network
elements, systems, infrastructure, transmission and other components as
specified by TeleNorte.
CELLULAR SERVICE means that cellular service being provided by TeleNorte through
its Subsidiaries, Xxxxx Celular S.A., Teleamapa Celular S.A., Teleamazon Celular
S.A., Telepara Celular S.A.and Telaima S.A. Celular S.A. pursuant to the
concessions for the Territory of Region 8.
CELLULAR SYSTEM means that Network Element comprised of the Products and
Software to be provided by Ericsson hereunder, including without limitation, the
switching, cell site equipment and associated services.
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CHANGE ORDER means a written request for a change in a Phase Acquisition
Document or a Purchase Order resulting from a change in the scope or content of
a Phase, as more specifically described in Exhibit F.
CLASS A CHANGE means a modification to an existing Product to remedy a non
compliance with Ericsson's specification required to correct design defects of a
type that result in electrical or mechanical inoperative conditions or extremely
unsatisfactory operating conditions or which is recommended to enhance safety.
CLASS AC CHANGE means a modification to an existing Product to remedy electrical
or mechanical inoperative conditions or extremely unsatisfactory operating
conditions that result from the Product aging or its use in specific combination
with another Product or the use of a certain feature or option.
COMMISSIONING OR COMMISSIONING TESTING means the series of tests performed by
Ericsson to verify the proper functioning of a Product and the proper completion
of its installation services prior to administering the Acceptance Test.
CONFIDENTIAL INFORMATION means information that the Parties have agreed to
protect from improper disclosures as per Section 11 of this Agreement.
CONDITIONAL ACCEPTANCE means the Cellular System has passed the Acceptance Tests
required for Ready for In-Service as more fully defined in Exhibit B.
DELIVERY means delivery of the Products to TeleNorte's warehouse or any other
predetermined location within the Territory.
DELIVERY DATE(S) means the date or dates specified in a Phase Acquisition
Document or Purchase Order on which a Product is to be delivered.
DDP means Delivery Duty Paid to a designated Delivery place within the Territory
as defined in the ICC Incoterms 1990.
DDP PRICE means the amount payable in respect of a Product or Service ordered by
TeleNorte as set forth in Exhibit A to this Agreement.
DOCUMENTATION means the Ericsson's standard Product or Service documentation for
its customers, whether written or supplied in other form. described in Exhibit E
and as amended from time to time.
EFFECTIVE DATE means September 27th, 1998.
EIA means the Electronics Industry Association (USA).
ERICSSON means Ericsson Telecomunicacoes S.A. a Brazilian company, enrolled with
the Ministry of Finance Taxpayers Registry (CGC/MF) under No.
33.067.745/0001-27, with its principal office at Xxx Xxxxx Xxxxxxx Xxxx, 000 in
the City of Sao Paulo, State of Sao Paulo, Brazil, Cep 02047-901.
FINAL ACCEPTANCE means that Ericsson has done the work necessary to resolve the
issues on the Punch List and the Cellular System met the performance targets set
forth in Exhibit B.
FORCE MAIEURE means any event beyond the reasonable control of the Party
responsible for performance ("Delayed Party") including failure or delay in
performance by the other Party, acts of God, acts of the public enemy, acts of
civil or military authority, governmental acts or omissions, acts of nature such
as hurricanes, earthquakes, fires, floods, epidemics, embargoes, war, riots, and
loss or damage to goods in transit, strikes, lockouts or other labor disputes
with respect to Delayed Party's operations, and strikes, lockouts or other labor
disputes of national or regional scope preventing performance hereunder by the
Delayed Party including its sub-contractors and suppliers (when no alternative
method of performance is reasonably available).
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FORECAST means a forecast provided by TeleNorte as per Section 4.1 of this
Agreement.
IMPLEMENTATION SCHEDULE means the implementation schedule for a given Phase or a
portion thereof, a Purchase Order or a Change Order as specified in the Exhibit
F.
MSC OR MOBILE SWITCHING CENTER means the Mobile Switching Center, comprised of
the switching and related equipment that routes calls from a mobile telephone
set to the called party (and vice-versa) and performs a variety of related
functions. In the Cellular System, an MSC is also known as an MTSO (mobile
telephone switching office).
NETWORK ELEMENT(S) means the elements that constitute the Cellular Network
namely (i) the Cellular System or a portion thereof, (ii) the transmission
system and (iii) the Sites infrastructure.
NEW FEATURE(S) means a new Software functionality or substantial performance
improvement that is made available to all users for the then current Software
releases.
PARTV OR PARTIES means in the singular, TeleNorte or Ericsson, as the case may
be determined from the context, or in the plural, both TeleNorte and Ericsson.
PHASE has the meaning set forth in Section 2.3.
PHASE ACQUISITION DOCUMENT means a written order by TeleNorte to Ericsson.
substantially in the form of Exhibit E, for the purpose of (i) defining the
scope of a given Phase or a portion thereof, (ii) specifying the Products,
Services and Software to be purchased for such Phase and their respective prices
as per Exhibit A; (iii) including the implementation Schedule and the
Responsibility Matrix; and (iv) including the applicable price.
PROJECT MANAGER has the meaning set forth in Sections 5.2 and 5.3.
PRODUCT(S) has the meaning set forth in Section 2.4.
PROJECT SUPPLIERS means suppliers other than Ericsson retained by TeleNorte for
the supply of certain products and services required for implementation of the
Cellular Network outside Ericsson's scope of supply, such as suppliers of
transmission equipment and civil infrastructure services.
PSTN OR PUBLIC SWITCHED TELEPHONE NETWORK means the telephone network that
provides telephone service to the public in a given area.
PUNCHLIST means a list prepared by Ericsson and agreed to by TeleNorte during
the performance of each Acceptance Test that sets forth those mutually agreed
items, if any, to be resolved by Ericsson before Final Acceptance.
PURCHASE ORDER means a written order by TeleNorte to Ericsson for the purchase
of specific Products and Services not covered by a Phase Acquisition Document
(i.e. purchase of individual Products and Services).
READY FOR IN-SERVICE means the availability for Cellular Service of the Cellular
Network, Network Elements or Products of a specified Phase or expansion after
the installation and commissioning thereof have been completed, in accordance
with the Implementation Schedule.
RESPONSIBILITY MATRIX means the table allocating tasks and responsibilities
between TeleNorte, Ericsson and Project Suppliers for a given Phase as specified
in a Phase Acquisition Document.
SECTION means, when used without any other reference, sections, including
subsections, within this Agreement.
SERVICES has the meaning set forth in Section 2.5.
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SHIPPING DOCUMENT means a document issued by a carrier evidencing shipment of
Products such as an airway xxxx, a xxxx of lading or a conhecimento de embarque.
SITE means any location at which Products and Services provided under this
Agreement are or will be delivered, installed, or performed.
SOFTWARE means the object-code (does not include source code) computer programs
furnished by Ericsson to TeleNorte for use solely in conjunction with the
Network Elements. The term "Software" includes. but shall not be limited to.
computer programs contained on magnetic tape. in a semiconductor device, on a
disk or in another memory device or system memory consisting of (a) hard-wired
logic instructions which manipulate data in central processors, instructions
which control input-output operations, and error diagnostic and recovery
routines and (b) sequences of instructions in machine-readable code that control
call processing, peripheral equipment and administration and maintenance
functions as well as associated documentation to describe, maintain or use the
programs.
SOFTWARE DOCUMENTATION means printed materials or electronic media used in
connection with Software, such as, but not limited to, user manuals, flow
charts, logic diagrams, program descriptions, and specifications. No source code
versions of Software are included in the Software Documentation.
SOFTWARE CORRECTION means Software that corrects or removes a reproducible
malfunction in a Software release.
SOFTWARE UPGRADE means a reissued version or partial update of existing Software
that adds to, improves or enhances existing features and capabilities of the
Network.
SUBSCRIBER means a legal entity or an individual having the right under the
appropriate terms and conditions with TeleNorte to use the Cellular Network or
any portion thereof.
SUBSIDIARIES means the subsidiaries of TeleNorte being on the date hereof Xxxxx
Celular S.A., Teleamapa Celular S.A., Teleamazon Celular S.A., Telepara Celular
S.A. and Telaima S.A. Celular S.A.
TDMA means the Time Division Multiple Access technology as described in interim
standard IS-136 (800 MHz) of the Telecommunications Industry Association.
TELENORTE means TeleNorte Celular Participacoes S.A., a Brazilian corporation
with its head office located at XXX xxxxxx 0 - Xxxx X xxxxxxxxx, 00000-000
Xxxxxxxx, Distrito Federal, registered with the Brazilian Registry of Corporate
Taxpayers (CGC/MF) under no. 02.361.554/0001-40.
TERRITORY means the States of Amapa, Amazonas, Maranhao, Roraima and Para within
the Federative Republic of Brazil within which TeleNorte is authorized to
provide Cellular Service.
TIA OR TELECOMMUNICATIONS INDUSTRY ASSOCIATION means the organization in the
United States of America charged with establishing technical standards for
cellular networks, currently the Telecommunications Industry Association, or its
successor.
WARRANTY PERIOD means the period during which a Product is covered by Ericsson's
warranties under applicable warranty provisions as per Section 9 of this
Agreement.
2. TERM AND SCOPE OF AGREEMENT
2.1. TERM. The term of this Agreement shall be three (3) years from the
Effective Date (the "Term").
2.2. SCOPE OF AGREEMENT. The scope of this Agreement is the supply by
Ericsson to TeleNorte and the purchase by TeleNorte from Ericsson
within the Term of Products, Services and Software for the
implementation of the Cellular Network pursuant to a mobile cellular
service concession ("Concession")
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held indirectly by TeleNorte through its Subsidiaries to provide
cellular service ("Cellular Service") in Region 8. Ericsson
acknowledges that, in entering into this Agreement, TeleNorte is
relying on the skill and expertise of Ericsson to carry out the
responsibilities it has undertaken pursuant to the terms of this
Agreement.
2.2.1 Subject to Force Majeure, during the Term TeleNorte and its
"Affiliates" (as defined below) including without limitation Telet S.A.
shall buy from Ericsson, Products and Services with a total value of R$
236.700.000 (Two Hundred and Thirty-Six Million Seven Hundred Thousand
Reais). For reference purposes with respect to Article 9.10,
TeleNorte's participation to this commitment represents 25% of this
amount. Notwithstanding any of the foregoing, TeleNorte shall be under
no obligation to purchase from Ericsson any Products or Services
hereunder before such time as Ericsson finances or arranges to be
financed (or guarantees to the financial institution financing such
purchase by TeleNorte) any purchase hereunder on financial terms
acceptable to TeleNorte, and thereafter, any purchase obligations of
TeleNorte shall be limited to amounts so financed or arranged to be
financed by Ericsson (or guaranteed by Ericsson to the financial
institution financing such purchase by TeleNorte). This "Commitment
Value" shall be determined on the basis of the unit prices set forth in
Exhibit A, on a DDP basis, calculated before taking into consideration
any discounts set forth in Exhibit A. For the purpose of the section
"Affiliate" shall include any Brazilian company of which more than
fifty percent (50%) of the shares are held by any shareholders or group
of shareholders of TeleNorte.
2.3. PHASES. TeleNorte and Ericsson agree to breakdown the implementation of
the Cellular Network into Phases, which will be defined in Phase
Acquisition Documents.
2.4. PRODUCTS. TeleNorte shall purchase from Ericsson the AMPS/TDMA IS-136
products, including drawings, documents, manuals and Software
identified in Exhibit A, which may be manufactured or produced by
Ericsson or procured by Ericsson from suppliers (collectively, the
"Products") for incorporation in the Cellular Network in the Territory.
Products furnished to TeleNorte under this Agreement are furnished for
use in connection with TeleNorte's operations of the Cellular Network
and are not furnished for resale.
