EXHIBIT 10.17
_____________________________________
ATLANTICA - 1
_____________________________________
PROJECT DEVELOPMENT
AND
CONSTRUCTION CONTRACT
AMONG
ALCATEL SUBMARINE NETWORKS
AND
ALCATEL SUBMARINE NETWORKS, INC.
AND
ATLANTICA NETWORK (BERMUDA) LTD.
_____________________________________
Dated as of June 16, 1999
_____________________________________
TABLE OF CONTENTS
GENERAL TERMS AND CONDITIONS
Article PAGE
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1 Provision of System.......................................................... 2
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2 Documents Forming the Entire Contract........................................ 2
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3 Definitions.................................................................. 2
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4 Contract Price............................................................... 12
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5 Terms of Payment............................................................. 15
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6 Contract Variations.......................................................... 18
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7 Responsibilities for Permits/Landing Licenses; Compliance with Laws.......... 19
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8 Route Survey................................................................. 20
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9 Acceptance................................................................... 20
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10 Warranty..................................................................... 25
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11 Contractor Support........................................................... 29
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12 Purchaser's Obligations...................................................... 30
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13 Termination for Default...................................................... 31
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14 Termination for Convenience.................................................. 33
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Article PAGE
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15 Suspension................................................................... 35
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16 Title and Risk of Loss....................................................... 36
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17 Force Majeure................................................................ 36
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18 Intellectual Property........................................................ 37
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19 Infringement................................................................. 41
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20 Safeguarding of Information and Technology................................... 43
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21 Export Control............................................................... 44
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22 Liquidated Damages........................................................... 44
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23 Limitation of Liability/Indemnification...................................... 45
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24 Counterparts................................................................. 46
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25 Design and Performance Responsibility........................................ 46
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26 Product Changes.............................................................. 46
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27 Risk and Insurance........................................................... 47
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28 Plant and Work Rules......................................................... 50
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29 Right of Access and Audit.................................................... 50
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30 Quality Assurance............................................................ 51
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31 Documentation................................................................ 52
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Article PAGE
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32 Training..................................................................... 52
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33 Settlement of Disputes/Arbitration........................................... 52
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34 Applicable Law............................................................... 53
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35 Notices...................................................................... 53
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36 Publicity and Confidentiality................................................ 54
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37 Assignment; Subcontractors................................................... 55
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38 Relationship of the Parties.................................................. 57
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39 Successors Bound............................................................. 57
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40 Article Captions............................................................. 57
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41 Severability................................................................. 57
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42 Prime Contractor; Joint and Several Liability of the Contractor; Guarantors.. 57
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43 Survival of Obligations...................................................... 58
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44 Non-Waiver................................................................... 58
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45 Language; Interpretation..................................................... 58
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46 Representations and Warranties............................................... 58
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47 Entire Agreement............................................................. 60
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48 Optional System Upgrades..................................................... 61
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Article PAGE
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49 Integration of BUS-1 in System............................................... 62
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50 Optional System Extension.................................................... 63
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51 Time of the Essence.......................................................... 64
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Exhibits and Appendices
EXHIBIT A GUARANTY
EXHIBIT B PERMIT LISTING
EXHIBIT C PAYMENT ESCROW AGREEMENT
EXHIBIT D FORMAT OF CONTRACTOR'S INVOICE CERTIFICATE
EXHIBIT E FORMAT OF CERTIFICATE OF PROVISIONAL/COMMERCIAL
ACCEPTANCE
EXHIBIT F STATEMENT OF ORIGIN AND LIST OF SUBCONTRACTORS
APPENDIX 1 PROVISIONING SCHEDULE
APPENDIX 1A UPGRADE PROVISIONING SCHEDULE
APPENDIX 1B EXTENSION OPTION PROVISIONING SCHEDULE
APPENDIX 2 BILLING SCHEDULE AND MILESTONES
APPENDIX 2A UPGRADE BILLING MILESTONES
APPENDIX 2B EXTENSION OPTION BILLING MILESTONES
APPENDIX 3 PLAN OF WORK
APPENDIX 4 TECHNICAL VOLUME, SYSTEM DESCRIPTION
APPENDIX 5 TECHNICAL VOLUME, TECHNICAL INFORMATION
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PROJECT DEVELOPMENT AND
CONSTRUCTION CONTRACT
This Project Development and Construction Contract ("Contract") is
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made as of this 16th day of June, 1999 among (i) ALCATEL SUBMARINE NETWORKS
(together with its permitted successors and assigns, "ASN"), a societe anonyme
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organized and existing under the laws of France, and having its principal office
in Paris, France, and ALCATEL SUBMARINE NETWORKS, INC. (together with its
permitted successors and assigns, "ASNI"), a corporation organized and existing
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under the laws of the State of Delaware, United States, and having its principal
office in Portland, Oregon, United States (ASN and ASNI are hereinafter
collectively referred to as "Contractor" and are jointly and severally liable
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for all obligations and liabilities of Contractor hereunder as more fully set
forth in Article 42 hereof) and (ii) Atlantica Network (Bermuda) Ltd., a
corporation organized and existing under the laws of Bermuda, and having its
principal office in St. David's, Bermuda (hereinafter "Purchaser").
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WHEREAS, Purchaser desires to establish a fiber optic submarine cable
system, to be known as the ATLANTICA-1 Submarine Cable System (hereinafter, and
as more fully defined herein, the "System"), which will be used to provide
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service between and among the United States mainland, Bermuda, Venezuela and
Brazil; and
WHEREAS, subject to the provisions of Sub-Article 6(B) hereof, the
System will consist of the following Segments:
Segment 1: From Tuckerton, New Jersey to Boca Raton, Florida;
Segment 2: From Boca Raton, Florida to Punta Gorda, Venezuela;
Segment 3: From Punta Gorda, Venezuela to Fortaleza, Brazil;
Segment 4: From Fortaleza, Brazil to St. David's, Bermuda;
Segment 5: From St. David's, Bermuda to Tuckerton, New Jersey,
including the system called BUS-1 (which Segment 5
consists of BUS-1 which already has been built and is
owned by Purchaser); and
Segment 6: From Fortaleza, Brazil to Rio de Janeiro, Brazil;
WHEREAS, Contractor is in the business of designing, constructing,
installing, supplying, delivering and manufacturing fiber optic submarine cable
systems and is familiar with the general business of the fiber optic submarine
cable system industry;
WHEREAS, Purchaser seeks to purchase from Contractor and own Segments
1 through 4 and 6 of the System and wishes to engage Contractor to perform the
Work in respect of the System (as hereinafter defined); and
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WHEREAS, Contractor is willing to perform the Work, as detailed in
Appendix 4, on a turn-key, fixed-price basis in accordance with and subject to
the terms hereof.
NOW THEREFORE, IT HAS BEEN AGREED AS FOLLOWS:
1 Provision of System
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In consideration of the Contract Price, the Contractor agrees to undertake
and complete the Work and to provide the Purchaser with (a) the System
(exclusive of Segment 6) meeting the System Performance Requirements on or
before the Scheduled RFS Date, (b) Segment 6 meeting the System Performance
Requirements on or before the Segment 6 Scheduled RFS Date, and (c) Segments 4
and 5 meeting the System Performance Requirements on or before the Segment 4/5
Scheduled RFS Date, in each case meeting the requirements of this Contract, all
in accordance with the terms hereof.
2 Documents Forming the Entire Contract
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This Contract consists of the terms and conditions set forth herein (the
"Terms and Conditions") and the following documents (in the form of attachments,
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including appendices, attached hereto), which shall be read and construed as
part of this Contract:
. Provisioning Schedule, Appendix 1
. Upgrade Provisioning Schedule, Appendix 1A
. Extension Option Provisioning Schedule, Appendix 1B
. Billing Schedule and Milestones, Appendix 2
. Upgrade Billing Milestones, Appendix 2A
. Extension Option Billing Milestones, Appendix 2B
. Plan of Work, Appendix 3
. Technical Volume, System Description, Appendix 4
. Technical Volume, Technical Information, Appendix 5
In the event of any inconsistency between the Terms and Conditions and the
above listed documents, the Terms and Conditions shall prevail. The Appendices
listed above have no order of precedence.
3 Definitions
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Except as otherwise defined, the following definitions shall apply
throughout this Contract:
AAA has the meaning set forth in Sub-Article 33(B).
Acceptance Testing means with respect to a Segment or the System, the
tests described in the System Commissioning and Acceptance section of
Appendix 4, as such tests shall be developed pursuant to such section by
mutual written agreement of the Parties with
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the concurrence of the Independent Engineer (or pursuant to Article 33 in
the absence of such mutual agreement) and designed to verify that such
Segment or the System meets the applicable System Performance Requirements.
Access Rights means all ownership, easements, leases, wayleaves and/or
other property rights, from both private and governmental entities, both on
land and below the surface of the water (including, without limitation,
agreements to use conduits and ducts, install manholes and to lease space
in cable stations) necessary to access, use and occupy cable stations and
the sites for cable stations (including, without limitation, to land and
install the submarine cable and related equipment and to bring such cable
from the ocean to the cable stations) in order for the Purchaser to own,
operate and maintain the System.
Actual Knowledge means the actual knowledge of any executives with
management responsibility for this Contract.
ASN has the meaning set forth in the first paragraph of this Contract.
ASNI has the meaning set forth in the first paragraph of this
Contract.
Assignment has the meaning set forth in Sub-Article 37(A).
Bankruptcy Event means an event specified in Sub-Article 13(A)(3) or
13(A)(4).
Billing Milestones means the billing milestones set forth in Appendix
2.
Billing Schedule means the billing schedule attached hereto as
Appendix 2.
BUS-1 means the fiber optic cable system known as "BUS-1" connecting
St. David's Bermuda and Tuckerton, New Jersey.
Certificate of Commercial Acceptance means a certificate in the form
of Exhibit E hereto issued by Purchaser in accordance with Sub-Article 9(D)
to Contractor certifying that a Segment or the System, as applicable, is
Ready for Commercial Acceptance.
Certificate of Final Acceptance means a certificate issued by
Purchaser in accordance with Sub-Article 9(E) to Contractor certifying that
the System is Ready for Final Acceptance.
Certificate of Provisional Acceptance means a certificate in the form
of Exhibit E hereto issued by Purchaser in accordance with Sub-Article 9(C)
to Contractor certifying that a Segment or the System, as applicable, is
Ready for Provisional Acceptance.
CIF means cost, insurance and freight, as defined in Incoterms.
Commissioning Report has the meaning set forth in the System
Commissioning and Acceptance section of Appendix 4.
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Confidential Information has the meaning set forth in Sub-Article
36(B).
Contract means this Project Development and Construction Contract,
specifically consisting of the documents described in Article 2, and shall
be deemed to include any amendments thereto or Contract Variations pursuant
to Article 6 (Contract Variations).
Contract Price means the Initial Contract Price, plus any variations
pursuant to Article 6 (Contract Variations) to the extent provided under
Sub-Article 4(A), Contract Taxes as set forth in Sub-Article 4(B) and other
adjustments to the Contract Price provided for in this Contract.
Contract Tax has the meaning set forth in Sub-Article 4(B)(1).
Contract Variation has the meaning set forth in Sub-Article 6(A).
Contractor means the entities that have collectively executed this
Contract as the Contractor, jointly and severally, and that will be
responsible for the performance of the Work under this Contract and shall
include their permitted successors and/or assigns.
Contractor Intellectual Property has the meaning set forth in Sub-
Article 18(A).
Date of Commercial Acceptance means the date that is determined in
accordance with Sub-Article 9(D).
Date of Final Acceptance means the date that is determined in
accordance with Sub-Article 9(E).
Date of Provisional Acceptance means the date that is determined in
accordance with Sub-Article 9(C).
Default means an Event of Default, as described in Sub-Article 13(A),
or any event, condition or occurrence which, with the giving of notice or
passage of time or both, would be an Event of Default.
Default Date means, with respect to the Scheduled RFS Date, the
Segment 4/5 Scheduled RFS Date or the Segment 6 Scheduled RFS Date, as the
case may be, one-hundred (100) days after such Scheduled RFS Date.
Defect and Defective each has the meaning set forth in Sub-Article
10(F).
Deliverable Software has the meaning set forth in Sub-Article 18(C).
Deliverable Technical Material has the meaning set forth in Sub-
Article 18(B).
Design Life Period has the meaning set forth in Sub-Article 10(B).
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Dispute Account means the Dispute Account to be created under the
Payment Escrow Agreement.
Dollars has the meaning set forth in Sub-Article 4(A)(1).
Event of Default has the meaning set forth in Sub-Article 13(A).
Extension Option Period has the meaning as set forth in Sub-Article
50(B).
Final Commissioning Report has the meaning set forth in the System
Commissioning and Acceptance section of Appendix 4.
Final Survey Report means the final route survey report described in
the Marine Operations section (Route Survey Reports subsection) of Appendix
4.
Force Majeure has the meaning set forth in Sub-Article 17(A).
Guarantor means Alcatel, a societe anonyme established in France and
the ultimate parent company of the Contractor.
Guaranty means the guaranty entered into by the Guarantor
contemporaneously with the initial payment made by Purchaser to Contractor
under this Contract in favor of the Purchaser in the form of Exhibit A
hereto.
Import Fiscal Costs has the meaning set forth in Sub-Article 4(B)(1).
Incoterms means the International Chamber of Commerce, Guide to
Incoterms (1990).
Independent Engineer means Xxxxxxx Xxxxxxxx or a similarly qualified
successor in the capacity as the engineer to, and selected by, the
financing sources secured in accordance with Sub-Article 37(C) who has
agreed to be bound by the confidentiality provisions of this Contract and
who is not affiliated with a competitor of Contractor or Purchaser. As
between the Purchaser and the Contractor, the Independent Engineer, acting
in accordance with this Contract, shall, solely for purposes of this
Contract, be deemed to be acting on behalf of the Purchaser.
Information has the meaning set forth in Sub-Article 20(A).
Initial Contract Price has the meaning set forth in Sub-Article
4(A)(1).
Intellectual Property has the meaning set forth in Sub-Article 18(A).
Landing Jurisdiction has the meaning set forth in Sub-Article 4(B)(1).
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Landing Licenses means, in the United States of America, a License to Land
and Operate a Submarine Cable System pursuant to the Submarine Cable Landing
License Act, 47 U.S.C. (S)(S) 34-39 and, in Bermuda, Venezuela and Brazil the
comparable licenses which are required under the laws of Bermuda, Venezuela and
Brazil.
Laws means any laws, ordinances, regulations, rules, orders, proclamations,
requirements of governmental authorities or treaties.
Manufacturing Materials has the meaning set forth in Sub-Article 13(B).
Notice of Termination has the meaning set forth in Sub-Article 14(A).
Party(ies) means any of the Purchaser, ASN and/or ASNI, as appropriate.
Pattern of Failure means any two or more failures of the same or similar
mechanisms included in any portion of the System have occurred which show that a
deterioration of the System performance will reasonably likely render or has
rendered the System outside any of its prescribed specifications or System
Performance Requirements, as detailed in Appendix 4, at any time during the
Design Life Period.
Payment Escrow Agent means Toronto Dominion Bank, in its capacity as escrow
agent under the Payment Escrow Agreement, and its successors in such
capacity.
Payment Escrow Agreement means that Escrow Agreement to be entered into
among the Prime Contractor, Purchaser, and the Payment Escrow Agent,
substantially in the form of Exhibit C hereto, with such changes therein as are
reasonably requested by the Payment Escrow Agent, as amended, modified or
supplemented from time to time.
Permits means all Access Rights, permits, pipeline and cable crossing
agreements, approvals, "no objections", permissions-in-principle,
authorizations, consents, customs clearances, registrations, certificates,
rights-of-way, easements, certificates of occupancy, licenses, including without
limitation, orders, vessel and crew authorizations/visas, permission for the
operation of navigational aids and radio systems and similar authorizations
necessary to complete the Work and operate and maintain the System (other than
any of the foregoing (i) relating to the ownership, operation and maintenance of
the System and not necessary until after the System is Ready for Final
Acceptance, (ii) which is or would be needed by Purchaser to engage in any
business outside the business relating to constructing, developing, owning,
repairing, maintaining and improving, and operating a submarine cable system or
(iii) which is or would be needed at any time by any purchaser or lessee of
capacity on the System or any portion thereof). Permits do not include Landing
Licenses.
Prime Contractor has the meaning set forth in Sub-Article 42A hereof.
Prime Rate shall mean the prime rate (or base rate) announced by CitiBank,
N.A. (whether or not such rate has actually been charged by such bank). If such
bank discontinues
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the practice of announcing the Prime Rate, the "Prime Rate" shall mean the prime
rate (or base rate) charged by any other bank (whose headquarters is in New
York, New York) selected by mutual agreement of the Parties or pursuant to
Article 33.
Provisioning Schedule means the price schedule attached hereto in Appendix
1.
Purchase Taxes has the meaning set forth in Sub-Article 4(B)(1).
Purchaser means Atlantica Network (Bermuda) Ltd. and shall include its
permitted successors and assigns.
Ready for Commercial Acceptance means
(i) for any Segment, that
(a) if the System is not at the same time also Ready for
Commercial Acceptance, the Purchaser has consented in
writing (as confirmed by the Independent Engineer), in its
sole discretion, to accept such Segment as Ready for
Commercial Acceptance,
(b) such Segment, as established by Acceptance Testing, has the
ability to carry commercial traffic between the two landing
points operating at an initial 20 Gb/s per fiber pair (with one
fiber pair equipped for working and one fiber pair for
protection) such that such Segment will meet performance criteria
of ITU-T G.826 as defined in the System Performance section of
Appendix 4 at the end of the Design Life Period and has line
monitoring operating pursuant to the principals enunciated in
ITU-T M.3010 and protection switching capability according to
ITU-T G.841, Annex A and as set forth in the Technical Volume,
(c) Contractor has tested and provided for interconnectivity
capability to the Segment terminal equipment as described in
Appendix 4 as established by Acceptance Testing,
(d) Contractor has performed its obligations under Article 18
(Intellectual Property) then required to be performed by it,
(e) all Permits have been obtained for such Segment in
accordance with this Contract, and
(f) the results of Acceptance Testing of such Segment
demonstrate that such Segment has satisfied the System
Performance Requirements for such Segment, and
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(ii) for the System, that
(a) the System has the ability, as established by Acceptance Testing,
to carry commercial traffic throughout the System operating at an
initial 20 Gb/s per fiber pair (with one fiber pair equipped for
working and one fiber pair for protection) such that the System
will meet performance criteria of ITU-T G.826 as defined in the
System Performance section of Appendix 4 at the end of the Design
Life Period, has line monitoring and a network management system
operating pursuant to ITU-T M.3010 and protection switching
capability according to ITU-T G.841, Annex A,
(b) Contractor has tested and provided for interconnectivity
capability to the System terminal equipment as described in
Appendix 4, as established by Acceptance Testing,
(c) Contractor has performed its obligations under Article 18
(Intellectual Property) then required to be performed by it,
(d) all Permits have been obtained for the System in accordance with
this Contract and
(e) the results of Acceptance Testing demonstrate that the
System has satisfied the System Performance Requirements.
