TURNKEY PROJECT AGREEMENT
IMPSAT S.A.
NORTEL NETWORKS CORPORATION
NORTEL NETWORKS DE ARGENTINA S.A.
DATED AS OF SEPTEMBER 6, 1999
TABLE OF CONTENTS PAGE
ARTICLE I. DOCUMENTS FORMING THE ENTIRE AGREEMENT.................................................................2
ARTICLE II. DEFINITIONS...........................................................................................3
2.1 Certain Definitional Provisions...................................................3
2.2 Definitions.......................................................................3
ARTICLE III. SCOPE OF WORK AND RESPONSIBILITIES..................................................................14
3.1 Scope of Work....................................................................14
3.2 Network Overview.................................................................14
3.3 Design, Engineering and Maintenance Services.....................................15
3.4 Equipment, Structures and Network Software.......................................16
3.5 Installation and Commissioning...................................................16
3.6 Responsibilities of Vendor -- General............................................17
3.7 Responsibilities of Impsat -- General............................................19
3.8 Responsibilities - Applicable Permits............................................20
3.9 Engineering Certification........................................................21
3.10 Interoperability.................................................................21
3.11 Safety and Security..............................................................21
3.12 Inspection Right.................................................................22
3.13 Operating Manuals................................................................23
3.14 Maintenance Manuals..............................................................23
3.15 Standards for Operating and Maintenance Manuals..................................24
3.16 RF Engineering...................................................................25
3.17 Site Acquisition and Rights of Way...............................................25
ARTICLE IV. PROJECT IMPLEMENTATION...............................................................................26
4.1 Impsat Project Manager...........................................................26
4.2 Vendor Project Manager...........................................................26
4.3 Network Implementation Project; Project Implementation Plan......................26
4.4 Impsat Requested Delays in Shipment of Equipment.................................26
4.5 Change Orders and Directed Changes...............................................27
4.6 Project Progress Reporting.......................................................28
4.7 Work Staffing....................................................................28
4.8 Force Majeure and Delay Attributable to Impsat...................................29
4.9 Records and Communications.......................................................30
4.10 Impsat Review, Comment and Approval..............................................30
4.11 Quality Assurance................................................................30
4.12 Training.........................................................................31
4.13 Performance Bond.................................................................31
ARTICLE V. ACCEPTANCE TESTING....................................................................................31
5.1 Acceptance Testing - General.....................................................31
5.2 Notification; Presence at Acceptance Tests.......................................31
5.3 Acceptance Test Reports and Acceptance Certificates..............................31
5.4 Punch Lists, Correction of Defects; Costs and Expenses...........................32
5.5 In Revenue Service...............................................................33
5.6 Provisional Acceptance...........................................................33
5.7 Final Acceptance.................................................................34
ARTICLE VI. SPARE PARTS; POST-COMMISSIONING SUPPORT..............................................................35
6.1 Spare Parts......................................................................35
6.2 Product Support Services; Emergency Technical Assistance Services................35
ARTICLE VII. INTELLECTUAL PROPERTY RIGHTS........................................................................36
7.1 Background IPR and Foreground IPR................................................36
7.2 Vendor License...................................................................36
7.3 Impsat's Obligations Regarding Software Elements.................................37
7.4 Assignment.......................................................................38
7.5 Sublicensing.....................................................................39
7.6 Software Element Maintenance and Support.........................................39
ARTICLE VIII. NOTIFICATION OF DEVELOPMENTS.......................................................................40
8.1 Industry Developments............................................................40
8.2 Vendor Developments..............................................................40
ARTICLE IX. PRICING AND PAYMENT PROVISIONS.......................................................................41
9.1 Product List and Pricing Schedule................................................41
9.2 Invoicing and Payments...........................................................41
9.3 Vendor Financing.................................................................43
9.4 Disputed Invoices................................................................45
9.5 Late Payments....................................................................45
9.6 Right of Offset..................................................................45
9.7 Taxes............................................................................46
ARTICLE X. SHIPPING, LOGISTICS, IMPORTATION; TITLE AND RISK OF LOSS..............................................48
10.1 Title and Risk of Loss - General.................................................48
10.2 Shipping.........................................................................49