2.5. SERVICES. TeleNorte shall purchase from Ericsson the services
identified in Exhibit A as may be required to implement a Phase
Acquisition Document, a Purchase Order or a Change Order (collectively
the "Services").
2.6. CELLULAR TDMA/AMPS SPECIFICATIONS. Telecommunications standards shall
apply to this Agreement to the extent not inconsistent with any terms
or conditions of this Agreement and regulations issued by the
Ministerio das Comunicacoes or ANATEL. Relevant telecommunications
standards include, but are not limited to the following:
NUMBER SUBJECT
a) FOR TDMA
IS-136.1-A 800 MHz TDMA Cellular ~ Radio Interface - Mobile Station -Base Station
Compatibility - Digital Control Channel (PN-3474)
IS-136.2-A 800 MHz TDMA Cellular - Radio Interface - Mobile Station - Base Station
Compatibility - Traffic Channels and FSK Control Channel (PN-3474)
IS-137-A 800 MHz TDMA Cellular - Radio Interface - Minimum Performance Standards
for Mobile Stations (PN-3605)
IS-1 38-A 800 MHz TDMA Cellular - Radio Interface - Minimum Performance Standards
for Base Stations (PN-3606)
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IS-641-A TDMA Cellular/PCS - Radio Interface - Enhanced Full-Rate
Speech Codec (PN-3467)
XXX-00 XX-000/XX-000X Compatibility issues (PN-3617)
IS-669 800 MHz Cellular Systems - TDMA Services - STU 111
(PN-3616)
IS-684 TDMA Cellular/PCS Systems - Radio Interface - Radio Link Protocol 2
(PN3658)
IS-685 TDMA Cellular/PCS Systems - TDMA Services - Packet Switched Data
(PN-3680)
IS-686 800 MHz Cellular System, TDMA Radio Interface, Minimum Performance
Standard for Enhanced Full-Rate Speech Codec (PN3690)
IS-41-C Networking Operations and Interswitch feature transparency
TSB-51 Implementation Aspects concerning the use of the R-Data message in
IS-136 (PN-3719)
PN-3731 Inter-operable implementation issues in IS-641
b) For AMPS AMPS The specifications established in Xxxxx Xxxxx de Telecomunicacoes issued
by the Ministerio das Comunicacoes
c) For Roaming Networking Operations and Interswitch Feature Transparency
IS-41-C
3. PURCHASE PROCESS
Exhibit F sets forth the procedure agreed to by the Parties for the
purchases to be made under this Agreement.
4. FORECASTS
4.1. FORECASTS. At the end of each six-month period as of the Effective
Date, TeleNorte shall deliver to Ericsson a good faith rolling written
forecast of TeleNorte's expected purchases of Products and Services for
the subsequent twelve (12) months period. TeleNorte and Ericsson shall
mutually define the form and content of the forecast and its form and
frequency may be modified from time to time by mutual agreement of
TeleNorte and Ericsson. Notwithstanding the foregoing, each such
forecast shall include a summary of the major components of the
Cellular System to be purchased during the period covered and the
anticipated dates of Delivery thereof. categorized as either "Switching
Equipment or "Site Equipment", in each case including any associated
Software. The Parties agree that all forecasts delivered pursuant to
this Section 4.1 are for planning purposes only and shall create no
binding obligations on the Parties.
5. CONTRACT ADMINISTRATION
5.1. CONTRACT ADMINISTRATION BY TELENORTE'S ORGANIZATION. TeleNorte shall
enter into separate agreements with each of the Project Suppliers and
shall be responsible for contract administration and coordination of
project activities within TeleNorte's internal departments.
5.2. TELENORTE'S PROJECT MANAGER. TeleNorte shall, during the Term of this
Agreement, appoint a Project Manager for the project to be the liaison
with the Ericsson's Project Manager, who shall:
(a) know the background of the project;
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(b) have authority to make day-to-day decisions, over the project
and its personnel without recourse to his head office; and
(c) have a good working knowledge of Portuguese and English.
5.2.2 TELENORTE'S PROJECT MANAGER RESPONSIBILITIES. TeleNorte's Project
Manager shall be responsible for coordinating the Cellular Network
implementation between Ericsson and TeleNorte. This coordination shall
include review and approval of all quotations and invoices, inventory
control of delivered equipment, to ensure of compliance with the
applicable Implementation Schedules; maintaining the closest possible
cooperation with Ericsson's Project Manager; being available at Sites
as reasonably requested; monitoring of the overall progress of project
schedule; liaison with external parties for the Cellular Network
implementation; coordinating with Ericsson to conclude agreement on the
Acceptance Tests; and supplying Ericsson with clarifications on the
technical specification requirements,
5.3. ERICSSON'S PROJECT MANAGER. During the Term of this Agreement, Ericsson
shall appoint a Project Manager who shall:
(a) know the background of the project,
(b) have authority to make day-to-day decisions, over the project
and its personnel without recourse to his head office;
(c) reside in Brazil and be available at the Sites, as reasonably
requested; and
(d) have a good working knowledge of Portuguese and English.
ERICSSON'S PROJECT MANAGER RESPONSIBILITIES. Ericsson's Project Manager
shall be responsible for project coordination and liaison with
TeleNorte's Project Manager and Project Suppliers.
5.4. ERICSSON'S SUBCONTRACTORS. Ericsson may employ subcontractors in
carrying out its obligations under this Agreement. Ericsson's use of
subcontractors shall not relieve Ericsson of its obligations and
responsibilities under this Agreement. Ericsson shall supervise the
work of Ericsson's subcontractors and shall be liable for any acts or
omissions of such subcontractors. TeleNorte may, at any time, require
Ericsson to replace a subcontractor where, in TeleNorte's reasonable
judgment. the subcontractor is not performing adequately and/or quality
standards are not respected. The cost resulting from the replacement of
a subcontractor shall be borne by Ericsson.
5.5. TELENORTE'S MATERIALS REMAIN PROPERTY OF TELENORTE. All plans,
drawings, designs and specifications, submitted by TeleNorte or on its
behalf, and marked confidential are Confidential Information to be
protected in accordance with Section 11 herein, shall remain the
property of TeleNorte, may be copied only in accordance with Section 11
herein and may not be disclosed to third parties by Ericsson without
TeleNorte's prior written consent. These materials shall be returned to
TeleNorte promptly upon its request without any copy remaining with
Ericsson except for copy to remain with Ericsson's counsel for use
before a court of law if required by Ericsson.
5.6. ERICSSON'S PERSONNEL. TeleNorte may, at any time, request Ericsson to
replace an employee where, in TeleNorte's reasonable judgment, the
employee is not performing adequately, The costs resulting from the
replacement of Ericsson's employee shall be borne by Ericsson.
5.7. DOCUMENTS TO BECOME PROPERTY OF TELENORTE. Except for Confidential
Information, the documents, which include plans, drawings, designs, and
specifications supplied by Ericsson to TeleNorte in connection with the
Products, shall be the property of TeleNorte, provided, however, that
title to Ericsson's intellectual property rights as stated in Section
10 shall not be conveyed to TeleNorte at any
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time. In addition, TeleNorte shall have the full right to use the
documents supplied by Ericsson which are Confidential Information in
the course of the normal operation and maintenance of the Cellular
Network.
5.8. RESPONSIBILITY FOR DOCUMENTS. Each Party supplying technical data or
documents shall be responsible for the completeness and correctness of
such technical data or documents. Where it is found that such technical
data or documents are not complete or are incorrect, each Party shall
notify the responsible Party and thereafter such responsible Party
shall promptly complete and/or correct such technical data or
documents.
6. PAYMENT, PRICING AND DISCOUNTS
6.1. GENERAL. The prices and discounts under this Agreement, as detailed in
Exhibit A, apply to Products, Services and Software furnished by
Ericsson and purchased by TeleNorte in accordance with the Commitment
Value indicated in Section 2.2.1. Where TeleNorte desires to purchase
products, or services or software that are not identified on Exhibit A,
the price for same shall be determined by mutual agreement of the
Parties. Should TeleNorte believe that it is likely to purchase such
products, or services or software more than once, the Parties agree to
amend Exhibit A to add such products, services or software at the
agreed upon price.
6.2. INVOICES. TeleNorte shall have no obligation to pay Ericsson for any
charges, unless such charges are expressly authorized by this
Agreement, a Phase Acquisition Document, a Purchase Order or a Change
Order and TeleNorte has received an invoice for such charges.
6.2.1 Each invoice rendered hereunder shall reference the Phase Acquisition
Document, the Purchase Order or a Change Order number and identify the
payment event, charges and applicable taxes, if any.
6.3. TERMS OF PAYMENT. TeleNorte shall pay invoiced amounts, less any
disputed amounts as set forth below, provided that TeleNorte shall not
be required to pay sooner than five days after its receipt of the
invoice in question. All payments for Products, Services and Software
shall be made based on their DDP values.
6.4. PRODUCT. Ninety percent (90%) of the DDP (R$) price for a particular
Product shall be paid forty-five (45) days after each shipment, upon
presentation by Ericsson of the relevant invoice and corresponding
Shipping Document. Ten percent (10%) of the DDP (R$) price for a
particular Product shall be paid upon Final Acceptance.
6.5. SOFTWARE. One hundred percent (100%) of the DDP (R$) price due for
Software shall be paid thirty (30) days after the Software is Ready for
In-Service.
6.6. SERVICES. Eighty-five percent (85%) of DDP price due for Services other
than Training, shall be paid forty-five (45) days from the date of
start of installation, as defined in the Phase Acquisition Document,
or, from the date of issuance of a Purchase Order or a Change Order, as
the case may be, and the balance fifteen percent (15%) shall be paid
upon Final Acceptance.
6.7. TRAINING. One hundred percent (100%) DDP (R$) price due for Training
shall be paid thirty (30) days after from presentation by Ericsson of
the relevant invoice for each completed course.
6.8. CURRENCY OF PRICES, ACCOUNTS AND PAYMENTS; IMPORT RESPONSIBILITIES AND
PAYMENT OF IMPORT DUTIES AND TAXES.
6.8.1 The Currency of Accounts shall be Brazilian Reais (R$). Ericsson shall
identify the Currency of Accounts used for determining prices and
charges under this Agreement.
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6.8.2 The base date for the purpose of adjustment of the prices set forth in
Exhibit A is the Effective Date. The prices shall be adjusted once
every twelve (12) months from the Effective Date consistent with
existing legislation or for lesser periods if law permits to take into
account local inflation, in accordance with the relevant indices
indicated below. Furthermore, independently of the date of the issuance
of a Phase Acquisition Document or a Purchase Order, payments made
under that Phase Acquisition Document or Purchase Order for events
occurring after an annual adjustment shall reflect the corresponding
adjustment.
PRODUCTS AND SERVICES ADJUSTMENT INDICES
All locally supplied Equipment and Index of the column 27 of the Conjuntura
materials Economica Magazine, published by Fundacao Xxxxxxx
Xxxxxx ("FGV")
All locally provided services Index of the column 20 of the Conjuntura
Economica Magazine, published by FGV
6.8.3 Exchange Rates for Imported Equipments
The purchase price of any imported Item ordered from Ericsson which are
not included in Exhibit A - Annex 1 as of the Effective Date will be
negotiated in good faith between the Parties. These prices in US$ will
be converted in Reais using the conversion ratio applicable on the date
of approval by TeleNorte of the Phase Acquisition Document or
Purchase/Change Order.
The price of items which are expected to be ordered on a recurring
basis will be listed in US$ in an Addendum to Exhibit A - Annex 1.
These prices in US$ will be converted in Reais at the time of
succeeding purchases using the conversion ratio applicable on the date
of approval by TeleNorte of the Phase Acquisition Document or
Purchase/Change Order.
The exchange rate applicable is the one published by Brazilian Central
Bank through Sisbacen System transaction PTAX-800-Sale-Option 5 for the
date payment is due.