Ready for Final Acceptance means
(i) for the System, that
(a)(I) the System has, in accordance with the Acceptance Testing,
successfully and continuously (other than by reason of Force
Majeure in which case the test period shall be extended for a
time period agreed between the Parties) functioned in
compliance with the System Performance Requirements during the
period of ninety (90) consecutive days after the Date of
Provisional Acceptance or
(II) if the System shall have failed to meet the System Performance
Requirements at any time during such period (other than by
reason of Force Majeure), the Contractor has corrected such
failure and the System has, in accordance with the Acceptance
Testing, successfully and continuously (other than by reason of
Force Majeure in which case the test period shall be extended
for a time period agreed between the Parties) functioned in
compliance with the System Performance Requirements for such
additional period of time not to exceed ninety (90) days (and
not to end prior to the date ninety (90) days after the Date of
Provisional Acceptance) as reasonably
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determined by the Purchaser (as confirmed by the Independent
Engineer) as being sufficient to confirm that such failure has
been corrected and that no other failures are likely to appear,
and
(b) all deficiencies noted in the Certificate of Provisional
Acceptance have been corrected in accordance with this Contract
(other than, at the election of Purchaser (as confirmed by the
Independent Engineer), minor deficiencies which will not affect
the operation of the System, in respect of which an equitable
adjustment to the Contract Price shall be made), and
(c) Contractor has complied in all respects with Article 18
(Intellectual Property), and
(d) the results of Acceptance Testing of the System demonstrate
that the System has satisfied the System Performance
Requirements.
Ready for Provisional Acceptance means
(i) with respect to any Segment,
(a) if the System is not, at the same time, also Ready for
Provisional Acceptance, the Purchaser has consented in writing
(as confirmed by the Independent Engineer), in its sole
discretion, to accept such Segment as Ready for Provisional
Acceptance,
(b) such Segment is complete in all material respects (and in any
event is Ready for Commercial Acceptance),
(c) the results of Acceptance Testing of such Segment demonstrate
that such Segment has satisfied the System Performance
Requirements,
(d) Contractor has substantially performed its obligations under
Article 18 (Intellectual Property) then required to be performed
by it, and
(e) all Permits have been obtained for such Segment in accordance
with this Contract, and
(ii) with respect to the System, the System is (as established by
Acceptance Testing) complete in all material respects (and in any
event is Ready for Commercial Acceptance), and all Segments are Ready
for Provisional Acceptance such that the System will meet performance
criteria of ITU-T G.826 as defined in the System Performance section
of Appendix 4 at the end of the Design Life Period, has line
monitoring and a network management system operating pursuant to ITU-T
M.3010 and protection switching capability according to ITU-T G.841,
Annex A.
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Representatives has the meaning set forth in Sub-Article 36(B).
Retainage means an amount equal to *
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
Retesting has the meaning set forth in Sub-Article 9(B)(3).
Route Survey means the route survey described in the Marine Operations
section (Route Survey Reports subsection) of Appendix 4.
Scheduled RFS Date has the meaning set forth in Sub-Article 9(A)(7).
Scheduled Upgrade Date has the meaning set forth in Sub-Article 48(G).
Sea State 5 has the meaning for such state of weather as described in the
Xxxxxxx Sea Scale.
Segment means Segment 1, Segment 2, Segment 3, Segment 4, Segment 5 or
Segment 6, as the case may be.
Segment 1 means the segment of the System from Tuckerton, New Jersey to
Boca Raton, Florida, and landing in locations capable of interconnecting with
major telecommunications carriers.
Segment 2 means the segment of the System from Boca Raton, Florida to Punta
Gorda, Venezuela, and landing in locations capable of interconnecting with
major telecommunications carriers.
Segment 3 means the segment of the System from Punta Gorda, Venezuela to
Fortaleza, Brazil and landing in locations capable of interconnecting with
major telecommunications carriers.
Segment 4 means the segment of the System from Fortaleza, Brazil to St.
David's, Bermuda and landing in locations capable of interconnecting with major
telecommunications carriers.
Segment 5 means the segment of the System from St. David's, Bermuda to
Tuckerton, New Jersey, including the System called BUS-1, and landing in
locations capable of interconnecting with major telecommunications
carriers.
Segment 6 means the segment of the System from Fortaleza, Brazil to Rio de
Janeiro, Brazil and landing in locations capable of interconnecting with
major telecommunications carriers.
Segment 4/5 Scheduled RFS Date has the meaning set forth in Sub-Article
9(A)(7).
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Segment 6 Scheduled RFS Date has the meaning set forth in Sub-Article
9(A)(7).
Software Escrow Agreement has the meaning set forth in Sub-Article 18(H).
Special Upgrade has the meaning set forth in Sub-Article 48(G).
Supplies means any and all goods, materials, plant, machinery, equipment,
hardware, spare parts and items to be supplied or supplied by the Contractor
under this Contract, including those items set forth on Appendix 1.
Suspension means a suspension pursuant to Sub-Article 15(A) or 15(B).
System means the four fiber pair submarine cable system consisting of
Segments 1, 2, 3, 4 and 6 (at an initial capacity of 20 Gb/s on each of two
fiber pairs, one working fiber pair and one protection fiber pair, with each
fiber pair upgradeable to 320 Gb/s at the Date of Commercial Acceptance or the
Date of Provisional Acceptance, as the case may be) and the two fiber pair
submarine cable system consisting of Segment 5 named as BUS-1, at an initial
capacity of 20 Gb/s on two fiber pairs with one working fiber pair and one
protection fiber pair as more fully described in the System Description section
of Appendix 4.
System Extension has the meaning set forth in Sub-Article 50(A).
System Performance Requirements means with respect to a Segment or the
System, the applicable performance requirements set forth or to be developed by
mutual written agreement of the Parties (and, with respect to those performance
requirements to be mutually developed by the Parties, as accepted and approved
by the Independent Engineer, which acceptance and approval shall not be
unreasonably withheld) pursuant to the System Performance section of the System
Description section of Appendix 4 (or pursuant to Article 33 in the absence of
such mutual agreement).
System Upgrade has the meaning set forth in Sub-Article 48(A).
Tax means any tax, duty, levy, charge or custom imposed or collected by any
taxing authority or agency (domestic or foreign).
Technical Volumes means the Technical Volumes attached hereto as Appendices
4 and 5.
Transfer Taxes has the meaning set forth in Sub-Article 4(B)(1).
Upgrade Option Period has the meaning as set forth in Sub-Article 48(B).
VAT has the meaning set forth in Sub-Article 4(B)(1).
Warranty Period has the meaning set forth in Sub-Article 10(A).
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Work means all activities, labor, management, engineering, procurement and
other work and services (other than the activities and services specified in
this Contract to be provided by Purchaser) necessary to be performed or provided
in developing, planning, designing, manufacturing, constructing, delivering,
installing and testing the System, until the System is Ready for Final
Acceptance, including without limitation, designating, coordinating and
obtaining all Permits. Whether or not used in conjunction with the term
"Supplies," the term "Work" shall always be deemed to include the provision of
all of the Supplies.
Year 2000 Compliant means, when used with respect to any software, firmware
or materials, that such software, firmware or materials will operate accurately
and, without interruption, accept, possess and in all manner retain full
functionality, as detailed in the Technical Volume, when referring to, or
involving, and process correctly any year, including any leap year, or date in
the twentieth and twenty-first centuries; provided, however, that
notwithstanding the description of full functionality in the Technical Volume,
nothing therein will diminish Contractor's obligation to furnish software,
firmware or materials that are Year 2000 compliant.
4 Contract Price
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A. Contract Price
1. The initial Contract Price for the Work, in United States Dollars
(US$ or "Dollars") is a fixed fee of US$620,861,575 (the "Initial
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Contract Price"). The Initial Contract Price does not include the
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cost of any (i) Contract Taxes as provided for in Sub-Article 4(B)
and (ii) any Contract Variations. The Initial Contract Price
includes, without limitation, all charges for CIF delivery of the
Supplies, all costs and expenses incurred in obtaining all Permits
and all costs and expenses incurred with respect to Supplies and
preparation of cable stations for terminal equipment.
2. The Provisioning Schedule sets forth the Contractor's breakdown of
the Initial Contract Price among various aspects of the Work. If
the actual cost of any aspect of the Work is greater or less than
that set forth in the Provisioning Schedule, such fact shall not
cause any change in the Initial Contract Price.
3. The Contractor and the Purchaser will share equally the costs and
expenses of the Payment Escrow Agent.
4. The Contractor will not arrange for any Permit which requires
payments to be made by the Purchaser or made after the System is
Ready for Provisional Acceptance, without the prior written
consent of the Purchaser.
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B. Taxes, Levies and Duties
1. The Initial Contract Price, as stated in Sub-Article 4(A) above,
excludes all Contract Taxes. For purposes of this Article the term
"Contract Tax" means: (i) customs duties, value added taxes
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("VAT"), taxes, levies, fees and any similar fiscal cost imposed
by the "Landing Jurisdiction" (the jurisdiction in which such
--------------------
Supplies will be permanently located once incorporated into the
System) on import of Supplies into the Landing Jurisdiction
(hereinafter referred to collectively as "Import Fiscal Costs");
-------------------
(ii) VAT, sales tax, business tax, general sales tax, consumption
tax, goods and services tax and any similar taxes imposed by the
Landing Jurisdiction on the transfer of ownership of the Supplies
from the Contractor to the Purchaser or provision of services in
the Landing Jurisdiction by the Contractor on behalf of the
Purchaser (hereinafter referred to collectively as "Transfer
--------
Taxes"); and (iii) duties, levies, fees or fiscal stamps imposed
-----
in respect of Contract legalizations, and use or property taxes
imposed on the value of the Contract, or a portion thereof, by a
Landing Jurisdiction (excluding any property taxes imposed on
property owned by the Contractor that is not intended to be
incorporated into the System) (hereinafter referred to
collectively as "Purchase Taxes"). Any Taxes not addressed in this
--------------
Contract are to be borne by the party upon whom they are imposed
by the tax authorities.
2. The Purchaser (i) shall be ultimately responsible for the payment
of all Contract Taxes and (ii) shall pay them directly to the tax
authorities in a Landing Jurisdiction at the time they are payable
to such tax authorities, provided that it has adequate notice that
they will be imposed. The Contractor will use reasonable efforts
to ensure that the Purchaser has adequate notice of Contract Taxes
due under this Sub-Article 4(B).
3. In the event that the Contractor pays Import Fiscal Costs and/or
Purchase Taxes, the Contractor shall issue a request for
reimbursement to the Purchaser within one month of the payment of
the Import Fiscal Costs or Purchase Taxes, which request shall
include evidence of the Contractor's payment of the relevant Tax.
Within sixty (60) days of receipt of such request, the Purchaser
will reimburse the Contractor, in US$, at the rate of exchange in
force on the date the Contractor paid the relevant Tax. If the
Contractor is required by a Landing Jurisdiction to charge
Transfer Taxes to the Purchaser, the Purchaser will pay such
Transfer Taxes to the Contractor, in US$, within sixty (60) days
of receipt of invoices for the Transfer Taxes issued pursuant to
and in compliance with the applicable regulations of the Landing
Jurisdiction regarding Transfer Taxes .
4. Amounts owed pursuant to requests for reimbursement under Sub-
Article 4(B)(3) that are not paid when due shall accrue late
payment charges in accordance with the terms for payment of the
Contract Price.
Page 13
5. If the Contractor shall become aware that it is entitled to
receive a refund or credit from a relevant taxing or governmental
authority in respect of a Contract Tax that the Purchaser has
paid, the Contractor shall promptly notify the Purchaser of the
availability of such refund or credit and shall, within thirty
(30) days after receipt of a request by the Purchaser (whether as
a result of notification that it has made to the Purchaser or
otherwise), make a claim to such taxing or governmental authority
for such refund or credit at the Purchaser's expense. If the
Contractor receives the refund or credit, the Contractor shall
within sixty (60) days from the date of receipt of the refund or
credit pay it over to the Purchaser (including any interest paid
or credited by the relevant taxing or governmental authority with
respect to such refund or credit), net of all out-of-pocket
expenses of the Contractor for obtaining the refund or credit;
provided, however, that the Purchaser, upon the request of the
-------- -------
Contractor, agrees to repay the amount paid over to the Purchaser
to the Contractor in the event the Contractor is required to repay
such refund or credit to such relevant authority.
6. The Contractor agrees to use reasonable efforts, including,
without limitation, registering for VAT and any applicable
Transfer Taxes in any country, state or other jurisdiction where
legally required, to cooperate with and assist Purchaser in its
efforts (i) to have Supplies made exempt from Contract Taxes,
whether in the manufacture of the Supplies or related to the
importation or location or installation of the Supplies; (ii) to
request revisions, drawbacks, remissions, reclassifications or the
like to the jurisdictions identified by the Purchaser; or (iii) to
reduce or eliminate Contract Taxes (including the provision of
applicable certifications and forms) and to obtain any available
refunds of Contract Taxes, provided that the Contractor shall not
be required to act other than in accordance with the relevant Laws
then in force. The Purchaser shall reimburse the Contractor, in
accordance with Article 5, for any reasonable out-of-pocket costs
(including the reasonable fees and expenses of legal counsel,
accountants and other advisors) incurred by the Contractor under
this Sub-Article 4(B)(6) provided that Purchaser was notified in
advance of and has consented to the incurrence of such costs, fees
and expenses. Contractor shall not be required to cooperate with
and assist Purchaser in its efforts under this Sub-Article 4(B)(6)
or to take any action hereunder which in the Contractor's good
faith judgment would incur any costs or if in Contractor's good
faith judgment it would be advisable to obtain the advice of
counsel, accountants or other advisors prior to cooperating with
or assisting Purchaser or taking any action, unless in each case,
Purchaser has agreed to reimburse Contractor under the foregoing
proviso.
7. As part of the Work, the Contractor shall obtain at its cost and
expense, on Purchaser's behalf, any import license or other
official authorization and carry out all customs formalities
necessary for the importation or exportation of Supplies in
connection with such Work. The Purchaser agrees to be the
Page 14
Importer or Exporter of Record or designate an Importer or
Exporter of Record/Consignee on its behalf. Purchaser must provide
a Letter of Authorization from any third party designate stating
it agrees to be the Importer or Exporter of Record on Purchaser's
behalf and identify the name and address of the designated
Importer or Exporter of Record.
8. The Supplies to be installed or held on land shall, at the cost
and expense of Contractor, be delivered to, unloaded and stored at
the agreed point at the named place of destination and shall be
consigned at such point to the Purchaser; provided, that risk of
loss and title to the Supplies shall pass in accordance with Sub-
Article 9(F).
C. Withholding Tax
1. If any withholding for any Tax other than a Contract Tax is
required by any Law as modified by applicable treaties in respect
of any payment to the Contractor, the Purchaser shall (i) withhold
the appropriate amount from such payment, and (ii) pay such amount
to the relevant authorities in accordance with applicable Laws.
2. To the extent reasonably possible, before withholding any such Tax
in respect of any payment to the Contractor, the Purchaser shall
inform the Contractor of the withholding requirement.
3. The Purchaser shall provide to the Contractor, as soon as
reasonably practicable, a certified copy of an official tax
receipt for any Tax which is withheld from any payment due to the
Contractor. All such receipts shall be in the name of the
Contractor. The Contractor agrees to complete accurately and
timely provide to the Purchaser or, if required, to the applicable
taxing authority, such forms, certifications or other documents as
may be requested in a timely manner by the Purchaser, in order to
allow it to make payments to the Contractor without any deduction
or withholding on account of such Taxes (or at a reduced rate
thereof) or to receive a refund of any amounts deducted or
withheld on account of such Taxes.
5 Terms of Payment
----------------
A. General Conditions of Payment
1. All payments shall be made and all invoices shall be rendered in
Dollars. The payor hereunder shall be responsible for and shall
pay all costs and fees for payment, as well as the banking and
wiring costs. All banking documents and correspondence must be in
English.
Page 15
B. Invoice Procedures
1. All invoices for Work shall be submitted according to the Billing
Schedule, provided that the appropriate Billing Milestones have been
achieved; provided, further that Contractor may invoice Purchaser in
advance of the specified Billing Schedule date when Contractor has
achieved the corresponding Billing Milestone. All invoices for Work
shall have a certificate in the form of Exhibit D attached.
2. Any Contract Variation shall be invoiced and paid in accordance with
the terms of the Contract Variation as specified in Article 6
(Contract Variations).
3. Invoices for amounts not described in Sub-Sections 1 and 2 above,
which may become payable hereunder by the Purchaser, shall be
submitted after applicable costs have been incurred or such other
time as may be specified in this Contract. Such invoices shall be
payable at a reasonable bank rate of exchange (to be agreed to by
the Parties) applicable at the time such costs were paid by the
Contractor, and shall be accompanied by a certificate of the
Contractor explaining such amount and certifying that it is payable.
4. The Contractor shall render all invoices to the following address or
facsimile number (or such other address as may be specified from
time to time by the Purchaser):
Atlantica Network (Bermuda) Ltd.
0 Xxxxxx'x Xxx Xxxx
Xxxxxxxxx, Xx. David's DDO2
Bermuda
Attention: Chief Financial Officer
With a copy to:
it-International Telecom Ltd.
