(1) The Contractor and the Purchaser hereby consent to take all necessary and reasonable steps within the scope of their business operations for the purpose of avoiding and protecting themselves from serious violations of obligations in the course of or in connection with the initiation, submission and execution of the orders. Serious violation of the obligations shall include any deliberate activity or failure to perform an activity which constitutes a violation of an obligation and causes or may cause tangible or intangible losses for the Purchaser (for example, fraud, disloyalty or illegal appropriation).
Regardless of the fact whether the Purchaser is suffering losses, a serious violation of the obligations, for the purposes of this provisions, arises particularly if:
- members of executive bodies, members of the Management Board or other employees of the Purchaser or its affiliated companies – regardless of the legal nature of their employment conditions – who are responsible for the initiation, submission or execution of orders or are assigned to a responsible function;
- persons who work for the Purchaser or a company hired by the Purchaser in the course of or in connection with the initiation, submission or execution of orders (subcontractors, consultants, project managers, etc.), without being employed by the Purchaser;
- holders of public functions in the country or in other countries, elected representatives, members of legislative, executive or judicial bodies, members of political parties or organizations or employees in national and international organizations or persons who have been assigned public authority or who perform public functions;
have been offered, promised or approved benefits (gifts, invitations, commissions, fees, delays in payments, discounts, etc.) for them or for a third party in the course of or in connection with the initiation, submission and execution of the orders, if and to the extent to which these benefits are intended to or could, based on the object, type and scope of the benefit, have a dishonest effect on the services of such persons.
In addition, regardless of the fact whether the Purchaser is suffering losses, any deliberate violation of the legal regulations intended to protect free and loyal competition, to protect commercial secrets as well as to protect copyrights and rights to industrial property of the Purchaser, such violation committed in the course of or in connection with the initiation, submission or execution of orders, shall represent a serious violation of the obligations for the purposes of this provision.
(2) If members of executive bodies, members of the Management Board, other employees of the Contractor, subcontractors of the Contractor or other third parties who work for the Contractor or a company hired by the Contractor, in accordance with the Contract concluded between the Contractor and the Purchaser, violate the obligation in accordance with paragraph 1 in the course of or in connection with the initiation, submission or execution of orders, the Contractor shall pay penalties to the Purchaser. The penalty shall equal 30% of the value of the order.
The Purchaser shall be entitled to both indemnification and contractual penalty from the Contractor as compensation for the damages incurred by the Purchaser as a result of the violation of the obligations in accordance with paragraph 1.
The penalties stipulated herein shall not be imposed if the violation of obligations in accordance with paragraph 1 was committed by a subcontractor of the Contractor, where the selection of the subcontractor was requested by the Purchaser, and the members of executive bodies, members of the Management Board, or other employees of the Contractor were not involved or unaware of the violation of the obligations.
(3) If the persons/ companies stated in paragraph 2 violate the obligations arising from paragraph 1 herein in the course of or in connection with the initiation, submission or execution of orders, the Purchaser shall have the right to terminate the Contract without providing information about the reasons.
In the event of a founded reason for suspicion regarding a violation of the obligations in accordance with paragraph 1 herein, the Contractor could be banned from participating in calls for collection of bids and implementation of orders for a period ranging between four (4) months and three (3) years. In particularly serious cases, the ban may be extended to seven years. The Contractor may also be prohibited from participating in calls for collection of bids and implementation of orders.
(4) The Contractor consents to cooperate in the defence from and in the identification of any possible violations of obligations in accordance with paragraph 1 herein. The Contractor specifically consents to provide to the Purchaser information available within the scope of its business operation and its scope of responsibility necessary for identifying the problem or to make such information available to the Purchaser if there is sufficient preliminary grounds to believe (preliminary suspicion of violation) that there has been a violation of obligations in accordance with paragraph 1 herein. In the event that the protection of commercial secrets of the Contractor prohibits the Contractor from disclosing or communicating such information to the Purchaser, the Contractor consents to disclose the information or make the information available to a third party selected by the Purchaser which party shall be bound by professional obligation for keeping secrets (for example, auditor, tax consultant or attorney at law).
(5) Should the Contractor become aware of certain facts that give grounds for suspicion of a violation of the obligations in accordance with paragraph 1 herein within the scope of business operations of the Purchaser, the Purchaser needs to be informed thereof without any undue delay. This is particularly valid for cases where the persons identified in paragraph 1 seek benefits of the type stated in paragraph 1 for their services, either for themselves or a third party, or have demonstrated their preparedness to allow to be influenced with the approval of such benefits while performing their services or in connection with the initiation, submission or execution of orders.
(6) In the event the Contractor violates the obligations imposed on the Contractor in accordance with paragraph 4 or paragraph 5 herein, the Purchaser shall have the right to withdraw from the Contract. This does not exclude the right of the Purchaser to claim indemnification and contractual penalty from the Contractor.