6.8.4 Notwithstanding the above clauses 6.8.1, 6.8.2, 6.8.3 the parties
hereby agreed to follow what has been agreed in the side letter dated
March 9, 1999 signed by the parties as follows:
"The parties hereby acknowledge that the prices for Products and
Services set forth in Exhibit - Annex 1 are identical to those provided
to Telet for similar Products and Services. These prices have been set
between Telet (an Affiliate of TeleNorte) and Ericsson in consideration
of a total value commitment described in Section 2.21 of the Telet
Agreement. Ericsson hereby acknowledges that Telet's prices are legally
binding for both Telet and TeleNorte for the Term of the Agreement.
Notwithstanding the above, TIW agrees to jointly review with Ericsson
the economic imbalance which the R$ vs US$ devaluation may have on
Ericsson's Agreement. This review will occur immediately following the
signature of the Telenorte Agreement, as already negotiated with
Ericsson, and the shipment of the equipment already covered by the
Phases 1B-0 and 1B-1 Phase Acquisition Documents from TeleNorte. This
review will be done in a climate of complete transparency such as to
provide to TIW a satisfactory understanding of the impact of the
devaluation and permit the quantification of mutually acceptable
measures which would compensate for the economic imbalance created by
the devaluation.
As a gesture of goodwill and to help Ericsson to move without further
undue delay with the above mentioned shipment, TeleNorte will make a
one time payment of. 1.2MReais in addition to the price of the Phase
1B-0 and Phase 1B-1 Phase Acquisition Document is to be considered as
an advance on a potential increase in prices resulting from the
above-mentioned assessment. This payment is not to be interpreted as a
acceptance by TIW or TeleNorte that this amount is a justified increase
in prices, nor indicative of relative size of potential future
adjustments. It is understood that prices for any equipment, software
and
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services which require conversion from US$ to R$ and which are not
included in the existing Agreement will be negotiated taking into
account prevailing conditions at time of conversion fram US$ to R$
which will take place at the Phase Acquisition Document of Purchase
Order dates.
6.9. TAXES
6.9.1 The DDP Prices for the Products set forth in Exhibit A include the
Imposto Sobre Produtos Industrializados (IPI), Imposto Sobre Circulacao
de Mercadorias e Servicos (ICMS), Imposto Sobre Servicos (ISS) and
Imposto de Importacao (11), the Programa 6.9 TAXES
6.9.2 The DDP Prices for the Products set forth in Exhibit A include the
Imposto Sobre Produtos Industrializados (IPI), Imposto Sobre Circulacao
de Mercadorias e Servicos (ICMS), Imposto Sobre Servicos (ISS) and
Imposto de Importacao (11), the Programa de Integracao Social (PIS) and
the Contribuicao para Financiamento da Seguridade Social (COFINS) taxes
and other similar taxes. If, after the Effective Date, any of the
foregoing taxes are increased, decreased, eliminated or modified by
operation of law or as a result of change in interpretation of the law
by the tax authorities or if new taxes are created that directly apply
to the sale of the Products or performance of the Services, the
respective DDP Prices will be modified to reflect the change.
6.9.3 If after the Effective Date, any Brazilian taxes other than those
referred to in Section 6.9.1. having a measurabie impact. in excess of
3%, on the cost of Products or Services are increased, decreased,
created or extinguished, then the Parties will negotiate in good faith
an interim adjustment to the DDP Prices set forth in Exhibit A of the
Products or Services affected and such interim prices shall be
applicable to any Purchase Orders issued by TeleNorte prior to the
first subsequent annual adjustment of the DDP Prices as set forth in
Section 6.8.2. If in the opinion of TeleNorte or Ericsson, acting
reasonably, the first subsequent annual adjustment of the DDP Prices as
set forth in Section 6.8.2 does not reflect adequately the effect of
tax variation on the DDP Prices of the affected Products or Services,
the Parties will enter into negotiations with the objective of agreeing
on a fair and equitable adjustment of the DDP Prices of such Products
and Services. For the purposes of this Section, Brazilian Taxes in
effect as of the Effective Date are as follows:
NAME DENOMINATION BASIS FOR CALCULATION RATE
1. INSS Instituto Nacional do Seguro Pay roll
Social Contribuicao
Previdenciaria:
- a Parte Empresa 20
- Salario Educacao 2.5%
- INCRA 0.2%
- SENAI/SENAC 1.0%
- SESI/SESC 1.5
- SEBRAE 0.6%
2.FGTS Fundo de Garantia do Tempo de Pay roll 8.0%
Servico
3.IOF Imposto sobre Operacoes de Remittance Amount 0%
Credito, Cambio e Seguro ou
Relativas a Titulos ou Valores
Mobiliarios (on imported Services
and Software)
4.IRF Imposto xx Xxxxx on imported Remittance Amount 15%
Services
6.9.4 For any error, omission or inaccuracy in the tax rates applicable on
Effective Date as set forth in Exhibit A, Ericsson shall bear the
liability for any additional amounts owed by TeleNorte because of
Ericsson's error, omission, inaccuracy or miscalculation. Ericsson
shall pay TeleNorte in Brazilian Reais an amount equal to the
difference between the amount of taxes set forth in Exhibit A and the
amount actually due to the
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Brazilian tax authorities. Ericsson to the extent possible shall make
this payment to TeleNorte in advance of when TeleNorte must make its
payment to Brazilian tax authorities. If TeleNorte is indemnified by
Ericsson for a tax liability under this Section, Ericsson may have (a)
the corresponding amount refunded to the extent TeleNorte subsequentfy
recovers such amount from the tax authorities or (b) request that the
amount of the indemnification be reduced or refunded to Ericsson by
TeleNorte, to the extent that TeleNorte is entitled to a tax credit or
a tax benefit resulting from application of the indemnified tax.
6.10. PAST DUE PAYMENTS. Any payment not made as provided in this Section 6
shall be subject to a late payment charge applied against the unpaid
portion of the charge. The late payment charge shall be applied daily
after the due date until payment is received. For late payments, the
daily rate payment charge shall be calculated by multiplying the
outstanding balance for the number of days of delay times the annual
ANBID - rate plus six percent (6%) per annum divided by 365 days. Any
payments more than ninety (90) days past due shall be considered a
Ericsson right to cease its performance under this Agreement until
payment, including applicable interest, is made.
6.11. DISPUTED PAYMENTS. If TeleNorte disputes any invoice, it shall, within
fifteen (15) days of its receipt of such invoice, so notify Ericsson,
giving the reasons in sufficient detail for Ericsson to respond. The
Parties will use their diligent efforts to resolve such dispute
expeditiously and shall not delay the payment process for immaterial
matters. Should TeleNorte dispute any sums due to Ericsson under this
Agreement, TeleNorte shall pay, in accordance with this Agreement that
part not in dispute. TeleNorte shall be liable to Ericsson for late
payment charges computed in accordance with Section 6.10. for the
amounts due to Ericsson should the dispute be resolved in Ericsson's
favor. The time for paying the portion of the invoice in dispute shall
be extended by a period of time equal to the time between Ericsson's
receipt of such notice from TeleNorte and the resolution of such
dispute plus five (5) business days.
7. RESPONSIBILITIES OF TELENORTE
Without further limiting the obligations of TeleNorte under this
Agreement, TeleNorte agrees to perform the following duties:
7.1. RESPONSIBILITY MATRIX. TeleNorte shall perform those responsibilities
identified as those of TeleNorte, including TeleNorte's portion of
responsibilities that are to be jointly performed by TeleNorte and
Ericsson, defined in the "Responsibility Matrix" for each Phase.
7.2. PERFORM TO SCHEDULE. TeleNorte shall negotiate in good faith the
Implementation Schedule for each Phase and shall adhere to the
Implementation Schedule for performance of its responsibilities set
forth therein and use reasonable efforts to minimize all delays.
7.3. COSTS. TeleNorte shall bear all the costs of its own legal fees,
interconnection facilities, telephone and utility charges and other
services and items being supplied by TeleNorte under this Agreement.
TeleNorte shall be responsible for payment of the costs of additional
customs bonded warehouse storage fees attributable to TeleNorte's
failure to make payment of importation duties and taxes when due, as
set forth in Section 6.8.3.
7.4. PUNCHLIST. TeleNorte shall negotiate in good faith the items to be
placed on each Punchlist.
7.5. ENGINEERING INFORMATION. TeleNorte shall:
7.5.1 Furnish, necessary information reasonably requested by Ericsson and in
accordance with the Responsibility Matrix and Implementation Schedule;
7.5.2 Provide, upon reasonable request, Cellular Network usage information
where Ericsson's analysis of Cellular Systems requirements has been
requested by TeleNorte or is otherwise required by a specific
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provision of this Agreement in order for Ericsson to discharge its
obligations under this Agreement and where the information requested is
reasonably necessary for these purposes;
7.6. OPERATION AND MAINTENANCE. TeleNorte shall assume responsibility for
the lawful and proper operation and maintenance of the Cellular
Network.
7.7. EXPORT CONTROLS. Where necessitated by the country of origin of the
Products, TeleNorte shall comply with all applicable export laws and
regulations of the country of origin. Specifically, but without
limitation, where the Products are so subject to export controls,
TeleNorte agrees that it will not resell or re-export Products or
technical data in any form without obtaining appropriate export or
re-export licenses from the government of the exporting country.
7.8. TELENORTE RESPONSIBILITY FOR CELLULAR NETWORK DESIGN.
TeleNorte shall be responsible for design specifications and the
Cellular network performance resulting therefrom.
7.9. TELENORTE RESPONSIBLE FOR INCORRECT DELIVERY. If TeleNorte requests
that a Product be delivered to a Site other than the one specified in
the Phase Acquisition Document or Purchase Order, TeleNorte shall bear
any additional expenses in delivering it to another Site (e.g.
transportation expenses, storage, etc.).
7.10. OTHER OBLIGATIONS. TeleNorte shall perform all other of its obligations
set out in this Agreement including the following:
(a) allow Ericsson's personnel employed in the project access to
the Sites at all reasonable hours, and to permit the use by
such personnel of all routes, roadways and ramps under the
control of TeleNorte when such access and use are necessary
for the proper performance of Ericsson's obligations
hereunder;
(b) permit all Ericsson's personnel employed in the project
hereunder to use at reasonable times such portions of existing
plant or equipment under TeleNorte's controi as necessary for
the proper completion of such project, and as it will not
interfere with TeleNorte's business operations;
(c) take reasonable security measures to safeguard Ericsson's
equipment onTeleNorte's premises against all damages or loss
caused by TeleNorte's employees from the Delivery until the
date of Final Acceptance of all Products.
(d) ensure that TeleNorte's personnel carrying out activities at
the Sites do not interfere with the progress of Ericsson's
obligations hereunder:
(e) use all reasonable efforts to ensure the PSTN interconnections
by the dates set forth in the Implementation Schedule. Any
delay in TeleNorte's obtention of the PSTN interconnection
will temporarily relieve Ericsson from meeting subsequent
scheduled commitments which are dependent on the
interconnection but solely for the period of time resulting
directly from such delay in obtaining the interconnection;
(f) take all necessary actions in accordance with the relevant
Phase Responsibility Matrix to ensure that Sites are ready and
available for commencement of installation;
(g) make available at TeleNorte's warehouse facility a
representative to acknowledge and perform an inventory of the
Products received;
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(h) ensure that Ericsson is properly informed of all information
in relation to other Project Suppliers required for Ericsson
to perform its obligations,;
(i) indemnify and hold Ericsson harmless from any liabilities,
costs and expenses including attorneys' and experts' fees
arising out of labor claims, lawsuits and proceedings
initiated against Ericsson by Ericsson's personnel allocated
to the project under TeleNorte's supervision, limited to the
personnel provided in accordance with Section 8.14., and
provided that TeleNorte has given cause to such labor claims,
lawsuits and proceedings.
