CELLULAR SYSTEM PURCHASE AND SALE AGREEMENT
THIS CELLULAR SYSTEM PURCHASE AND SALE AGREEMENT ("Agreement") is entered
into as of this 24th day of November, 1998 by and between TELEMIG CELULAR S.A.,
a Brazilian corporation with its head office located at Xxx Xxxxxxx Xxxxx, 000,
0xx xxxxx Xxxx Horizonte, MG, Brazil, registered with the Brazilian Registry of
Corporate Taxpayers (CGC/MF) under n(degree) 02.320.739/0001-06 ("Telemig
Celular") and, NORTHERN TELECOM DO BRASIL INDUSTRIA E COMERCIO LTDA., a
Brazilian corporation with its head office located at Av. das Nacoes Unidas.
n(degree) 17891.4(degree) andar. Sao Paulo, SP, Brazil, registered with the
Brazilian Registry of Corporate Taxpayers (CGC/MF) under n(degree)
67.807.859/0001-88 ("Nortel Industria"); NORTHERN TELECOM DO BRASIL COMERCIO E
SERVICOS LTDA., formerly named Nortel Comercio e Servicos Ltda., a Brazilian
corporation with its head office located at Xx. xxx Xxxxxx Xxxxxx, x(xxxxxx)
00000, 10(degree) andar, parte A, Sao Paulo, SP, Brazil, registered with the
Brazilian Registry of Corporate Taxpayers (CGC/MF) under n(degree)
01.993.432/0001-03 ("Nortel Comercio") and NORTHERN TELECOM LIMITED, a Canadian
corporation with head office located at 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0 ("Nortel") (collectively, "Nortel").
RECITALS
WHEREAS, Telemig Celular holds a Mobile Cellular Service concession to
provide cellular service (the "Cellular Service") in the State of Minas Gerais,
in the Federative Republic of Brazil.
WHEREAS, Telemig Celular wishes to engage Nortel to provide a Cellular
System including certain design considerations and the deployment of a cellular
network in phases.
WHEREAS, Nortel acknowledges that, in entering into this Agreement,
Telemig Celular is relying on the skill and expertise of Nortel to carry out the
responsibilities it has undertaken pursuant to the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual premises contained herein
the Parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS
Capitalized terms used within this Agreement or within an Exhibit to this
Agreement are defined in this Section in alphabetical order or in an
Exhibit.
Acceptance Date means the date when the Acceptance Tests or Systems
Acceptance Tests are completed to the satisfaction of Telemig Celular in
accordance with Exhibit B of this Agreement.
Acceptance Tests (AT) means the mutually agreed methods of testing and
procedures that will be used to measure the performance of the Cellular
System, Network Elements or Products as administered in accordance with
Exhibit B of this Agreement.
Account Manager means Nortel's account manager responsible for Telemig
Celular's account.
Agreement means this Cellular System Purchase and Sale Agreement, and all
Exhibits attached hereto.
AMPS means Advanced Mobile Phone System technology as described in interim
standard IS-3 (800 MHz) of the Telecommunication Industry Association.
ANATEL (Agencia Nacional de Telecomunicacoes) means the regulatory agency
of the government of the Federative Republic of Brazil. or any successor
thereof charged with licensing Cellular Mobile Service networks.
Associated Company means any Person (as hereinafter defined), now or
hereafter existing, in which the direct or indirect controlling shareholder
of Telemig Celular or direct or indirect group of shareholders of Telemig
Celular having more than 50% of the voting equity of Telemig Celular has
any direct or indirect interest, by record or beneficial ownership alone or
in combination with any other, of 50% or more of the voting equity or
voting rights of the subject Person, or of any option, warrant or right to
acquire any such voting equity or voting rights of the subject Person.
BTS means the Base Transceiver Subsystem, which is the Cellular TDMA/AMPS
Base Station.
Cellular Network means the EFRC/TDMA-IS136/AMPS mobile cellular telephone
network (operating in the 800 MHz ) to be operated by Telemig Celular
within the Territory to provide the Cellular Service and consisting of
networks, network elements, systems, infrastructure, transmission and other
components as specified by Telemig Celular.
Cellular Service means that cellular service to be provided by Telemig
Celular pursuant to the concession granted by ANATEL for the Territory.
Cellular System means that Network Element comprised of the Products and
Software to be provided by Nortel hereunder, including without limitation,
the switching, cell site equipment and associated services.
CFR means Cost and Freight to a designated airport in Brazil, as defined in
the ICC Incoterms 1990 and modified in Section 12.
CFR Price means the amount payable in relation to Imported Products ordered
by Telemig Celular set forth in Exhibit A.
Change Order means a written request for a change in a Phase Acquisition
Document or a Purchase Order resulting from a change in the scope or
content of a Phase, as more specifically described in Exhibit F.
Class A Change means a modification to an existing Product to remedy a
non-conformance to Nortel's specification required to correct design
defects of a type that result in electrical or mechanical inoperative
conditions or extremely unsatisfactory operating conditions or which is
recommended to enhance safety.
Class AC Change means a modification to an existing Product to remedy
electrical or mechanical inoperative conditions or extremely unsatisfactory
operating conditions that result from the Product aging or its use in
specific combination with another Product or the use of a certain feature
or option.
Commissioning or Commissioning Testing means the series of tests performed
by Nortel to verify the proper functioning of a Product and the proper
completion of its installation services prior to administering the
Acceptance Test.
Confidential Information means information that the Parties have agreed to
protect from improper disclosures as per Section 11 of this Agreement.
Conditional Acceptance means the Cellular System has passed certain
portions of the Acceptance Tests required for In-Service as more fully
defined in Exhibit B.
Critical Fault means a failure of the Cellular System or Product to perform
such that system degradation or an unscheduled outage occurs. The following
criteria shall be used to define a critical fault for a switch and a cell
site equipment during the Soak Period: (i) if a Switch ceases call
processing or call processing is degraded ({a} 10% or more of the total
amount of circuits in an interconnection trunk group are out of service;
{b} 10% or more of the Subscribers are out of service; or {c} no usable
billing data is being entered on tape) and during the Soak Period the sum
of unscheduled outages exceeds 1 minute; and (ii) if a Site ceases call
processing or call processing is degraded ({a} 10% or more of the total
amount of circuits in an interconnection trunk group to the switch are out
of service; {b} 10% or more of the Subscribers cannot receive or terminate
calls), excluding blocking due to lack of radios and during the Soak Period
the sum of unscheduled outages exceeds 2 minutes.
CTIA means the Cellular Telecommunication Industry Association, or its
successor organization (USA).
Delivery means delivery of the Products to Telemig Celular's warehouse or
any other predetermined location within the Territory.
Delivery Date(s) means the date or dates specified in a Phase Acquisition
Document or Purchase Order on which a Product is to be delivered.
Documentation means the Nortel's standard Product or Service documentation
for its customers, whether written or supplied in other form, described in
Exhibit E and as amended from time to time.
Embedded Software has the meaning set forth in Section 11 of Exhibit C.
Effective Date means November 24th, 1998.
EIA means the Electronics Industry Association (USA).
Final Acceptance means that a Phase in the implementation of the Cellular
System, or a particular Product or Service has successfully passed
Acceptance Tests.
Force Majeure means any event beyond the reasonable control of the Party
responsible for compliance ("Delayed Party") including failure or delay in
performance by the other Party, acts of God, acts of the public enemy, acts
of civil or military authority, governmental acts or omissions, acts of
nature such as hurricanes, earthquakes, fires, floods, epidemics,
embargoes, war, riots, and loss or damage to goods in transit, strikes in
Delayed Party's operations, and strikes or other labor disputes of national
or regional scope preventing performance hereunder by the Delayed Party
including its sub-contractors and suppliers (when no alternative method of
compliance is reasonably available).
Forecast means a forecast provided by Telemig Celular as per Section 4.1 of
this Agreement.
Imported Product means a Product for which Telemig Celular is identified as
the importer of record.
In-Country Product means a Product which has not been imported.
Implementation Schedule means the implementation schedule for a given Phase
or a portion thereof, a Purchase Order or a Change Order.
MSC or Mobile Switching Center means the Mobile Switching Center, comprised
of the switching and related equipment that routes calls from a mobile
telephone set to the called party (and vice-versa) and performs a variety
of related functions. In the Cellular System, an MSC is also known as an
MTSO (mobile telephone switching office).
Network Element(s) means the elements that constitute the Cellular Network
namely (i) the Cellular System or a portion thereof, (ii) the transmission
system and (iii) the Sites infrastructure.
New Feature(s) means a new Software functionality or substantial
performance improvement that is made available to all users for the then
current Software releases.
Party or Parties means in the singular, Telemig Celular or Nortel, as the
case may be determined from the context, or in the plural, both Telemig
Celular and Nortel.
Person includes, without limitation any individual or group, and any firm,
corporation, company, association, partnership, consortium, joint venture,
trust, or incorporated or incorporated organization established in
accordance with the laws of Brazil.
Phase has the meaning set forth in Section 2.3.
Phase Acquisition Document means a written order by Telemig Celular to
Nortel, substantially in the form of Exhibit F, for the purpose of (i)
defining the scope of a given Phase or a portion thereof, (ii) specifying
the Products, Services and Software to be purchased for such Phase and
their respective prices as per Exhibit A and (iii) including the
Implementation Schedule and the Responsibility Matrix.
Project Manager has the meaning set forth in Sections 5.2. and 5.3.
Product(s) has the meaning set forth in Section 2.4.
Project Suppliers means suppliers other than Nortel retained by Telemig
Celular for the supply of certain products and services required for
implementation of the Cellular Network outside Nortel's scope of supply,
such as suppliers of transmission equipment and civil infrastructure
services.
PSTN or Public Switched Telephone Network means the telephone network that
provides telephone service to the public in a given area.
Punchlist means a list prepared by Nortel and agreed to by Telemig Celular
during the performance of each Acceptance Test that sets forth those
mutually agreed items, if any, to be resolved by Nortel before Final
Acceptance.
Purchase Order means a written order by Telemig Celular to Nortel for the
purchase of specific Products and Services not covered by a Phase
Acquisition Document (i.e. purchase of individual Products and Services).
Ready for In-Service means the availability for Cellular Service of the
Cellular Network, Network Elements or Products of a specified Phase or
expansion after the installation and commissioning thereof have been
completed (K Date), in accordance with the Phase Implementation Schedule.
Responsibility Matrix means the table allocating tasks and responsibilities
between Telemig Celular, Nortel and Project Suppliers for a given Phase.
Section means, when used without any other reference, sections, including
subsections, within this Agreement.
Service(s) has the meaning set forth in Section 2.5.
Shipping Document means a document issued by a carrier evidencing shipment
of Products such as an airway xxxx, a xxxx of lading or a conhecimento de
embarque.
Site means any location at which Products and Services provided under this
Agreement are or will be delivered, installed, or performed.
Soak Period means, with respect to a Phase, in the implementation of the
Cellular Network, ninety (90) days of continuous operation of the Cellular
System or Products of such Phase without a Critical Fault. The Soak Period
shall commence upon Ready for In-Service.