10.3 Importation and Inland Transportation............................................49
10.4 Export and Import Licenses and Work Permits......................................49
ARTICLE XI. INSURANCE 50
11.1 Maintenance of Insurance.........................................................50
11.2 Additional Requirements..........................................................51
11.3 Subcontractors' Insurance Requirements...........................................52
11.4 Evidence of Insurance............................................................52
ARTICLE XII. PRODUCT WARRANTIES..................................................................................52
12.1 Equipment and Services Warranty..................................................52
12.2 Software Warranty................................................................53
12.3 Civil Work Warranty..............................................................54
12.4 Warranty Limitations.............................................................55
ARTICLE XIII. INDEMNITIES AND LIMITATIONS ON LIABILITY...........................................................56
13.1 Vendor Indemnity.................................................................56
13.2 Impsat Indemnity.................................................................57
13.3 No Limitation on Other Rights....................................................58
13.4 Limitation.......................................................................58
13.5 Cooperation......................................................................58
13.6 Defense of Claims................................................................58
ARTICLE XIV. FAILURE TO DELIVER AND EARLY COMPLETION.............................................................59
14.1 Vendor's Failure to Deliver on Time..............................................59
14.2 Vendor's Early Completion........................................................60
14.3 Performance Related Damages......................................................60
ARTICLE XV. REPRESENTATIONS AND WARRANTIES.......................................................................61
15.1 Representations and Warranties of the Vendor.....................................61
15.2 Representations and Warranties of Impsat.........................................61
ARTICLE XVI. TERM AND TERMINATION................................................................................62
16.1 Term.............................................................................62
16.2 Termination......................................................................62
16.3 Impsat's Option Upon Termination.................................................63
ARTICLE XVII. USE OF SUBCONTRACTORS..............................................................................64
17.1 Consent Required for Vendor to Subcontract.......................................64
17.2 Use of Subcontractors............................................................64
17.3 Vendor Warranties................................................................65
17.4 Payments to Subcontractors.......................................................65
17.5 Removal of Subcontractor or Subcontractor's Personnel............................65
17.6 Subcontractor Insurance; Compliance with Local Laws..............................66
17.7 No Effect of Inconsistent Terms in Subcontracts..................................66
17.8 Additional Restrictions..........................................................66
ARTICLE XVIII. GOVERNING LAW; DISPUTE RESOLUTION.................................................................66
18.1 Governing Law....................................................................66
18.2 Informal Dispute Resolution......................................................66
18.3 Agreement to Resolve Disputes by Arbitration.....................................67
18.4 Arbitration Awards...............................................................68
ARTICLE XIX. MISCELLANEOUS.......................................................................................68
19.1 Expenses.........................................................................68
19.2 Relationship of the Parties......................................................69
19.3 Notices..........................................................................69
19.4 Headings.........................................................................70
19.5 Severability.....................................................................70
19.6 Waiver...........................................................................70
19.7 Entirety of Agreement; No Oral Change............................................70
19.8 The Parties' Right to Assign.....................................................71
19.9 Confidentiality..................................................................71
19.10 Binding Effect...................................................................73
19.11 Counterparts.....................................................................73
Exhibits
Exhibit A Network Design Plan
Exhibit B Description of Network Management System
Exhibit C Description of Functional Units and Coefficients for Liquidated Damages and
Bonuses
Exhibit D Project Implementation Plan
Exhibit E On-Going ECC Services
Exhibit F Acceptance Test Procedures
Exhibit G Accommodation Plan and Description of Civil Engineering Services
Exhibit H Special Considerations Related with Telecommunications Products
Exhibit I Technical Support Provisions
Exhibit J Operations and Maintenance
Exhibit K Training Strategy and Plans
Exhibit L Technical Specifications of Equipment, Optic Fiber and Civil Work
Exhibit M Product List and Pricing Schedule
Exhibit N Standby Letter of Credit
TURNKEY PROJECT AGREEMENT
This Turnkey Project Agreement (this "Agreement") is entered into as of the 3rd day of September, 1999 by and among IMPSAT S.A., a company organized under the laws of Argentina ("Impsat"), Nortel Networks Corporation, a corporation organized under the laws of Canada ("NNC"), and Nortel Networks de Argentina S.A., a corporation organized under the laws of Argentina ("Nortel-Argentina") and, together with NNC, the "Vendor") (the Vendor, together with Impsat, collectively referred to as the "Parties").