8. RESPONSIBILITIES OF ERICSSON
Ericsson, without further limiting the obligations of Ericsson under
this Agreement, agrees to perform the following duties:
8.1. RESPONSIBILITY MATRIX. Ericsson shall perform those responsibilities
identified as those of Ericsson, including Ericsson's portion of
responsibilities that are to be jointly performed by TeleNorte and
Ericsson, defined in each Phase's Responsibility Matrix.
8.2. PERFORM TO SCHEDULE. Ericsson shall negotiate in good faith the
Implementation Schedule and adhere to the Implementation Schedule for
performance of its responsibilities set forth therein.
8.3. ACCEPTANCE TESTS. Ericsson shall adhere to Acceptance Tests set forth
in Exhibit B
8.4. PUNCHLIST. Ericsson shall negotiate in good faith the items to be
placed on each Punchlist.
8.5. INFORMATION REQUESTED E3Y TELENORTE. Ericsson shall furnish to
TeleNorte necessary information reasonably requested by TeleNorte and
in accordance with the Responsibility Matrix and Implementation
Schedule.
8.6. UPGRADES, NEW PRODUCTS OR SERVICES. Ericsson shall make new and
upgraded Products available to TeleNorte when the upgrades become
available. Ericsson Software Upgrades shall be provided in accordance
with Section 10.3. Except as provided for such Software, where such new
Products or Services are developed by Ericsson. Ericsson shall
negotiate the price and delivery schedule in good faith.
8.7. SUPPORT SERVICES. Customer system support for the Cellular Network
shall be provided on a per switch basis for a period of three(3) years
in accordance with Exhibit A. The support period for each switch shall
commence on the earlier of Final Acceptance or ninety (90)days after
Ready for In-Service. The description of Ericsson's customer service
support is set forth in Exhibit D.
8.8. RETROFITS. Provided that TeleNorte has consented in writing, Ericsson
shall provide a retrofit package or any change in cellular TDMA/AMPS
standards subsequently put into effect by the government, regulatory
agencies, the TIA, the EIA at Ericsson's then prevailing charges.
8.9. DOCUMENTATION. Ericsson shall provide TeleNorte with the Documentation
as set forth in Exhibit E.
8.10. TRAINING. Ericsson shall provide the training courses and manuals for
TeleNorte's employees as set forth in Exhibit J. Ericsson shall provide
at no charge to TeleNorte 250 student-days of cellular training for
TeleNorte's designated personnel. TeleNorte shall notify Ericsson prior
to enrollment of its desire to use the free student days. Ericsson's
standard cancellation policy shall apply. TeleNorte shall bear the
travel and living expenses of its personnel. Ericsson shall make
available to TeleNorte its most updated training course description.
These courses and manuals will be generally in Portuguese and
occasionally in English and will be in Sao Xxxx dos Xxxxxx, in the
state of Sao Paulo.
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8.11. CONFORMITY WITH LAW. The Products and Services ordered hereunder shall
comply with applicable federal, state and local laws, rules and
regulations in effect on the Effective Date. Any impact caused by new
laws, rules and regulations promulgated after the Effective Date will
be subject to agreement of the Parties.
8.12. SAFETY AND LEGAL STANDARDS. Ericsson is responsible for assuring that
proper safety measures are taken to avoid accidents and that all work
performed is done in accordance with the relevant health and
occupational safety laws, whether the work is performed by Ericsson or
by Ericsson's subcontractors. Ericsson shall be responsible at its own
expense for ensuring that all necessary procedures are in place and
supervision is provided to ensure the safety of all Ericsson's
personnel or subcontractors who may at any time or for whatever reason
be present on any of the Sites as part of Ericsson carrying out the
Services, including but not limited to the Installation Services.
Ericsson shall comply with TeleNorte's security policy for Sites.
8.13. INSPECTION. TeleNorte and its employees, agents or representatives
shall at all times have the right to inspect the performance by
Ericsson of the Services referred to in Section 2.5. TeleNorte shall
have the right to order the suspension of a Service being executed, if
TeleNorte acting reasonable determine that the work is not in
conformity with the terms of this Agreement and applicable laws and
regulations. If Ericsson demonstrates that the suspended Service was
being performed in conformity with this Agreement and applicable laws
and regulations, then Ericsson shall not be responsible for any delays,
penalties or additional cost arising from the suspension of such
Services.
8.14. OPERATION AND MAINTENANCE SUPPORT. Within thirty (30) days of
TeleNorte's written request, Ericsson, in accordance with Exhibit A ,
shall allocate the following technical personnel: (a) two (2) qualified
O & M Switch specialists and (b) four (4) qualified O & M cell sites
and specialists to provide services to Telenorte. Each individual's
participation as set forth in this Section is based on a forty-hour
workweek (Monday to Friday) (the "Standard Work Week"). To the extent
that TeleNorte's requirements result in Ericsson's personnel working
hours above the Standard Work Week or on weekends or statutory holidays
in effect in the Territory, then Ericsson shall be entitled to charge
TeleNorte for hours worked in excess of the Standard Work Week at the
applicable overtime rate. The rendering of services by Ericsson's
personnel above the Standard Work Week shall be subject to Brazilian
labor laws, regulations and customs.
8.15. REPAIR DEPOT. Ericsson shall maintain in Brazil a circuit board and
component exchange depot to fulfill Ericsson's repair obligations in
Exhibit G.
8.16. ACCEPTANCE TESTS. Perform acceptance tests of all Products in
accordance with the procedures set forth in Exhibit B.
8.17. ERICSSON RESPONSIBLE FOR INCORRECT DELIVERY; EXCESS ITEMS. If any
Product is delivered to an incorrect point, any additional expenses
incurred in delivering it to the correct point of delivery and the risk
of transportation shall be borne by Ericsson. Ericsson is also
responsible for items delivered in excess of those required in the
Phase Acquisition Document or Purchase Order or Change Order.
8.18. MARKING AND IDENTIFYING GOODS. Ericsson's prices for Products include
charges for packing and marking shipping containers in accordance with
Ericsson's standard practices. In normal circumstances, Ericsson shall:
(i) Enclose a packing memorandum with each shipment and, if
shipment contains more than one package, identify the package
containing the memorandum; and
(ii) Xxxx Ericsson's manufactured Products as practicable for
identification in accordance with Ericsson's marking
specifications (e.g., model/serial number and month and year
of manufacture.)
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In order to meet TeleNorte's requests, Ericsson agrees to work with
TeleNorte to determine the feasibility of marking shipping cartons in
accordance with TeleNorte's specifications. Where in order to meet
TeleNorte's requests Ericsson packs and/or is required to xxxx shipping
cartons in accordance with TeleNorte's specifications, Ericsson may
invoice TeleNorte additional charges for any material efforts required
for such packing and/or marking.
8.19. ERICSSON INSURANCE COVERAGE. Ericsson agrees to maintain, so long as it
performs installation or other Services hereunder, the following
insurance coverage as well as all other insurance required by law in
the jurisdiction where the work is performed:
8.19.1 WORKER'S COMPENSATION. Workers' compensation and related insurance as
required by law;
8.19.2 GENERAL LIABILITY. Commercial general liability insurance, with a limit
of at least Five Million Reais (R$5.000.000.00) per occurrence, and
comprehensive motor vehicle liability coverage with a limit of at least
One Million Reais (R$1.000.000.00) for bodily injury, including death,
to any one person, One Million Reais (R$1.000.000,00) for each
occurrence of property damage, and Half Million Reais (R$500.000,00)
for any other occurrence. The above indicated amounts shall be adjusted
according to the provisions of Section 6.8.2 taking into account the
index of column 27 of Conjuntura Economica Magazine published by FGV.
Ericsson shall have the option where permitted by law to self-insure
any or all of the foregoing insurance. In the event Ericsson exercises
said option, Ericsson shall timely inform TeleNorte in writing.
8.19.3 SITE DELIVERY INSURANCE OF PRODUCTS. Shall be maintained until delivery
to the Sites.
8.19.4 DEMONSTRATION OF INSURANCE. Upon request by TeleNorte, Ericsson shall
demonstrate insurance coverage as required above.
9. WARRANTIES
9.1. PRODUCT WARRANTY. Ericsson warrants to TeleNorte that:
9.1.1 PRODUCTS. For the period of twenty-four (24) months commencing on the
earlier of Final Acceptance or ninety (90) days after Ready for
In-Service, Ericsson's Products will be free from defects in material
and workmanship, and will conform to Ericsson's specifications. The
Warranty Period for a Product or part thereof repaired or provided as a
replacement under this Warranty is twelve (12) months or the unexpired
term of the Warranty Period applicable to the repaired or replaced
Product or part, whichever is longer.
9.2. APPLICATION PROCEDURES FOR PRODUCT WARRANTY. If, under normal and
proper use during the applicable Warranty Period, a defect or
nonconformity is identified in a Product furnished by Ericsson, and
TeleNorte notifies Ericsson in writing of such defect or nonconformity
promptly after TeleNorte discovers such defect or nonconformity and
follows Ericsson's instructions regarding the return of the defective
or non-conforming hardware Product, Ericsson shall take the following
action:
9.2.1 Ericsson, at its option, shall promptly attempt to repair or replace
such hardware Product without charge at its facility.
9.2.2 Where Ericsson has elected to repair or replace hardware Product that
has been installed by Ericsson and Ericsson ascertains that the
hardware Product is not readily returnable by TeleNorte, Ericsson will
promptly repair or replace the Product at TeleNorte's Site.
9.2.3 If Ericsson has elected to repair or replace a defective circuit board
or plug-in component, TeleNorte is responsible for removing and
reinstalling it. For any other Product Ericsson shall be responsible
for removal and reinstallation of the Product.
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9.2.4 Products returned for repair or replacement will be accepted by
Ericsson only in accordance with its instructions and procedures for
such returns. The transportation expense associated with returning such
Product to Ericsson shall be borne by TeleNorte.
Ericsson shall pay the cost of transportation of the repaired or
replacing Product to the destination designated by TeleNorte within the
Territory.
9.2.5 Defective or non-conforming Products or parts that are replaced
hereunder shall become Ericsson's property.
9.2.6 To the extent Ericsson makes generally available to its customers a
warranty extension Program for hardware Products, TeleNorte has the
option to participate in such Program, at Ericsson's then prevailing
rates and other terms and conditions. In this case, (i) Ericsson shall
notice to TeleNorte of such warranty extension Program as soon as
practicable, and (ii) upon receipt of such notice, TeleNorte shall give
Ericsson notice of its decision to purchase any available extension at
least thirty (30) days prior to the expiration of the warranty to be
extended.
9.3. SOFTWARE WARRANTY.
9.3.1 Ericsson warrants to TeleNorte that each item of Software, when
delivered to TeleNorte and properly installed and operated, will be
free from defects which result in reproducible malfunctions which
materially affect the use of the Software in accordance with Ericsson's
specifications therefor for a period of twenty four (24) months from
the earlier of Final Acceptance or ninety (90) days after Ready for
In-Service.
9.3.2 With respect to Software, from a supplier other than Ericsson, Ericsson
does hereby assign to TeleNorte the warranties given to Ericsson by its
supplier of such items and such warranties will prevail for a term of
at least twelve (12) months from the earlier of Final Acceptance or
ninety (90) days after Ready for In-Service. If Ericsson is prevented
from assigning such warranties, Ericsson itself shall fully warrant
such Software for a period of twelve (12) months from Final Acceptance.
9.4. WARRANTY FOR SERVICES. Ericsson warrants to TeleNorte that Services
will be performed in a careful and workmanlike manner and in accordance
with Ericsson's Specifications or any mutually agreed specification for
such Services using material free from defects except where such
material is provided by TeleNorte. If the Services prove to be not so
performed and if TeleNorte notifies Ericsson within a six (6) month
period commencing on the date of completion of the Services, Ericsson,
at its option and expense, either will promptly correct any defects and
deficiencies for which it is responsible or promptly render a full or
pro-rated refund or credit based on the original charge for the
Services.