The Xxxxxx Centre
2 Harbour Exchange Square
London E14 9GE
England
Attention: Xxxxxxx Xxxxxxxx
C. Payment Procedures
1. The Purchaser shall pay the Contractor, and the Contractor shall
accept payment, in accordance with this Article 5 (Terms of
Payment). All payments due and owing to the Contractor shall be paid
to the Prime Contractor (and each invoice shall so provide) and
payment to the Prime Contractor shall be deemed payment to the
Contractor. Any amounts
Page 16
received by the Prime Contractor shall be deemed to have been received
by the Prime Contractor in its capacity as agent of the Contractor. The
Prime Contractor shall pay such amounts to the Contractor net of any
applicable taxes or levies that may be imposed on the Contractor.
2. Purchaser agrees to pay an initial payment to Contractor in the amount
of US$62,086,157 on July 15, 1999. Failure to receive this payment
shall entitle Contractor to immediately suspend Work hereunder.
3. Invoices shall be given to the Purchaser and the Independent Engineer
on the fifteenth (15th) day of any month, subject to Sub-Article
5(C)(5) below, and shall be due and payable on the later to occur of
the last day of the next month or forty-five (45) days from the
Purchaser's receipt of the invoice (the "Payment Date").
------------
4. Invoices or amounts owed which are not paid when due shall accrue late
payment charges from the day, following the day, on which payment was
due until the day on which it is paid. Invoices for such extended
payment charges shall not be issued for an amount less than U.S.
$1,000. Late payment charges shall be computed at the rate of the Prime
Rate plus 2%.
5. In the event that the Purchaser has an objection to any invoice, the
Purchaser shall notify the Contractor by the Payment Date and the
Purchaser and Contractor shall make every reasonable effort to settle
promptly the dispute concerning the payment(s) in question. Failure to
notify or pay the Contractor by the Payment Date shall entitle the
Contractor, under Sub-Article 15(B), to suspend Work hereunder. In the
event such dispute is not settled by the Payment Date, the Prime
Contractor and the Purchaser will execute and deliver a Payment Escrow
Agreement substantially in the form of Exhibit C hereto, with such
changes therein as the Payment Escrow Agent may reasonably request, and
the Purchaser will have the right to withhold payment of the disputed
amount(s) (or withhold from the invoice amount a sum equal to the
amount purportedly owing by Contractor to Purchaser hereunder) so long
as it deposits, in full, such disputed amount(s) into the Dispute
Account. In the event payment is made under the Payment Escrow
Agreement, Contractor shall continue to perform the Work hereunder.
(a) Provided such disputed amount is placed into the Dispute Account
in a timely manner, the Purchaser shall not be deemed to be in
breach of or in default for failing to pay Contractor.
(b) The Payment Escrow Agent will distribute the disputed amount in
accordance with the terms of the Payment Escrow Agreement.
(c) In addition, the prevailing Party shall be entitled to receive
from the Dispute Account an amount equal to the interest earned by
the
Page 17
Payment Escrow Agent on the distributed, disputed amount,
which shall be distributed by the Payment Escrow Agent under
clause (b) above.
6. The Purchaser shall make timely payments for that portion of the
invoice not in dispute in accordance with Sub-Article 5(C) or such
payments will be assessed extended payment charges as set forth in
Sub-Article 5(C)(4). Pending resolution of the dispute, the
Purchaser may not withhold payment (unless also subject to
dispute) on any other invoice concerning different goods and/or
services submitted by Contractor.
6 Contract Variations
-------------------
A. Either Party may request, during construction of the System, by written
order, a contract variation requiring additions or alterations to, deviations or
deductions from the System ("Contract Variation"). If the other Party consents,
------------------
in its sole discretion, this change will be formalized as an amendment to this
Contract by a Contract Variation; provided, that the Contractor will not
--------
unreasonably withhold its consent to a Contract Variation requested by the
Purchaser.
B. A Contract Variation shall not become effective unless and until the
price adjustment, the terms and schedule of payment and the extension or
reduction of time and all other terms have been mutually agreed upon by the
Parties (and the Parties shall act reasonably and in good faith in connection
with all such terms) and such Contract Variation is signed by an authorized
representative of each of the Purchaser and the Prime Contractor. Each Contract
Variation shall be incorporated as an amendment to this Contract.
C. Contractor may seek a Contract Variation for any change, after the date
hereof, of any Law (except those, and to the extent, affecting only Taxes or
wages) which requires a change in the Work or affects the costs (other than
Taxes or wages) incurred or to be incurred by the Contractor or any combination
of the foregoing and Purchaser shall agree to any such change in Work as may be
required and, subject to Sub-Article 4(A), to an equitable adjustment to the
Contract Price. In such event, Contractor shall use its best endeavors to
minimize any increase in cost arising out of a change in Law. As of the date
hereof, neither Party has Actual Knowledge of any proposed change in any Law
that would require a change in the Work.
D. The Parties shall negotiate appropriate Contract Variations in good
faith to finalize the scope of the Work required for the land acquisition and/or
lease and civil works (i.e., construction) associated with the provision of
----
cable stations, and access thereto, such negotiations to be completed by July
15, 1999. Subject to completion of negotiations by the date specified in the
preceding sentence, no Contract Variation referred to in this Sub-Article 6(D)
shall result in an extension of the Scheduled RFS Date, the Segment 6 Scheduled
RFS Date or the Segment 4/5 Scheduled RFS Date.
Page 18
7 Responsibilities for Permits/Landing Licenses; Compliance with Laws
-------------------------------------------------------------------
A. The Purchaser shall reasonably cooperate with and assist the Contractor
to obtain all Permits, to the extent that Purchaser's cooperation and assistance
are necessary for Contractor to expeditiously and cost-efficiently obtain such
Permits. The Purchaser agrees to respond promptly to any such request from
Contractor. Further, the Purchaser agrees that it will not impede or interfere
with Contractor's activities or Contractor's abilities to perform its
obligations. Upon notice from Contractor with respect to a Permit or receipt by
Purchaser of a copy of a Permit, Purchaser shall use reasonable efforts to
fulfill all conditions of such Permit and perform all responsibilities
thereunder, except to the extent that such conditions or responsibilities are
those of the Contractor under or relating to the Work or as provided in Sub-
Articles 4(A)(4) and 7(B). Contractor will inform Purchaser as to any such
conditions or responsibilities that are not ordinary and routine and obtain
Purchaser's written consent thereto prior to arranging for any such Permit.
B. The Contractor shall have the responsibility for obtaining and shall
use its best efforts to obtain as soon as reasonably practicable and at
Contractor's cost and expense, all Permits. With respect to any interest in real
property, Contractor shall (unless Purchaser otherwise requires), to the extent
practicable, obtain title directly in the name of the Purchaser or its designee.
The Contractor will cause, at its cost and expense, all Permits not issued in
the name of Purchaser to be freely assignable to Purchaser, and to be assigned
to Purchaser at the time title to the System is transferred to Purchaser
pursuant to this Contract. Contractor will cause all Permits to provide that any
payments thereunder are the obligation of Contractor and not of Purchaser.
C. The Purchaser shall be responsible for obtaining, at its expense (but
shall not be liable for its failure to obtain), Landing Licenses. The Contractor
will cooperate with the Purchaser in connection therewith.
D. Any delay in obtaining or failure to obtain any Permit shall constitute
Force Majeure and be treated as described in Article 17 (Force Majeure), except
to the extent such delay is a result of Contractor's negligence, willful
misconduct or breach of this Contract.
E. Except with respect to variations necessitated by complying with any
changes, enacted after the date hereof, in any Laws (the costs with respect to
which shall be borne by the Contractor and/or the Purchaser to the extent
provided in this Contract), the Contractor shall be responsible for the payment
of any and all costs incurred as a result of the need to vary design, drawings,
plans or procedures to comply with any of the circumstances set forth in this
Article. The Contractor shall, before making any variations from the designs,
drawings, plans or procedures that may be necessitated by so complying with any
Laws and that would represent a change to the design of the System, give to the
Purchaser written notice, specifying the variations proposed to be made, and the
reasons for making them. As of the date hereof, neither Party has Actual
Knowledge of any proposed changes in the Laws which would necessitate any such
variation.
F. The Contractor shall (i) give all notices required by any Laws to be
given to any authority and (ii) perform or permit the performance by authorized
persons of any inspection required by the said Laws in connection with Work
performed under this Contract.
Page 19
G. As part of the Initial Contract Price, the Contractor shall obtain, at
its own risk and expense, any export and import license and other official
authorization and carry out all customs formalities for the exportation and
importation of Supplies and, where necessary, for their transit through another
country.
H. Further to the Permit Listing in Exhibit B, within 30 days after the
date of execution of this Contract, the Contractor will prepare and deliver to
the Purchaser an updated list of Permits that to its knowledge are required to
be obtained under current Law in order to complete the Work and shall update
such list from time to time as it becomes aware of changes in Permit
requirements. Such list, as updated from time to time, shall set forth the
projected dates of filing for such Permits and an estimate of when such Permits
are expected to be obtained. Without limiting Contractor's liabilities in
respect of Sub-Articles 7(B) and (G), Contractor shall have no liability in
respect of the accuracy of the information furnished under this Sub-Article,
except in the case of gross negligence or willful misconduct.
I. Contractor, in performing the Work, shall comply with all applicable
Laws, including, without limitation, all employment, safety and environmental
laws.
J. Contractor is responsible for notifying any third party cable or
pipeline owner or operator whose system could be impacted by a System cable
crossing or by the proximate location of any portion of the System.
8 Route Survey
------------
A. The Contractor shall conduct the Route Survey and select the cable
route for the System (other than with respect to BUS-1) in accordance with the
information in the Final Survey Report. Contractor shall be permitted to make
changes, at its discretion, to the route selection (other than with respect to
BUS-1), if necessary for operational reasons without additional cost to
Purchaser.
B. Any changes to the route selection requested by Purchaser shall be
treated as a Contract Variation in accordance with Article 6 (Contract
Variations).
9 Acceptance
----------
A. General
1. The Acceptance Testing shall be performed by the Contractor at its
cost and expense. The Purchaser and its designated representatives
(including the Independent Engineer) may observe, at their own
expense, the Contractor's tests and review the test results.
Purchaser may request and conduct any additional tests, at its own
expense (except where the additional test establishes that the
Work in question has not been performed in strict compliance with
this Contract, in which case Contractor shall bear the cost of
such test), but any delay caused by such process shall be a Force
Majeure
Page 20
event except where any such test establishes that the Work or portion
thereof that is subject to such test has not been performed in strict
compliance with this Contract. To the extent Acceptance Testing criteria
have not been established with respect to a given portion of the System as
of the date of this Contract, the Parties agree to cooperate in promptly
establishing appropriate criteria as is reasonable under the circumstances.
2. Until the Date of Final Acceptance of the System, the Purchaser agrees to
allow Contractor reasonable access to all Segments of the System, subject to
the terms of the Permits and Landing Licenses and provided that such access
does not unduly interfere with service of the System.
3. The Purchaser (together with the Independent Engineer) shall issue a
Certificate of Commercial Acceptance if the provisions of Sub-Article
9(D)(1) are satisfied.
4. Once a Segment or the System is Ready for Provisional Acceptance, the
Purchaser shall issue a Certificate of Provisional Acceptance (subject to
the approval of the Independent Engineer), provided, that it is within the
Purchaser's sole discretion as to whether to accept a Segment instead of the
System.
5. Once the System is Ready for Final Acceptance, the Purchaser (subject to the
approval of the Independent Engineer) shall issue a Certificate of Final
Acceptance.
6. The Purchaser (or the Independent Engineer) shall not unreasonably withhold
or delay issuance of a Certificate of Commercial Acceptance, a Certificate
of Provisional Acceptance or a Certificate of Final Acceptance, as
applicable.
7. The Contractor agrees that, except with respect to Segment 6, the Date of
Provisional Acceptance of the System or Date of Commercial Acceptance of the
System will occur by December 30, 2000 (as such date may be extended under
Article 6 (Contract Variations), Article 17 (Force Majeure) or otherwise
under this Contract or by written agreement of the Parties (the "Scheduled
---------
RFS Date")). The Contractor agrees that, with respect to Segment 6, the Date
--------
of Provisional Acceptance or Date of Commercial Acceptance will occur by
February 16, 2001 (as such date may be extended under Article 6 (Contract
Variations)) (the "Segment 6 Scheduled RFS Date"). The Contractor further
----------------------------
agrees that, with respect to Segments 4 and 5, the Date of Provisional
Acceptance or Date of Commercial Acceptance will occur by September 30, 2000
(as such date may be extended under Article 6 (Contract Variations)) (the
"Segment 4/5 Scheduled RFS Date").
------------------------------
8. The Date of Commercial Acceptance, Date of Provisional Acceptance and Date
of Final Acceptance, as the case may be, shall be deemed to have
Page 21
occurred with respect to a Segment or the System, as applicable, if a
Certificate of Commercial Acceptance, a Certificate of Provisional
Acceptance or a Certificate of Final Acceptance, as applicable, is
issued with respect thereto.
B. Notice of Acceptance or Rejection
1. Within thirty (30) days of receipt by Purchaser and the Independent
Engineer of the Commissioning Report, the Purchaser (subject to
confirmation by the Independent Engineer) must issue notification to
the Contractor of the following:
(a) issuance of a Certificate of Provisional Acceptance in accordance
with Sub-Article 9(C); or
(b) rejection of a Certificate of Provisional Acceptance, but instead
issuance of a Certificate of Commercial Acceptance in accordance
with Sub-Article 9(D) below; or
(c) rejection of the Segment or the System in its existing condition
and issuance of neither a Certificate of Provisional Acceptance
nor a Certificate of Commercial Acceptance, with, in the case of
the System, a written explanation of reasons for rejection (it
being understood that acceptance of a Segment instead of the
System is at the sole discretion of the Purchaser).
If the Purchaser or the Independent Engineer fails to
respond with such notification within thirty (30) days, then the Date
of Provisional Acceptance of the Segment (subject to Purchaser's
written consent) or the System shall be deemed to be the date such
Commissioning Report was received by the Purchaser.
2. On receipt of a notice from the Purchaser pursuant to Sub-Articles
9(B)(1)(b) or (c) above, the Contractor shall be entitled to address
any disputes and explain any discrepancies to the Purchaser regarding
the results of the Acceptance Testing. Unless Purchaser, for good
cause, rejects such explanation, it shall issue a new notice pursuant
to Sub-Article 9(B)(1) above, which shall be deemed to have been
issued on the date of the original notice.
3. In case of rejection, and if the explanation by the Contractor as
referred to in Sub-Article 9(B)(2) above is not accepted, for good
cause, by the Purchaser, the Contractor shall, at Contractor's
expense, carry out the necessary corrective actions and will effect a
new series of Acceptance Testing ("Retesting"). After receipt by
---------
Purchaser and the Independent Engineer of the new Commissioning
Report describing the results of Retesting, the
Page 22
Purchaser will be granted a new period of thirty (30) days to analyze
the new Commissioning Report according to the provisions of Sub-
Article 9(B)(1) and any new notice of the Purchaser shall apply from
the date the Purchaser receives such new Commissioning Report.
C. Provisional Acceptance
1. The Certificate of Provisional Acceptance may have annexed to it a
list of all outstanding Work to be completed and deficiencies to be
corrected by the Contractor in accordance with this Contract. The
Contractor shall, at its expense and as soon as reasonably
practicable, correct such deficiencies and complete the Work indicated
on all such listed items so as to comply with the requirements of this
Contract, provided that the Purchaser allows Contractor the necessary
access to the Segment(s) as the Contractor reasonably needs and as
allowed under the Permits and Landing Licenses to correct such
deficiencies and complete the Work. The Contractor shall give the
Purchaser reasonable notice of its requirement for such access.
Notwithstanding the above, provided that Contractor has been allowed
access to the Segment(s) as required in Sub-Article 9(A)(2), the
Contractor shall continue to carry the risk of loss for any deficient
Supply and Work until such deficiency is no longer outstanding.
D. Commercial Acceptance
1. A Certificate of Commercial Acceptance shall be issued by Purchaser
and provided the Contractor accepts, with respect to a Segment or the
System if the results of the Acceptance Testing demonstrate that such
Segment or the System does not justify the issuance of a Certificate
of Provisional Acceptance, but nevertheless, such Segment or the
System is Ready for Commercial Acceptance; provided, that acceptance
of a Segment instead of the System shall be in the sole discretion of
the Purchaser (as confirmed by the Independent Engineer).
2. Each Certificate of Commercial Acceptance shall have annexed to it a
mutually agreed list of all outstanding Work to be completed and
deficiencies to be corrected by the Contractor in accordance with this
Contract.
3. The Contractor shall, at its expense and as soon as reasonably
practicable, correct such deficiencies and complete the Work indicated
on such list, so as to comply with the requirements of this Contract,
provided that the Purchaser allows Contractor (to the extent Purchaser
has the right to do so) the necessary access to the Segment(s) as the
Contractor reasonably needs to remedy such outstanding items. The
Contractor shall give the Purchaser reasonable notice of its
requirement for such access. Notwithstanding the above, provided that
Contractor has been allowed access to the Segment(s) as required in
Sub-Article 9(A)(2), the Contractor shall continue to carry the
Page 23
risk of loss for any deficient Supply and Work until such deficiency
is no longer outstanding.
4. When the outstanding deficiencies referenced in Sub-Article 9(D)(3)
above have been remedied and completed, and the Segment(s) is
otherwise Ready for Provisional Acceptance in accordance with this
Contract, the Purchaser (as confirmed by the Independent Engineer)
will promptly issue a Certificate of Provisional Acceptance; provided,
--------
that acceptance of a Segment instead of the System shall be in the
sole discretion of the Purchaser.
5. The issuance of a Certificate of Commercial Acceptance with respect to
a Segment shall in no way relieve the Contractor from its obligation
to provide a Segment conforming with the System Performance
Requirements at the time of the issuance of a Certificate of
Commercial Acceptance. Moreover, the issuance of a Certificate of
Commercial Acceptance for a Segment or the System shall not be in lieu
of the issuance of a Certificate of Provisional Acceptance for each
Segment and the System and the Contractor shall still be required to
achieve the Ready for Provisional Acceptance standard with respect to
each Segment and the System.
E. Final Acceptance
1. Within thirty (30) days of the date of receipt by Purchaser and the
Independent Engineer of the Final Commissioning Report, the Purchaser
shall issue a Certificate of Final Acceptance or reject such Report.