Software means the object-code (does not include source code) computer
programs furnished by Nortel to Telemig Celular for use solely in
conjunction with the Cellular System. The term "Software" includes, but
shall not be limited to, computer programs contained on magnetic tape in a
semiconductor device, on a disk or in another memory device or system
memory consisting of (a) hard-wired logic instructions which manipulate
data in central processors, instructions which control input-output
operations, and error diagnostic and recovery routines and (b) sequences of
instructions in machine-readable code that control call processing
peripheral equipment and administration and maintenance functions as well
as associated documentation to describe, maintain or use the programs.
Software Base Load means Software that performs the basic activities in a
Network Element such as but not limited to, hardware control call
processing, cell site control, mobility control, inter-MSC signaling and
interface, PSTN signaling and interface, and user interface. Nortel shall
provide Telemig Celular with Base Loads for Software licensed hereunder to
Telemig Celular as such Base Loads become available and subject to the
terms and conditions set forth in Exhibit C.
Software Documentation means printed materials or electronic media used in
connection with Software. Such as, but not limited to, user manuals, flow
charts,logic diagrams, program descriptions, and specifications. No source
code versions of Software are included in the Software Documentation.
Software Feature(s) means a Software designed to improve
performance/capacity to the Cellular Network and/or RF environment, or
create new Cellular Service (s). Nortel shall provide Telemig Celular with
Features as they become available, subject to the terms and conditions set
forth in Exhibit C.
Software Patch means a Software designed to correct or remove a
reproducible malfunction in a Software.
Software Upgrade means a reissued version or partial update of existing
Software Base Load (with or without the inclusion of optional features)
that adds to, improves or enhances existing Software Features and
capabilities of the Cellular Network.
Subscriber means a legal entity or an individual having the right under the
appropriate agreement with Telemig Celular to use the Cellular Network or
any portion thereof.
TDMA means the Time Division Multiple Access technology as described in
interim standard IS-136(800 MHz) of the Telecommunication Industry
Association.
Term has the meaning set forth in Section 2.1.
Territory means the State of Minas Gerais, in the Federative Republic of
Brazil within which Telemig Celular is authorized to provide Cellular
Service.
TIA or Telecommunication Industry Association means the organization in the
United States of America charged with establishing technical standards for
cellular networks, currently the Telecommunication industry Association, or
its successor
Total Unitary Price means the amount payable in respect of a Product or
Service ordered by Telemig Celular as set forth in Exhibit A to this
Agreement, comprised by the CFR/unit Price of the Product or the unit Price
of the Service, plus the applicable taxes and duties.
Warranty Period means the period during which a Product is covered by
Nortel's warranties under applicable warranty provisions as per Section 9
of this Agreement.
2. TERM AND SCOPE OF AGREEMENT
2.1 TERM. The term of this Agreement shall be three (3) years from the
Effective Date (the "Term").
2.2 SCOPE OF AGREEMENT. The scope of this Agreement is the supply by Nortel to
Telemig Celular and the purchase by Telemig Celular from Nortel within the
Term of this Agreement of Products, Services and Software comprising a
Cellular System for expansion of a Cellular Network in the State of Minas
Gerais, Brazil.
2.2.1 Subject to Force Majeure, Telemig Celular shall buy from Nortel and
Nortel shall sell to Telemig Celular, Products and Services in two
Phases -- the first in the amount of US$85,000,000.00 (eighty-five
million US Dollars) (the "First Phase Value Commitment") and the
second in the amount of US$ 69,000,000.00 (sixty-nine million US
Dollars) (the "Second Phase Value Commitment") -- with a total value
of US$154,000,000.00 (one-hundred and fifty-four million US Dollars),
based on the Total Unitary Prices as set forth in Exhibit A (the
"Total Value Commitment"). Telemig Celular acknowledges that its Total
Value Commitment is derived from the unitary prices set forth in
Exhibit A. The Phase Value Commitments are conditional on the
appropriate financing arrangement being acceptable to Telemig Celular.
2.2.2. REMOVED
2.2.3. REMOVED
2.3 PHASES. Telemig Celular and Nortel agree to breakdown the implementation of
the Cellular Network into Phases, which will be defined in Phase
Acquisition Documents.
2.4 PRODUCTS. Telemig Celular shall purchase from Nortel the TDMA IS-136
products, including drawings, documents, manuals and Software identified in
Exhibit A, which may be manufactured or produced by Nortel or procured by
Nortel from suppliers (collectively the "Products") for incorporation in
the Cellular Network in the Territory.
Products furnished to Telemig Celular under this Agreement are furnished
for use in connection with Telemig Celular's operations of the Cellular
Network and are not furnished for resale.
2.5 SERVICES. Telemig Celular shall purchase from Nortel the services
identified in Annex A.3 of Exhibit A as may be required to implement a
Phase Acquisition Document, a Purchase Order or a Change Order
(collectively the "Services").
2.6 CELLULAR TDMA/AMPS SPECIFICATIONS. Telecommunications standards shall apply
to this Agreement to the extent not inconsistent with any terms or
conditions of this Agreement and regulations issued by the Ministerio das
Comunicacoes or ANATEL. Relevant telecommunications standards include, but
are not limited to the following:
Number Subject
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a) For TDMA
IS-136.1-A 800 MHz TDMA Cellular - Radio Interface - Mobile
Station - Base Station Compatibility - Digital Control
Channel (PN-3474)
IS-136.2-A 800 MHz TDMA Cellular - Radio Iinterface - Mobile
Station - Base Station Compatibility - Traffic Channels
and FSK Control Channel (PN-3474)
IS-137-A 800 MHz TDMA Cellular - Radio Interface - Minimum
Performance Standards for Mobile Stations (PN-3605)
IS-138-A 800 MHz TDMA Cellular - Radio Interface - Minimum
Performance Standards for Base Stations (PN-3606)
IS-641-A TDMA Cellular/PCS - Radio Interface - Enhanced
Full-Rate Speech Codec (PN-3467)
XXX-00 XX-000/XX-000X Compatibility Issues (PN-3617)
IS-669 800 MHz Cellular Systems - TDMA Services - STU 111
(PN-3616)
IS-684 TDMA Cellular/PCS Systems - Radio Interface - Radio
Link Protocol 2 (PN-3658)
IS-685 TDMA Cellular/PCS Systems - TDMA Services - Packet
Switched Data (PN-3680)
IS-686 800 MHz Cellular System, TDMA Radio Interface, Minimum
Performance Standard for Enhanced Full-Rate Speech
Codec (PN-3690)
IS-41-C Networking Operations and Interswitch feature
transparency
TSB-51 Implementation Aspects concerning the use of the R-Data
message in IS-136 (PN-3719)
PN-3731 Inter-operable implementation issues in IS-641
b) For AMPS
AMPS The specifications established in Xxxxx Xxxxx de
Telecomunicacoes n(degree)20/96 issued by the
Ministerio das Communicacoes
c) For Roaming
IS-41-C Networking Operations and Interswitch Feature
Transparency
3. PURCHASE PROCESS
Exhibit F sets forth the procedure agreed to by the Parties for the
purchases to be made under this Agreement.
4. FORECASTS
4.1 FORECASTS. At the end of each six-month period as of the Effective Date,
Telemig Celular shall deliver to Nortel a good faith rolling written
forecast of Telemig Celular's expected purchases of Products and Services
for the subsequent twelve (12) months period. Telemig Celular and Nortel
shall mutually define the form and content of the forecast and its form and
frequency may be modified from time to time by mutual agreement of Telemig
Celular and Nortel. Notwithstanding the foregoing, each such forecast shall
include a summary of the major components of the Cellular System to be
purchased during the period covered and the anticipated dates of Delivery
thereof, categorized as either "Switching Equipment" or "Site Equipment",
in each case including any associated Software. The Parties agree that all
forecasts delivered pursuant to this Section 4.1 are for planning purposes
only and shall create no binding obligations on the Parties.
5. CONTRACT ADMINISTRATION
5.1 CONTRACT ADMINISTRATION BY TELEMIG CELULAR'S ORGANIZATION. Telemig Celular
shall enter into separate agreements with each of the Project Suppliers and
shall be responsible for contract administration and coordination of
project activities within Telemig Celular's internal departments.
5.2 TELEMIG CELULAR'S PROJECT MANAGER. Telemig Celular shall, during the Term
of this Agreement, appoint a Project Manager for the project to be the
liaison with the Nortel's Project Manager, who shall:
(a) be fully cognizant of all the background of the project; and
(b) have authority to make day-to-day decisions, over the project and its
personnel without recourse to his head office;
5.2.1 Telemig Celular's Project Manager Responsibilities. Telemig Celular's
Project Manager shall be responsible for coordinating the Cellular
Network implementation between Nortel and Telemig Celular. This
coordination shall include review and approval of all quotations and
invoices, inventory' control of delivered equipment, ensurance of
compliance with the applicable Implementation Schedules; maintaining
the closest possible cooperation with Nortel's Project Manager; being
available at Sites as reasonably requested; monitoring of the overall
progress of project schedule; liaison with external parties for the
Cellular Network implementation, coordinating with Nortel to conclude
agreement on the Acceptance Tests; and supplying Nortel with
clarifications on the technical specification requirements.
5.3 NORTEL'S PROJECT MANAGER. During the Term of this Agreement, Nortel shall
appoint a Project Manager who shall:
(a) be fully cognizant of the background of the project; and
(b) have authority to make day-to-day decisions, over the project and its
personnel without recourse to his head office.
5.3.1 Nortel's Project Manager Responsibilities. Nortel's Project Manager
shall be responsible for project coordination and liaison with Telemig
Celular's Project Manager. Nortel's Project Manager responsibilities
shall include being available at Sites as reasonably requested;
ensuring compliance with Nortel's obligations under the Implementation
Schedule; coordinating with Telemig Celular to conclude agreement on
the Acceptance Tests; and maintaining the closest possible cooperation
with Telemig Celular's Project Manager.
5.4 NORTEL'S SUBCONTRACTORS. Nortel may employ subcontractors in carrying out
its obligations under this Agreement. Nortel's use of subcontractors shall
not relieve Nortel of its obligations and responsibilities under this
Agreement. Nortel shall supervise the work of Nortel's subcontractors and
shall be liable for any acts or omissions of such subcontractors. Telemig
Celular may, at any time, require Nortel to replace a subcontractor where,
in Telemig Celular's reasonable judgment, the subcontractor is not
performing adequately and/or quality standards are not respected. Any
delays or cost resulting from the replacement of a subcontractor shall be
borne by Nortel.
5.5 TELEMIG CELULAR'S MATERIALS REMAIN PROPERTY OF TELEMIG CELULAR. All plans,
drawings, designs and specifications, submitted by Telemig Celular or on
its behalf and marked confidential are Confidential Information to be
protected in accordance with Section 11 herein shall remain the property of
Telemig Celular, may be copied only in accordance with Section herein and
may not be disclosed to third parties by Nortel without Telemig Celular's
prior written consent. These materials shall be returned to Telemig Celular
promptly upon its request without any copy remaining with Nortel except for
copy to remain with Nortel's counsel for use before a court of law if
required by Nortel.
5.6 NORTEL'S PERSONNEL. Telemig Celular may at any time, request Nortel to
replace an employee where, in Telemig Celular's reasonable judgment. The
employee is not performing adequately. Any delays or costs resulting from
the replacement of Nortel's employee shall be borne by Nortel.