9.5. NO TROUBLE FOUND. If Ericsson determines that a Product for which a
warranty is claimed is not defective or not non-conforming, TeleNorte
shall pay Ericsson's reasonably incurred costs of handling, inspecting,
testing, and transporting and, if applicable, travelling and related
expenses. However, if upon return to service the Product apparently
fails to operate properly, TeleNorte and Ericsson shall jointly work to
determine the cause of such failure and, if it is determined that the
failure in fact was the result of a warranted defect or nonconformity
in such item, TeleNorte's obligation to pay such costs shall be
extinguished. In such case any amount previously paid to Ericsson shall
promptly be refunded to TeleNorte.
9.6. SIGNALING SYSTEMS WARRANTY. Ericsson warrants that the operation of its
R2, ISUP/SS7, IS-41 and IS-136 signaling systems comply with the
standards in effect in Brazil on the Effective Date.
Temporary or long term changes that Ericsson may be able to supply in
the form of software work-arounds" or "exchange data" to overcome other
operator or vendor network deviations from the standards will be
provided free of charge, subject to joint effort to implement analysis.
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The Parties agree that evolution in generic signaling interfaces in
Brazil after the Effective Date would have to be addressed on a case by
case basis. Ericsson normally provides the software requirements to
comply with the evolution in generic signaling interfaces free of
charge. New Product requirements would be provisionable, chargeable
items.
9.7. BILLING SYSTEM/PSTN COMPATIBILITY WARRANTY. Ericsson warrants that its
MSC CDR (Call Data Record) is PSTN compatible and the operation of its
MSC CDR complies with the standards in effect in Brazil on the
Effective Date.
Ericsson will assume the cost of modifying its MSC CDR to the extent it
is incompatible with other operator or vendor networks and equipment
that comply with generally acceptable billing standards.
In regards to MSC CDR compatibility with the PSTN, temporary or long
term changes that Ericsson may be able to do in software work-around
solutions and/or Software Corrections to overcome other operator or
vendor network deviations from the requirements will be provided free
of charge, subject to a joint effort to implement analysis.
The Parties agree that evolutions in billing and PSTN compatibility
requirements in the Brazilian market after the Effective Date would
have to be addressed on a case by case basis. Ericsson normally
provides the software requirements to comply with the evolution in
billing standards free of charge. New hardware requirements would be
provisionable, chargeable items.
9.8. GUARANTEED CAPACITIES.
9.8.1 Ericsson warrants that each Network Element and Product identified in
Exhibit A, provided to TeleNorte pursuant to this Agreement shall at
all times meet or exceed the applicable guaranteed capacities as set
forth in applicable Phase Acquisition Documents.
9.8.2 If TeleNorte believes that Ericssan has breached its guarantee under
Section 9.8.1 TeleNorte shall so notify Ericsson in writing, such
notice to set forth in reasonable detail the nature of the suspected
breach and the likely impact of such breach on the affected System(s).
If Ericsson fails, within thirty (30) days after the date of
TeleNorte's notice (the "Investigation Period"), to establish, to
TeleNorte's reasonable satisfaction, that the affected Product is in
compliance with the applicable Design Assumptions or to cause such
Product to so comply, then TeleNorte shall be entitled to compensation
from Ericsson as set forth in this Section 9.8, provided that TeleNorte
gives written notice to Ericsson of its intent to seek compensation
hereunder within fifteen (15) days after the expiration of such thirty
(30) day period.
9.8.3 With respect to any Product that fails to fulfill the applicable stated
capacities as set forth in applicable Phase Acquisition Documents,
Ericsson will provide any additional or enhanced Products and the
services necessary to cause such non-conforming Products (considered
together with such additional Products) to comply with the applicable
stated capacities. The time of such replacement or time of furnishing
of any additional or enhanced Products and services to comply with the
applicable stated capacities shall be discussed by the Parties in a
case by case basis in compliance with Exhibit I entitled Warranty
Support Procedure. The Parties hereby agree that such replacement or
time of furnishing of any additional or enhanced Products and services
shall duly take into account the impact of the shortage of capacities
on TeleNorte's operation. Ericsson shall provide such additional or
enhanced Products and services at its own expense, except to the extent
that the Products so provided by Ericsson result in additional capacity
being available to TeleNorte in excess of stated and expected capacity
for the non-conforming Product (such excess, the "Excess Capacity.
TeleNorte shall pay Ericsson an amount (not to exceed the DDP Price of
such additional Products) proportional to the Excess Capacity but only
to the extent that the Excess Capacity exceeds the stated capacity by
10% or more. Notwithstanding the foregoing, Ericsson shall not issue
any invoice to TeleNorte, and TeleNorte shall not be required to pay
any amount, in respect of any Excess Capacity, unless and until
TeleNorte first uses such Excess Capacity. Title and risk of loss to
any additional Products delivered pursuant to this Section 9.8 shall
pass to TeleNorte at Delivery.
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9.9. COSTS NOT TO BE BORNE BY ERICSSON. Notwithstanding anything to the
contrary in this Section 9, Ericsson shall not be responsible for any
of the following costs incurred by TeleNorte in connection with
Products and Services provided to TeleNorte pursuant to Section 9.8.3.
(a) land acquisition or lease costs,,
(b) building costs,
(c) operational or maintenance costs associated with the
additional Products; and
(d) lost revenue;
9.10. CONSEQUENCES OF FAILURE TO FULFILL THE CAPACITIES. The provision of
additional Products and Services pursuant to Section 9.8.3, shall be
subjected to Ericsson's Ready for In-Service date Liquidated Damage
provisions as set forth in Section 13.2 in relation to the related
Phase Acquisition Document or Purchase/Change Order specifications.
9.11. PRODUCT CHANGES OR SUBSTITUTIONS BY ERICSSON. At any time during its
performance of this Agreement, Ericsson may implement changes in the
Products identified in Exhibit A, modify the drawings and
specifications relating thereto, or substitute Products of a similar or
more recent design. Ericsson will provide TeleNorte with advance
written notice of any change, modification or substitution, including
notice of Ericsson's intention to change the Product price. The notice
shall be given at least thirty (30) days in advance of the effective
date of the change, modification or substitution. However, notice of
ten (10) days will be necessary where Ericsson reasonably considers the
change as minor, where there is no price change and where items (a)
through (g) set forth below are complied with.
Changes, modifications or substitutions must comply with each of the
following requirements:
(a) it must not adversely affect TeleNorte's ability to fulfill
its obligations under the Concession or ability to operate its
Cellular Network in accordance with the specifications;
(b) it must not adversely affect physical or functional
interchangeability or performance specifications unless
otherwise agreed in writing by TeleNorte;
(c) the price for equivalent performance must be the same or lower
than the price provided in this Agreement unless otherwise
agreed in writing by TeleNorte. This price comparison shall
include all pertinent and related costs to TeleNorte:
(d) it must not detract from the safety of the Product;
(e) it must have received all necessary regulatory approvals,
including type-acceptance or type-certification, electrical
safety agency approval, etc;
(f) it must be functionally equivalent and plug-compatible with
the prior Product;
(g) it must not in any way reduce or in any way diminish
Ericsson's obligations under the warranties provided in this
Agreement nor may it reduce or diminish in any way the scope
of warranties and representations provided to TeleNorte under
this Agreement.
Where each of these requirements has been met to TeleNorte's
satisfaction, TeleNorte and Ericsson shall agree upon a Change Order
reflecting Ericsson's proposal.
With respect to changes, modifications, and substitutions which do not
conform to the foregoing requirements, Ericsson shall notify TeleNorte
in writing thirty (30) days prior to their effective dates. In
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the event that any such change is not desired by TeleNorte, TeleNorte
shall notify Ericsson within thirty (30) days from the date of notice
and Ericsson shall not furnish any such changed Products to TeleNorte
on any orders in process at time Ericsson is so notified. If a change
is acceptable to TeleNorte, such change shall be reflected in a Change
Order.
9.12. YEAR 2000 WARRANTY
Ericsson represents and warrants that the Products shall function,
during the applicable Warranty period, with respect to any date
dependent operations prior to, into and through the Year 2000, without
any material, service affecting non-conformance to its applicable
specifications, provided that both any hardware and/or any specific
software load or release designated as necessary by Ericsson has been
installed with respect to such Products. If any Product fails to so
function, TeleNorte's remedy and Ericsson's obligation under this
warranty is for Ericsson to correct such failure through, at Ericsson's
option, the repair or replacement or modification of the relevant
hardware and/or software of such Product or such other actions as
Ericsson reasonably determines to be appropriate, all in the time,
manner and upon the conditions set out in the hardware and/or software
Warranty provisions of this Agreement with respect to the Products. The
provisions set forth in this Section do not constitute a representation
that the date format used by any Product supplied hereunder complies
with any particular standard. Certain Products may continue to use year
representations which do not use four digits where such representations
can be interpreted without ambiguity as to century.
In the case that the Products do not function, during the applicable
Warranty period, with respect to any date dependent operations prior
to, into and through the Year 2000 as mentioned above, to the extent
Ericsson proves that such non-compliance is attributable to previous
equipment (HW and SW) purchased and installed or not by TeleNorte,
prior to the Effective Date, Ericsson shall not be responsible for such
non conformity.
9.13. DISCLAIMER OF WARRANTIES/LIMITATION OF LIABILITY.
9.13.1 EXCLUSIONS. For all warranties set forth hereunder. TeleNorte hereby
agrees that Ericsson shall not be liable or responsible for any
deficiencies resulting from:
(a) Ericsson's reliance on erroneous material information
furnished by TeleNorte to Ericsson in the Network Documents or
agreed to in a document signed by TeleNorte Project Manager or
an authorized representative;
(b) reasons of Force Majeure;
(c) unauthorized TeleNorte material changes, modifications or
revisions to the Products;
(d) as to the stated capacities, material reasons attributable to
TeleNorte, and including:
(A) TeleNorte's failure to apply Ericsson's explicit plans or
instructions for system design, preventive and remedial
maintenance, frequency management, parameter adjustments and
cell site traffic engineering for radio capacity; (B)
TeleNorte's failure to implement all Ericsson recommended
recovery and system stabilization procedures; (C) TeleNorte's
decision not to implement Software Updates and Software
Corrections promptly upon their availability where such
Software Updates and Software Corrections are made available
by Ericsson to TeleNorte as provided in this Agreement; (D)
TeleNorte's failure to replace defective circuit boards: (E)
TeleNorte's failure to follow applicable explicit instructions
of Ericsson, where such instructions are capable of reasonable
interpretation and are unambiguous;
(e) modifications, misuse, neglect, or abuse of the Products,
except when made, done or caused by Ericsson (including its
subcontractors); improper wiring, repairing, splicing,
alteration,
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installation, storage or maintenance, except when made, done
or caused by Ericsson; use in a manner not in accordance with
Ericsson's or vendor's specifications, operating instructions
or software license to use or failure of TeleNorte to apply
previously applicable Ericsson modifications and corrections;
(f) defects in Products (and related Software) neither
manufactured nor supplied by Ericsson under the terms of this
Agreement.
In addition, Ericsson makes no warranty with respect to Products which
have had their serial numbers or months and year of manufacture
removed, obliterated or altered, and with respect to expendable items,
including, without limitation, fuses, light bulbs, motor brushes, and
the like.
9.14. NETWORK EXPANSION AND SPARES.
9.14.1 Class A and AC Hardware Changes. Ericsson shall provide Class A Changes
and Class AC Changes free of charge to TeleNorte for the life of the
Products.
9.14.2 Network Expansion Availability. For a period of five (5) years from the
expiration of the Term, Ericsson shall make available to TeleNorte
standard Ericsson manufactured Products and Ericsson developed Software
that is compatible and functionally equivalent to and will permit
normal Network expansion within the parameter defined by the
specifications and under terms and conditions (including prices)
mutually agreed to by TeleNorte and Ericsson. If Ericsson discontinues
the supply of compatible standard Products or Software during such
period of time, and such is not reasonably available from any other
vendor, then Ericsson shall make available to TeleNorte a commercially
reasonable Project for migration to Ericsson's then-current products
offering similar functionality.