If the Purchaser neither issues a Certificate of Final Acceptance nor
rejects such Report within such thirty (30) day period, then the Date
of Final Acceptance of the System shall be deemed to be the date such
Final Commissioning Report was received by the Purchaser.
F. Title and Risk of Loss
1. If the Purchaser, in its sole discretion, chooses to accept a Segment
prior to accepting the System, then upon payment of all amounts listed
in the Billing Schedule with respect to such Segment (other than the
Retainage applicable to such Segment) and the issuance of a
Certificate of Commercial Acceptance or a Certificate of Provisional
Acceptance with respect to such Segment by the Purchaser in accordance
with this Contract, title (free and clear of all liens other than
those deriving through or from the Purchaser) to such Segment and all
Supplies incorporated into and/or attached to such Segment shall pass
to and vest in the Purchaser.
2. Upon (i) payment of all amounts listed in the Billing Schedule with
respect to the System (other than the Retainage) and (ii) the issuance
of a Certificate of Commercial Acceptance or a Certificate of
Provisional Acceptance with respect to the System by the Purchaser in
accordance with this Contract, title
Page 24
(free and clear of all liens other than those deriving through or
from the Purchaser) to the System and all Supplies attached to
and/or incorporated into the System shall pass to and vest in the
Purchaser.
3. As from the date of vesting of title in a Segment or the System,
as applicable, the Purchaser shall, except as set forth in the
following sentence, assume the risk of loss in respect of all
parts of such Segment or the System, as applicable, and
responsibility for its maintenance. As stated in Sub-Article
9(A)(2), the Contractor will be allowed access to such Segment,
and, so long as the Contractor has been allowed access to such
Segment as may be required in accordance with Sub-Article
9(A)(2), the Contractor shall continue to carry the risk of loss
with respect to each deficient Supply and Work under Sub-Article
9(C)(1) and/or 9(D)(2) until such deficiencies are no longer
outstanding.
4. Upon passage of title to a Segment or the System, as the case may
be, Contractor shall deliver written evidence thereof in
substantially the form of Exhibit E hereto.
10 Warranty
--------
A. Except as provided in Sub-Article 49(C), Contractor represents and
warrants that the System and the Supplies shall be free from Defects and shall
otherwise comply fully with all of the terms and provisions of this Contract,
including the requirement that the System fully meet all of the System
Performance Requirements (collectively, the "Warranty") for a period commencing
--------
on the first Date of Provisional Acceptance for any Segment and ending *
after the last Date of Provisional Acceptance of any Segment (hereinafter
"Warranty Period").
---------------
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
1. The Contractor shall promptly and fully cure, at its sole cost
and expense, by repair or replacement, at its sole option, any
breach of the Warranty if notice of such breach is provided to
Contractor prior to the expiration of the Warranty Period,
including any breach which may become apparent or be discovered
due to imperfect workmanship, faulty design or faulty Supplies,
or any act, neglect or omission on the Contractor's part, whether
in connection with the System or to property not constituting a
portion of the System that is damaged or harmed by such breach.
(a) In making such repairs, Contractor may make changes to the
System or substitute Supplies of later or comparable design,
provided the changes, modifications, or substitutions are
made in accordance with this Contract and, under normal and
proper use do not cause the System to fail to meet any of
the System Performance Requirements.
(b) The Contractor shall use reasonable efforts to minimize the
period of time that any Segment or the System is out of
service for testing and
Page 25
repair. The Purchaser agrees to cooperate with the
Contractor to facilitate the Contractor's repair activity.
(c) It is understood that if there is any breach of the
Warranty, the Purchaser may at any time (but it shall have
no obligation to) dispatch the maintenance authority to
effect repairs and/or replacements and the Contractor shall
promptly reimburse the Purchaser for the cost thereof. The
Contractor shall be given advance notice and be entitled, at
its cost and expense, to have a representative on board ship
to observe at sea repairs and shall be given the earliest
possible notice of any such repair.
(d) In the event that the Contractor fails to commence making
provision for any repair and/or replacement required
pursuant to this Article 10 within thirty (30) days after
receipt of notice from Purchaser and/or fails to use all
reasonable efforts to minimize the period of time that any
Segment or the System or any portion thereof is out of
service for repair and/or replacement, the Purchaser may
effect the repair and/or replacement and the Contractor
shall promptly reimburse the Purchaser for the cost thereof.
The Contractor shall be given advance notice and be
entitled, at Contractor's cost and expense, to have a
representative on board ship to observe at sea repairs and
shall be given the earliest possible notice of any such
repair.
Subject to Sub-Article 10(D), any repair and/or replacement by any
maintenance authority or on behalf of the Purchaser shall not in any way
diminish the Contractor's obligation with respect to the Warranty. Moreover,
such remedy by the Purchaser shall not limit or nullify any other obligations of
the Contractor under this Contract or the Purchaser's other rights under this
Contract. Any Supplies discovered to be Defective or faulty and recovered
during a repair pursuant to this Article 10 shall be returned to the Contractor
at its request, and at Contractor's cost and expense.
2. The Contractor shall, at its cost and expense, cure fully any
breach of the Warranty and shall supply all necessary repair
materials, including Supplies. However, the Contractor may use,
with the written consent of the Purchaser, which shall not be
unreasonably withheld, the materials needed to effect a repair
from the Purchaser's available spare materials. The Contractor
shall promptly replace (at a time mutually agreed to by the
Parties), at its cost and expense, in kind such materials
supplied from the Purchaser's spare materials or, at the option
of Purchaser, reimburse Purchaser for such materials at the
original purchase price.
3. The Contractor represents and warrants that, until the expiration
of the Warranty Period, the Work will be performed in a
workmanlike manner using materials free from Defects except when
such materials are provided by the Purchaser (it being understood
that all materials arranged for directly by Contractor, whether
or not purchased in the name of Purchaser, are not
Page 26
materials provided by the Purchaser). If any Work proves to be
not so performed and Purchaser notifies the Contractor prior to
the expiration of the Warranty Period, the Contractor will
promptly correct the Defect at Contractor's cost and expense.
4. Any Supply or Work which replaces any Defective Supply or Work
during the Warranty Period shall be subject to a further Warranty
Period of two (2) years. However, the Warranty Period shall never
exceed five (5) years from the Date of Provisional Acceptance of
the System.
5. The Contractor shall be responsible for enforcing the warranties
of all subcontractors (including vendors of Supplies) during the
Warranty Period.
B. The System is designed to operate in accordance with the System
Performance Requirements for a period of twenty-five (25) years from the Date of
Provisional Acceptance (whether or not any System Upgrades are done) (the
"Design Life Period"). The Contractor represents and warrants that (i) the
------------------
System shall be designed so that until the * of the Date of Provisional
Acceptance of the System, no Pattern of Failure shall occur, (ii) the System
shall be designed with sufficient transmission margin to be upgradeable to a
capacity of 320 Gb/s per fiber pair, and (iii) until the * of the Date of
Provisional Acceptance of the System, no design defect shall occur with respect
to the System or any portion thereof which causes or is reasonably likely to
cause the System or any portion thereof to fail to operate in accordance with
the System Performance Requirements at any time during the Design Life Period.
In the event the Contractor breaches any of the representations and warranties
referred to in this Sub-Article 10(B), Contractor shall, at its cost and
expense, promptly effect such reengineering and redesign and make such repairs
and/or replace such Supplies as may be necessary to correct such breach. The
Contractor shall bear the costs of all repairs and Supplies and of the
reengineering and redesign necessary to effect such repairs and replacements.
The Contractor represents and warrants that all Deliverable Software and
Deliverable Technical Materials are Year 2000 Compliant.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
C. The representations and warranties provided above in Sub-Articles 10(A)
and (B) by the Contractor shall not apply to Defects or failures of performance,
to the extent resulting from damage caused by improper acts or omissions of the
Purchaser or its agents, employees or representatives or third parties (other
than the Contractor, its agents and subcontractors), or which result from
improper modifications, misuse, neglect, accident or abuse, or improper repair,
storage or maintenance by other than the Contractor or its agents or
subcontractors, or use in a manner not in accordance with the System Description
in Appendix 4.
D. THE WARRANTY IN THIS ARTICLE 10 IS EXCLUSIVE AND IS IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE SPECIFICALLY
DISCLAIMED; PROVIDED, HOWEVER, THAT NOTHING IN THIS ARTICLE 10 IS A LIMITATION
ON ANY WARRANTY OF TITLE OR ANY OTHER REPRESENTATION AND WARRANTY EXPRESSLY SET
FORTH IN THIS CONTRACT.
Page 27
E. The Contractor shall, in accordance with its normal operating practices,
investigate at its cost and expense any Supply repaired or replaced pursuant to
this Article 10 to determine the type of Defect and the cause of failure of the
Supply. The Contractor shall provide a written report to the Purchaser on the
results of the investigation, if any.
F.
1. Standard of Work and Supplies.
-----------------------------
(a) The Contractor shall ensure that all Work performed
hereunder, all Supplies and the System (during construction
and when constructed), shall strictly comply with the System
Performance Requirements and Appendix 4 and all other
requirements and provisions of this Contract, including,
without limitation, insurance requirements and applicable
Laws.
(b) Any Work or Supply that fails to satisfy the following
requirements and standards is referred to herein as
"Defective," and the condition causing such Work or Supply
---------
to be Defective is referred to herein as a "Defect": new and
------
undamaged, good and workmanlike, free from defects at the
time installed and at all times through the end of the
Warranty Period (including any defects in condition,
quality, workmanship and design, and defects arising from
normal weather conditions and normal use provided that
maintenance is provided by the Purchaser consistent with the
practices of a reasonably prudent fibre optic cable
operator), in good quality and operating condition, and
adequate, appropriate and standard for the purposes
contemplated by this Contract.
(c) Without prior written approval by the
Purchaser, the Contractor shall not use any Supply other
than that specified where such Supply would (i) affect
System functionality or (ii) adversely affect the System
performance. If the Contractor wishes to use such substitute
Supply, it will make written application to the Purchaser
for approval of such a substitute certifying in writing that
the quality of the proposed substitute is equal to or better
than that specified and that the substitute is suited to the
same use and capable of performing the same function as that
specified. All Supplies shall be fabricated, constructed,
applied, installed, connected, used, cleaned and conditioned
in accordance with the instructions of the applicable
vendor, manufacturer, fabricator or processor.
2. Preparation of Detailed Engineering. The Contractor shall be
-----------------------------------
solely responsible for the detailed professional design and
engineering (the "Detailed Engineering") of the System so that,
--------------------
as constructed, the System shall comply with the System
Performance Requirements. The Contractor
Page 28
shall secure professional engineering certifications for all
drawings prepared as part of the Detailed Engineering, to the
extent required by any applicable Laws. Any review by the
Purchaser shall not relieve or diminish the Contractor's
responsibility for errors or omissions, adequate design,
performance requirements, and proper operation of any item
required under this Contract.
3. Conduct of Work on Property. In clearing the land which is
---------------------------
subject to any Permit or Landing License and in the performance
of the Work, the Contractor shall comply with the terms of this
Contract. The Contractor shall pay to the Purchaser the value of
any harm or damages to any land which is subject to or covered by
any Permit or Landing License caused by the Contractor or any
subcontractor to the extent that such harm or damages are the
result of the Contractor's (or any subcontractor's) failure to
act as a reasonably prudent construction contractor. The
Contractor shall pay for all harm or damages to land or property
outside of the land subject to or covered by any Permit or
Landing License which is caused by the Contractor or any
subcontractor.
4. Safety. The Parties recognize and agree that safety is of
------
paramount importance in the performance of the Work and that the
Contractor is fully responsible for ensuring that the Work is
performed in a safe manner and shall take all reasonable actions
and precautions that are necessary or advisable to ensure safety
and to avoid accidents, injuries and property damage, including
the use of adequate protective devices, warning signs and
barriers as may be required under the circumstances. The
Contractor shall comply with and cause its employees, agents and
subcontractors (and their respective employees and agents) to
comply with reasonable safety procedures in performing the Work.
Nothing in this Sub-Article 10(F)(4) shall affect the
Contractor's status as an independent contractor.
5. Protection of Work. Until the commencement of the Warranty
------------------
Period, the Contractor shall, at its expense, continuously
maintain reasonable protection of the Supplies and the System
from damage, and shall protect its employees, subcontractors,
agents and their respective employees, the employees and property
of the Purchaser, and property owners and others in the vicinity
of the Work from injury or loss arising in connection with this
Contract or the Work.
11 Contractor Support
------------------
A. For a period of * from the applicable Date of Provisional Acceptance
or Date of Commercial Acceptance of the System whichever is earlier, the
Contractor will make available to the Purchaser replacement parts and repair
service for the System as may be reasonably necessary for its operation,
maintenance or repair. Where identical parts cannot be supplied, the Contractor
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
Page 29
shall provide fully compatible parts with characteristics equal or superior to
those originally provided by the Contractor. Such parts and services shall be
provided under commercially reasonable conditions of price and delivery.
B. Notwithstanding Sub-Article 11(A), if for any reason the Contractor or
Contractor's suppliers intend to cease or ceases manufacturing or having
manufactured identical or fully compatible replacement parts, the Contractor
shall give at least one year's prior written notice to the Purchaser to allow
the Purchaser to order from the Contractor any required replacement parts and
shall provide full details of the arrangements to provide equivalents.
12 Purchaser's Obligations
-----------------------
A. Purchaser agrees to pay all amounts payable by it when due under this
Contract and to perform all of its other obligations under this Contract.
B. If any loss, damage, delay or failure of performance of the System
results from the Purchaser's failure to perform its obligations under this
Contract and results in an increase in the costs of performance or the time
required for performance of any of the Contractor's duties or obligations under
this Contract, the Contractor shall be entitled, as appropriate, to (i) an
equitable adjustment in the Contract Price, (ii) an equitable extension of time
for completion of the Work, (iii) reimbursement for all such reasonable
additional costs incurred, and (iv) to the extent necessary in light of
Purchaser's failure and the adjustments made in accordance with clauses (i),
(ii) and (iii) above, an equitable adjustment of the Work.
1. The Contractor shall inform the Purchaser promptly of any
occurrence covered under this Sub-Article 12(B), and shall
use reasonable efforts to minimize any such additional costs
or delay.
2. The Contractor shall promptly provide to the Purchaser a
written estimate of the anticipated additional costs and
time required to complete the Work and request relief from
contractual obligations or duties, as appropriate. Purchaser
shall, upon notification, make advance payment to Contractor
for the reasonable estimated amount of anticipated
additional costs; provided that Purchaser may deposit such
--------
amount into the Dispute Account and Sub-Article 5(C)(5)
shall apply. Contractor shall, without limiting Purchaser's
obligations in the foregoing sentence, discuss such costs
with Purchaser upon Purchaser's request.
3. As soon as reasonably practicable after the actual costs
become known to the Contractor, the Contractor shall provide
a statement of such actual costs to the Purchaser.
4. If the estimated amount is greater than the amount of actual
costs, then the Contractor shall promptly reimburse the
Purchaser. If the amount of actual costs incurred is greater
than the estimated amount, then the Purchaser shall
Page 30
reimburse the Contractor for any shortfall in accordance
with Article 5 (Terms of Payment).
13 Termination for Default
-----------------------
A. Either Party may, by written notice of termination for Default,
immediately upon receipt or such later date as specified in the notice,
terminate the whole or any part of this Contract in any one of the following
circumstances (each an "Event of Default"):
----------------
1. In the case of the Purchaser, (a) if Contractor fails to
comply with the terms and conditions of this Contract and,
if such failure occurs prior to the Date of Commercial
Acceptance of the System or the Date of Provisional
Acceptance of the System, it would be reasonable to believe
that the Contractor will not be able to provide (i) the
System (exclusive of Segment 6) which is Ready for
Provisional Acceptance or (ii) Segments 4 and 5 which are
Ready for Provisional Acceptance, in either case within one
hundred (100) days after the Scheduled RFS Date or the
Segment 4/5 Scheduled RFS Date, as the case may be; (b) if
Contractor fails to comply with the terms and conditions of
this Contract and, if such failure occurs prior to the Date
of Commercial Acceptance of Segment 6 or the Date of
Provisional Acceptance of Segment 6, it would be reasonable
to believe that the Contractor will not be able to provide
Segment 6 which is Ready for Provisional Acceptance within
one hundred (100) days after the Segment 6 Scheduled RFS
Date (provided, however, that under clauses (a) and (b) of
this Sub-Article 13(A)(1), the Purchaser shall provide
Contractor notice of such failure and a cure period which
shall expire on the earlier to occur of forty-five (45) days
after Contractor's receipt of notice of the failure and the
applicable Default Date and such cure period shall in no
event (x) affect the Purchaser's right to terminate this
Contract under clause (c) of this Sub-Article 13(A)(1) or
any other right of termination under this Contract or (y)
affect the Purchaser's rights to liquidated damages under
Article 22); or (c) the Contractor fails to cause the System
to be Ready for Provisional Acceptance within one hundred
(100) days after the Scheduled RFS Date;
2. If any Party defaults on any of its payment obligations and
does not cure such default (whether by paying money to the
payee or the Payment Escrow Agent) within a period of thirty
(30) days (or such longer period as the non-breaching Party
may authorize in writing) after receipt of written notice
demanding cure (subject to dispute provisions);
3. If the other Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property,
Page 31
or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
4. If an involuntary case or other proceeding shall be commenced
against the other Party seeking liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a
period of sixty (60) days; or an order for relief shall be
entered against the other Party.
B. If this Contract is terminated by the Purchaser as provided in Sub-
Article 13(A), the Purchaser, in addition to any other rights provided in this
Article and upon payment to Contractor of all monies due and owing as set forth
in Sub-Article 13(C) below, may require the Contractor to transfer title and
deliver to the Purchaser in the manner and to the extent directed by the
Purchaser (i) any or all completed Work and/or Supplies, and/or such partially
completed Work and/or cable and materials, parts, tools, dies, jigs, fixtures,
plans, drawings, information, and contract rights (hereinafter collectively
"Manufacturing Materials"), (ii) Deliverable Software and (iii) Deliverable
-----------------------
Technical Materials as the Contractor has had specifically produced or
specifically acquired for the performance of such part of this Contract as has
been terminated and which, if this Contract had been completed, would have been
required to be furnished to the Purchaser; and the Contractor shall, upon the
direction of the Purchaser, protect and preserve property in the Contractor's
possession in which the Purchaser has an interest.