5.7 DOCUMENTS TO BECOME PROPERTY OF TELEMIG CELULAR. Except for Confidential
Information, the documents, which include plans, drawings, designs, and
specifications supplied by Nortel to Telemig Celular in connection with the
Products, shall be the property of Telemig Celular, provided, however, that
title to Nortel's intellectual property rights as stated in Section 10
shall not be conveyed to Telemig Celular at any time. In addition, Telemig
Celular shall have the full right to use the documents supplied by Nortel
which are Confidential Information in the course of the normal operation
and maintenance of the Cellular Network.
5.8 RESPONSIBILITY FOR DOCUMENTS. Each Party supplying technical data or
documents shall be responsible for the completeness and correctness of such
technical data or documents. Where it is found that such technical data or
documents are not complete or are incorrect, each Party shall notify the
responsible Party and thereafter such responsible Party shall promptly
complete and/or correct such technical data or documents.
6. PAYMENT, PRICING AND DISCOUNTS
6.1 GENERAL. The prices and discounts under this Agreement, as detailed in
Exhibit A. Apply to Products, Services and Software furnished by Nortel and
purchased by Telemig Celular in accordance with the Total Value Commitment
indicated in Section 2.2.1.
6.1.1 REMOVED
6.1.2 The Parties acknowledge and agree that the CFR values contained in
Exhibit A may vary depending on whether the Product is imported or
supplied locally, provided that the resulting Total Unitary Price of
the Product being supplied does not exceed the corresponding Total
Unitary Price stated in Exhibit A.
6.2 INVOICES.
6.2.1 Telemig Celular shall have no obligation to pay Nortel for any
charges, unless such charges are expressly authorized by this
Agreement, a Phase Acquisition Document, Purchase Order or a Change
Order and Telemig Celular has received an invoice for such charges.
6.2.2 Each invoice issued hereunder shall reference the Phase Acquisition
Document, the Purchase Order or a Change Order number and identify the
payment event charges and applicable taxes, if any.
6.3 TERMS OF PAYMENT. Telemig Celular shall pay invoiced amounts less any
disputed amounts as set forth below. All payments for Imported Products
shall be made based on their CFR values. All payments for In-Country
Products, Services and Software shall be made based on their Total Unitary
Prices as set forth in Exhibit A. In the event that Telemig Celular wishes
to purchase Imported Products and financing is not available, the Parties
agree to review the payment terms set forth in Section 6.4, consistently
with Brazilian import and currency exchange regulations then in force.
6.4 REMOVED
6.5 REMOVED
6.6 SOFTWARE. The payment terms for Software are set forth in Exhibit C.
6.7 REMOVED
6.8 TRAINING. One-hundred percent (100%) Total Unitary (R$) Price due for
Training shall be paid thirty (30) days after presentation by Nortel of the
relevant invoice for each completed course.
6.9 CURRENCY OF PRICES, ACCOUNTS AND PAYMENTS; IMPORT RESPONSIBILITIES AND
PAYMENT OF IMPORT DUTIES AND TAXES.
6.9.1 The Currency of Accounts shall be U.S. Dollars (US$) for Imported
Products or Brazilian Reais (R$) for In-Country Products and Services,
except as otherwise set forth in Section 6.9.3. Nortel shall identify
the Currency of Accounts used for determining prices and charges under
this Agreement.
6.9.2 The Prices set forth in US$ in Exhibit A for the In-Country Products
and Services shall be converted into Reais on the Effective Date using
the exchange rate for the sale of US dollars published by the Central
Bank of Brazil through the SISBACEN System, Code PTAX 800. Such Prices
are basic for the Effective Date and shall be adjusted once every
twelve (12) months from the Effective Date consistent with existing
legislation or for lesser periods if law permits to take into account
local inflation, in accordance with the relevant indices indicated
below. Furthermore, independently of the date of the issuance of a
Phase Acquisition Document or a Purchase Order, payments made under
that Phase Acquisition Document or Purchase Order for events occurring
after an annual adjustment shall reflect the corresponding adjustment.
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Products and Services Adjustment Indices
--------------------------------------------------------------------------------
In-Country Equipment and materials Index of the column 27 of the Conjuntura
Economica Magazine, published by Fundcao
Xxxxxxx Xxxxxx ("FGV")
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In-Country Services Index of the column 20 of the Conjuntura
Economica Magazine, published by FGV
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6.9.3 On the date of the first delivery to Telemig Celular of any Product
manufactured in Brazil to replace an Imported Product, the CFR (US$)
Price contained in Exhibit A for the replaced Imported Product shall
be converted into Reais using the exchange rate for the sale of US
dollars published by the Central Bank of Brazil through the SISBACEN
System, Code PTAX800 on that date. Thereafter, the Reais Price for any
such Product manufactured in Brazil shall be adjusted on an annual
basis according to the variation of the index of the column 27 of the
Conjuntura Economica Magazine, published by FGV. Invoicing in Reais
for all BTS Equipment shall be initiated on or before October 1, 1999
and for Software on or before December 1, 1999, subject to compliance
with Brazilian applicable laws. The rate applicable to conversion into
Reais for invoicing purposes shall be the same as the one provided for
in this Section 6.9.3. effective on the first date of such invoicing.
6.9.4 REMOVED
6.9.5 To the extent Telemig Celular is the importer of record for a
Product, Nortel shall obtain in the name of Telemig Celular customs
clearance and any necessary governmental authorization for importation
into Brazil and exportation from the country of origin. Telemig
Celular shall be responsible for the timely payment of all Brazilian
import duties and taxes relating to the importation of the Imported
Products into Brazil.
6.10. TAXES
6.10.1 The Total Unitary Prices for the Products set forth in Exhibit A
have been calculated on the assumption that taxes directly incident on
the sale of Products or performance of Services are the Imposto Sobre
Produtos Industrializados (IPI), Imposto Sobre Circulacao de
Mercadorias e Servicos (ICMS), Imposto Sobre Servicos (ISS) and
Imposto de Importacao (II). In addition the Programa de Integracao
Social (PIS) and the Contribuicao para Financiamento da Seguridade
Social (COFINS) taxes have also been applied to the calculation of the
Total Unitary Prices for In-Country Products. If after the Effective
Date any of the foregoing taxes are increased, decreased, eliminated
or modified by operation of law or as a result of change in
interpretation of the law by the tax authorities or in case new taxes
are created that directly apply to the sale of the Products or
performance of the Services, the respective Total Unitary Prices will
be modified to reflect the change.
6.10.2 If after the Effective Date, any Brazilian taxes other than those
referred to in Section 6.10.1, having a measurable impact, in excess
of 3%, on the cost of In-Country Products or Services are increased,
decreased, created or extinguished, then the Parties will negotiate in
good faith an interim adjustment to the Total Unitary Prices set forth
in Exhibit A of the Products or Services affected and such interim
prices shall be applicable to any Purchase Orders issued by Telemig
Celular prior to the first subsequent annual adjustment of the Total
Unitary Prices as set forth in Section 6.9.2. If in the opinion of
Telemig Celular or Nortel, acting reasonably, the first subsequent
annual adjustment of the Total Unitary Prices (as set forth in Section
6.9.2) does not reflect adequately the effect of tax variation on the
Total Unitary Prices of the affected Products or Services, the Parties
will enter into negotiations with the objective of agreeing on a fair
and equitable adjustment of the Total Unitary Prices of such Products
and Services. For the purposes of this Section, Brazilian Taxes in
effect as of the Effective Date are as follows:
Name Denomination Basis for Calculation Rate
1. INSS Instituto Nacional do Seguro Social Pay roll
Contribuicao Previdenciaria:
i Parte Empresa 20%
i Salario Educacao 2.5%
i INCRA 0.2%
i SENAI/SENAC 1.0%
i SESI/SESC 1.5%
i SEBRAE 0.6%
2. FGTS Fundo de Guarantia do Tempo de Servico Pay roll 8%
3. IOF Imposto sobre Operacoes de Credito, Cambio e Remittance Amount 0%
Seguro ou Relativas a Titulos ou Valores
Mobiliarios (on imported Services and Software)
4. IRF Imposto xx Xxxxx on Imported Services Remittance Amount 15%
6.10.3 For any error, omission or inaccuracy in the tax rates applicable on
the Effective Date as set forth in Exhibit A, Nortel shall bear the
liability for any additional amounts owed by Telemig Celular. Nortel
shall pay Telemig Celular in Brazilian Reais an amount equal to the
difference between the amount of taxes set forth in Exhibit A and the
amount actually due to the Brazilian tax authorities. Nortel to the
extent possible shall make this payment to Telemig Celular in advance
of when Telemig Celular must make its payment to Brazilian tax
authorities. If Telemig Celular is indemnified by Nortel for a tax
liability under this Section, Nortel may have (a) the corresponding
amount refunded to the extent Telemig Celular subsequently recovers
such amount from the tax authorities or (b) request that the amount of
the indemnification be reduced or refunded to Nortel by Telemig
Celular, to the extent that Telemig Celular is entitled to a tax
credit or a tax benefit resulting from application of the indemnified
tax.
6.11 PAST DUE PAYMENTS. Any payment not made as provided in this Section 6 shall
be subject to a late payment charge applied against the unpaid portion of
the charge. The late payment charge shall be applied daily after the due
dates until payment is received. For U.S. Dollar late payments, the daily
late payment charge shall be calculated by multiplying the outstanding
balance by the number of days of delay times twelve percent (12%) per annum
divided by 365 days. For Brazilian Reais late payments the daily rate
payment charge shall be calculated by multiplying the outstanding balance
by the number of days of delay times the annual ANBID rate plus six percent
(6%) per annum divided by 365 days. Any payments more than ninety (90) days
past due shall be considered a Nortel right to terminate under Section
13.8, except where such sums are in dispute as provided in Section 6.12.
6.12 DISPUTED PAYMENTS. Telemig Celular shall notify Nortel of any disputed
invoice within fifteen (15) days of its receipt of such invoice. The
Parties will use their diligent efforts to resolve such dispute
expeditiously. Should Telemig Celular dispute any sums due to Nortel under
this Agreement, Telemig Celular shall pay, in accordance with this
Agreement that part not in dispute. Telemig Celular shall be liable to
Nortel for late payment charges computed in accordance with Section 6.11,
for the amounts due to Nortel should the dispute be resolved in Nortel's
favor. The time for paying the portion of the invoice in dispute shall be
extended by a period of time equal to the time between Nortel's receipt of
such notice from Telemig Celular and the resolution of such dispute plus
five (5) business days.
7. TELEMIG CELULAR RESPONSIBILITIES
Without further limiting the obligations of Telemig Celular under this
Agreement, Telemig Celular agrees to perform the following duties:
7.1 RESPONSIBILITY MATRIX. Telemig Celular shall discharge those
responsibilities identified as those of Telemig Celular, including Telemig
Celular's portion of responsibilities that are to be jointly performed by
Telemig Celular and Nortel, defined in the "Responsibility Matrix" for each
Phase.
7.2 PERFORM TO SCHEDULE. Telemig Celular shall negotiate in good faith the
Implementation Schedule for each Phase and shall adhere to the
Implementation Schedule for performance of its responsibilities set forth
therein and use reasonable efforts to minimize all delays.
7.3 COSTS. Telemig Celular shall bear all the costs of its own legal fees,
interconnection facilities, telephone and utility charges and other
services and items being supplied by Nortel under this Agreement. Telemig
Celular shall be responsible for payment of the costs of additional customs
bonded warehouse storage fees attributable to Telemig Celular's failure to
make payment of importation duties and taxes when due, as set forth in
Section 6.9.5.
