<PAGE>
EXHIBIT 10.18
[*]=CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETED ASTERISKS HAS BEEN OMITTED AND FILED SEPERATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
MASTER AGREEMENT FOR DATA
COMMUNICATIONS AND VALUE ADDED SERVICES
(ARGENTINA)
This Master Agreement for Data Communications and Value Added Services (this
"Agreement") entered into on December 23, 1999 (the "Effective Date") by and
between AOL Argentina S.R.L., an Argentine limited liability company with
offices in Maipu 1300, Piso 10 Capital Federal (CP 1006) ("AOL") and IMPSAT
S.A., with offices in Alferez Pareja 256, Buenos Aires, Capital Federal (CP
1007) ("IMPSAT").
WHEREAS, AOL is an Internet and online service provider which desires to
build a proprietary AOLnet data communications network in Argentina;
WHEREAS, AOLnet is defined to be the subset of AOL's dial-up access network
in which AOL has complete control of (i) the usage, location and quantities of
the applicable equipment; (ii) the purchase, usage, and deployment of all
hardware and software utilized to support the network infrastructure; and (iii)
the right to resell all available capacity to third parties.
WHEREAS, IMPSAT is a provider of data communications services and value
added services, including Internet access services;
WHEREAS, IMPSAT has agreed to build out a portion of AOLnet in Argentina
and provide communications services and value added services to AOL;
WHEREAS, the parties desire to formalize their relationship;
NOW, THEREFORE, in consideration of the mutual promises set forth herein, the
parties agree as follows:
1. Scope of Services. IMPSAT shall install, activate, maintain, and operate
-----------------
Modems for AOL's nationwide dial-up network in AOL-designated cities in
Argentina, as set forth in Exhibit C ("Deployment Plan"). The parties further
agree to negotiate in good faith regarding future expansion of AOL-designated
cities within Argentina. The initial total network size shall be [*] Modems. For
purposes of this Agreement, "Modem" shall mean an individual data channel,
having the bandwidth specified in Paragraph 2.1("Network Charges") from a
specified location in Argentina to any of the then-current AOL data centers.
This channel may be established via an analog or digital ingress (e.g., a
channelized E-1, ISDN or ADSL circuit) to a Modem Box. "Modem Box" shall mean
the physical product, which houses the Modems and the netserver capacity to
provide intelligence regarding the network.
1.1 Commitments. AOL agrees to order from IMPSAT a minimum of [*] modems
-----------
for the buildout of AOLnet in Argentina by May 2001; provided, however, that
IMPSAT meets all required performance criteria as determined by AOL in its sole
discretion based on agreed performance criteria. Such performance criteria
include, but are not limited to: (i) meeting the monthly buildout targets
specified by AOL, and (ii) meeting the requisite service levels for such
buildout (including without limitation the performance levels specified in
Exhibit A). If in any
<PAGE>
month IMPSAT fails to meet any of its installation commitments, AOL's minimum
commitment for all following months shall be reduced by one-twelfth of the
percentage by which IMPSAT has fallen short of its quality and capacity
requirements for such month. The above-described reduction in commitment shall
not limit any of AOL's other rights and remedies hereunder or at law. Except for
the specific commitments expressed above, AOL shall not otherwise be committed
to purchase modems or services from IMPSAT.
1.2 IMPSAT Obligations.
------------------
(a) IMPSAT shall deploy any capacity requests accepted by IMPSAT
within ninety (90) days of acceptance. The parties agree that IMPSAT may not
implement any changes with respect to the manufacturer of the Modems and routers
deployed throughout the network without AOL's prior written approval. IMPSAT
also agrees to deinstall Modem capacity from one site and reinstall it at
another site, at AOL's sole discretion and cost, within ninety (90) days after
AOL's request for such deinstallation/reinstallation. If IMPSAT refuses to
accept a capacity request or does not deploy a capacity request within ninety
(90) days after accepting such request, AOL shall be free to request
installation of such capacity from another provider. Further, any such capacity
request that IMPSAT refuses or does not timely fulfill shall nevertheless be
counted towards AOL's minimum commitment as specified in Paragraph 1.1
("Commitments"). IMPSAT also agrees to implement any new technology on an
expedited basis for AOL who shall determine the technology and vendor of choice
for the Modems and related equipment and, in the event of significant changes to
cost directly resulting therefrom, the parties may revisit the fees set forth in
Paragraph 2 ("Fees").
(b) Subject to Paragraph 1.2 c) and d), AOL will have the right to
direct IMPSAT to withdraw Returnable Dedicated Modems (as defined below) within
90 days of the latest acceptance date of such Modems. "Returnable Dedicated
Modem" shall mean [*] of the number of Modems IMPSAT is deploying in connection
with an AOL initial buildout request, as defined in Paragraph 1 ("Scope of
Services").