C. If this Contract is terminated by Contractor as provided in Sub-
Article 13(A), the Purchaser shall pay the total of:
1. the cost of settling and paying claims arising out of the
termination of Work under the contracts and orders, as provided
in Sub-Article 14(B)(3) below which are properly chargeable to
the terminated portion of this Contract;
2. the reasonable out-of-pocket costs of settlement including
accounting, legal, clerical and other expenses necessary for the
preparation of settlement claims and supporting data with respect
to the terminated portion of this Contract and for termination
and settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection, preservation and disposition of property
proper to this Contract; and
3. any general damages that are required by law.
Page 32
D. Force Majeure events pursuant to Article 17 (Force Majeure) shall not
constitute a default or provide a basis for termination under this Article.
E. Except as provided in Article 23 and regardless of any termination of
this Contract as provided in Sub-Article 13(A), neither Party shall be relieved
from any liability for damages or otherwise which may have been incurred by
reason of any breach of this Contract.
F. Without limitation to the foregoing, in the event that Purchaser
terminates this Contract pursuant to Sub-Article 13(A), the Contractor shall be
liable to Purchaser (without duplication) for the total of all costs and
expenses incurred by Purchaser in completing the Work and/or in correcting
deficiencies in the Work to the extent that the payments made to Contractor
pursuant to this Contract, together with such costs and expenses, exceed the
Contract Price.
14 Termination for Convenience
---------------------------
A. The performance of Work under this Contract may be terminated by the
Purchaser in whole, or in part, at its discretion. The Purchaser shall deliver
to the Contractor a written notice specifying the extent to which performance of
Work under this Contract is terminated, and the date upon which such termination
becomes effective (a "Notice of Termination"). Upon termination, the Purchaser
---------------------
will make payment to Contractor of all monies due and owing as set forth in Sub-
Article 14(D) below.
B. After receipt of such Notice of Termination, and except as otherwise
directed by the Purchaser, the Contractor shall:
1. Stop Work under this Contract on the date and to the extent
specified in the Notice of Termination;
2. Place no further orders or contracts for Supplies, services or
facilities except as may be necessary for completion of such
portion of Work under this Contract as is not terminated;
3. Use reasonable efforts to terminate all orders and contracts to
the extent that they relate to the performance of Work terminated
by the Notice of Termination;
4. Assign to the Purchaser, in the manner, at the time, and to the
extent directed by the Purchaser, all of the Contractor's rights,
title and interest under the orders and contracts so terminated;
5. Use reasonable efforts to settle all outstanding liabilities and
all claims arising out of such termination of orders and
contracts, with the Purchaser's approval or ratification to the
extent required;
Page 33
6. Transfer title and deliver to the Purchaser in the manner, at the
time and to the extent (if any) directed for the fabricated or
unfabricated parts, Work in process and completed Work. Supplies
and other material produced as a part of, or acquired in
connection with, the performance of the Work terminated by the
Notice of Termination;
7. Use reasonable efforts to sell, in the manner, at the time, to the
extent and at the price or prices directed or authorized by the
Purchaser, any property of the types referred to in Sub-Article
14(B)(6) above; provided, however, that the Contractor:
-------- -------
(a) shall not be required to extend credit to any buyer;
and
(b) may acquire any such property under the conditions
prescribed by and at a price approved by the Purchaser;
and provided further that the net proceeds of any such
-------- -------
transfer or disposition shall be applied in reduction of any
payments to be made by the Purchaser to the Contractor under this
Contract or, if no such payments are due, paid in such other
manner as the Purchaser may direct;
8. Complete performance of such part of the Work which was not
terminated by the Notice of Termination; and
9. Take such action as may be necessary, or as the Purchaser may
reasonably direct, for the protection and preservation of the
property related to this Contract which is in the Contractor's
possession and in which the Purchaser has acquired or may acquire
an interest.
C. After such Notice of Termination, the Contractor shall submit to the
Purchaser a written termination claim. Such claim shall be submitted promptly,
but, unless otherwise extended by the Parties, in no event later than three (3)
months from the effective date of termination.
D. In the settlement of any such partial or total termination claim, the
Purchaser shall pay to the Contractor the total of:
1. all amounts invoiced in accordance with this Contract plus, for
Work or Supplies which have been done or provided but which have
not been invoiced, an amount calculated by reference to the prices
set forth in the Provisioning Schedule and to the amount of such
Work or Supplies done or provided;
2. the reasonable cost of settling and paying claims arising out of
the termination of Work under the contracts and orders which are
properly chargeable to the terminated portion of this Contract;
and
Page 34
3. the reasonable out-of-pocket costs of settlement including
accounting, legal, clerical and other expenses necessary for the
preparation of settlement claims and supporting data with respect
to the terminated portion of this Contract and for termination and
settlement of contracts thereunder, together with reasonable
storage, transportation and other costs incurred in connection
with the protection and disposition of property proper to this
Contract.
E. In arriving at the amount due to the Contractor under this Article 14,
all unliquidated payments made to the Contractor, any liability which the
Contractor may have to the Purchaser, and the agreed price for, or the proceeds
of sale of any materials, supplies or other things acquired by the Contractor or
sold, pursuant to the provisions of this Article 14, and not otherwise recovered
by or credited to the Purchaser shall be deducted.
F. The Purchaser may, from time to time, under such terms and conditions
as it prescribes, approve partial payments and payments on account against costs
incurred by the Contractor in connection with the terminated portion of this
Contract. If such payments total in excess of the amount finally agreed or
determined to be due under this Article 14, such excess shall be refunded, upon
demand, by the Contractor to the Purchaser.
G. For a period of two years after final settlement under this Contract,
the Contractor shall preserve and make available to the Purchaser at reasonable
times at the Contractor's office, but without direct charge to the Purchaser,
all supporting books, records and documents required to be kept relating to the
terminated Work.
15 Suspension
----------
A. The Purchaser may, at its convenience, order the Contractor to suspend
all or part of the Work for such period of time as the Purchaser determines to
be appropriate. If, as a result of such suspension, the Contractor incurs
additional costs or losses in the discharge of its responsibilities under this
Contract, and where such suspension, losses or costs are not caused by the
Contractor's act or omission and could not have been reasonably prevented by the
Contractor, the Contractor shall be allowed an equitable adjustment to the
Contract Price or the Provisioning Schedule in Appendix 1 and an equitable
extension in the time required for performance.
B. Upon the occurrence of:
(i) an Event of Default by the Purchaser; or
(ii) any transfer of this Contract prior to the Date of Final
Acceptance of any portion of the System except in accordance with
Article 37.
Contractor, in addition to any other rights provided in Article 13, may suspend
performance of the Work.
Page 35
C. Every forty-five (45) days, during the period of Suspension, the
Parties shall meet formally and review the circumstances surrounding the
Suspension including, without limitation, the anticipated date of re-commencing
Work.
D. Thereafter, if the Suspension continues for a total of one hundred and
eighty (180) consecutive days, the Contractor may terminate this Contract by
notice to the Purchaser and this Contract shall be deemed to have been
terminated by Purchaser, effective on the date of Contractor's notice, in
accordance with Sub-Article 13(A) and the remaining provisions of Article 13
shall apply.
16 Title and Risk of Loss
----------------------
A. Except as provided in Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology) and, Article 21 (Export Control),
title to all Supplies provided by the Contractor hereunder for incorporation in
or attachment to a Segment shall pass to and vest in the Purchaser in accordance
with Article 9 (Acceptance). Risk of loss or damage to all Supplies (including
Supplies consigned to Purchaser) provided by the Contractor for incorporation in
or attachment to such Segment shall pass to and vest in the Purchaser in
accordance with Article 9. Prior to risk of loss so passing, Contractor shall
bear the risk of loss. Upon termination of this Contract pursuant to Article 13
(Termination for Default) or 14 (Termination for Convenience), the Purchaser may
require, upon full payment of all amounts due thereunder (provided that, without
--------
limiting Purchaser's obligation to make any such payment, if this Contract is
terminated by Purchaser because of a Bankruptcy Event full payment shall not be
required prior to the transfer of title), that title to Supplies, which has not
previously passed to the Purchaser, pass to the Purchaser, free and clear of all
liens, claims, charges and other encumbrances other than those deriving through
Purchaser.
B. Upon the passage of title in accordance with this Contract, the
Contractor warrants that all Supplies and the System (or portion thereof) to
which title has passed will be free and clear of all liens, claims, charges and
other encumbrances other than those deriving through the Purchaser. Moreover,
Contractor warrants that all Permits which are transferred to Purchaser will, at
the time of such transfer, be free and clear of all liens, claims, charges and
other encumbrances arising by, through or under the Contractor, its affiliates
and its subcontractors.
17 Force Majeure
-------------
A. The Contractor shall not be responsible for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control ("Force Majeure"), including but not limited to:
-------------
delay in obtaining or failure to obtain any Permits (subject to the provisions
of Sub-Article 7(D)); the Purchaser's delay in obtaining or failure to obtain
any Landing Licenses; acts of God or of the public enemy; acts or failure to act
of any governmental authority; war or warlike operations, civil war or
commotion, mobilizations or military call-up, and acts of similar nature;
revolution, rebellions, sabotage, and insurrections or riots; fires, floods,
epidemics, quarantine restrictions; strikes, and other labor actions; freight
embargoes; Sea State 5; trawler or anchor damage; damage caused by other marine
activity such as fishing, marine research
Page 36
and marine development; acts or omissions of transporters; provided that (i) a
--------
loss by Contractor of employees (other than by reasons of Force Majeure), (ii)
strikes and other labor actions involving the Contractor's own work force, (iii)
the first 5 days of Sea State 5 (unless any such day occurs during the 30 days
immediately preceding the then Scheduled RFS Date), (iv) the failure (other than
by reason of Force Majeure) of any subcontractor, supplier or transporter to
perform its obligations to Contractor (including on account of insolvency)
unless such supplies or transportation or other services are generally
unavailable in the marketplace, (v) the unavailability of any raw materials or
components, unless such raw materials or components are generally unavailable in
the marketplace or are unavailable by reason of force majeure or, (vi) any
increase in Contractor's costs shall not in and of itself constitute Force
Majeure. Moreover, in no event shall any breach of this Contract by Contractor
constitute Force Majeure.
B. If any such Force Majeure causes an increase in the time or costs
required for performance of any of its duties or obligations, with the exception
of marine installation activities, the Contractor shall be entitled to an
equitable extension of time for completion of the Work and an equitable
adjustment in the Contract Price; provided, however, in regard to the marine
-------- -------
installation (i.e., the undersea portion of the System and Supplies), the
----
Contractor shall only be entitled to an equitable extension of time for the
completion of the Work.
C. The Contractor shall inform the Purchaser promptly with written
notification, and in all cases no later than fourteen (14) days of discovery and
knowledge, of any occurrence covered under this Article and shall use its
reasonable efforts to minimize such additional delays. The Contractor shall
promptly provide an estimate of the anticipated time and costs required to
complete the Work. Contractor shall be entitled to an equitable extension of
time and equitable adjustment in the Contract Price resulting from the Force
Majeure condition.
D. Within thirty (30) days of receipt of such a notice from Contractor,
the Purchaser (together with the Independent Engineer) may provide a written
response. The absence of a response shall be deemed as acceptance of
Contractor's notice and request for additional time.
E. Every forty-five (45) days during the period of Force Majeure, the
Parties shall meet and review the circumstances surrounding the Force Majeure,
including, without limitation, the anticipated date of recommencing work.
18 Intellectual Property
---------------------
A. Ownership in Contractor; No Licenses Except Those Expressly Granted
All right, title and interest in and to all Intellectual Property created
or developed by Contractor, under this Contract, before commencing its
performance under this Contract, is and shall remain the sole property of
Contractor. Unless otherwise expressed in this Contract, no license is implied
or granted herein to Purchaser to any Intellectual Property by virtue of this
Contract owned or controlled by Contractor (the "Contractor Intellectual
-----------------------
Property"), nor by the transmittal or disclosure of any Contractor Intellectual
--------
Property to Purchaser. Any Contractor Intellectual Property disclosed,
furnished, or conveyed to Purchaser that is marked as "Proprietary" or
"Confidential" (or
Page 37
if transmitted orally is identified as being proprietary or confidential in a
subsequent writing) shall be treated in accordance with the provisions of
Article 20 (Safeguarding of Information and Technology). As used herein,
"Intellectual Property" means any information, computer or other apparatus
---------------------
programs, software, specifications, drawings, designs, sketches, tools, market
research or operating data, prototypes, records, documentation, works of
authorship or other creative works, ideas, concepts, methods, inventions,
discoveries, improvements, or other business, financial and/or technical
information (whether or not protectable or registrable under any applicable
intellectual property law).
B. Licenses
Contractor shall furnish to Purchaser, upon the transfer of title to any
portion of the System pursuant to this Contract, copies of all technical
information, specifications, drawings, designs, sketches, tools, operating data,
records, documentation and/or other types of engineering or technical data or
information relating to the operation, maintenance or repair of each item of
such portion of the System as delivered by Contractor (the "Deliverable
-----------
Technical Material"). Contractor grants to Purchaser a perpetual, royalty-free,
------------------
non-transferable (except under the circumstances specified in Sub-Article 18(G)
below) license to use and reproduce all Contractor Intellectual Property
included in or necessary to use the Deliverable Technical Materials. This
license grant shall, in any event, be on such terms and to such an extent to
fulfill Purchaser's obligations under this Contract and shall be sufficient to
permit the Purchaser to undertake using, operating and maintaining the System
supplied by Contractor. Further, Purchaser shall have the right to employ third
parties (under appropriate written obligations respecting confidentiality) to
assist Purchaser in fulfilling its obligations under this Contract and in using,
operating or maintaining the System. Contractor grants to Purchaser a
perpetual, royalty-free, non-transferable (except under the circumstances
specified in Sub-Article 18(G) below) license to use and reproduce those
portions of Deliverable Technical Materials owned or controlled by third parties
(but only to the extent of any rights which may have been granted to Contractor
by such third parties). This license grant shall be sufficient to permit the
Purchaser to undertake using, operating and maintaining the System supplied by
Contractor. Further, Purchaser shall have the right to employ third parties
(under appropriate written obligations respecting confidentiality) to assist
Purchaser in fulfilling its obligations under this Contract and in using,
operating or maintaining the System but with no right to sublicense. It is
expressly understood that it shall not be a violation of this license for
Purchaser, on its own behalf or through third parties (under appropriate written
obligations respecting confidentiality) specifically employed for the purpose,
to use and reproduce the Deliverable Technical Material to modify the System or
any portion thereof or connect the System or any portion thereof to other
systems, subject to the rights of third parties therein and thereto, and subject
to the limitations on Contractor's obligations as set forth in Articles 10(C)
and 19(A) concerning any such modification or interconnection.
C. Deliverable Software
Contractor shall furnish to the Purchaser, upon transfer of title to any
portion of the System pursuant to this Contract, copies of all computer or other
apparatus programs and software and related documentation relating to the
operation, maintenance or repair of the computer systems of such portion of the
System, as delivered by Contractor (the "Deliverable Software"). All Deliverable
--------------------
Software that is Contractor Intellectual Property shall be delivered in
executable form. Contractor
Page 38
shall also furnish to Purchaser, from time to time during the Warranty Period,
copies of all computer or other apparatus programs and software and related
documentation that Contractor may develop to correct errors or to maintain
Deliverable Software previously furnished to Purchaser, which shall also be
treated as Deliverable Software in accordance with the terms of this provision
and subject to this Contract upon delivery thereof to Purchaser. Contractor
grants to Purchaser a perpetual, royalty-free, non-transferable (except under
the circumstances specified in Sub-Article 18(G) below) license to use and
reproduce the Deliverable Software that is Contractor Intellectual Property to
the same extent and on the same terms as the licenses granted to Purchaser under
Sub-Article 18(B) above. The license granted to Purchaser by Contractor in
Deliverable Software that is Contractor Intellectual Property or that is owned
or controlled by third parties shall be limited to use with the particular type
of computer equipment or substantially similar replacement equipment for which
such Deliverable Software was provided in the System as supplied by Contractor.
1. Confidentiality
Purchaser shall keep Deliverable Software that is
Contractor Intellectual Property or that is owned or controlled
by third parties confidential in accordance with Article 20
(Safeguarding of Information and Technology) and Article 21
(Export Control), to the extent that such Deliverable Software is
designated as Confidential Information by its owner, and agrees
to use commercially reasonable efforts to see that its employees,
consultants, and agents, and other users of such software, comply
with the provisions of this Contract. Purchaser also agrees to
refrain from taking any steps, such as reverse assembly or
decompilation, to derive a source code equivalent of any
Deliverable Software, provided that Contractor does not go
insolvent or bankrupt to thereby trigger a software escrow event
in accordance with Article 18(H). In the case of insolvency or
bankruptcy of Contractor, Purchaser shall limit any derivation of
a source code equivalent to that portion of the Deliverable
Software that is Contractor Intellectual Property. Purchaser
shall not under any circumstances take any steps to derive a
source code equivalent from that portion of the Deliverable
Software comprising commercial, off-the-shelf software developed
or provided by third parties.
2. Backup Copies
Purchaser may make and retain archive copies in
executable form of Deliverable Software. Any copy thereof will
contain the same copyright notice and proprietary markings as are
on the original software and shall be subject to the same
restrictions as the originals.
3. Termination of Software Licenses
In the event of (i) use by Purchaser of Deliverable
Software in a manner other than as permitted in Sub-Article 18(C)
or (ii) any other material breach of this Article 18 by Purchaser
that, in either event, is not
Page 39
cured within sixty (60) days from receipt by Purchaser of written
notice of such impermissible use or breach, Contractor, at its
option, may terminate the rights granted to Purchaser pursuant to
this Article, which termination shall take effect no sooner than
sixty (60) days following receipt by Purchaser of a subsequent
written notice of termination. Upon termination, Purchaser shall
either return or destroy, at Contractor's option, all copies of
Deliverable Software furnished to Purchaser under this Contract.