7.4 PUNCHLIST. Telemig Celular shall issue the Punchlist.
7.5 ENGINEERING INFORMATION. Telemig Celular shall:
7.5.1 Furnish necessary information reasonably requested by Nortel and in
accordance with the Responsibility Matrix and Implementation Schedule;
7.5.2 Provide, upon reasonable request, Cellular Network usage information
where Nortel's analysis of the Cellular System's requirements has been
requested by Telemig Celular or is otherwise required by a specific
provision of this Agreement in order for Nortel to discharge its
obligations under this Agreement and where the information requested
is reasonably necessary for these purposes.
7.6 OPERATION AND MAINTENANCE. Telemig Celular shall be responsible for the
lawful and proper operation and maintenance of the Cellular Network after
the Ready for In-Service date.
7.7 EXPORT CONTROLS. Where necessitated by the country of origin of the
Products, Telemig Celular shall comply with all applicable export laws and
regulations of the country of origin. Specifically, but without limitation,
where the Products are so subject to export controls. Telemig Celular
agrees that it will not resell or re-export Products or technical data in
any form without obtaining appropriate export or re-export licenses from
the government of the exporting country.
7.8 CELLULAR NETWORK DESIGN AND PERFORMANCE. Telemig Celular shall be
responsible for design specifications, approvals and the Cellular Network
performance resulting therefrom.
7.9 INCORRECT DELIVERY. If Telemig Celular requests that a Product be delivered
to a Site other than the one specified in the Phase Acquisition Document or
Purchase Order, Telemig Celular shall bear any additional expenses in
delivering it to another Site (e.g. transportation expenses, storage,
etc.).
7.10 OTHER OBLIGATIONS. Telemig Celular shall perform all other of its
obligations set out in this Agreement including the following:
(a) allow Nortel's personnel employed in the project access to the Sites
at all reasonable hours, and to permit the use by such personnel of
all routes, roadways and ramps under the control of Telemig Celular
when such access and use are necessary for the proper performance of
Nortel's obligations hereunder;
(b) permit all Nortel's personnel employed in the project hereunder to use
at reasonable times such portions of existing plant or equipment under
Telemig Celular's control as necessary for the proper completion of
such project, and as it will not interfere with Telemig Celular's
business operations;
(c) take reasonable security measures to safeguard Nortel's equipment on
Telemig Celular's premises against all damages or loss caused by
Telemig Celular's employees from the Delivery until the date of Final
Acceptance of all Products;
(d) ensure that Telemig Celular's personnel carrying out activities at the
Sites do not interfere with the progress of Nortel's obligations
hereunder;
(e) provide Nortel with the Nota Fiscal forms in a timely fashion as
Telemig Celular is the importer of record so as to permit Nortel to
fill out said forms appropriately and arrange for transportation of
the Products from customs clearance to Telemig Celular's warehouse or
to the applicable installation Site;
(f) use all reasonable efforts to ensure the PSTN interconnections by the
dates set forth in the Implementation Schedule. Any delay in Telemig
Celular's obtention of the PSTN interconnection to proceed with such
interconnection will temporarily relieve Nortel from meeting scheduled
commitments which are dependent on the interconnection but solely for
the period of time resulting directly from such delay in obtaining the
interconnection;
(g) take all necessary actions in accordance with the relevant Phase
Responsibility Matrix to ensure that Sites are ready and available for
commencement of installation; and
(h) make available at Telemig Celular's warehouse facility a
representative to acknowledge receipt of the Products.
8. NORTEL RESPONSIBILITIES AND REPRESENTATIONS
Nortel, without further limiting the obligations of Nortel under this
Agreement, agrees to perform the following duties:
8.1 RESPONSIBILITY MATRIX. Nortel shall discharge those responsibilities
identified as those of Nortel, including Nortel's portion of
responsibilities that are to be jointly performed by Telemig Celular and
Nortel, defined in each Phase's Responsibility Matrix.
8.2 PERFORM TO SCHEDULE. Nortel shall negotiate in good faith the
Implementation Schedule and adhere to the Implementation Schedule for
performance of its responsibilities set forth therein.
8.3 ACCEPTANCE TESTS. Perform acceptance tests of all Products in accordance
with the procedures set forth in Exhibit B.
8.4 PUNCHLIST. Nortel shall resolve the items indicated on the Punchlist, in
accordance with the procedures set forth in Exhibit B.
8.5 INFORMATION REQUESTED BY TELEMIG CELULAR. Nortel shall furnish to Telemig
Celular necessary information reasonably requested by Telemig Celular and
in accordance with the Responsibility Matrix and Implementation Schedule.
8.6 UPGRADES, NEW PRODUCTS OR SERVICES. Nortel shall make new Products and
Services and upgraded Software available to Telemig Celular when such new
Products, Services or Software upgrades become available.
8.7 TECHNICAL ASSISTANCE AND SERVICES SUPPORT. Free customer service support
(TAS/ETAS) for the Cellular System shall be provided on a per switch basis
for a period of twenty-four (24) months. The support period for each switch
and related cell site shall commence on the earlier of Final Acceptance or
ninety (90) days after Ready for In-Service. The description of Nortel's
customer service support is set forth in Exhibit D.
8.8 RETROFITS. Provided that Telemig Celular has consented in writing, Nortel
shall provide a retrofit package or any change in cellular TDMA/AMPS
standards subsequently put into effect by the government, regulatory
agencies, the TIA, the EIA at Nortel's then prevailing charges.
8.9 DOCUMENTATION. Nortel shall provide Telemig Celular with the Documentation
as set forth in Exhibit E.
8.10 TRAINING. Nortel shall provide the training courses and manuals for Telemig
Celular's employees as set forth in Exhibit H. Telemig Celular shall bear
the travel and living expenses of its personnel. Nortel shall make
available to Telemig Celular its most updated training course description.
8.11 CONFORMITY WITH LAW. The Products and Services ordered hereunder shall
comply with applicable federal, state and local laws, rules and
regulations. Any impact caused by laws, rules and regulations promulgated
after the Effective Date will be subject to agreement of the Parties.
8.12 INPI REGISTRATION. To the extent certain Imported Services under this
Agreement constitute technical assistance, Telemig Celular and Nortel shall
cooperate in registering an agreement for the rendering of such Services
pursuant to the terms of this Agreement with the Brazilian National
Institute of Industrial Property (INPI) to allow the remittance by Telemig
Celular of amounts due hereunder to Nortel for the Imported Services
qualifying as technical assistance.
8.13 SAFETY AND LEGAL STANDARDS. Nortel is responsible for ensuring that proper
safety measures are taken to avoid accidents and that all work performed is
done in accordance with the relevant health and occupational safety laws,
whether the work is performed by Nortel or by Nortel's subcontractors.
Nortel shall be responsible at its own expense for ensuring that all
necessary procedures are in place and supervision is provided to ensure the
safety of all Nortel's personnel or subcontractors who may at any time or
for whatever reason be present on any of the Sites as part of Nortel
carrying out the Services, including but not limited to the Installation
Services. Nortel shall comply with Telemig Celular's security policy for
Sites.
8.14 INSPECTION. Telemig Celular and its employees, agents or representatives
shall at all times have the right to inspect the performance by Nortel of
the Services referred to in Section 2.5. Telemig Celular hall have the
right to order the suspension of a Service being executed, if Telemig
Celular acting reasonably determines that the work is not in conformity
with the terms of this Agreement and applicable laws and regulations. If
Nortel demonstrates that the suspended Service was being performed in
conformity with this Agreement and applicable laws and regulations, then
Nortel shall not be responsible for any delays, penalties or additional
cost arising from the suspension of such Services.
8.15 REPAIR DEPOT. Nortel shall maintain in Brazil a circuit board and component
exchange depot to fulfill Nortel's repair obligations in Exhibit C.
8.16 INCORRECT DELIVERY; EXCESS ITEMS. If any Product is delivered to an
incorrect point, any additional expenses incurred in delivering it to the
correct point of delivery and the risk of transportation shall be borne by
Nortel. Nortel is also responsible for items delivered in excess of those
required in the Phase Acquisition Document or Purchase Order or Change
Order.
8.17 MARKING AND IDENTIFYING GOODS. Nortel's prices for Products include charges
for packing and marking shipping containers in accordance with Nortel's
standard practices. In normal circumstances, Nortel shall:
(i) Enclose a packing memorandum with each shipment and, if shipment
contains more than one package, identify the package containing the
memorandum; and
(ii) Xxxx Nortel's manufactured Products as practicable for
identification in accordance with Nortel's marking specifications (e.g.,
model/serial number and month and year of manufacture.)
In order to meet Telemig Celular's requests Nortel agrees to work with
Telemig Celular to determine the feasibility of marking shipping canons in
accordance with Telemig Celular's specifications. Where in order to meet
Telemig Celular's requests Nortel packs and/or is required to xxxx shipping
cartons in accordance with Telemig Celular's specifications. Nortel may
invoice Telemig Celular additional charges for any material efforts
required for such packing and/or marking.
8.18 NORTEL INSURANCE COVERAGE. Nortel agrees to maintain, so long as it
performs installation or other Services hereunder, the following insurance
coverage as well as all other insurance required by law in the jurisdiction
where the work is performed:
8.18.1 Worker's Compensation. Workers' compensation and related insurance
as required by law.
8.18.2 Transportation Insurance. Insurance coverage relating to the
transportation of the Products from the place of manufacture up to the
place of Delivery.
8.18.3 General Liability. The Commercial general liability insurance
coverage, with a limit of at least Ten Million Reais (R10.000.000,00)
per occurrence, and comprehensive motor vehicle liability coverage
with a limit of at least Two Million Reais (R2.000.000,00) for bodily
injury, including death, to any one person. Two Million Reais
(R2.000.000,00) for each occurrence of property damage, and One
Million Reais (R$1.000.000,00) for any other occurrence. The
above-indicated amounts shall be adjusted according to the provisions
of Section 6.9.2 taking into account the index of column 27 of
Conjuntura Economica Magazine published by FGV.
Nortel shall have the option where permitted by law to self-insure any
or all of the foregoing insurance. In the event Nortel exercises said
option, Nortel shall timely inform Telemig Celular in writing.
8.18.4 Demonstration of Insurance. Upon request by Telemig Celular. Nortel
shall demonstrate insurance coverage as required above.
9. WARRANTIES
9.1 PRODUCT WARRANTY. Nortel warrants to Telemig Celular that:
9.1.1 Products. For the period of twenty-four (24) months commencing on the
earlier of Final Acceptance or ninety (90) days after Ready for
in-Service, Nortel's Products will be free from defects in material
and workmanship, and will conform to Nortel's specifications. The
Warranty Period for a Product or part thereof repaired or provided as
a replacement under this Warranty is twelve (12) months or the
unexpired term of the Warranty Period applicable to the repaired or
replaced Product or part, whichever is longer.
9.2 APPLICATION PROCEDURES FOR PRODUCT WARRANTY. The procedures regarding
application for Product Warranty are set forth in Exhibit G.
9.3 SOFTWARE WARRANTY.
9.3.1 Nortel warrants to Telemig Celular that each item of Software, when
delivered to Telemig Celular and properly installed and operated, will
be free from defects which result in reproducible malfunctions which
materially affect the use of the Software in accordance with Nortel's
specifications therefore for a period of twenty four (24) months from
the earlier of Final Acceptance or ninety (90) days after Ready for
in-Service.