Nothing herein shall bar Ericsson from discontinuing individual items
of hardware Products. Ericsson shall notify TeleNorte, usually at least
one (1) year, before Ericsson discontinues accepting orders for an item
of Ericsson's manufactured Product sold under this Agreement. Where
Ericsson offers a Product for sale that is equivalent in form, fit and
function, the notification period may vary. Notwithstanding the
foregoing, Ericsson agrees that it will not discontinue accepting
orders for Products until Ericsson and TeleNorte have agreed upon a
mutually acceptable transition plan that takes into account TeleNorte's
existing investment in the item scheduled for discontinuance, including
a last opportunity to order additional numbers of such Products to
include in its inventory.
9.14.3 SPARE PARTS AVAILABILITY. Ericsson warrants the availability of
spareparts or their functional equivalent for the Products for a period
of five (5) years from the expiration of the Term. Prices for spare
parts shall be those in effect at the time of order placement. Should
Ericsson during the aforesaid period discontinue production of any
spare parts, Ericsson will give TeleNorte advance written notice to
enable TeleNorte to place orders for its requirements of spare parts or
enter into any other mutually satisfactory arrangements with Ericsson
prior to discontinuance of production.
10. SOFTWARE LICENSE AND INTELLECTUAL PROPERTY RIGHTS
10.1. RIGHT TO USE SOFTWARE LICENSE. Ericsson reserves title to Software and
hereby grants to TeleNorte the right to use license for Software
provided hereunder upon and subject to the terms and conditions set
forth in Software license terms contained in Exhibit C and forming part
hereof. With respect to Software provided from a supplier other than
Ericsson, Ericsson warrants it has the right to grant a sublicense to
TeleNorte to use the Software. Such expressly granted rights are for
use of the Software to operate the Cellular Network in the Territory
only.
10.2. SOFTWARE CORRECTIONS. Ericsson shall provide TeleNorte with Software
Corrections for Software licensed hereunder to TeleNorte, as such
Software Corrections become available. Ericsson shall grant TeleNorte a
right to use license for any Software Correction.
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10.3. SOFTWARE UPGRADES. Software Upgrades approved by Ericsson for
commercial release will be provided in accordance with Exhibit A.
Optional features included in new releases are not free of charge and
must be purchased by TeleNorte. TeleNorte shall also be responsible for
any purchases of additional hardware required for use with new software
releases.
10.4. OPTIONAL FEATURES. Ericsson shall provide the following optional
Software features free of charge to TeleNorte for the first 100,000
subscribers:
Calling Number ID
10.5. DEFENSE AGAINST INFRINGEMENT CLAIMS. In any claim, action. suit or
legal, arbitration, mediation or other proceedings, Ericsson, at
Ericsson's expense. shall defend TeleNorte, its directors, officers.
agents and employees, against any claim that Products, including
Software, supplied hereunder, (collectively, the "Indemnified
Products") infringes any patent or copyright. trademark, trade secret
or other tangible or intangible property right, whether Brazilian or
foreign, which is recognized or the judgment of which is enforceabe in
the in Brazil (collectively, "Proprietary Rights"), by reason of their
use in furnishing cellular services in accordance with Ericsson's
specifications provided that (i) TeleNorte notifies Ericsson in writing
of the claim, promptly, but no later than thirty (30) days after
TeleNorte has received written notice of such claim, (ii) Ericsson has
sole control of the defense, including appeals, and all related
settlement negotiations, and (iii) upon Ericsson's request, TeleNorte
gives Ericsson information and reasonable assistance for the defense.
TeleNorte may, at its sole cost, engage counsel to confer with Ericsson
in connection with any such claim. Ericsson shall reimburse TeleNorte
its actual reasonable costs for personnel (including legal counsel) or
resources engaged in providing information or assistance requested by
Ericsson. Ericsson shall indemnify and hold harmless TeleNorte, its
officers, agents and employees against any such claims, demands, causes
of action, costs, expenses, liabilities, damages or losses, finally
awarded against TeleNorte by a court of law, agreed to in settlement or
awarded by any other body or person authorized under law or contract to
award such damages on account of such alleged infringement or
violation.
10.6. ERICSSON TO ACT. If TeleNorte's use of the Indemnified Products shall
be enjoined, or in Ericsson's opinion, is likely to be enjoined,
Ericsson shall, at its option and expense, either procure the right for
TeleNorte to continue using such Indemnified Products or replace or
modify the Indemnified Products so that they become non-infringing. If
none of the foregoing options is commercially reasonable, Ericsson will
remove the enjoined Indemnified Products and refund to TeleNorte any
amounts paid to Ericsson, less a reasonable charge for any actual
period of use by TeleNorte. Should the Indemnified Product so removed
be a component of the Cellular Network and such removal causes any part
of the Cellular Network not to meet the Guaranteed Capacities, then
Ericsson shall be liable for returning the Product to the Guaranteed
Capacities and for direct damages caused to TeleNorte resulting from
such actions.
10.7. INFORMATION SUPPLIED BY TELENORTE. Notwithstanding the above, Ericsson
has no liability for any claim of Proprietary Right infringement to the
extent that (i) it arises directly and wholly from adherence to
specifications, designs, drawings or instructions furnished by
TeleNorte; or (ii) arises from adherence to instructions to apply
TeleNorte's trademark, trade name or other company identification, or
(iii) resides in Project Suppliers' equipment which is not of
Ericsson's origin and which is furnished by TeleNorte to Ericsson for
use under this Agreement or (iv) relates to uses of Indemnified
Products provided by Ericsson in combination with other Indemnified
Products furnished either by Ericsson or other, which combination was
not installed, recommended or otherwise approved by Ericsson. In the
foregoing cases numbered (i) through (iv), TeleNorte will defend and
save Ericsson harmless, subject to the same terms and conditions and
exceptions stated above in Sections 10.5 and 10.6 with respect to the
Ericsson's obligations.
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00. CONFIDENTIALITY.
11.1. CONFIDENTIAL INFORMATION DEFINED. "Confidential Information" shall mean
that information disclosed by one Party to the other which at the time
of disclosure is designated as confidential (or like designation), is
disclosed in circumstances of confidence or would be understood by the
Parties exercising reasonable business judgment to be confidential
pursuant to this Agreement and shall include, without implied
limitation, formulas, processes, designs, photographs, plans, samples,
Product performance reports, subscriber lists, pricing information,
studies, findings, inventions, ideas, drawings, schematics, sketches,
specifications, parts lists, technical data, data bases, software in
any form, flowcharts, algorithms, and other business and technical
information. Confidential Information may be communicated orally, in
writing, by electronic or magnetic media, by visual observation and by
other means. The Party receiving said notification shall, from that
time forward treat such information as proprietary. Excluded from
Confidential Information is that which the recipient had in its
possession without confidential limitation prior to disclosure, which
is independently developed by either Party, which is known or becomes
known to the general public without breach of this Agreement or which
is rightfully received from a third Party and without confidential
limitation.
11.2. EXCHANGE OF INFORMATION. From time to time during the performance of
this Agreement, the Parties may deem it necessary to provide each other
with Confidential Information. The Parties agree:
11.2.1 NONDISCLOSURE. Each of them shall maintain the confidentiality of such
Confidential Information and not to disclose it to any third Party
except as authorized by the original disclosing Party in writing.
11.2.2 "NEED TO KNOW" DISCLOSURE. Each of them shall restrict disclosure of
Confidential Information only to employees and Authorized Agents who
have a "need to know." Such Confidential Information shall be handled
with the same degree of care which the receiving Party applies to its
own Confidential Information but in no event no less than reasonable
care.
11.2.3 PRECAUTIONS. Each of them shall take all necessary and appropriate
precautions to guard the confidentiality of Confidential Information,
including informing its employees and authorized agents who handle such
Confidential Information that it is confidential and not to be
disclosed to others, but in no event, less than reasonable care.
11.2.4 OWNERSHIP. Confidential Information is and shall at all times remain
the property of the disclosing Party. No use of any Confidential
Information is permitted except as otherwise provided herein and no
license to a Party under any trademark, patent, copyright, mask work or
any other intellectual property right, is either granted or implied by
the conveying of Confidential Information to such Party.
11.2.5 USE. Each of them shall use such Confidential Information only as
required for the purposes of this Agreement.
11.2.6 REPRODUCTION. Confidential Information furnished in written, pictorial,
magnetic or other tangible form shall not be reproduced or copied, in
whole or part, except as reasonably necessary (i) by Ericsson for its
performance under this Agreement, and (ii) by TeleNorte for its
installation, operation and maintenance of items furnished by Ericsson
under this Agreement; if copied or reproduced shall bear the same
notices or legends, if any, as the originals and shall, together with
any full or partial copies thereof, be returned, destroyed or erased
(including any computer memory thereof) when no longer needed for the
purposes authorized under this Agreement. The receiving Party shall use
reasonable efforts to return, destroy, or erase such tangible
Confidential Information. (including copies, reproductions or other
documents containing Confidential information) within ten (10) business
days of the disclosing Party's written request.
11.2.7 Survival. This Section shall continue until termination of this
Agreement; provided, however that all obligations hereunder with
respect to Confidential Information received prior to such expiration,
cancellation or termination of this Agreement shall survive such
expiration, cancellation or termination for
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three (3) years thereafter, if the Confidential Information is business
information, or for five (5) years thereafter, if the Confidential
Information is technical.
11.3. AGREEMENT DISCLOSURE. Except as may be required by applicable law,
neither Ericsson nor TeleNorte shall disclose to any third party the
contents of this Agreement, the Exhibits or any amendments hereto or
thereto for a period of two (2) years after the termination of this
Agreement without the prior written consent of the other Party.
Additionally, neither Party shall disclose the existence of this
Agreement where both Parties agree in writing in advance upon the
manner and content of such disciosure. Ericsson to the extent
appropriate can disclose the content of the Agreement to its
subcontractors, provided such subcontractors agree in writing to
maintain such information confidential. TeleNorte may disclose this
Agreement to banks and financing entities with a view to obtaining
funds provided the said banks and financing entities agree in writing
to maintain such information Confidential.
11.4. THIRD PARTIES. Except as provided below with respect to Authorized
Agents, neither Party shall disclose Confidential Information of the
other Party hereto to any third person without such other Party's prior
written consent, Any such consent may be conditioned upon execution by
the third person of a nondisclosure agreement in a form satisfactory to
the Party whose Confidential Information is being disclosed.
11.5. AUTHORIZED AGENTS. For purposes of this Section 11, the term
"Authorized Agent" includes an attorney, a consultant, a subcontractor,
a Project Supplier or other third Party, but only to the extent such
Party is performing or enforcing (or assisting the receiving Party to
perform or enforce) or advising the receiving Party with respect to its
rights and obligations under this Agreement, and provided that such
third Party agrees in writing (a copy of which writing will be produced
to the disclosing Party at its request) to the same conditions
respecting use of Confidential Information contained in this clause and
to any other reasonable conditions requested by the disclosing Party.
11.6. TRADEMARK AND PUBLICITY. Nothing contained in this Agreement shall be
construed as conferring any right to use any name, trademark or other
designation of either Party hereto, including any contraction,
abbreviation, or simulation of any of the foregoing, in advertising,
publicity or marketing activities. Any publicity, advertising, etc.,
with regard to this Agreement or the Cellular Network which mentions
the other Party shall be mutually agreed upon in writing prior to
disclosure.
12. TITLE AND RISK OF LOSS
12.1. TITLE PASSAGE AND RISK OF LOSS. Unless otherwise provided in this
Agreement or as otherwise may be agreed to by the Parties, title to
Products shall be transferred to TeleNorte upon Delivery and risk of
loss shall be transferred upon Conditional Acceptance. Title to
Ericsson's intellectual property, including Software, patents,
copyrights, trademarks and tradenames, shall not be conveyed to
TeleNorte at any time.