4. Indemnification
In the event of (i) use by Purchaser of Deliverable
Software furnished hereunder other than as permitted in Sub-
Article 18(C) or (ii) any other material breach of this Article
18 by Purchaser, Purchaser shall indemnify and hold Contractor
harmless from any and all third party claims resulting therefrom,
whether arising from a defect in the software or otherwise.
D. Trademarks, Tradenames, etc.
No rights are granted herein to either Party to use any identification
(such as, but not limited to tradenames, trademarks, service marks or symbols,
and abbreviations, contractions, or simulations thereof) owned or used by the
other Party or its affiliates to identify itself, its affiliates or any of its
products or services. Each Party agrees that it will not, without the prior
written permission of the other Party, use such identification in advertising,
publicity, packaging, labeling, or in any other manner to identify itself or any
of its products, services, or organizations, or represent directly or indirectly
that any product, service, or organization is a product, service, or
organization of the other Party or its affiliates, or that any product or
service of a Party is made in accordance with or utilizes any Intellectual
Property belonging to the other Party or its affiliates.
E. DISCLAIMER, LIMITATION OF LIABILITY
CONTRACTOR REPRESENTS THAT ANY INFORMATION OR INTELLECTUAL PROPERTY
FURNISHED IN CONNECTION WITH THIS CONTRACT SHALL BE TRUE AND ACCURATE TO THE
BEST OF ITS KNOWLEDGE AND BELIEF, BUT CONTRACTOR SHALL NOT BE HELD TO ANY
LIABILITY FOR UNINTENTIONAL ERRORS OR OMISSIONS THEREIN.
F. Representations and Warranties
Contractor represents and warrants, to the best of its knowledge at the
time of delivery, (i) that the Deliverable Technical Materials and Deliverable
Software to be furnished by Contractor under this Contract will not infringe any
rights in Intellectual Property belonging to any third party, (ii) that
Contractor has all necessary rights to furnish such Deliverable Technical
Materials and Deliverable Software to Purchaser for use by Purchaser in
accordance with the terms of this Contract, and (iii) that Purchaser's use of
such Deliverable Technical Materials and Deliverable Software for the purposes
contemplated in this Contract will not, by itself, cause Purchaser to incur
Page 40
any liability to any third party with respect to Purchaser's use thereof in
accordance with the provisions of this Contract.
G. Transferability
Except as otherwise provided in Sub-Article 37(A), (B) and (D), the
licenses granted to Purchaser by Contractor in the Deliverable Technical
Materials and Deliverable Software are personal and non-transferable, except
that Purchaser may assign or transfer such licenses to (1) an affiliated entity
under common control with the Purchaser or (2) to any entity succeeding to
Purchaser's entire interest in the System as a result of reorganization or
restructuring of the Purchaser or in the event of a change of control of the
Purchaser.
H. Deliverable Software Escrow
Within sixty (60) days of the Date of Provisional Acceptance or Commercial
Acceptance of any portion of the System, the Parties shall enter into a Software
Escrow Agreement, the principals of which are outlined hereunder, with a
software escrow service, following which Contractor shall deliver copies of
source code and related documentation for that portion of Deliverable Software
that is Contractor Intellectual Property (but not that portion of Deliverable
Software comprising commercial, off-the-shelf software, or software developed or
provided by third parties) to a third party commercial software escrow service,
and from time to time as it becomes available, copies of source code for
updates, maintenance releases, or other new versions of the Deliverable Software
that is Contractor Intellectual Property relating to the operation, maintenance,
or repair of the computer systems of any portion of the System as delivered by
Contractor during the System's twenty-five (25) year Design Life Period.
A detailed listing of commercial, off-the-shelf software, or software
developed or provided by third parties, to be included in the Deliverable
Software shall be delivered by Contractor to Purchaser within sixty (60) days of
the Date of Provisional Acceptance of any portion of the System.
The escrow service shall be authorized by Contractor to release the
escrowed software to Purchaser within five (5) business days after the receipt
of notice by Purchaser (which notice Purchaser shall not deliver unless a
Bankruptcy Event shall have occurred in respect to either ASN or ASNI, or either
ASN or ASNI is no longer engaged in the business of operating or maintaining
systems comparable to the System) that a Bankruptcy Event has occurred or that
the Contractor is no longer in the business of operating or maintaining systems
comparable to the System.
19 Infringement
------------
A. The Contractor agrees to defend or settle at its own expense all suits
for infringement of any patent, copyright, trademark or other form of
intellectual property right in any country of the world, for the use and
operation of the System as supplied by Contractor and for any component part
thereof or Supply used therein (or the manufacture of any Supply or the normal
use thereof) provided by the Contractor or on its behalf pursuant to this
Contract and will hold the Purchaser
Page 41
harmless from all expense of defending any such suit and all payments for final
judgment assessed on account of such infringement, except such infringement or
claim arising from:
1. The Contractor's adherence to the Purchaser's directions in
the design and configuration of the System or to Supplies of
the Purchaser's selection; or
2. Such Supplies furnished to the Contractor by the Purchaser,
other than in each case, items of the Contractor's design or
selection or the same as any of the Contractor's commercial
merchandise or in processes or machines of the Contractor's
design or selection used in the manufacture of such standard
products or parts; or
3. Use of the System or the Supplies furnished by Contractor
other than for the purposes indicated in, or reasonably to
be inferred from, this Contract or in conjunction with other
products; or
4. Modification of the System or the Supplies furnished by the
Contractor, or connection of the System to another system by
any person or entity other than Contractor, without prior
expressed written approval by Contractor, which approval
shall not be unreasonably withheld.
B. The Purchaser will, at its own expense, defend all suits against the
Contractor for an excepted infringement as referred to in Sub-Article 19(A) and
hold the Contractor harmless from all expense of defending any such suit and
from all payments by final judgment assessed against the Contractor on account
of such excepted infringement.
C. The Contractor and the Purchaser agree to give each other prompt
written notice of claims and suits for infringement, full opportunity and
authority to assume the sole defense, including appeals and, upon request and at
its own expense, the other agrees to furnish all information and assistance
available to it for such defense.
D. If all or any portion of the System or any Supply provided by the
Contractor or on its behalf is held to constitute an infringement (excluding
excepted infringements specified in Sub-Article 19(A)) and is subject to an
injunction restraining its use or any order providing for its delivery up to or
destruction, or if in respect of any such claim of infringement the Contractor
deems it advisable to do so, the Contractor shall at its own expense either:
1. Procure, at the Contractor's cost and expense, for the
Purchaser the right to retain and continue to use the
System, the affected portion thereof, or any such Supply
without interruption for the Purchaser;
2. Replace or modify, at the Contractor's cost and expense, the
System, the affected portion thereof, or any Supply so that
it becomes non-infringing while continuing to meet the
System Performance Requirements; or
Page 42
3. If the remedies specified in Sub-Articles 19(D)(1) and
19(D)(2) are not feasible, refund to the Purchaser the full
purchase price paid for the System, the affected portion
thereof, or any Supply found to be infringing.
E. In no event shall the Purchaser make any admission or settle any claim
in relation with any claim for infringement without Contractor's consent.
20 Safeguarding of Information and Technology
------------------------------------------
A. In performance of this Contract, it may be mutually advantageous to
the Parties hereto to share certain specifications, designs, plans, drawings,
software, market research or operating data, prototypes, or other business,
financial, and or/technical information related to products, services, or
systems which are proprietary to the disclosing Party or its affiliates (and in
the case of Contractor, Contractor's parent company) (together with this
Contract and related documents, "Information"). The Parties recognize and agree
-----------
that Information includes information that was supplied in contemplation hereof
prior to execution of this Contract, and further agree that Information includes
information in both tangible and intangible form.
B. Unless such Information was previously known to the Party receiving
such Information free of any obligation to keep it confidential, or such
Information has been or is subsequently made public through other than
unauthorized disclosure by the receiving Party or is independently developed by
the receiving Party (as documented by the records of the receiving Party), it
shall be kept confidential by the Party receiving such Information, shall be
used only in the performance of this Contract, and may not be used for any other
purposes except upon such terms as may be agreed upon in writing by the Party
owning such Information. The receiving Party may disclose such Information to
other persons, upon the furnishing Party's prior written authorization, but
solely to perform acts which this Article expressly authorizes the receiving
Party to perform itself and further provided such other person agrees in writing
(a copy of which writing will be provided to the furnishing Party at its
request) to the same conditions respecting disclosure and use of Information
contained in this Article and to any other reasonable conditions requested by
the furnishing Party. Nothing herein shall prevent a Party from disclosing
Information (a) upon the order of any court or administrative agency, (b) upon
the request or demand of, or pursuant to any regulation of, any regulatory
agency or authority, (c) to the extent reasonably required in connection with
the exercise of any remedy hereunder and (d) to a Party's legal counsel or
independent auditors.
C. The Purchaser may disclose Information to its lenders, investors and
their representatives in connection with obtaining financing for the System,
provided that each such lender, investor or their respective representative
enters into a confidentiality agreement containing terms and conditions similar
to those in this Contract. Any such disclosure of Information shall be subject
to the restrictions in Sub-Article 20(B).
Page 43
21 Export Control
--------------
The Parties acknowledge that any products, software, and technical
information (including, but not limited to, services and training) provided by
either Party under this Contract are or may be subject to export laws and
regulations of France, the United Kingdom, Australia and the United States of
America and the destination country(ies) and any use or transfer of such
products, software and technical information must be authorized under those
Laws. The Parties agree that they will not use, distribute, transfer or transmit
the products, software or technical information (even if incorporated into other
products) except in compliance with export Laws. If requested by either Party,
the other Party agrees to sign all necessary export-related documents as may be
required to comply with applicable export Laws.
22 Liquidated Damages
------------------
If (a) the System (exclusive of Segment 6) is not Ready for Commercial
Acceptance or Ready for Provisional Acceptance by the Scheduled RFS Date, (b)
Segment 6 is not Ready for Commercial Acceptance or Ready for Provisional
Acceptance by the Segment 6 Scheduled RFS Date, or (c) either or both of
Segments 4 and 5 are not Ready for Commercial Acceptance or Ready for
Provisional Acceptance by the Segment 4/5 Scheduled RFS Date, as any such date
may have been extended under:
1. Article 6 (Contract Variations);
2. Article 17 (Force Majeure); or
3. Article 15 (Suspension); or
4. Other arrangements as agreed in writing between the Purchaser and
the Contractor;
then Contractor shall pay to Purchaser for each day of delay, for up to 100
days, by way of pre-estimated and liquidated damages for the delay and not as a
penalty as follows: (i) in the case of clause (a) of this Article 22, an amount
equal to 0.1% of the Initial Contract Price for the System (less the value of
Segment 6 and less the amount of any liquidated damages already paid in respect
of either or both of Segments 4 and 5, as the case may be); (ii) in the case of
clause (b) of this Article 22, an amount equal to 0.1% of the value of Segment 6
as set forth in Appendix 1; and (iii) in the case of clause (c) of this Article
22, an amount equal to 0.1% of the value of either or both of Segments 4 and 5,
as the case may be. Except as provided in Article 13, such damages will be to
the full satisfaction of the Contractor's liability for delay. Contractor shall
pay by the 15th day of each month, all of the aforesaid damages for delay in
respect of the days of delay that occurred in the prior month.
Page 44
23 Limitation of Liability/Indemnification
---------------------------------------
A. NOTWITHSTANDING ANY OTHER PROVISION IN THIS CONTRACT, AND IRRESPECTIVE
OF ANY FAULT, NEGLIGENCE OR GROSS NEGLIGENCE OF ANY KIND, IN NO EVENT SHALL
EITHER PARTY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS (INCLUDING
FINANCING SOURCES AND THEIR REPRESENTATIVES) BE LIABLE FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, RELIANCE OR SPECIAL (INCLUDING PUNITIVE) DAMAGES,
INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE, LOSS OF BUSINESS OPPORTUNITY OR
THE COSTS ASSOCIATED WITH THE USE OF RESTORATION FACILITIES RESULTING FROM ITS
FAILURE TO PERFORM PURSUANT TO THE TERMS AND CONDITIONS OF THIS CONTRACT.
B. THE CONTRACTOR'S MAXIMUM AGGREGATE LIABILITY, WHETHER IN TORT,
CONTRACT OR OTHERWISE, SHALL NOT EXCEED * OF THE CONTRACT PRICE; PROVIDED,
HOWEVER, THAT THE FOREGOING LIMITATION OF LIABILITY SHALL NOT APPLY TO THE
CONTRACTOR'S OBLIGATIONS UNDER ARTICLE 19 AND SUB-ARTICLE 23(C).
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
C. Contractor, at its expense, shall defend, indemnify and hold harmless
Purchaser, its agents (including financing sources and their representatives),
subcontractors and employees against any and all claims, demands, and judgments
for losses due to any act or omission, arising out of, or in connection with
this Contract or, prior to risk of loss passing to Purchaser, the operation and
maintenance of the System, to the extent such losses were caused by the
negligence or willful misconduct of the Contractor, its subcontractors,
employees or agents. The defense, indemnification and save harmless obligation
is specifically conditioned on the following: (i) Purchaser providing prompt
notification in writing of any such claim or demand when it obtains Actual
Knowledge thereof (and if Purchaser does not so provide such notice, then the
indemnification shall not apply to the extent such failure to provide such
notice prevents Contractor from defending against such claim), and (ii)
Contractor having the right to control the defense of any such action, claim or
demand and of all negotiations for its settlement or compromise; provided,
however, the Purchaser shall cooperate, at the Contractor's expense, in a
reasonable way to facilitate the Contractor's defense of such claim or demand or
the negotiations for its settlement. Nothing in this Sub-Article 23(C) shall
limit Purchaser's other rights and remedies otherwise provided in this Contract.
D. Purchaser, at its expense, shall defend, indemnify and hold harmless
Contractor, its agents, subcontractors and employees against any and all claims,
demands, and judgments for losses due to any act or omission, arising out of, or
in connection with this Contract or, after risk of loss passes to Purchaser, the
operation or maintenance of the System, to the extent such losses were caused by
the negligence or willful misconduct of the Purchaser, its subcontractors,
employees or agents (other than Contractor or its agents or subcontractors). The
defense, indemnification and save harmless obligation is specifically
conditioned on the following (i) Contractor providing prompt notification in
writing of any such claim or demand when it obtains Actual Knowledge thereof
(and if Contractor does not so provide such notice, then the indemnification
shall not apply to the extent such failure to provide such notice prevents
Purchaser from defending against such claim), and (ii) Purchaser having the
right to control the defense of any such action, claim or demand and of all
Page 45
negotiations for its settlement or compromise; provided, however, Contractor
shall cooperate, at Purchaser's expense, in a reasonable way to facilitate the
Purchaser's defense of such claim or demand or the negotiations for its
settlement. Nothing in this Sub-Article 23(D) shall limit the Contractor's
other rights and remedies otherwise provided in this Contract.
24 Counterparts
------------
This Contract may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
25 Design and Performance Responsibility
-------------------------------------
A. The Contractor shall be solely responsible for the design of and for
all details of the System and for the adequacy thereof.
B. The Contractor's responsibility for design of the System shall not in
any way be diminished nor shall the Contractor's design approach be restricted
or limited by the Purchaser's acceptance of the Contractor's guidance or
recommendations as to engineering standards and design specifications, or by the
Purchaser's or the Independent Engineer's suggestions or recommendations on any
aspect of the design.
C. Purchaser shall use reasonable efforts in assisting the Contractor to
obtain in a timely manner accurate information required for the Contractor to
perform the Work, which the Contractor cannot expeditiously and cost-effectively
obtain from any source other than the Purchaser.
D. If Purchaser reasonably believes that Contractor is failing to
maintain the progress of the Work such that the target date of Provisional
Acceptance of any Segment is expected to be thirty (30) days or more later than
the date therefor set forth in the Plan of Work, Appendix 3, then Contractor
shall (to the extent that appropriate measures are not already being
undertaken), and, in addition to any other obligations specified in this
Contract, work in good faith to regain and thereafter maintain such progress.
26 Product Changes
---------------
The Contractor may at any time make changes to the System furnished
pursuant to this Contract, or modify the drawings and published specifications
relating thereto, or substitute Supplies of later design, provided the changes,
modifications, or substitutions under normal and proper use do not impact upon
the form, fit, expected life or function of the System as provided in the System
Performance Requirements as confirmed in writing to the Purchaser and the
Independent Engineer to their reasonable satisfaction.
Page 46
27 Risk and Insurance
------------------
A. The Contractor shall at all times maintain, and upon request, the
Contractor shall furnish the Purchaser with certificates, or other reasonable
evidence, that Contractor maintains, the following insurance or has adequate
self-insurance (other than as required to comply with any statutory insurance
requirements):
1. Workmen's Compensation and Employers Liability Insurance
(with a limit of not less than * for any one incident or
series of incidents arising from one event or such higher
limit as may be required by the laws of any jurisdiction)
covering the officers and employees of the Contractor for
all compensation or other benefits required of the
Contractor by the laws of any nation or political sub-
division thereof to which the Contractor and its operations
under this Contract are subject in respect of injury of
death of any such employee.
2. Comprehensive General Public Liability Insurance, covering
personal injury and/or property damage, with combined single
limits of not less than * for claims of injury or death of
any persons or loss of or damage to property resulting from
any one accident. This insurance to be extended to provide
Marine Comprehensive General Liability including liabilities
arising out of the operation of subsea equipment.
3. All Risk Insurance in respect of all property of Contractor,
its respective officers, agents and employees connected with
the performance of the Work against all loss or damage from
whatever cause.
4. Conventional Marine Hull and Machinery Insurance including
War Risks on any vessel(s) owned, operated or chartered by
the Contractor, in an amount equal to the full value
thereof. In the event of damage to or loss of such
vessel(s), the Contractor agrees to look to its insurance
carrier for payment of such loss or damage and hereby
releases the Purchaser and waives any claims, including any
claim of a general average nature, against the Purchaser for
the loss of such vessel(s) unless due to the negligence of
Purchaser, its agent or representatives (other than
Contractor) or its subcontractors or agents.
5. All vessels in excess of * are to be entered in a Mutual
Protection and Indemnity Association with a full and
unlimited entry or to have Marine Protection and Indemnity
Insurance with a limit of not less than * including coverage
for illness, injury or death of crew members (unless covered
under Workmen's Compensation Insurance), Contractual
Liability Coverage, Collision and Tower's Liability, Removal
of Wreck and Debris and Third Party Liability. However,
vessels of less than * shall only be required to carry
Contractual Liability Coverage, Collision and Tower's
*MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION
FOR CONFIDENTIAL TREATMENT.