9.3.2 With respect to Software from a supplier other than Nortel, Nortel
does hereby assign to Telemig Celular the warranties given to Nortel
by its supplier of such items and such warranties will prevail for a
term of at least twelve (12) months from the earlier of Final
Acceptance or ninety (90) days after Ready for In-Service. If Nortel
is prevented from assigning such warranties, Nortel itself shall fully
warrant such Software for a period of twelve (12) months from Final
Acceptance.
9.4 WARRANTY FOR SERVICES. Nortel warrants to Telemig Celular that Services
will be performed in a careful and workmanlike manner and in accordance
with Nortel's Specifications or any mutually agreed specification for such
Services using material free from defects except where such material is
provided by Telemig Celular. If the Services prove to be not so performed
and if Telemig Celular notifies Nortel within a six (6) month period
commencing on the date of completion of the Services, Nortel, at its option
and expense, either will promptly correct any defects and deficiencies for
which it is responsible or promptly render a full or pro-rated refund or
credit based on the original charge for the Services.
9.5 NO TROUBLE FOUND. If Nortel determines that a Product for which a warranty
is claimed is not defective or not non-conforming, Telemig Celular shall
pay Nortel's reasonably incurred costs of handling, inspecting, testing,
and transporting and, if applicable, traveling and related expenses.
However, if upon return to service the Product apparently fails to operate
properly, Telemig Celular and Nortel shall jointly work to determine the
cause of such failure and, if it is determined that the failure in fact was
the result of a warranted defect or nonconformity in such item, Telemig
Celular's obligation to pay such costs shall be extinguished. In such case
any amount previously paid to Nortel shall promptly be refunded to Telemig
Celular.
9.6 SlGNALING SYSTEMS WARRANTY. Nortel warrants that the operation of its R2,
ISUP/SS7, IS-41 or IS-136 signaling systems comply with the standards in
effect in Brazil on the Effective Date. Connectivity equipment variations
requiring a change in mix or volume to provide for different connectivity
strategies of these standard signaling systems are provisionable,
chargeable items.
Nortel will assume the cost of modifying its Software or Product to the
extent interface incompatibilities to other operator or vendor equipment
arises from the Product deviation from the signaling standards.
Temporary or long term changes that Nortel may be able to supply in the
form in software work-around solutions and/or datafill to overcome other
operator or vendor network deviations from the standards will be provided
free of charge, subject to joint effort to perform the pertinent analysis.
The Parties agree that evolution in generic signaling interfaces in Brazil
after the Effective Date shall be addressed on a case by case basis. Nortel
normally provides the software requirements to comply with the evolution in
generic signaling interfaces free of charge. New Product requirements would
be provisionable, chargeable items.
9.7 BILLING SYSTEM/PSTN COMPATIBILITY WARRANTY. Nortel warrants that its MTX
CDR (Call Detail Record System) Product are PSTN compatible and the
operation of its MTX CDR System complies with the standards in effect in
Brazil on the Effective Date.
Nortel will assume the cost of modifying its MTX CDR or Product to the
extent it is incompatible with other operator or vendor networks and
equipment that comply with generally acceptable billing standards.
In regards to MTX CDR System's compatibility with the PSTN, temporary or
long term changes that Nortel may be able to do in software work-around
solutions and/or datafill to overcome other operator or vendor network
deviations from the requirements will be provided free of charge, subject
to a joint effort to perform the pertinent analysis.
The Parties agree that evolutions in billing and PSTN compatibility
requirements in the Brazilian market after the Effective Date shall be
addressed on a case by case basis. Nortel normally provides the software
requirements to comply with the evolution in billing standards free of
charge. New hardware requirements would be provisionable chargeable items.
9.8 GUARANTEED CAPACITIES.
9.8.1 Nortel warrants that each Network Element and Product identified in
Exhibit A, provided to Telemig Celular pursuant to this Agreement,
shall at all times meet or exceed the applicable guaranteed capacities
determined for each phase in accordance with the associated high level
design (the "Guaranteed Capacities").
9.8.2 If Telemig Celular believes that Nortel has breached its guarantee
under Section 9.8.1 Telemig Celular shall so notify Nortel in writing,
such notice to set forth in reasonable detail the nature of the
suspected breach and the likely impact of such breach on the affected
System(s). If Nortel fails, within thirty (30) days after the date of
Telemig Celular's notice (the "Investigation Period"), to establish,
to Telemig Celular's reasonable satisfaction, that the affected
Product is in compliance with the applicable Guaranteed Capacities or
to cause such Product to so comply, then Telemig Celular shall be
entitled to compensation from Nortel as set forth in this Section 9.8,
provided that Telemig Celular gives written notice to Nortel of its
intent to seek compensation hereunder within fifteen (15) days after
the expiration of such thirty (30) day period.
9.8.3 With respect to any Product described in Exhibit A, that fails to
fulfill the applicable Guaranteed Capacities, Nortel will provide any
additional or enhanced Products and the services necessary to cause
such non-conforming Products (considered together with such additional
Products) to comply with the applicable Guaranteed Capacities. Nortel
shall provide such additional or enhanced Products and services at its
own expense, except to the extent that the Products so provided by
Nortel result in additional capacity (as determined in accordance with
the applicable sections of the high level design associated with the
given phase being available to Telemig Celular in excess of the
Guaranteed Capacity for the non-conforming Product (such excess, the
Excess Capacity), in which case Telemig Celular shall pay Nortel an
amount (not to exceed the Total Unitary Price of such additional
Products) proportional to the Excess Capacity but only to the extent
that the Excess Capacity exceeds the Guaranteed Capacity by 10% or
more. Notwithstanding the foregoing, Nortel shall not issue any
invoice to Telemig Celular, and Telemig Celular shall not be required
to pay any amount, in respect of any Excess Capacity, unless and until
Telemig Celular first uses such Excess Capacity. Title and risk of
loss to any additional Products delivered pursuant to this Section 9.8
shall pass to Telemig Celular at Delivery.
9.9 COSTS NOT TO BE BORNE BY NORTEL. Notwithstanding anything to the contrary
in this Section 9, Nortel shall not be responsible for any of the following
costs incurred by Telemig Celular in connection with Products and Services
provided to Telemig Celular pursuant to Section 9.8.3.
(a) land acquisition or lease costs;
(b) building costs;
(c) operational or maintenance costs associated with the additional
Products; and lost revenue;
9.10 CONSEQUENCES OF FAILURE TO FULFILL THE GUARANTEED CAPACITIES. The provision
of additional Products and Services pursuant to Section 9.8.3, shall be
Telemig Celular's sole remedy for a breach of Section 9.8.1. and Nortel's
sole obligation with respect to the failure of any Product acquired by
Telemig Celular hereunder to fulfill the Guaranteed Capacities provided
that the Products thereafter fulfill the Guaranteed Capacities.
9.11 PRODUCT CHANGES OR SUBSTITUTIONS BY NORTEL. At any time during its
performance of this Agreement, Nortel may implement changes in the Products
identified in Exhibit A, modify the drawings and specifications relating
thereto, or substitute Products of a similar or more recent design. Nortel
will provide Telemig Celular with advance written notice of any change,
modification or substitution, including notice of Nortel's intention to
change the Product price. The notice shall be given at least thirty (30)
days in advance of the effective date of the change, modification or
substitution. However, notice of ten (10) days will be necessary where
Nortel reasonably considers the change as minor, where there is no price
change and where items (a) through (g) set forth below are complied with.
Changes, modifications or substitutions must comply with each of the
following requirements:
(a) it must not adversely affect Telemig Celular's ability to fulfill
its obligations under the Concession or ability to operate its Cellular
Network in accordance with the specifications;
(b) it must not adversely affect physical or functional
interchangeability or performance specifications unless otherwise agreed in
writing by Telemig Celular;
(c) the price for equivalent performance must be the same or lower
than the price provided in this Agreement unless otherwise agreed in
writing by Telemig Celular. This price comparison shall include all
pertinent and related costs to Telemig Celular;
(d) it must not detract from the safety of the Product;
(e) it must have received all necessary regulatory approvals,
including type-acceptance or type-certification, electrical safety agency
approval, etc;
(f) it must be functionally equivalent and plug-compatible with the
prior Product;
(g) it must not in any way reduce or in any way diminish Nortel's
obligations under the warranties provided in this Agreement nor may it
reduce or diminish in any way the scope of warranties and representations
provided to Telemig Celular under this Agreement.
Where each of these requirements has been met to Telemig Celular's
satisfaction Telemig Celular and Nortel shall agree upon a Change Order
reflecting Nortel's proposal.
With respect to changes, modifications, and substitutions that do not
conform to the foregoing requirements, Nortel shall notify Telemig Celular
in writing thirty (30) days prior to their effective dates. In the event
that any such change is not desired by Telemig Celular, Telemig Celular
shall notify Nortel within thirty (30) days from the date of notice and
Nortel shall not furnish any such changed Products to Telemig Celular on
any orders in process at time Nortel is so notified. If a change is
acceptable to Telemig Celular, such change shall be the reflected in a
Change Order.
9.12 YEAR 2000 WARRANTY. Nortel represents and warrants that the Products shall
function, during the applicable Warranty period, with respect to any date
dependent operations prior to, into and through the Year 2000, without any
service affecting non-conformance to its applicable specifications. Nortel
shall in a timely manner designate any hardware and/or any specific
software load or release necessary to be installed with respect to such
Products and Nortel's warranty hereunder is subject to the installation
thereof. If any Product fails to so function, Telemig Celular's remedy and
Nortel's obligation under this warranty is for Nortel to correct such
failure through, at Nortel's option, the repair or replacement or
modification of the relevant hardware and/or software of such Product or
such other actions as Nortel reasonably determines to be appropriate, all
in the time, manner and upon the conditions set out in the hardware and/or
software Warranty provisions of this Agreement with respect to the
Products. The provisions set forth in this Section do not constitute a
representation that the date format used by any Product supplied hereunder
complies with any particular standard. Certain products may continue to use
year representations that do not use four digits where such representations
can be interpreted without ambiguity as to century' and will not give rise
to a breach of the warranty hereunder.
9.13 DISCLAIM1ER OF WARRANTIES/LIMITATION OF LIABILITY.
9.13.1 Exclusions. Telemig Celular hereby agrees that Nortel shall not be
liable or responsible for any deficiencies resulting from:
(a) Nortel's reliance on erroneous material information furnished by
Telemig Celular to Nortel in the Network Documents or agreed to in a
document signed by Telemig Celular Project Manager or an authorized
representative;
(b) reasons of Force Majeure;
(c) unauthorized Telemig Celular material changes, modifications or
revisions to the Products;
(d) as to the Guaranteed Capacities, material reasons attributable to
Telemig Celular, and including: (A) Telemig Celular's failure to apply
Nortel's explicit plans or instructions for system design, preventive and
remedial maintenance, frequency management, parameter adjustments and cell
site traffic engineering for radio capacity; (B) Telemig Celular's failure
to implement all Nortel-recommended recovery and system stabilization
procedures; (C) Telemig Celular's decision not to implement Software
Upgrades and Software Patches promptly upon their availability where such
Software Upgrades and Software Patches are made available by Nortel to
Telemig Celular as provided in this Agreement; (D) Telemig Celular's
failure to replace defective circuit packs; (E) Telemig Celular's failure
to follow applicable explicit instructions of Nortel, where such
instructions are capable of reasonable interpretation and are unambiguous:
(e) modifications, misuse, neglect, or abuse of the Products, except
when made, done or caused by Nortel; improper wiring, repairing, splicing,
alteration, installation, storage or maintenance, except when made, done or
caused by Nortel; use in a manner not in accordance with Nortel's or
vendor's specifications, operating instructions or software license to use
or failure of Telemig Celular to apply previously applicable Nortel
modifications and corrections;
(f) defects in products (and related software) neither manufactured
nor supplied by Nortel under the terms of this Agreement.