RECITALS:
WHEREAS, IMPSAT Corporation ("Impsat Corp."), the parent company of Impsat, desires for its subsidiaries to construct and operate a telecommunications network in several countries throughout Latin America (the "Project"), with Phase I of the Project encompassing Argentina and Brazil, as specified in the Network Design Plan attached hereto as Exhibit A (the "Network," as more fully defined herein); and
Whereas, Impsat Corp. issued a request for proposal ("RFP") on August 14, 1998 with respect to the potential issuance of a contract for engineering consulting services with respect to the Project (the "ECC"), including the design, deployment and development of the Project, which RFP included Impsat Corp.'s minimum requirements with respect to the ECC; and
Whereas, NNC responded to the RFP for the ECC on October 22, 1998 with a written proposal, and Impsat Corp. and NNC subsequently exchanged additional information with respect to Impsat Corp.'s requirements and NNC's willingness to meet such requirements; and
Whereas, Impsat Corp. subsequently determined that the best interests of the Project would be served by having the Project constructed on a turnkey basis, rather than having separate companies perform engineering services and equipment procurement services; and
Whereas, Impsat Corp. issued a second RFP with respect to the provision of Phase 1 of the Project on a turnkey basis, and Vendor received from Impsat on or about December 23, 1998 a series of documents detailing the scope of and performance requirements for the Network, including a project master plan, price sheets, basic descriptions of the Project, drawings and specifications and a negotiations framework; and
WHEREAS, in response to these documents, Vendor submitted a series of offers to Impsat on or about March 22, 1999 detailing Vendor's plans for designing and building the Network in accordance with Impsat's requirements, including a technical proposal, a commercial proposal and other additional proposals; and
WHEREAS, Impsat Corp. and NNC have entered into that certain Letter of Intent dated May 17, 1999, as subsequently extended on July 26, 1999 and August 17, 1999 (the "LOI"), in which the parties thereto agreed to preliminary terms and conditions regarding the Network; to negotiate further in order to finalize definitive documentation for the implementation of the Network; and for the Vendor to commence work on certain aspects of the Network; and
WHEREAS, the Parties desire to provide for the Vendor to undertake all work and supply all goods and services necessary for the design, planning, manufacturing, procurement, supply, delivery, integration and installation of equipment, construction of facilities, and testing and commissioning of the Network, on a "turnkey" basis, all on the terms and conditions set forth herein; and
WHEREAS, the Parties have agreed to enter into this Agreement to govern their relationship with respect to the design and construction of the portion of the Network located in Argentina (the "Subnetwork"), and IMPSAT Comunicacoes Ltda., a Subsidiary of Impsat Corp., NNC and Northern Telecom do Brasil Comercio e Servicos Ltda., a Subsidiary of NNC ("Nortel-Brazil"), are simultaneously entering into a similar agreement to govern their relationship with respect to the design and construction of the portion of the Network located in Brazil (the "Companion Subnetwork");
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Impsat and the Vendor hereby agree as follows:
ARTICLE I.