TeleNorte shall notify Ericsson promptly of any claim with respect to
loss which occurs while Ericsson has the risk of loss and shall
cooperate in every reasonable way to facilitate the settlement of any
claim.
12.2. LIABILITY FOR NEGLIGENCE. Notwithstanding anything herein to the
contrary, the Party that by negligence, intentional act or failure to
act where action is required under this Agreement causes damage, loss
or destruction to any Product shall be liable to the other Party
irrespective of the fact that title and risk of loss of such Product is
incumbent upon such other Party.
13. DAMAGES, BONUSES, DELAYS AND TERMINATION
13.1. PROPERTY AND PERSONAL INJURY (TELENORTE)
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13.1.1 PROPERTY DAMAGE. Ericsson shall indemnify and hold harmless TeleNorte
and its directors, officers, agents, servants and employees from any
claim, demand, cause of action, damage, cost, expense, loss or
liability, on account of tangible property damage (including damage to
property owned by third Parties other than TeleNorte), arising out of
or in connection with this Agreement to the extent such damages were
caused by the negligent acts or omissions, willful misconduct and
strict product liability of Ericsson or its agents, contractors,
officers or employees, or any person responsible to Ericsson hereunder
while performing under this Agreement provided: (i) TeleNorte promptly
notifies Ericsson in writing of any suits, claims or demands against
TeleNorte for which Ericsson is responsible under this indemnity, (ii)
TeleNorte gives Ericsson full opportunity and authority to assume the
sole defense of and settle such suits, and (iii) TeleNorte furnishes to
Ericsson upon request all reasonable information and assistance
available to TeleNorte for defense against any such suit, claim or
demand. Ericsson's liability under this indemnity shall be that
proportion directly attributable to the fault of Ericsson or its
employees or agents but in no event exceed One Million Reais (R$
1.000.000,00) for any one occurrence of property damage, such value to
be annually adjusted as per the 'IGP-DI Coluna 27' index, issued by
FGV.
13.1.2 PERSONAL INJURY (TELENORTE). Ericsson shall indemnify and hold harmless
TeleNorte and its directors, officers, agents, servants and employees
from any claim, demand, cause of action, damage, cost, expense, loss or
liability, on account of death or personal injury (whether to
TeleNorte, TeleNorte's officers, agents or employees or third Parties)
arising out of or in connection with this Agreement to the extent such,
injury or death was caused by the negligent acts or omissions, willful
misconduct or product liability of Ericsson or its agents, contractors,
officers or employees, or any person responsible to Ericsson hereunder
while performing under this Agreement provided: (i) TeleNorte promptly
notifies Ericsson in writing of any suits, claims or demands against
TeleNorte for which Ericsson is responsible under this indemnity, (ii)
TeleNorte gives Ericsson full opportunity and authority to assume the
sole defense of and settle such suits, and (iii) TeleNorte furnishes to
Ericsson upon request all reasonable information and assistance
available to TeleNorte for defense against any such suit, claim or
demand at Ericsson's costs. Ericsson's liability under this indemnity
shall be that proportion directly attributable to the fault of Ericsson
or its employees or agents, or as may be determined by a court of Law.
13.2. LIQUIDATED DAMAGES. Should Ericsson, as a result of its breach of its
obligations under this Agreement, fail to meet a Ready for In-Service
date, as specified in the applicable Phase Acquisition Document,
Ericsson shall be liable to TeleNorte for liquidated damages to accrue
at the rate of one and half percent (1.5%) of the value of the portion
of the Cellular System, which, as a result of Ericsson's breach, is not
available to provide service as a result of the delay, per week of
delay commencing after the scheduled Ready for In-Service date, up to a
maximum of ten percent (10%) of the total DDP value of the relevant
Phase as contained in each Phase Acquisition Document. If TeleNorte has
the right to receive from Ericsson liquidated damages under this
Section 13.2, TeleNorte shall be entitled to set off the amount due
under this Section 13.2. against payment of any Ericsson invoices
thereafter, in whole or in part, up to an amount equal to such
liquidated damages or costs, as the case may be. TeleNorte will give
Ericsson prior written notice specifying in reasonable detail the basis
for such withholding.
13.3. REMEDIES FOR TELENORTE DELAYS. For delays caused by TeleNorte
("TeleNorte Delays"), the dates set forth in the Implementation
Schedule or other schedules for Ericsson's performance shall be
adjusted to later dates. The extent of adjustment shall be as many days
as are required to compensate the TeleNorte Delay and the adjustment
shall be based on a review of the relevant Ericsson's critical path
development and deployment plans ie. planning evaluation and review
technique/critical path method ("PERT/CPM" chart). Where additional
expenses are incurred by Ericsson in making up for a TeleNorte Delay,
Ericsson shall receive an equitable adjustment in its prices to
compensate for the additional expenses. If Ericsson is unable to
deliver or install Equipment of perform Services because of TeleNorte's
failure to satisfy its obligations under this Agreement, then TeleNorte
shall (i) furnish suitable temporary storage facilities for such
Equipment and reimburse Ericsson for all reasonable cost and
out-of-pocket expenses actually incurred by Ericsson attributable to
TeleNorte's failure to have the Sites ready and available for the
commencement of installation including cost (a) to store such Equipment
(including the costs of transporting such Equipment to and from
Ericsson's storage facilities if TeleNorte fails to furnish
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suitable temporary facilities and (b) to redeploy Ericsson's workforce.
For the avoidance of doubt, a "TeleNorte Delay" includes but is not
limited to any delay resulting from TeleNorte's delay in obtaining
interconnection with the PSTN.
13.4. CONCESSION PENALTY AGAINST TELENORTE. In the event that ANATEL assesses
a penalty against TeleNorte for failure to meet the terms of the
Concession as a result of Ericsson's failure to properly and timely
discharge its duties under this Agreement, Ericsson shall indemnify
TeleNorte for any such penalty up to an aggregate limit of five percent
(5%) of the Commitment Value in the proportion of its participation to
the commitment as set forth in 2.2.1.
13.5. TELENORTE DELAY TERMINATION. Should a TeleNorte delay with respect to
an Implementation Schedule date exceed ninety (90) days, Ericsson may
cease its performance under this Agreement until the Parties have in
good faith arrived at a mutually acceptable revised Implementation
Schedule. If the Parties fail to agree upon the revised Implementation
Schedule in the subsequent ninety (90) days Ericsson may terminate this
Agreement as provided herein for TeleNorte's failure to perform.
Ericsson's right of termination is without prejudice to any other
remedies that Ericsson may possess.
13.6. MAXIMUM LIQUIDATED DAMAGES. Should liquidated damages for any given
Phase reach ten percent (10%) of the value of the Cellular System of
the particular Phase, TeleNorte may terminate this Agreement. TeleNorte
must exercise this right of termination at any time within thirty (30)
days after such right to terminate accrues.
13.7. BREACH BY EITHER PARTY. Where a Party is in material breach of this
Agreement, and where the non-breaching Party has given ninety (90) days
prior written notice specifying the breach to the breaching Party and
the breaching Party has not cured the breach within such 90-day period,
then the non-breaching Party may terminate this Agreement without
liability.
13.8. BANKRUPTCY. Either Party may terminate this Agreement (except for those
items fully discharged) without liability, if the other Party makes a
general assignment for the benefit of creditors, or if a petition in
bankruptcy or under any insolvency law is filed by or against the other
Party and such petition is not dismissed within sixty (60) days after
it has been filed.
13.9. CONCESSION. Should ANATEL revoke TeleNorte's Concession, Ericsson may
terminate this Agreement. Ericsson's right of termination is without
prejudice to any other remedies Ericsson may possess.
13.10. SURVIVAL. Termination of this Agreement, for whatever cause shall be
without prejudice to any right or obligation of any Party hereto in
respect of this Agreement which has arisen prior to such termination or
expiration. If this Agreement is terminated by either Party prior to
the completion of Final Acceptance of the Cellular System or portion
thereof as defined in the relevant Phase Acquisition Document, then
such Products actually delivered to the corresponding Site(s) as of the
effective date of termination shall be submitted to Conditional
Acceptance and Final Acceptance. The Parties' rights and obligations,
which by their nature would continue beyond the termination,
cancellation, or expiration of this Agreement, shall survive the
termination, cancellation or expiration of this Agreement.
13.11. TELENORTE PENALTY FOR FAILURE TO REACH COMMITMENT VALUE. If TeleNorte
and its 'Affiliates" fail, by the end of the Term, to make purchases up
to the Commitment Value, TeleNorte will pay Ericsson a penalty
equivalent to five percent (5%) of the difference between the purchases
made and the Commitment Value in the proportion of its participation to
the commitment as set forth in 2.2.1.
14. LIMITATION OF LIABILITY
14.1. SCOPE OF LIABILITY. TeleNorte's exclusive remedies and the entire
liability of Ericsson and its affiliates and their employees and agents
for any claim, loss, damage or expense of TeleNorte or any other
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entity arising out of this Agreement, or the use or performance of any
Network, System, Product or Service whether in action for or arising
out of the breach of contract, tort, including negligence, indemnity,
or product liability shall be as follows:
(1) For delay and penalties - the remedies set forth in Section
13;
(2) For the performance or non-perforrnance of Products and
Services or claims that they
do not conform to a warranty - the forth in the applicable
"warranty(ies)" clause;
(3) For tangible property damage and personal injury caused by
Ericsson's negligence - the amount of direct damages as per
Sections 13. 1,1 and 13.1.2;
(4) For everything other than as set forth above - the amount of
the direct damages not to exceed the purchase price of the
Products and Services giving rise to TeleNorte's claim,
including awarded counsel fees and costs or eleven percent (11
%) of the Phase value, whichever is lower;
Notwithstanding any other provision of this Agreement, neither Party,
its affiliates and its employees and agents shall have any liability to
the other for any loss of profit or revenues, whether as a result of
breach of contract, warranty, tort (including negligence).
Ericsson shall not be responsible for any claim, loss, damage or
expense resulting from TeleNorte's negligence or willful misconduct.
15. FORCE MAJEURE
15.1. RESPONSIBILITY IN THE EVENT OF FORCE MAJEURE. Except as explicitly
provided elsewhere in this Agreement, neither Party shall be liable for
any delays in delivery or performance, or for failure to manufacture
deliver or perform when caused by Force Majeure.
Each Party shall promptly notify the other Party of the occurrence of a
Force Majeure. If any Force Majeure occurs and results in a delay or
failure in performance, the Party injured by the other's inability to
perform may elect to: (a) terminate that part of any Phase Acquisition
Document or Purchase Order affected by the Force Majeure as to Products
not already shipped or Services not already rendered if the Force
Majeure continues for a period of forty five (45) days after
notification; (b) suspend that part of any Phase Acquisition Document
or Purchase Order affected by the Force Majeure for the duration of the
Force Majeure, buy, sell, obtain, or furnish elsewhere Products to be
bought, sold, obtained, or furnished hereunder, and deduct from any
Phase Acquisition Document or Purchase Order commitment the quantity
bought, sold, obtained, or furnished or for which such commitments have
been made elsewhere; or (c) resume performance under such Phase
Acquisition Document or Purchase Order once the Force Majeure ceases
with an option for the injured Party to extend the delivery or
performance date up to the length of time the Force Majeure endured.
Unless written notice is given within thirty (30) days after such
injured Party is provided written notice of the occurrence of a Force
Majeure, option (c) shall be deemed selected. Nothing contained herein
or elsewhere shall impose any obligation on either Party to settle any
labor difficulty.
16. ASSIGNMENT
This Agreement shall accrue to the benefit of the Subsidiaries and the
Parties and be binding upon the Parties hereto and any successor(s)
entity into which either Party shall have been merged to or
consolidated with or to which either Party shall have sold or
transferred all or substantially all of its assets. Except as provided
in this Section, neither Party shall assign this Agreement or any right
or interest under this Agreement, nor delegate any work or obligation
to be performed under this Agreement ("an assignment"), without the
prior written consent of the other Party. Any attempted assignment in
contravention of this clause shall be void and ineffective.