In addition, Nortel makes no warranty with respect to Products which have
had their serial numbers or months and year of manufacture removed,
obliterated or altered, and with respect to expendable items, including,
without limitation, fuses, light bulbs, motor brushes, and the like.
9.14. Network Expansion and Spares
9.14.1 REMOVED
9.14.2 Network Expansion Availability. For a period of five (5) years from
the expiration of the Term, Nortel shall make available to Telemig
Celular standard Nortel manufactured Products and Nortel developed
Software that is compatible and functionally equivalent to and will
permit normal Network expansion within the parameter defined by the
specifications and under terms and conditions (including prices)
mutually agreed to by Telemig Celular and Nortel. If Nortel
discontinues the supply of compatible standard Products or Software
during such period of time, and such is not reasonably available from
any other vendor, then Nortel shall make available to Telemig Celular
a commercially reasonable Product for migration to Nortel's
then-current products offerings similar functionality.
Subject to the foregoing nothing herein shall bar Nortel from
discontinuing individual items of hardware Products. Nortel shall
notify Telemig Celular, usually at least one (1) year, before Nortel
discontinues accepting orders for an item of Nortel's manufactured
Product sold under this Agreement. Where Nortel offers a Product for
sale that is equivalent in form, fit and function, the notification
period may vary. Notwithstanding the foregoing, Nortel agrees that it
will not discontinue accepting orders for Products until Nortel and
Telemig Celular have agreed upon a mutually acceptable transition plan
that takes into account Telemig Celular's existing investment in the
item scheduled for discontinuance, including a last opportunity to
order additional numbers of such Products to include in its inventory.
9.14.3 Spare Parts Availability. Nortel warrants the availability of spare
parts or their functional equivalent for the Products for a period of
five (5) years from the expiration of the Term. After the expiration
of the Term, prices for spare parts shall be those in effect at the
time of order placement. Should Nortel during the aforesaid period
discontinue production of any spare parts, Nortel will give Telemig
Celular advance written notice to enable Telemig Celular to place
orders for its requirements of spare parts or enter into any other
mutually satisfactory arrangements with Nortel prior to discontinuance
of production.
10. SOFTWARE LICENSE AND INTELLECTUAL PROPERTY RIGHTS
10.1 RIGHT TO USE SOFTWARE LICENSE. Nortel reserves title to Software and hereby
grants to Telemig Celular a right to use license for said Software either
(i) on a perpetual basis against payment of the respective Software License
Fee set forth in the specific table in Exhibit A or (ii) on a term basis
against payment of the respective Software License Fee set forth in the
specific table in Exhibit A and subject to the terms and conditions
contained in Exhibit C. With respect to Software provided from a supplier
other than Nortel, Nortel warrants it has the right to grant a sublicense
to Telemig Celular to use the Software, in accordance with the terms and
conditions set forth in this Agreement. Such expressly granted rights are
for use of the Software to open the Cellular Network in the Territory only.
10.2 DEFENSE AGAINST INFRINGEMENT CLAIMS. In any claim, action, suit or legal,
arbitration, mediation or other proceedings, Nortel, at Nortel's expense,
shall defend Telemig Celular, directors, officers, agents and employees,
jointly and severally, against any claim that Nortel Products, including
Software, supplied hereunder, (collectively, the "Indemnified Products")
infringes any patent or copyright, trademark, trade secret or other
tangible or intangible property right, whether Brazilian or foreign, which
is recognized or the judgment of which is enforceable in the Territory
(collectively, "Proprietary Rights"), by reason of their use in furnishing
cellular services in accordance with Nortel's specifications provided that
(i) Telemig Celular notifies Nortel in writing of the claim, promptly, but
no later than thirty (30) days after Telemig Celular has received written
notice of such claim, (ii) Nortel has sole control of the defense,
including appeals, and all related settlement negotiations, and (iii) upon
Nortel's request, Telemig Celular gives Nortel information and reasonable
assistance for the defense. Telemig Celular may, at in sole cost, engage
counsel to confer with Nortel in connection with any such claim. Nortel
shall reimburse Telemig Celular its actual reasonable costs for personnel
(including legal counsel) or resources engaged in providing information or
assistance requested by Nortel. Nortel shall indemnify and hold harmless
Telemig Celular, its officers, agents and employees against any such
claims, demands, causes of action, costs, expenses, liabilities, damages or
losses, finally awarded against Telemig Celular by a court of law, agreed
to in settlement or awarded by any other body or person authorized under
law or contract to award such damages on account of such alleged
infringement or violation.
10.3 NORTEL TO ACT. If Telemig Celular's use of the Indemnified Products shall
be enjoined, or in Nortel's opinion, is likely to be enjoined, Nortel
shall, at its option and expense, either procure the right for Telemig
Celular to continue using such Indemnified Products or replace or modify
the Indemnified Products so that they become non-infringing. If none of the
foregoing options is practical, Nortel will remove the enjoined Indemnified
Products and refund to Telemig Celular any amounts paid to Nortel, less a
reasonable charge for any actual period of use by Telemig Celular should
the Indemnified Product so removed be a component of the Cellular Network
and such removal causes any part of the Cellular Network not to meet the
Guaranteed Capacities, then Nortel shall be liable for returning the
Product to the Guaranteed Capacities and for direct damages caused to
Telemig Celular resulting from such actions.
10.4 INFORMATION SUPPLIED BY TELEMIG CELULAR. Notwithstanding the above, Nortel
has no liability for any claim of Proprietary Right infringement to the
extent that (i) it arises directly and wholly from adherence to
specifications, designs, drawings or instructions furnished by Telemig
Celular; or (ii) arises from adherence to instructions to apply Telemig
Celular's trademark, trade name or other company identification; or (iii)
resides in Project Suppliers' equipment which is not of Nortel's origin and
which is furnished by Telemig Celular to Nortel for use under this
Agreement or (iv) relates to uses of Indemnified Products provided by
Nortel in combination with other Indemnified Products furnished either by
Nortel or other, which combination was not installed, recommended or
otherwise approved by Nortel. In the foregoing cases numbered (i) through
(iv), Telemig Celular will defend and save Nortel harmless, subject to the
same terms and conditions and exceptions stated above in Sections 10.5 and
10.6 with respect to the Nortel's obligations.
11. CONFIDENTIALITY
11.1 CONFIDENTIAL INFORMATION DEFINED. "Confidential Information" shall mean
that information disclosed by one Party to the other which at the time of
disclosure is designated as confidential (or like designation), is
disclosed in circumstances of confidence or would be understood by the
Parties exercising reasonable business judgment to be confidential pursuant
to this Agreement and shall include, without implied limitation, formulas,
processes, designs, photographs, plans, samples, Product performance
reports, subscriber lists, pricing information, studies, findings,
inventions, ideas, drawings, schematics, sketches, specifications, parts
lists, technical data, data bases, software in any form, flowcharts,
algorithms, and other business and technical information. Confidential
Information may be communicated orally, in writing, by electronic or
magnetic media, by visual observation and by other means. The Party
receiving said notification shall, from that time forward treat such
information as proprietary. Excluded from Confidential Information is that
which the recipient had in its possession without confidential limitation
prior to disclosure, which is independently developed by either Party,
which is known or becomes known to the general public without breach of
this Agreement or which is rightfully received from a third Party and
without confidential limitation.
11.2 EXCHANGE OF INFORMATION. From time to time during the performance of this
Agreement. The Parties may deem if necessary to provide each other with
Confidential Information. The Parties agree;
11.2.1 Nondisclosure. Each of them shall maintain the confidentiality of
such Confidential Information and not disclose it to any third Party
except as authorized by the original disclosing Party in writing.
11.2.2 "Need to Know" Disclosure. Each of them shall restrict disclosure of
Confidential Information only to employees and Authorized Agents who
have a "need to know." Such Confidential Information shall be handled
with the same degree of care that the receiving Party applies to its
own Confidential Information but in no event no less than reasonable
care.
11.2.3 Precautions. Each of them shall take all necessary and appropriate
precautions to guard the confidentiality of Confidential Information,
including informing its employees and authorized agents who handle
such Confidential Information that it is confidential and not to be
disclosed to others, but in no event, less than reasonable care.
11.2.4 Ownership. Confidential Information is and shall at all times remain
the property of the disclosing Party. No use of any Confidential
Information is permitted except as otherwise provided herein and no
license to a Party under any trademark, patent, copyright, mask work
or any other intellectual property right, is either granted or implied
by the conveying of Confidential Information to such Party.
11.2.5 Use. Each of them shall use such Confidential Information only as
required for the purposes of this Agreement.
11.2.6 Reproduction. Confidential Information furnished in written,
pictorial magnetic or other tangible form shall not be reproduced or
copied, in whole or part, except as reasonably necessary (i) by Nortel
for its performance under this Agreement, and (ii) by Telemig Celular
for its installation, operation and maintenance of items furnished by
Nortel under this Agreement; if copied or reproduced shall bear the
same notices or legends, if any, as the originals and shall, together
with any full or partial copies thereof, be returned, destroyed or
erased (including any computer memory thereof) when no longer needed
for the purposes authorized under this Agreement. The receiving Party
shall use reasonable efforts to return, destroy, or erase such
tangible Confidential Information, (including copies, reproductions or
other documents containing Confidential Information) within ten (10)
business days of the disclosing Party's written request.
11.2.7 Survival. This Section shall continue until termination of this
Agreement; provided, however that all obligations hereunder with
respect to Confidential information received prior to such expiration,
cancellation or termination of this Agreement shall survive such
expiration, cancellation or termination for three (3) years
thereafter, if the Confidential information is business information,
or for five (5) years thereafter, if the Confidential Information is
technical.
11.3 AGREEMENT DISCLOSURE. Except as may be required by applicable law, neither
Nortel nor Telemig Celular shall disclose to any third party the contents
of this Agreement, the Exhibits or any amendments hereto or thereto for a
period of two (2) years after the termination of this Agreement without the
prior written consent of the other Party. Additionally, neither Party shall
disclose the existence of this Agreement where both Parties agree in
writing in advance upon the manner and content of such disclosure. Nortel
to the extent appropriate can disclose the content of the Agreement to its
subcontractors, provided that such subcontractors agree in writing to
maintain such information confidential. Telemig Celular may disclose this
Agreement to banks and financing entities with a view to obtaining funds
provided that the said banks and financing entities agree, in writing to
maintain such information Confidential.
11.4 THIRD PARTIES. Except as provided below with respect to Authorized Agents,
neither Party shall disclose Confidential Information of the other Party
hereto to any third person without such other Party's prior written
consent. Any such consent may be conditioned upon execution by the third
person of a nondisclosure agreement in a form satisfactory to the Party
whose Confidential Information is being disclosed.