DOCUMENTS FORMING THE ENTIRE AGREEMENT
This Agreement consists of the commercial terms and conditions contained in the body of this Agreement, and the following Exhibits, which shall be read and construed as part of this Agreement:
Exhibit A Network Design Plan
Exhibit B Description of Network Management System
Exhibit C Description of Functional Units and Coefficients
for Liquidated Damages and Bonuses
Exhibit D Project Implementation Plan
Exhibit E On-Going ECC Services
Exhibit F Acceptance Test Procedures
Exhibit G Accommodation Plan and Description of Civil
Engineering Services
Exhibit H Special Considerations Related with Telecommunications
Products
Exhibit I Technical Support Provisions
Exhibit J Operations and Maintenance
Exhibit K Training Strategy and Plans
Exhibit L Technical Specifications of Equipment, Optic
Fiber and Civil Work
Exhibit M Product List and Pricing Schedule
Exhibit N Letter of Credit
The Exhibits listed above have no order of precedence. In the event of any conflict or inconsistency between the terms and conditions contained in this Agreement and the above Exhibits, the terms and conditions contained in the Agreement shall prevail, except with respect to Exhibits A, E, G, H, I, J and L, provided, however, that in no event shall any Exhibits prevail over Articles VII, IX, XII and XIII, except as otherwise specifically provided for in Section 9.1. In the event of any conflict or inconsistency between the terms and conditions in the NNCPs and any other documents provided by Vendor, the terms and conditions contained in this Agreement and the terms and conditions contained in the Exhibits shall prevail.
ARTICLE II.
2.1 Certain Definitional Provisions.
(a) When used without definition in any Contract Document, a capitalized term that is defined in this Agreement shall have the meaning provided herein.
(b) The words "hereof," "herein," "hereunder" and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection and Exhibit references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined in this Agreement are equally applicable to both the singular and plural forms and derivative forms of such terms.
(d) When used in this Agreement, the terms "include," "includes" and "including" are not limiting.
2.2 Definitions.
As used in this Agreement, the following capitalized terms have the following meanings:
"Acceptance Testing for Provisional Acceptance" has the meaning specified in Section 5.6.
"Acceptance Tests" means, collectively, the performance and reliability demonstrations, if applicable, and the tests to be performed in accordance with the applicable Acceptance Test Procedures, or other such demonstrations and tests as agreed to by the Parties.
"Acceptance Test Procedures" means, collectively, the test procedures described in Exhibit F specifying the purposes, testing principles, test specifications, test procedures and success criteria for each of the Acceptance Tests.
"Accommodation Plan" means the Accommodation Plan and Description of Civil Engineering Services attached hereto as Exhibit G.
"Affiliate" when used with respect to any Person, means any other Person that controls, is controlled by or is under common Control with such Person, whether through ownership of voting securities or otherwise. Notwithstanding the foregoing, no Governmental Entity shall be considered an Affiliate of any Person.
"Aggregate Price" has the meaning specified in Section 9.1.
"Agreement" has the meaning specified in the prefatory paragraph hereto.
"Applicable Laws" means, as to any Person, all laws, statutes, rules, regulations, codes, treaties, ordinances, judgments, decrees, injunctions, writs, orders, directives and stipulations of any Governmental Entity, and interpretations thereof, in any jurisdiction or country (i) applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject or (ii) having jurisdiction over all or any part of the Subnetwork or the Work to be performed pursuant to the terms of this Agreement.
"Applicable Permits" means any franchise, permit, authorization, concession, approval, license (including export/import licenses), order, waiver or similar instrument (including any of the foregoing relating to land use, building and occupancy permits and "roofrights") of or from any Governmental Entity having jurisdiction over all or any part of the Subnetwork or the Work to be performed pursuant to the terms of this Agreement or of or from any other Person to the extent necessary to perform and complete the Work.
"Background IPR" of NNC and its Subsidiaries or of Impsat and its Subsidiaries means any IPR of such party, or any IPR licensed from a third-party by such party, that is conceived, created, or developed prior to, or independent of, any Work or Service performed under this Agreement.
"Building Infrastructure" means, with respect to any Network Element Facility, the grounding , the air-conditioning systems (both general and special), the fire alarm and extinguisher systems, elevators, water and sewer systems, the uninterruptible power supply ("UPS"), the main power boards, the power distribution boards, the towers, the transformers, the power generators, the electrical rectifiers and batteries, the cable and equipment ladders, trays and racks, the technical floors, the security systems, the environmental telesupervision systems, the auxiliary lighting systems and all other infrastructure subsystems required for a Network Element Facility to function properly.
"Business Day" means any day other than Saturday or Sunday or a day that is a public holiday in Argentina.
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