Page 47
Liability, Removal of Wreck and Debris and Third Party
Liability insurance with a limit of not less than * .
6. Specialist Operations Insurance with a limit of not less
than *.
7. Transit Insurance including inland, air, and Marine Cargo
coverage including War (other than on land) in an amount
sufficient to cover the expected highest value of any one
shipment. Coverage to include Institute Cargo Clauses, all
risks 1.1.63, Institute War Clauses, London Malicious Damage
Clause, and Institute Strikes Riots and Civil Commotion
Clauses or their equivalent.
8. Marine Cargo or equivalent is required to protect, for full
cost, against all risks of physical loss or damage to the
Supplies to be included in the System (other than War Risks)
beginning with when each such item is ready for shipping and
ending when the submersible Supplies are placed overside the
cable laying vessel and when the Supplies are delivered to
the cable stations, central offices, or network operation
center. The coverage is broadened to include damages
resulting from cable cut due to adverse weather and
continues to cover cable lying on the seabed.
9. Sea Bed or equivalent coverage (including an Old Mines and
Torpedoes Clause, including other derelict weapons of War)
is required to protect, for full cost, against all risks of
physical loss or damage to the submersible Supplies
described in Sub-Article 27(A)(10) below. See last
paragraph.
10. War Risks or equivalent coverage is required to protect
against damage to, seizure by and/or destruction of the
System by means of war, piracy, takings at sea and other
warlike operations until discharge of the Supplies. For the
purposes of this Article "discharge of the Supplies" shall
be deemed to take place when the Supplies reach the sea
bottom, as far as the submersible Supplies are concerned,
and when the Supplies are off-loaded in the respective
terminal country, as far as non-submersible Supplies are
concerned.
11. Pollution Liability (EIL) insurance for installation
operations and as arising from the use of vessels in an
amount not less than * or such higher sum as may be required
to meet any legal requirement in the area of operations.
The Comprehensive General Public Liability Insurance required pursuant to
Sub-Article 27(A)(2) above, shall include Contractual Liability Coverage which
shall specifically apply to the obligations assumed by the Contractor under the
Terms and Conditions of this Contract.
B. 1. All the foregoing insurance shall note the interest of the
Purchaser and its lenders on the policies and be effected
with a creditworthy insurer and shall
*MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
Page 48
be endorsed to provide Purchaser with at least thirty (30)
days prior written notice of cancellation or material
change.
2. All the foregoing insurances shall name the Purchaser (and
its lenders) as an additional insured and shall note the
interest of the Purchaser and its lenders on the policies,
in which event the Contractor's insurance shall be primary
to any insurance carried by Purchaser.
3. The limits specified herein are minimum requirements and
shall not be construed in any way as limits of liability or
as constituting acceptance by Purchaser (or its lenders) of
such responsibility for financial liabilities in excess of
such limits. The Contractor shall bear all deductibles
applicable to any insurance.
4. If it is judicially determined that the monetary limits of
insurance required hereunder or of any indemnity voluntarily
assumed under the Terms and Conditions of this Contact which
the Contractor agrees will be supported either by available
liability insurance or voluntarily self-insured, in part or
whole, exceeds the maximum limits permitted under applicable
law, it is agreed that said insurance requirements or
indemnity shall automatically be amended to conform to the
maximum monetary limits permitted under such law.
5. Contractor shall take reasonable steps to provide that any
sub-contractor engaged by it has in effect or will effect
Employer's Liability, Workmen's Compensation, Hull and
Machinery and Protection and Indemnity insurances and any
other insurances required by law, together with such other
insurances as the Contractor may consider necessary.
6. If the Contractor fails to effect or keep in force any of
the insurances required under this Contract, Purchaser (or
its lenders on Purchaser's behalf) may effect and keep in
force any such insurances and pay such premiums as may be
necessary for that purpose and from time to time deduct the
amount so paid by Purchaser from any money due or which may
become due to the Contractor hereunder or recover the same
as a debt due from the Contractor, provided that Purchaser
is not in Default.
7. Each Party shall give the other prompt notification of any
claim with respect to any of the insurances to be provided
hereunder, accompanied by full details giving rise to such
claim. Each Party shall afford the other all such assistance
as may be required for the preparation and negotiation of
insurance claims.
8. Contractor shall report to Purchaser as soon as practicable
all accidents or occurrences resulting in injuries to
Contractor's employees or third parties,
Page 49
or damage to property of third parties, arising out of our
during the course of services for Purchaser by Contractor.
C. The Contractor may organize such levels of deductibles, excesses and
self-insurance as it considers appropriate and which are within prudent industry
standards.
D. The insurance requirements of this Article 27 will remain in place
with respect to each Segment, and will not in any way be diminished or reduced
until the transfer of title and risk of loss shall have passed to Purchaser of
such Segment, even in the event of the sale of substantially all the assets of
the Contractor by way of a merger, consolidation or sale of assets.
28 Plant and Work Rules
--------------------
Employees and agents of each Party shall, while on the premises of the
other or its subcontractors, comply with all plant rules and governmental
regulations.
29 Right of Access and Audit
-------------------------
A. The Contractor shall, upon reasonable notice of not less than ten (10)
working days, during normal business hours and in a manner to avoid any
disruption of the work on the premises including performance of other contracts,
permit access by the Purchaser or its Quality Assurance (QA) Representative or
the Independent Engineer (other than a competitor of the Contractor or any
affiliate of a competitor) to the Contractor's premises where the Work will be
performed, and will use its best endeavors to secure rights of access to
premises of its subcontractors where the Work will be performed, having
subcontracts or orders in the amount of, or equivalent to U.S. $125,000 or more,
in accordance with the Contractor's contractual arrangements with its
subcontractors, and allow the Purchaser or its QA Representative or the
Independent Engineer to:
1. audit the Contractor's quality assurance system and its
application to the Work, including manufacture, development
and raw materials and components provision;
2. inspect all parts of the manufacturing facilities to the
extent reasonably practicable to ensure that their quality
meets the System specifications as detailed in Appendices 4
and 5.
This right of access shall allow for the Purchaser and/or its QA representative
and/or the Independent Engineer (up to a total of three (3) persons). The
Purchaser shall provide the name(s), nationality and title of each such visitor
prior to the visit. The Contractor shall not be responsible for any costs,
including travel and accommodation costs, of the Purchaser or its
representatives.
B. The right of access shall also allow for the Purchaser and/or
representatives (up to a total of three (3) persons) to be aboard the vessel(s)
during installation and the route survey. The Contractor shall not be
responsible for any costs of the Purchaser or its representatives, except for
Page 50
living expenses on board the vessel which includes one (1) daily telex or fax.
All other travel and accommodation costs for the Purchaser or its QA
Representatives shall be for the account of the Purchaser.
C. Any right of access shall not be construed as creating any obligation
requiring the Contractor or its subcontractors to disclose trade secrets or
proprietary information. Further, such right of access may be conditioned on the
execution of a confidentiality and non-disclosure agreement and/or subject to
routine building or security rules, regulations or procedures.
D. Any exercise of any right of the Purchaser hereunder to inspect,
audit, visit or to observe any part of the Work shall not be construed as
limiting any obligation of Contractor hereunder, including without limitation,
under Articles 1 and 10 hereof. Moreover, and notwithstanding anything to the
contrary in this Contract, the Purchaser's right to inspect and reject Work or
Supplies shall not obligate the Purchaser to conduct such inspections. Neither
exercise by the Purchaser of such right, nor any failure on the part of the
Purchaser to discover or reject any Defective Work or Supply (or payment for or
use by the Purchaser of any Defective Work or Supply) shall be construed to
imply an acceptance of such Defective Work or Supply, or a waiver of either such
Defect or of Contractor's obligations or the Purchaser's rights under this
Contract or applicable Law.
E. Contractor will have access to the System as necessary to accomplish
its responsibilities under this Contract and in order to make repairs.
Contractor will provide reasonable notice of its need for access and will take
reasonable steps to minimize disruptions to the operation of the System.
F. Contractor shall give the Purchaser and the Independent Engineer
reasonable prior written notice of each project management review meeting with
respect to the status of the construction and/or installation of the System, and
Purchaser's representatives and the Independent Engineer shall at their cost be
permitted to attend and participate in such meetings.
G. Notwithstanding anything to the contrary in this Article 29, with
respect to Work performed on a cost-plus basis only, Purchaser shall have the
right to inspect, during normal business hours, all of the Contractor's
property, books, and records to perform a financial audit as to such Work, such
audit to be performed by an independent auditor chosen by the Purchaser. The
Contractor shall retain all pertinent records until three years after the
expiration of the Warranty Period. The Purchaser's auditors may copy any
documents that can be properly audited hereunder, and the Purchaser agrees that
any such copies will be used only for the Purchaser's purposes hereunder.
Contractor shall use its best endeavors to provide the Purchaser with identical
audit rights in any subcontract made by the Contractor for Work performed on a
cost-plus basis hereunder.
30 Quality Assurance
-----------------
All Supplies provided under this Contract shall be inspected and tested, at
the cost and expense of Contractor, by representatives designated by the
Contractor to the extent reasonably practical to assure that the quality of the
Supplies is sufficient to realize the System Performance Requirements. The
inspection and test program established for such Supplies shall be consistent
with
Page 51
commercial practices normally employed by the Contractor in the construction of
submarine cable systems. The foregoing shall not be construed as limiting any of
the Contractor's obligations under this Contract.
31 Documentation
-------------
The Contractor shall, at its cost and expense, furnish to the Purchaser
seven copies of the standard documentation, one of which shall be in the
Portuguese language, one of which shall be in the Spanish language, and the
remainder of which shall be in the English language for the System provided
hereunder. All English documentation shall be provided prior to the Acceptance
Testing. All draft documentation and marine charts will be supplied in English
only. Additional copies of the documentation are available at additional cost.
32 Training
--------
The Contractor will provide, as part of the Initial Contract Price, until
the Date of Final Acceptance, any and all training necessary for the operation
and maintenance of the System. Such training shall occur in the English, Spanish
or Portuguese language, as applicable and at the request of Purchaser.
33 Settlement of Disputes/Arbitration
----------------------------------
A. The Parties shall endeavor to settle amicably by mutual discussions
any disputes, differences, or claims whatsoever related to this Contract.
B. Failing such amicable settlement, any controversy, claim or dispute
arising under or relating to this Contract, including the existence, validity,
interpretation, performance, termination or breach thereof, shall, be finally
settled by arbitration in accordance with the International Arbitration Rules of
the American Arbitration Association ("AAA"). Unless the Parties agree to a
---
sole arbitrator, there shall be three (3) arbitrators, with each Party
appointing one arbitrator, who collectively will select a third. The language of
the arbitration shall be English. The Arbitrator will not have authority to
award punitive damages to either Party. Each Party shall bear its own expenses,
but the Parties shall share equally the fees and expenses of the Arbitration
Tribunal and the AAA. This Contract shall be enforceable, and any arbitration
award shall be final, and judgment thereon may be entered in any court of
competent jurisdiction. In any such arbitration, the decision in any prior
arbitration under this Contract shall not be deemed conclusive of the rights as
among themselves of the Parties hereunder. The arbitration shall be held in New
York, New York, U.S.A.
C. THE OBLIGATIONS OF EACH PARTY IN RESPECT OF THIS CONTRACT DUE TO ANY
OTHER PARTY SHALL, NOTWITHSTANDING ANY JUDGMENT IN A CURRENCY (THE "JUDGMENT
--------
CURRENCY") OTHER THAN DOLLARS, BE DISCHARGED ONLY TO THE EXTENT THAT ON THE
--------
BUSINESS DAY FOLLOWING RECEIPT BY SUCH PARTY OF ANY SUM ADJUDGED TO BE SO DUE IN
THE JUDGMENT CURRENCY, SUCH
Page 52
PARTY MAY, IN ACCORDANCE WITH NORMAL BANKING PROCEDURES, PURCHASE DOLLARS WITH
THE JUDGMENT CURRENCY; IF THE AMOUNT OF DOLLARS SO PURCHASED IS LESS THAN THE
SUM ORIGINALLY DUE TO SUCH PARTY IN DOLLARS, EACH OTHER PARTY AGREES, AS A
SEPARATE OBLIGATION AND NOTWITHSTANDING ANY SUCH JUDGMENT, TO INDEMNIFY SUCH
PARTY AGAINST SUCH LOSS, AND IF THE AMOUNT OF DOLLARS SO PURCHASED EXCEEDS THE
SUM ORIGINALLY DUE TO ANY OTHER PARTY TO THIS CONTRACT, EACH OTHER PARTY AGREES
TO REMIT TO SUCH PARTY, SUCH EXCESS.
34 Applicable Law
--------------
THIS CONTRACT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS
XX XXX XXXXX XX XXX XXXX, XXXXXX XXXXXX, EXCLUDING ITS CONFLICTS OF LAW
PROVISIONS AND EXCLUDING THE CONVENTION FOR THE INTERNATIONAL SALE OF GOODS.
35 Notices
-------
A. Any notice, consent, approval, or other communication pursuant to this
Contract shall be in writing, in the English language, and shall be deemed to be
duly given or served on a Party if sent to the Party at the address stipulated
in Sub-Article 35(B) and if sent by any one of the following means only:
1. Sent by hand: Such communication shall be deemed to have
been received on the day of delivery provided receipt of
delivery is obtained.
2. Sent by facsimile: Such communication shall be deemed to
have been received, under normal service conditions, twenty-
four (24) hours following the time of dispatch or on
confirmation by the receiving Party, whichever is earlier.
3. Sent by registered or certified mail: Such communication
shall be deemed to have been received, under normal service
conditions, on the day it was received or on the tenth day
after it was dispatched, whichever is earlier.
B. For purposes of this Article, the names, addresses and fax numbers of
the Parties are as detailed below. Any change to the name, address, and
facsimile numbers may be made at any time by giving thirty (30) days prior
written notice.
Alcatel Submarine Networks
00 Xxx Xxxxxx Xxxxxxxxx
00000 Clichy Cedex
France
Facsimile: 011-33-01-4756-6920
Page 53
Alcatel Submarine Networks, Inc.
00000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000-0000
Atlantica Network (Bermuda) Ltd.
0 Xxxxxx'x Xxx Xxxx
Xxxxxxxxx, Xx. Xxxxx'x XX00
Xxxxxxx
Attn: General Counsel
Facsimile: 000-000-0000
with a copy to:
GlobeNet Communications Group Ltd.
000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xx Xxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Attn: Vice-President, Network Operations
Facsimile: 000-000-0000
36 Publicity and Confidentiality
-----------------------------
A. No information relating to this Contract shall be released by either
Party to any newspaper, magazine, journal or other written, oral or visual
medium without the prior written approval of an authorized representative of the
other Party; provided that, subject to Article 20 (Safeguarding of Information
--------
and Technology) and the following Sub-Article, this Article shall not restrict
either Party from (i) responding to customary press inquiries or otherwise
making public or private statements in the normal course of business, so long as
consistent with a mutually agreed press-release and (ii) assisting in the
obtaining of financing in accordance with Sub-Article 37(C), including the
publication of a financial tombstone.
B. This Contract and any non-public information (including Information),
written or oral, with respect to this Contract (collectively, "Confidential
------------
Information"), will be kept confidential and shall not be disclosed, in whole or
-----------
in part, to any person other than affiliates, officers, directors, employees,
agents or representatives of a Party (collectively, "Representatives") who need
---------------
to know such Confidential Information for the purpose of negotiating, executing
and performing this Contract. Each Party agrees to inform each of its
Representatives of the non-public nature of the Confidential Information and to
direct such persons to treat such Confidential Information in accordance with
the terms of this Article. Nothing herein shall prevent a Party from disclosing
Confidential Information (a) upon the order of any court or administrative
agency, (b) upon the request or demand of, or pursuant to any regulation of, any
regulatory agency or authority, (c) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (d) to a Party's legal
counsel, advisors or independent auditors, (e) to any actual or prospective
lenders to and investors in the Purchaser or Purchaser's parent or affiliate
companies, and (f) to any actual or
Page 54
proposed assignee of all or part of its rights hereunder provided that such
actual or proposed assignee agrees in writing to be bound by the provisions of
this Article.
37 Assignment; Subcontractors
--------------------------
A. Except as provided in this Article 37, neither Party shall assign this
Contract or any right or interest under this Contract, nor delegate any work or
obligation to be performed under this Contract ("Assignment"), without the other
----------
Party's prior written consent which shall not be unreasonably withheld (it being
understood that it shall be deemed to be reasonable to withhold consent to the
assignment of this Contract or any rights, interest or obligations hereunder to
a competitor of Contractor or an affiliate of a competitor or uncreditworthy
party). For purposes of this Article 37, "competitor" means a provider of
undersea cable equipment. Nothing herein shall preclude a Party from employing
a subcontractor in carrying out its obligations under this Contract. A Party's
use of such subcontractor shall not release the Party from its obligations or
liability (including warranties) under this Contract. If a proposed
subcontractor of major Supplies (i.e. Supplies listed on Exhibit F) is not
----
listed on Exhibit F hereto, Contractor shall obtain written approval thereof
from Purchaser, which approval shall not be unreasonably withheld.
B. Each Party has the right to assign all of its rights under this
Contract or to delegate all of its duties hereunder at any time without the
other Party's consent to any successor to substantially all the assets of the
assigning Party by way of a merger, consolidation or sale or transfer of assets
provided that in the case of any assignment or delegation pursuant to this Sub-
Article 37(B) such assignee shall assume in writing all warranties,
representations and obligations of the assigning Party under this Contract. The
assigning Party shall give the other party written notice thirty (30) days prior
to the assignment; provided, however, the assigning Party shall remain liable
for all of its obligations under this Contract as if the assignment had not
occurred. Any assignment or transfer by the assigning Party not expressly
permitted by Sub-Article 37(B) shall be of no force and effect.
C. The Parties acknowledge that Purchaser may finance construction of the
System and that in connection therewith the financing parties will require that
such financing be secured by certain assets of Purchaser (including but not
limited to this Contract).