11.5 AUTHORIZED AGENTS. For purposes of this Section 11, the term Authorized
Agent" includes an attorney, a consultant, a subcontractor, a Project
Supplier or other third Party, but only to the extent such Party is
performing or enforcing (or assisting the receiving Party to perform or
enforce) or advising the receiving Party with respect to its rights and
obligations under this Agreement, and provided that such third Party agrees
in writing (a copy of which will be produced to the disclosing Party at its
request) to the same conditions respecting the use of Confidential
Information contained in this clause and to any other reasonable conditions
requested by the disclosing Party.
11.6 TRADEMARK AND PUBLICITY. Nothing contained in this Agreement shall be
considered as conferring any right to use any name, trademark or other
designation of either Party hereto, including any contraction,
abbreviation, or simulation of any of the foregoing, in advertising,
publicity or marketing activities. Any publicity advertising, etc., with
regard to this Agreement or the Cellular Network which mentions the other
Party shall be mutually agreed upon in writing prior to disclosure.
12. TITLE AND RISK OF LOSS
12.1 TITLE PASSAGE AND RISK OF LOSS. Title to and risk of loss of Products shall
be transferred to Telemig Celular upon Delivery unless otherwise provided
in this Agreement or as otherwise may be agreed to by the Parties. Title to
Nortel's intellectual property, including Software, patents copywrite,
trademarks and tradenames, shall not be conveyed to Telemig Celular at any
time Telemig Celular shall notify Nortel promptly of any claim with respect
to loss that occurs while Nortel has the risk of loss and shall cooperate
in every reasonable way to facilitate the settlement of any claim.
12.2 LIABILITY FOR NEGLIGENCE. Notwithstanding anything herein to the contrary.
The Party that by negligence intentional act or failure to act where action
is required under this Agreement causes damage, loss or destruction to any
Product shall be liable to the other Party irrespective of the fact that
title and risk of loss of such Product is incumbent upon such other Party.
13. DAMAGES, DELAYS AND TERMINATION
13.1 PROPERTY AND PERSONAL INJURY (TELEMIG CELULAR).
13.1.1 Property Damage. Nortel shall indemnify and hold harmless Telemig
Celular and its directors, officers, agents, servants and employees
from any claim. demand, cause of action, damage, cost, expense, loss
or liability, on account of tangible property damage (including damage
to property owned by third Parties other than Telemig Celular),
arising out of or in connection with this Agreement to the extent such
damages were caused by the negligent acts or omissions, willful
misconduct and strict product liability of Nortel or its agents,
contractors, officers or employees, or any person responsible to
Nortel hereunder while performing under this Agreement provided: (i)
Telemig Celular promptly notifies Nortel in writing of any suits,
claims or demands against Telemig Celular for which Nortel is
responsible under this indemnity, (ii) Telemig Celular gives Nortel
frill opportunity and authority to assume the sole defense of and
settle such suits, and (iii) Telemig Celular furnishes to Nortel upon
request all reasonable information and assistance available to Telemig
Celular for defense against any such suit, claim or demand. Nortel's
liability under this indemnity shall be that proportion directly
attributable to the fault of Nortel or its employees or agents but in
no event exceed Two Million Reais (R$ 2,000,000.00) for any one
occurrence of property damage, such value to be annually adjusted as
per the "IGP-DI Coluna 27" index, issued by FGV.
13.1.2 Personal Injury (Telemig Celular). Nortel shall indemnify and hold
harmless Telemig Celular and its directors, officers, agents, servants
and employees from any claim, demand, cause of action, damage, cost,
expense, loss or liability, on account of death or personal injury
(whether to Telemig Celular, Telemig Celular's officers, agents or
employees or third Parties) arising out of or in connection with this
Agreement to the extent such, injury or death was caused by the
negligent acts or omissions, willful misconduct and strict product
liability of Nortel or its agents, contractors, officers or employees,
or any person responsible to Nortel hereunder while performing under
this Agreement provided: (i) Telemig Celular promptly notifies Nortel
in writing of any suits. claims or demands against Telemig Celular for
which Nortel is responsible under this indemnity, (ii) Telemig Celular
gives Nortel Full Opportunity and authority to assume the sole defense
of and settle such suits, and (iii) Telemig Celular furnishes to
Nortel upon request all reasonable information and assistance
available to Telemig Celular for defense against any such suit, claim
or demand at Nortel's costs. Nortel's liability under this indemnity
shall be that proportion directly attributable to the fault of Nortel
or its employees or agents, or as may be determined by a court of Law.
13.2 REMOVED
13.3. PERFORMANCE BOND. Nortel shall issue a Performance Bond for a value equal
to ten percent (10%) of the total value for each Phase under this
Agreement. The first Phase Performance Bond shall be delivered to Telemig
Celular within thirty (30) days following the signature of this Agreement.
For each of the subsequent Phases a Performance Bond shall be delivered to
Telemig Celular within forty-five (45) days of the issuance by Telemig
Celular of its Phase Acquisition Document. Telemig Celular acknowledges
that each Performance Bond is subject to Instituto de Resseguros do Brasil
(IRB) approval and Nortel is not liable for any delay attributable thereto.
The Performance Bond shall be in favor of Telemig Celular. The Performance
Bond shall be issued by an insurance/surety company acceptable to Telemig
Celular and shall be in form and substance acceptable to Telemig Celular in
the exercise of its reasonable discretion. Telemig Celular may only draw
down on the Performance Bond if (i) Nortel fails to cure a material breach
pursuant to Section 13.8 within 30 days of Telemig Celular's written notice
of breach to Nortel or (ii) the maximum amount of liquidated damages under
Sections 13.7 (Maximum Liquidated Damages) have been attained. Each
Performance Bond shall be released within ten (10) working days following
Final Acceptance of the applicable Phase.
13.4 REMOVED
13.5. REMOVED
13.6. TELEMIG CELULAR DELAY TERMINATION. Should a Telemig Celular delay with
respect to an Implementation Schedule date exceed six (6) months, Nortel
may terminate this Agreement as provided herein for Telemig Celular's
failure to perform. Nortel, however, will notify Telemig Celular at least
thirty (30) days prior to such action and will continue to work in good
faith with Telemig Celular to resolve their delay. Nortel may exercise this
right of termination at any time within ten (10) days after such delay has
exceeded six (6) months. Nortel's right of termination is without prejudice
to any other remedies that Nortel may possess.
13.7. REMOVED
13.8. BREACH BY EITHER PARTY. Where a Party is in material breach of this
Agreement, and where the non-breaching Party has given thirty (30) days
prior written notice specifying the breach to the breaching Party and the
breaching Party has not cured the breach within such 30-day period then the
non-breaching Party may terminate this Agreement without liability.
13.9. BANKRUPTCY. Either Party may terminate this Agreement (except for those
items fully discharged) without liability, if the other Party makes a
general assignment for the benefit of creditors, or if a petition in
bankruptcy or under any insolvency law is filed by or against the other
Party and such petition is not dismissed within sixty (60) days after it
has been filled.
13.10. CONCESSION. Should ANATEL revoke Telemig Celular's Concession and if said
revocation is not reversible on appeal, Nortel may terminate this
Agreement. Nortel's right of termination is without prejudice to any other
remedies Nortel may possess.
13.11. SURVIVAL. Termination of this Agreement, for whatever cause shall be
without prejudice to any right or obligation of any Party hereto in respect
of this Agreement which has arisen prior to such termination or expiration.
If this Agreement is terminated by either Party prior to the completion of
Final Acceptance of the Cellular System or portion thereof as defined in
the relevant Phase Acquisition Document, then such Products actually
delivered to the corresponding Site(s) as of the effective date of
termination shall be submitted to Conditional Acceptance and Final
Acceptance. The Parties' rights and obligations, which by their nature
would continue beyond the termination, cancellation, or expiration of this
Agreement shall survive the termination, cancellation or expiration of this
Agreement.
14. LIMITATION OF LIABILITY
14.1 NORTEL'S JOINT LIABILITY. The Nortel entities shall have joint and several
liability for any liabilities or obligations set forth in this Agreement.
14.2 SCOPE OF LIABILITY. Telemig Celular's exclusive remedies and the entire
liability of Nortel and its affiliates and their employees and agents for
any claim, loss, damage or expense of Telemig Celular or any other entity
arising out of this Agreement, or the use or performance of any Network,
System, Product or Service whether in action for or arising out of the
breach of contract, including negligence, indemnity, or strict liability
shall be as follows:
(1) For delay and penalties - the remedies set forth in Section 13;
(2) For the performance or non-performance of Products and Services or
claims that they do not conform to a warranty - the remedy set forth in the
applicable "warranty(ies)" clause;
(3) For tangible property damage and personal injury caused by
Nortel's negligence - the amount of direct damages as per Sections 13.1.1
and 13.1.2;
(4) For everything other than as set forth above - the amount of the
direct damages not to exceed the purchase price of the Products and
Services giving rise to Telemig Celular's claim, including awarded counsel
fees and costs or eleven percent (11%) of the Phase value, whichever is
lower.
Notwithstanding any other provision of this Agreement, neither Party, its
affiliates and its employees and agents shall have any liability to the
other for any loss of profit or revenues, whether as a result of breach of
contract, warranty, tort (including negligence).
Nortel shall not be responsible for any claim, loss, damage or expense
resulting from Telemig Celular's negligence or willful misconduct.
15. FORCE MAJEURE
15.1 Responsibility IN THE EVENT OF FORCE MAJEURE. Except as explicitly provided
elsewhere in this Agreement, neither Party shall be liable for any delays
in delivery or performance of its respective obligations hereunder or for
failure to manufacture, deliver or comply with this Agreement when caused
by Force Majeure.
Each Party shall promptly notify the other Party of the occurrence of a
Force Majeure if any Force Majeure occurs and results in a delay or failure
in performance by either Party of its obligations under this Agreement, the
Party injured by the other's inability to perform may elect to: (a)
terminate that part of any Phase Acquisition Document or Purchase Order
affected by the Force Majeure as to Products not already shipped or
Services not already rendered if the Force Majeure continues for a period
of forty five (45) days after notification; (b) suspend that part of any
Phase Acquisition Document or Purchase Order; affected by the Force Majeure
for the duration of the Force Majeure, buy, sell, obtain, or furnish
elsewhere Products to be bought, sold, obtained, or furnished hereunder,
and deduct from any Phase Acquisition Document or Purchase Order commitment
the quantity bought, sold, obtained, or furnished or for which such
commitments have been made elsewhere; or (c) resume performance under such
Phase Acquisition Document or Purchase Order once the Force Majeure ceases
with an option for the injured Party to extend the delivery or performance
date up to the length of time the Force Majeure endured. Unless written
notice is given within thirty (30) days after such injured Party is
provided written notice of the occurrence of a Force Majeure, option (c)
shall be deemed selected.
16. ASSIGNMENT This Agreement shall accrue to the benefit of and be binding
upon the Parties hereto and any successor(s) entity into which either Party
shall have been merged to or consolidated with or to which either Party
shall have sold or transferred all or substantially all of its assets.
Except as provided in this Section, neither Party shall assign this
Agreement or any right or interest under this Agreement, nor delegate any
work or obligation to be performed under this Agreement ("an assignment"),
without the prior written consent of the other Party. Any attempted
assignment in contravention of this clause shall be void and ineffective.