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For the purpose of this clause the term "Agreement" shall include this
Agreement, any subordinate contracts placed under this Agreement and
any orders placed under such Agreement or any subordinate contract.
The Parties agree that any consent to a requested assignment shall not
be unreasonably withheld or delayed.
The Parties agree that Ericsson or TeleNorte or one of their respective
constituents may assign all or a part of their rights and duties
hereunder to a designated wholly-owned (directly or indirectly)
subsidiary of Ericsson or TeleNorte, as the case may be, provided that
Ericsson or TeleNorte remains jointly and severally responsible for the
fulfillment of all obligation incumbent upon its assignee as per this
Agreement.
17. REMEDIES
The remedies made available to the Parties for the events specified
under this Agreement are exclusive unless otherwise stated herein.
18. GOVERNING LAW
The validity, construction and interpretation of, and the right and
obligations of the Parties, pursuant to this Agreement and any
amendment hereto shall be governed by the laws of the Federative
Republic of Brazil (including its conflict of laws rules).
19. NOTICE
19.1. GENERAL. Notices required to be given by one Party to another shall be
deemed properly given if reduced to writing and personally delivered or
transmitted by postage prepaid registered or certified post, return
receipt requested, by air courier, or by facsimile or other electronic
mail with confirmation receipt. Such notices shall be deemed to have
been given and shall be effective upon receipt.
19.1.1 NOTICE TO TELENORTE. Ericsson shall send notices to TeleNorte at the
following address:
TELENORTE S.A.
Travessa Xxx Xxxxxxx, 931
66053-260 Belem, Para, Brazil
Attn.: Xxxxxx Ged
Phone: + (55) (00) 000-0000
Fax: + (55) (00) 000-0000
With a copy (which shall not constitute Notice) to:
TELESYSTEM INTERNATIONAL WIRELESS INC.
0000 xx xx Xxxxxxxxxxx Xxxxxx West, 16th Floor
Montreal, Quebec, Canada
H3B 4W5
Attention: Executive Vice President. Operations
Tel: (1) (000) 000-0000
Fax: (1) (000) 000-0000
19.1.2 NOTICE TO ERICSSON. TeleNorte shall send notices to Ericsson at the
following address:
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ERICSSON TELECOMUNICACOES X. X.
Xxx Xxxxx Xxxxxxx Maia , 300
02047 901 Sao Paulo SP Brasil
Attn.: New Cellular Operators Marketing and Sales Director
Phone: (55) (00) 0000 0000
Fax: (55) (00) 0000 0000
19.2. MODIFICATIONS TO NOTICE ADDRESS. Either Party may change the addresses
for giving notice by providing the other Party with written
information about such change of address in accordance with Section
1 9. 1.
20. SECTION HEADINGS AND PLURALS
20.1. SECTION HEADINGS. The headings of Sections in this Agreement are
provided for convenience of reference only and are not intended to be a
part of or affect the meaning or interpretation of this Agreement or
any Section.
20.2. PLURALS. Any reference herein to singular shall mean plural and vice
versa as the context may so require.
21. WAIVER
Any failure or delay on the part of Ericsson or TeleNorte to exercise
any right, power or privilege or to strictly enforce any such term or
condition of this Agreement, on one or more occasion shall not operate
or be construed as a waiver of the same or any other terms and
conditions of this Agreement on any other occasion.
22. REPRESENTATION OF AUTHORITY EACH PARTY REPRESENTS THAT:
22.1. EXPRESS AUTHORITY. The persons executing this Agreement have express
authority to do so under specific or standing delegation, and in so
doing, to bind the Party thereto; and
22.2. NO VIOLATION. The execution, delivery, and performance of this
Agreement does not violate any provision of any by-law, charter,
regulation or any other governing authority of the Party; and
22.3. DULY AUTHORIZED. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary partnership or
corporate action and this Agreement is a valid and binding obligation
of such Party.
23. LEGAL COMPLIANCE
It is the Parties' intention to comply with all applicable federal,
state and local statutes, regulations and orders (if and as applicable
to TeleNorte or Ericsson). To the extent that any provision shall be
held to be invalid, illegal or unenforceable, such provisions shall be
considered null and void but the remaining provisions of this Agreement
shall remain in effect. In the event the invalid, illegal or
unenforceable provision is considered an essential element of this
Agreement, the Parties shall promptly negotiate a replacement
provisions that is acceptable to both Parties and is valid, legal and
enforceable, and come as close as possible to reflect accurately the
intentions of the Parties underlying the invalid, illegal or
unenforceable provision or provisions.
24. DISPUTE RESOLUTION
24.1. GENERAL. If a dispute arises out of or relates to this Agreement,
including any disputes related to payments to be made under the terms
of this Agreement, either Party may request that the Parties seek to
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resolve the dispute by negotiation of the appropriate executives of
each Party, who shall have full authority to settle the dispute. The
Parties agree to meet at least once within fifteen (15) days of the
request for negotiation to try to resolve the dispute. If, within
thirty (30) days after such meeting, or the first request for a
meeting, should a meeting not be convened, the Parties have not
succeeded in negotiating a resolution of the dispute, either Party may
request that such dispute be resolved by arbitration as set forth in
Section 24.2, the provisions of Brazilian Law 9.307 of September 23,
1996 applying.
24.2. ARBITRATION. The arbitration shall be conducted by three (3)
arbitrators familiar with the cellular telecommunications industry and
shall be held in Sao Paulo, Brazil in accordance and subject to the
Rules of Conciliation and Arbitration, as promulgated from time to time
by the International Chamber of Commerce (ICC) (the "Ruies"), by three
(3) arbitrators. Each Party shall designate one (1) arbitrator, and the
two- (2) arbitrators so designated shall appoint the third arbitrator
as provided in the Rules. The arbitrators shall determine the language
in which the arbitration shall be conducted. The arbitrators will allow
such discovery as is appropriate, consistent with the purpose of
arbitration in accomplishing fair, speedy, and cost-effective
resolution of disputes. All discovery will be completed, and the
arbitration hearing will be commenced, within forty-five (45) days
after appointment of all of the arbitrators and the arbitration hearing
will conclude within thirty (30) days after it commences. The
arbitrators will make every effort to enforce these timing requirements
strictly, but may extend the time periods upon a showing that
exceptional circumstances require extension to prevent manifest
injustice. The award shall be made within six (6) months of the
selection of the arbitrator(s). If judicial enforcement of such
arbitration award is sought by either Party, judgment may be entered
upon such award in any court of competent jurisdiction, or application
may be made to such court for a judicial acceptance of the award and an
order of enforcement. The duty of the Parties to arbitrate any dispute
relating to the interpretation or performance of this Agreement or the
grounds for the termination thereof shall survive the expiration or
termination of this Agreement for any reason. The arbitrator(s) shall
apply Brazilian law and the relief awarded by the arbitrator(s) shall
not exceed in form that awardable by a Brazilian court of competent
jurisdiction. In the event of any arbitration or other legal proceeding
to enforce an arbitration award, the substantially prevailing Party, if
any, shall be entitled to reimbursement for reasonable attorneys' fees
and costs of the proceeding by the other Party or Parties. The
determination of which Party has substantially prevailed and the amount
of attorneys' fees, if any, to be awarded shall be made by the
arbitrator(s), or other person adjudicating the enforcement action at
the same time and in the same proceeding as the underlying enforcement
action being decided, and shall be included in the award. If it is
determined in such enforcement action that there is no substantially
prevailing Parties, and in the underlying arbitration, each Party shall
bear its own attorney's fees and expenses, but those related to the
costs of the arbitrator(s) shall be borne equally by the Parties. The
arbitrator(s) shall determine the issues of arbitrability, but may not
limit, expand or otherwise modify, the terms of the Agreement, nor have
authority to award punitive damages in excess of compensatory damages
and each Party irrevocably waives any claim thereto.
All discussions and documents prepared pursuant to any attempt to
resolve a dispute under this section 24 are confidential and for
settlement purposes only and shall not be admitted in any court or
other forum as an admission or otherwise against a Party for any
purpose unless such restriction is against public policy in the
applicable jurisdiction or a court of competent jurisdiction or a
governmental agency orders such disclosure or use.
Nothing in this Section 24 shall prevent any Party from seeking
injunctive relief in a judicial proceeding if interim relief from a
court is necessary to preserve the status quo pending resolution or to
prevent serious and irreparable injury to that Party or others.
24.3. CONFIDENTIALITY. The Parties, their representatives, other participants
and arbitrator(s) shall hold the existence, content and result of
dispute resolution proceedings in confidence as provided in Section 11
of this Agreement.
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00. CONSENT
Wherever in this Agreement consent, approval or mutual agreement is
required of TeleNorte or Ericsson the appropriate Party agrees not to
unreasonably withhold or delay such consent or approval.
26. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall
constitute one and the same instrument. The Parties agree that only one
representative of TeleNorte and one representative of Ericsson shall
initial each page of the Agreement including its Exhibits.
27. MOST FAVORED CUSTOMER
Ericsson hereby warrants to TeleNorte that as of the Effective Date,
TeleNorte is receiving, under this Agreement, commercial prices, terms
and conditions for the Products and Services relative to the
consolidated volume of TeleNorte and its "Affiliates" for the Products
and Services covered herein, that are at least as favorable as those
being provided by Ericsson to any other cellular customer of comparable
relative volume in Brazil on the Effective Date. If Ericsson was in
breach of the foregoing warranty on the Effective Date, Ericsson shall
make the appropriate reductions or improvements to make the foregoing
warranty accurate as of the Effective Date provided that the evaluation
shall be done within the territory of Brazil for hardware, software and
services unit prices. In the event that during the Term, TeleNorte or
any Affiliate awards a contract to Ericsson for the supply of Products
and Services under substantially the same terms and conditions as set
forth under this Agreement (the "Supply Contract"), Ericsson shall
warrant that on the effective date of said Supply Contract the unitary
prices, terms and conditions for such Products and Services are at
least as favorable as those being provided under contract or Purchase
Orders by Ericsson to any other cellular customer in Brazil that is
purchasing the Products and Services offered under this Agreement in
volume comparable to the aggregate volume of TeleNorte and its
Affiliates. Ericsson agrees that, effective as of the date of signature
of the Supply Contract, Ericsson shall extend to TeleNorte and to any
other Affiliate to which Ericsson is a supplier such favorable unitary
prices, terms and conditions,
The reference for comparison shall be Network(s) which magnitude(s) do
not differ more than 20% quantified by the number of TRXs -and shall be
applicable during the three month period prior, or the three month
period following to an order of hardware, software or service.
Ericsson agrees that, should TeleNorte request to audit the application
of the above provisions by an independent professional firm, it will
make available the necessary and complete information to enable such
Audit.
28. ENTIRE AGREEMENT
This Agreement and any subordinate agreements and orders accepted
pursuant to this Agreement or any subordinate agreements constitutes
the entire understanding between the Parties concerning the subject
matter hereof and supersedes all prior discussions, agreements and
representations, whether oral or written and whether or not executed by
Ericsson and TeleNorte. No modification, amendment or other change
shall be made to this Agreement or any part thereof unless reduced to
writing and executed by authorized representatives of each Party.
29. LANGUAGE
This Agreement shall be executed in English and Portuguese; in case of
conflict between such versions, the Portuguese version shall prevail.
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IN WITNESS HEREOF, THE PARTIES HEREBY EXECUTE THIS AGREEMENT IN THE PRESENCE OF
THE TWO UNDERSIGNED WITNESSES.
TELENORTE S.A. Two signatures
By: By:
Name: Name:
Title: Title:
ERICSSON TELECOMUNICACOES S/A Two signatures
By: By:
Name: Name:
Title: Title:
Witnesses: Two signatures
Name: Name:
RG: RG:
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