1. Contractor agrees to deliver within fifteen (15) days upon
request, an opinion or opinions of counsel, in form and
substance reasonably satisfactory to the Purchaser,
addressed to the Purchaser and its lenders, which opinion or
opinions shall, without limitation, express the opinion that
this Contract is enforceable and the Contractor has all
necessary power and authority to execute this Contract and
perform its obligations hereunder.
2. Contractor shall execute and deliver to the Purchaser's
lenders all documents and certificates reasonably requested
by the Purchaser and shall cooperate with the Purchaser in
obtaining financing for the System to the extent reasonably
necessary. Without limiting the foregoing, Contractor
agrees, at its expense and to the extent reasonably
requested by the Purchaser and its lenders, (i) to execute
documents (A) consenting to the assignment of this
Page 55
Contract by way of security to the Purchaser's lenders, (B)
agreeing to pay all sums of money payable to the Purchaser
under this Contract to accounts held by or on behalf of the
Purchaser's lenders, (C) agreeing not to terminate this
Contract without providing (x) notice to the Purchaser's
lenders and (y) except in the case of Default by the
Purchaser which allows Contractor to terminate pursuant to
Article 13, consent of the Purchaser's lenders, (D) agreeing
not to amend or modify this Contract (including Contract
Variations under Article 6) in a manner that would
materially adversely affect the Purchaser, but in any event
result in a cost increase to the Purchaser in excess of
US$500,000, without the consent of the Purchaser's lenders,
(E) certifying that this Contract is in full force and
effect and that there is no default by Contractor (or, to
its knowledge, the Purchaser) under this Contract (or
describing any such default), (F) making representations to
the Purchaser's lenders concerning the corporate existence
of Contractor and its authority to enter into and perform
this Contract and other customary corporate representations
and (G) clarifying this Contract if reasonably requested by
the Purchaser's lenders; (ii) to provide the most recently
available information to the Purchaser's lenders concerning
the Contractor's finances; and (iii) to accompany, at the
Purchaser's expense, the Purchaser and the Purchaser's
lenders (or their representatives) on financing roadshows.
D. Notwithstanding anything in this Contract to the contrary, the
Purchaser shall have the following rights: the Purchaser shall, without the
consent of the Contractor, have the right from time to time, to (a) assign its
rights and delegate its duties under this Contract to any person or entity and
(b) to sell, transfer or otherwise dispose of its interest in the System or any
portion thereof without in any way affecting its rights or Contractor's
obligations under this Contract; PROVIDED, HOWEVER, that (i) in the case of an
assignment of the Purchaser's rights or a delegation of the Purchaser's duties
to an affiliate of the Purchaser prior to the earlier to occur of the Date of
Provisional Acceptance or the Date of Commercial Acceptance with respect to a
Segment (such earlier date is hereinafter referred to as the "Acceptance Date"),
---------------
the Purchaser shall remain liable for all of its obligations under this Contract
with respect to such Segment until the Acceptance Date and (ii) no assignment of
the Purchaser's rights under this Contract with respect to a Segment shall be
permitted (other than to an affiliate of the Purchaser or as contemplated by
Sub-Article 37(C)) prior to the Acceptance Date with respect to such Segment
unless Contractor consents to such assignment, which consent shall not be
withheld unreasonably.
38 Relationship of the Parties
---------------------------
All work performed by a Party under this Contract shall be performed as an
independent contractor and not as an agent of the other and no persons furnished
by a Party shall be considered the employees or agents of the other. Each Party
shall be responsible for its employees' compliance with all Laws while
performing under this Contract. This Contract shall not form a joint venture or
partnership between the Parties.
Page 56
39 Successors Bound
----------------
This Contract shall be binding on the Contractor and the Purchaser and
their respective successors and permitted assigns.
40 Article Captions
----------------
The captions of the Articles do not form part of this Contract and shall
not have any effect on the interpretation thereof.
41 Severability
------------
If any of the provisions of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions and the rights and obligations of the Contractor and the
Purchaser shall be construed and enforced accordingly. In the event such invalid
or unenforceable provision is an essential and material element of this
Contract, the Parties shall promptly negotiate a replacement provision.
42 Prime Contractor; Joint and Several Liability of the Contractor; Guarantors
---------------------------------------------------------------------------
A. The Contractor hereby designates ASN as the Prime Contractor to be
responsible for the coordination and monitoring of the Work and administration
of this Contract. The Prime Contractor shall act as principal point of contact
between Purchaser and Contractor, although Purchaser may, at its option,
communicate with ASNI. Any notice given to or by, any amendment or Contract
Variation executed and delivered, any consent, waiver or approval given to or
by, or any other action taken by, the Prime Contractor shall be deemed to be the
joint action of each of the parties constituting the Contractor, and Purchaser
shall be entitled to rely thereon.
B. ASN and ASNI shall each be jointly and severally liable to Purchaser
for payment and performance of all of the obligations and liabilities of the
Contractor whatsoever under this Contract. Each of ASN and ASNI shall, by
itself, be deemed fully liable to Purchaser for the payment and performance of
all the obligations and liabilities of the Contractor hereunder, including all
obligations and liabilities arising as a result of (i) a failure by the other
party constituting the Contractor to pay and perform its obligations and
liabilities hereunder, (ii) any breach of warranty by such other party or (iii)
any act or omission by such other party which causes a Default hereunder.
Purchaser may seek to enforce all of the obligations and liabilities of
Contractor hereunder, or seek remedies with respect thereto, against both of, or
either one of, the parties constituting the Contractor without seeking
enforcement or remedies against the other such party. Neither party constituting
the Contractor shall have the right to raise as a defense against any claim
brought by Purchaser, the allegation that such claim was caused by the fault of
the other party constituting the Contractor.
Page 57
C. The Contractor agrees to cause its ultimate parent company to execute
and deliver, contemporaneously with the initial payment under this Contract, a
guaranty to Purchaser substantially in the form of Exhibit A hereto.
43 Survival of Obligations
-----------------------
The Parties' rights and obligations, which, by their nature would continue
beyond the termination, cancellation or expiration of this Contract, including,
but not limited to, those contained in Sub-Article 4(B) (Taxes, Levies and
Duties) and Sub-Article 4(C) (Withholding Tax), Article 10 (Warranty), Article
11 (the Contractor Support), Article 18 (Intellectual Property), Article 20
(Safeguarding of Information and Technology), Article 21 (Export Control) and
Article 23 (Limitation of Liability/ Indemnification) shall survive termination,
cancellation or expiration hereof.
44 Non-Waiver
----------
A waiver of any of the terms or conditions of this Contract, or the failure
of either Party strictly to enforce any such term or condition, on one or more
occasions shall not be construed as a waiver of the same or of any other term or
condition of this Contract on any other occasion.
45 Language; Interpretation
------------------------
This Contract has been executed in the English language and English will be
the controlling language for interpretation of this Contract. As used in this
Contract, "including" means "including without limitation."
46 Representations and Warranties
------------------------------
A. Contractor's Representations and Warranties. Contractor represents
-------------------------------------------
and warrants to Purchaser and acknowledges and agrees, as follows:
(a) ASN is a societe anonyme duly formed, validly existing and
in good standing under the laws of France and ASNI is a
Delaware corporation, duly formed, validly existing and in
good standing under the laws of Delaware and each has
obtained all qualifications under all applicable laws
necessary to engage in the business required of it under
this Contract and has full power and authority to own its
property and to carry on its business as now conducted.
(b) Contractor has full power and authority to execute this
Contract and to carry out its obligations under this
Contract. Its execution and performance of this Contract and
the consummation of the
Page 58
transactions contemplated by this Contract have been duly
authorized by all requisite corporate action on its part.
This Contract constitutes a valid and legally binding
obligation of Contractor, enforceable against it in
accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect
relating to creditors' rights generally. Its representative
executing this Contract has sufficient authority to sign
this Contract in its name and on its behalf, and that
authority has not been limited or revoked.
(c) Contractor's execution and performance of this Contract and
the transactions contemplated hereby do not constitute a
breach of any term or provision of, or a default under, (A)
any contract or agreement to which it or any of its
affiliates is a party or by which it or any of its
affiliates or its or their property is bound, (B) its
organizational documents or (C) any laws, regulations or
judicial orders having applicability to it, which breach
would have a material adverse affect on its ability to
perform its obligations hereunder.
(d) There is no legal proceeding pending or, to Contractor's
knowledge, threatened against it that could materially
adversely affect the validity of this Contract or its
ability to perform its obligations hereunder.
(e) It has the requisite expertise, professional qualifications,
skills, personnel, technology, experience and technical
resources to perform the Work.
(f) It has had a full and complete opportunity to examine this
Contract.
(g) It has made all investigations and inspections that it deems
necessary to perform the Work in accordance with this
Contract. Contractor has ascertained and relied upon its own
investigation of the availability and quality of laborers
and suppliers in each location in which all or any portion
of the Work is to be performed, and has investigated to its
satisfaction all applicable legal and regulatory
requirements relating thereto.
B. Purchaser Representations and Warranties. Purchaser represents and
----------------------------------------
warrants to Contractor as follows:
(a) It is a duly formed and validly existing corporation under
the laws of its jurisdiction of incorporation. It has full
power and authority to own its property and to carry on its
business as now conducted.
Page 59
(b) It has full power and authority to execute this Contract and
to carry out its obligations under this Contract. Its
execution and performance of this Contract and the
consummation of the transactions contemplated by this
Contract have been duly authorized by all requisite
corporate action on its part. This Contract constitutes a
valid and legally binding obligation of Purchaser,
enforceable against it in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or
hereafter in effect relating to creditors' rights generally.
Its representative executing this Contract has sufficient
authority to sign this Contract in its name and on its
behalf, and that authority has not been limited or revoked.
(c) Purchaser's execution and performance of this Contract and
the transactions contemplated hereby do not constitute a
breach of any term or provision of, or a default under, (A)
any contract or agreement to which it or any of its
affiliates is a party or by which it or any of its
affiliates or its or their property is bound, (B) its
organizational documents or (C) any laws, regulations or
judicial orders having applicability to it, which breach
would have a material adverse affect on its ability to
perform its obligations hereunder.
(d) There is no legal proceeding pending or, to Purchaser's
knowledge, threatened against it that could materially
adversely affect the validity of this Contract or its
ability to perform its obligations hereunder.
47 Entire Agreement
----------------
This Contract supersedes all prior oral or written understanding among the
Parties and constitutes the entire agreement with respect to the subject matter
herein, including that certain Letter of Intent to Proceed issued by the
Purchaser on June 4, 1999 and signed by ASN on June 7, 1999 (the "LOI");
---
provided, however, that no payment is owed by the Purchaser to ASN under the LOI
as a result of the LOI being superseded by this Contract unless the Purchaser
fails to make the initial payment under Sub-Article 5(C)(2) before the
termination of this Contract by any Party. If any Party terminates this
Contract before the initial payment is made hereunder, the Purchaser shall, in
lieu of such initial payment, be required to pay promptly the amount as
determined under paragraph 3 of the LOI. The terms and conditions of this
Contract shall not be modified or amended except by a writing signed by
authorized representatives of the Purchaser and the Prime Contractor.
48 Optional System Upgrades
------------------------
A. Contractor hereby grants Purchaser an irrevocable option for one or
more (as determined by Purchaser) future upgrades to the System (each
a "System Upgrade") that may be exercised by Purchaser during the
Upgrade Option Period. Except as otherwise provided in this Contract,
all of the terms and conditions of this Contract (including Article
10) shall apply to each System Upgrade.
B. The upgrade option period ("Upgrade Option Period") during which
Purchaser may place orders to upgrade the System shall commence
following the Date of Final Acceptance of the System and end *
after the Date of Final Acceptance of the System.
C. The Purchaser may exercise its option for one or more System
Upgrades at any time and from time to time during the Upgrade
Option Period to upgrade the System by providing notice pursuant
to Article 35.
Each System Upgrade shall consist of an incremental increase in the
System capacity in integral multiples of * per fiber pair around the
System ring network, * . For particular System interfaces, a
separate notice pursuant to Article 35 shall be provided by the
Purchaser. Each System Upgrade shall increase the capacity of all
Segments by equal increments for service and protection capacity
and shall include all necessary spares, documentation and training
attendant to such System Upgrade.
D. In implementing each System Upgrade, the Contractor will * any
disruption to existing System traffic. The Contractor, upon
receiving written authorization from Purchaser, may reroute
traffic on a service path on the installed System to a protection
path on the installed System in order to implement the System
Upgrade so as not to incur traffic disruption.
E. The performance of the System, *, following the implementation of
a System Upgrade, shall be consistent with the end-of-life bit error
rate requirements as specified in the Technical Volumes. The terms
and conditions as set forth in Article 9 govern acceptance of the
System as upgraded by the System Upgrades.
F. The System Upgrades shall be provided by the Contractor at the
prices as set forth in the Upgrade Provisioning Schedule,
Appendix 1A and payable as set forth in the Upgrade Billing
Schedule, Appendix 2A. Terms of payment for the Upgraded Work
are governed by the terms and conditions as set forth in
Article 5.
G. The plan of work for any System Upgrade shall be negotiated in
good faith by the Contractor and the Purchaser; provided, however,
that Contractor shall use reasonable efforts to ensure that the
installation, testing and acceptance of each System Upgrade will
occur as soon as reasonably practicable (the "Scheduled Upgrade
Date"), but in no event later than the date which is * after the
Purchaser gives notice pursuant to Sub-Article 48(C). The
Purchaser will use reasonable efforts to try to forecast its
System Upgrade capacity requirements so as to give earlier notice
of an estimated time of upgrade to the Contractor. The Parties
agree that where overlapping occurs because the Purchaser exercises
its option for a System Upgrade prior to the completion of a
previously elected System Upgrade(s), the Parties will agree in
good faith to a mutually acceptable delivery schedule and price
adjustment (a "Special Upgrade"). Should a need for a special upgrade
(in addition to the foregoing) arise, the Parties will negotiate
in good faith to meet Purchaser's needs.
*
I. The Contractor's maximum aggregate liability, whether in tort,
contract or otherwise, shall, for any work described in this
Article or corresponding obligations, not exceed * of the System
Upgrade price as set forth in the Upgrade Provisioning Schedule,
Appendix 1A.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT.
Page 60
49 Integration of BUS-1 in System
------------------------------
A. The Parties acknowledge that for the provision of the System, it will
be necessary to utilize the existing BUS-1 system. This Article governs the
utilization of the BUS-1 system. This Article shall be governed in accordance
with the terms and conditions of this Contract.
B. The Contractor will perform all necessary tests on BUS-1 to confirm
its capability for use in the System and to determine the number of wavelengths
by which it can be upgraded while still meeting the System Performance
Requirements.
C. Contractor undertakes to integrate and upgrade BUS-1 into the links
supplied by Contractor, subject to the following provisions:
1. Contractor has determined that BUS-1 is capable for use in
the System.
2. In its present configuration, the BUS-1 system complies with
performance criteria of ITU-T G.826 and interconnectivity
capability according to ITU-T G.957 and G.958.
3. Contractor is given reasonable access to BUS-1 for all
purposes necessary for the integration and upgrade, provided
that such access does not unduly interfere with service of
the BUS-1 system.
4. Purchaser will promptly repair any defects in BUS-1 (other
than defects caused by Contractor or its agents or
Subcontractors) and to the extent such defects delay the
Contractor in the performance of its tasks under this
Article 49, Contractor shall be entitled to claim extensions
of time under Article 17 and any additional cost arising
therefrom.
Page 62
5. With respect to BUS-1, the terms and conditions of Article
10 shall apply except in regard to Defects in BUS-1 not
caused by the Contractor (or its agents or subcontractors)
or any supplies not furnished by Contractor (or its agents
or subcontractors).
50 Optional System Extension
-------------------------
A. Contractor hereby grants Purchaser an irrevocable option to change the
System configuration to include an extension to * and to one or more additional
sites in * as set forth in Appendix 1B, with exact site locations to be
determined by the Purchaser (each a "System Extension"). Except as otherwise
provided in this Contract, all of the terms and conditions of this Contract
(including Article 10) shall apply to each System Extension.
B. The extension option period ("Extension Option Period") during which
Purchaser may place orders to extend the System shall commence on the date
hereof and shall end on *.
C. Purchaser may exercise this option to extend the System during the
Extension Option Period by providing notice pursuant to Article 35.
D. The performance of each System Extension shall be consistent with the
end-of-life bit error rate requirements as specified in the Technical Volumes.
The terms and conditions as set forth in Article 9 govern acceptance of each
System Extension.
E. Each System Extension shall be provided by the Contractor * as set
forth in the Extension Provisioning Schedule, Appendix 1B and payable as set
forth in the Extension Billing Schedule, Appendix 2B. Terms of payment for the
System Extension work are governed by the terms and conditions as set forth in
Article 5.
F. The plan of work for any System Extension shall be negotiated in good
faith by the Contractor and the Purchaser; provided, however, that Contractor
shall use reasonable efforts to ensure that the installation, testing and
acceptance of each System Extension will occur as soon as reasonably
practicable. The Purchaser will use reasonable efforts to try to forecast its
requirements so as to give earlier notice of an estimated time for the extension
works.
G. The Contractor's maximum aggregate liability, whether in tort, contract
or otherwise, shall for any work or corresponding obligations described in this
article, not exceed * of the System Extension price as set forth in the
Extension Provisioning Schedule, Appendix 1B.
* MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL
TREATMENT.
51 Time of the Essence
-------------------
Time is of the essence of this Contract.
Page 63
52. Guaranty
--------
Contractor shall cause the Guarantor to execute and deliver the Guaranty to
Purchaser no later than the date on which the initial payment referred to in
Sub-Article 5(C)(2) is paid.
Page 64
This Contract is executed as of the date first set forth above in Paris,
France by a duly authorized representative of ASN, in Portland, Oregon by a duly
authorized representative of ASNI, and in St. David's, Bermuda by a duly
authorized representative of Purchaser, as set forth below.
ALCATEL SUBMARINE NETWORKS
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: General Counsel
ALCATEL SUBMARINE NETWORKS, INC.
By: /s/ XXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
ATLANTICA NETWORK (BERMUDA) LTD.
By: /s/ XXXXX X. XXXXXXXXXX
---------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President - Bermuda Operations
Page 65