For the purpose of this clause the term "Agreement" shall include this
Agreement, any subordinate contracts placed under this Agreement and any
orders placed under such Agreement or any subordinate contract.
The Parties agree that any consent to a requested assignment shall not be
unreasonably withheld or delayed.
The Parties agree that Nortel or Telemig Celular or one of their respective
constituents may assign all or a part of their rights and duties hereunder
to a designated company related to Nortel or to Telemig Celular or a
wholly-owned (directly or indirectly) subsidiary of Nortel or Telemio as
the case may be, provided that Nortel or Telemig Celular remains jointly
and severally responsible for the fulfillment of all obligation incumbent
upon its assignee as per this Agreement. For the purposes of this Section,
a company related to Nortel or to Telemig Celular shall be a company having
the same or substantially the same shareholder ownership as Telemig
Celularor Nortel.
17. REMEDIES
The remedies made available to the Parties for the events specified under
this Agreement are exclusive unless otherwise stated herein.
18. GOVERNING LAW
The validity, construction and interpretation of, and the right and
obligations of the Parties' pursuant to this Agreement and any amendment
hereto shall be governed by the laws of the Federative Republic of Brazil
(including its conflict of laws rules).
19. NOTICE
19.1 GENERAL. Notices required to be given by one Party to another shall be
deemed properly given if reduced to writing and personally delivered or
transmitted by postage prepaid registered or certified post, return receipt
requested, by air courier or by facsimile or other electronic mail with
confirmation receipt. Such notices shall be deemed to have been given and
shall be effective upon receipt.
19.1.1 Notice to Telemig Celular. Nortel shall send notices to Telemig
Celular at the following address:
Telemig Celular X.X.
Xxx Xxxxxxx Xxxxx, 000, 0(xxxxxx) xxxxx,
Xxxx Horizonte, MG, Brasil
CEP 30140-170
Attn.: Director Superintendent
Phone: (0000) 000-0000
Fax:: (0000) 000-0000
With a copy (which shall not constitute Notice) to:
Telesystem International Wireless Inc.
0000 xx xx Xxxxxxxxxxx Xxxxxx West, 16th Floor
Montreal, Quebec, Canada
H3B 4W5
Attention: Executive Vice President, Operations
Tel: (1) (000)000-0000
Fax: (1) (000)000-0000
19.1.2 Notice to Nortel. Telemig Celular shall send notices to Nortel at
the following address:
Northern Telecom Limited
Northern Telecom do Brasil Comercio e Servicos Ltda.
Northern Telecom do Brasil Industria e Comercio Ltda.
Xx. xxx Xxxxxx Xxxxxx, 00000-00(Xxxxxx) andar
04795-100 - Sao Paulo - SP - Brasil
Attn.: Vice President Wireless Sales
Phone: (55) (00) 000-0000
Fax: (55) (00) 000-0000
19.2 MODIFICATIONS TO NOTICE ADDRESS. Either Party may change the addresses for
giving notice by providing the other Party with written information about
such change of address in accordance with Section 19.1.
20. SECTION HEADINGS AND PLURALS
20.1 SECTlON HEADINGS. The headings of Sections in this Agreement are provided
for convenience of reference only and are not intended to be a part of or
affect the meaning or interpretation of this Agreement or any Section.
20.2 PLURALS. Any reference herein to singular shall mean plural and vice versa
as the context may so require.
21. WAIVER
Any failure or delay on the part of Nortel or Telemig Celular to exercise
any right, power or privilege or to strictly enforce any such term or
condition of this Agreement, on one or more occasion shall not operate or
be construed as a waiver of the same or any other terms and conditions of
this Agreement on any other occasion.
22. REPRESENTATION OF AUTHORITY
Each Party represents that:
22.1 EXPRESS AUTHORITY. The persons executing this Agreement have express
authority to do so under specific or standing delegation, and in so doing,
to bind the Party thereto; and
22.2 NO VIOLATION. The execution, delivery, and performance of this Agreement
does not violate any provision of any by-law, charter, regulation or any
other governing authority of the Party; and
22.3 DULY AUTHORIZED. The execution, delivery and performance of this Agreement
has been duly authorized by all necessary partnership or corporate action
and this Agreement is a valid and binding obligation of such Party.
23. LEGAL COMPLIANCE
It is the Parties' intention to comply with all applicable federal, state
and local statutes, regulations and orders (if and as applicable to Telemig
Celular or Nortel). To the extent that any provision shall be held to be
invalid, illegal or unenforceable, such provisions shall be considered null
and void but the remaining provisions of this Agreement shall remain in
effect. In the event the invalid, illegal or unenforceable provision is
considered an essential element of this Agreement, the Parties shall
promptly negotiate a replacement provision that is acceptable to both
Parties and is valid, legal and enforceable, and come as close as possible
to reflect accurately the intentions of the Parties underlying the invalid,
illegal or unenforceable provision or provisions.
24. DISPUTE RESOLUTION
24.1 GENERAL. If a dispute arises out of or relates to this Agreement including
any disputes related to payments to be made under the terms of this
Agreement, either Party may request that the Parties seek to resolve the
dispute by negotiation of the appropriate executives of each Party, who
shall have full authority to settle the dispute. The Parties agree to meet
at least once within fifteen (15) days of the request for negotiation to
try to resolve the dispute. If, within thirty (30) days after such meeting,
or the first request for a meeting, should a meeting not be convened, the
Parties have not succeeded in negotiating a resolution of the dispute,
either Party may request that such dispute be resolved by arbitration as
set forth in Section 24.2, the provisions of Brazilian Law 9.307 of
September 23, 1996 applying.
24.2 ARBITRATION. The arbitration shall be conducted by three (3) arbitrators
familiar with the cellular telecommunication industry and shall be held in
Sao Paulo, Brazil in accordance and subject to the Rules of Conciliation
and Arbitration, as promulgated from time to time by the International
Chamber of Commerce (ICC) (the "Rules"), by three (3) arbitrators. Each
Party shall designate one (1) arbitrator, and the two (2) arbitrators so
designated shall appoint the third arbitrator as provided in the Rules. The
arbitrators shall determine the language in which the arbitration shall be
conducted. The arbitrators will allow such discovery as is appropriate,
consistent with the purpose of arbitration in accomplishing fair, speedy,
and cost-effective resolution of disputes. All discoveries will be
completed, and the arbitration hearing will be commenced within forty-five
(45) days after appointment of all of the arbitrators and the arbitration
hearing will conclude within thirty (30) days after it commences. The
arbitrators will make every effort to enforce these timing requirements
strictly but may extend the time periods upon a showing that exceptional
circumstances require extension to prevent manifest injustice. The award
shall be made within six (6) months of the selection of the arbitrator(s).
If judicial enforcement of such arbitration award is sought by either
Party, judgment may be entered upon such award in any court of competent
jurisdiction, or application may be made to such court for a judicial
acceptance of the award and an order of enforcement. The duty of the
Parties to arbitrate any dispute relating to the interpretation or
performance of this Agreement or the grounds for the termination thereof
shall survive the expiration or termination of this Agreement for any
reason. The arbitrator(s) shall apply Brazilian law and the relief awarded
by the arbitrator(s) shall not exceed in form that awardable by a Brazilian
court of competent jurisdiction. In the event of any arbitration or other
legal proceeding to enforce an arbitration award the substantially
prevailing Party if any, shall be entitled to reimbursement for reasonable
attorneys' fees and costs of the proceeding by the other Party or Parties.
The determination of which Party has substantially prevailed and the amount
of attorneys' fees, if any, to be awarded shall be made by the
arbitrator(s), or other person adjudicating the enforcement action at the
same time and in the same proceeding as the underlying enforcement action
being decided, and shall be included in the award. If it is determined in
such enforcement action that there is no substantially prevail in Parties,
and in the underlying arbitration, each Party shall bear its own attorney's
fees and expenses but those related to the costs of the arbitrator(s) shall
be borne equally by the Parties. The arbitrator(s) shall determine the
issues of arbitrability but may not limit expand or otherwise modify, the
terms of the Agreement, nor have authority to award punitive damages in
excess of compensatory damages and each Party irrevocably waives any claim
thereto.
All discussions and documents prepared pursuant to any attempt to resolve a
dispute under this Section 24 are confidential and for settlement purposes
only and shall not be admitted in any court or other forum as an admission
or otherwise against a Party for any purpose unless such restriction is
against public policy in the applicable jurisdiction or a court of
competent jurisdiction by a governmental agency orders such disclosure or
use.
Nothing in this Section 24 shall prevent any Party from seeking injunctive
relief in a judicial proceeding if interim relief from a court is necessary
to preserve the status quo pending resolution or to prevent serious and
irreparable injury to that Party or others.
24.3 CONFIDENTIALITY. The Parties, their representatives, other participants and
arbitrator(s) shall hold the existence content and result of dispute
resolution proceedings in confidence as provided in Section 11 of this
Agreement.
25. CONSENT
Wherever in this Agreement consent, approval or mutual agreement is
required of Telemig Celular or Nortel the appropriate Party agrees not to
unreasonably withhold or delay such consent or approval.
26. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall
constitute one and the same instrument. The Parties agree that only one
representative of Telemig Celular and one representative of Nortel shall
initial each page of the Agreement including its Exhibits.
27. REMOVED
28. ENTIRE AGREEMENT
This Agreement and any subordinate agreements and orders accepted pursuant
to this Agreement or any subordinate agreements constitutes the entire
understanding between the Parties concerning the subject matter hereof and
supersedes all prior discussions, agreements and representations, whether
oral or written and whether or not executed by Nortel and Telemig Celular.
All modifications, amendments or other changes made to this Agreement or
any part thereof shall be reduced to writing and executed by authorized
representatives of each Party.
28.1 PRIOR SUPPLY AGREEMENTS
Any Products or Services purchased prior to or to be purchased after the
date hereof by Telemig Celular under the terms and conditions set forth in
supply agreements entered into by Telemig Celular and Promon Eletronica
Ltda., prior to the date hereof, shall not be considered for the purposes
of calculating the Total Volume Commitment referred to in Section 2.2.1.
IN WITNESS HEREOF, THE PARTIES HEREBY EXECUTE THIS AGREEMENT IN THE PRESENCE OF
THE TWO UNDERSIGNED WITNESSES.
TELEMIG CELULAR S.A.
By: /s/Luiz Gonzaga Xxxx By: /s/ Xxxxxx Xxxxxxx
------------------------- ----------------------
Title: Director Superintendente Title: Network Manager
Attorney-in-Fact
NORTHERN TELECOM DO BRASIL COMERCIO E SERVICOS LTDA.
By: /s/Xxxx Xxxxx Herve Xxxx By: /s/ Xxxxxxxx Xxxxx De X. X. Xxxxx
------------------------- ---------------------------------
Title: Attorney-in-Fact Title: Attorney-in-Fact
NORTHERN TELECOM DO BRASIL INDUSTRIA E COMERCIO LTDA.
By: /s/ Xxxxxxxx Xxxxx De X. X. Xxxxx
---------------------------------
Title: Attorney-in-Fact
NORTHERN TELECOM LIMITED
By: /s/ Fard Nathos
---------------
Title: Attorney-in Fact
Witness:
1. /s/ Xxxxxx Xxxxx Vale Xxxx 2. /s/ Xxxxxx X. Xxxxxx
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