(c) For the Returnable Dedicated Modems, the parties shall negotiate
the terms upon which AOL shall loan to IMPSAT the use of such equipment (i.e.,
the right to return such equipment for full refund therefor), including all
hardware, software, spare parts and installation services necessary for the
operation of the service for 90 days.
(d) Ten (10) days before the end of such 90-day period, AOL shall
provide IMPSAT with a written communication defining how many of the Returnable
Dedicated Modems will be kept, and how many will be returned. For each 30
Returnable Dedicated Modems returned by AOL(i) from the Effective Date until 31
December 2000, AOL shall pay IMPSAT the cost of the removal of such Returnable
Dedicated Modems, provided that IMPSAT shall do its best efforts to minimize
such cost and (ii) from 1 January 2001 forward AOL shall pay IMPSAT the rate,
without taxes, of [*] per Returnable Dedicated Modem.
1.3 Implementation of Network and Value Added Services. AOL shall have
--------------------------------------------------
absolute control over the locations being served and the establishment of a
reasonable schedule for installations. In the event that AOL directs a change
in service location or circuit type or a reallocation of Modems among locations
after tasking has been issued or Modems have been activated, any additional
costs incurred by IMPSAT, including any service termination or service
activation costs, will be reimbursed by AOL. AOL shall retain control of how
the users connect
2
<PAGE>
to the network and how the network connects to AOL. IMPSAT shall control the
design and use of the network backbone, the value added services, and the
backhaul circuits from the virtual PoPs to the physical PoPs. IMPSAT shall
determine the location of actual Modem installation, and IMPSAT shall also
identify the number and location of spare Modems necessary to ensure compliance
with the performance specifications described in Exhibit A.
2. Fees.
----
2.1 Network Charges. In exchange for the network services and value added
---------------
services to be provided hereunder, IMPSAT will be paid the following for Modems
accepted by AOL, without taxes (all prices are quoted in Argentine pesos
according to law 23.982):
(a) [*] per Dedicated Modem per month for the Modems comprising the
Domestic network (the "Base Domestic Price"), provided that such fee per [*]
Modem will not be charged with regards to a Returnable Dedicated Modem at such
time that it is returned or withdrawn in accordance with Paragraph 1.2(b).
(b) [*] per Dedicated Modem per month for the Modems comprising the
International (IWAN) network (the "Base International Price"), provided that
such fee per [*] Modem will not be charged with regards to a Returnable
Dedicated Modem at such time that it is returned or withdrawn in accordance with
Paragraph 1.2(b).
(c) The Base Price paid to IMPSAT shall include all costs relating to
the management of the dial-up network, including but not limited to: (a) the
network circuit requirement (E-3), a LEC circuit requirement of 1 per 30 Modems,
and a backhaul requirement of 1 E1 per 256 Modems; (b) recurring LEC circuit
charges; (c) recurring backhaul circuit charges; (d) amortization of all one-
time circuit installation fees; (e) analog POTs lines; (f) non-capital
equipment; (g) site maintenance; (h) recurring co-location charges; (i) co-
location installation fees; (j) other one-time installation fees; (k) Modem
management fees; (l) equipment lease expenses at IMPSAT sites; and (m) the cost
of any spare equipment. For purposes of this paragraph, the DS-3 requirements
are as follows:
Throughput Modems per DS-3 (or equivalent)
---------- -------------------------------
[*] [*]
-
DS-3s shall be defined as a network circuit with a 45-megabit capacity with
utilization no higher than [*].
(d) The Base Price is valid for a [*] bps service only. Each
additional [*] bps increment as set forth above that is requested by AOL will
result in an additional [*] per Modem per month to the Base Price. The parties
agree that the network sizing assumes that backhaul and backbone circuits are
sized at no greater than [*] peak utilization per individual circuit, measured
as an average over recurring five minute windows.
3
<PAGE>
(e) Subject to Paragraph 11 ("Indemnity"), AOL agrees to pay all
applicable goods and services taxes relating to the services provided under this
Agreement as identified in the relevant invoice provided pursuant to Paragraph
2.4 ("Payment Terms").
(f) AOL shall not be required to pay for the use of any Modem or
Modem Box for any period of time during a billing cycle in which such Modem or
Modem Box is inoperable or otherwise out of service.
2.2 Volume Discounts. In exchange for AOL committing to the capacity set
-----------------
forth in Paragraph 1.1 ("Commitments"), IMPSAT agrees to provide the following
discounts to AOL during the term of the agreement;
(a) For Modem orders that result in a total installed Modem base of
between [*] Modems, a cumulative discount of [*] will be applied to the combined
per Modem cost for the entire Modem base, including the newly ordered Modems.
(b) For Modem orders that result in a total installed Modem base of
between [*] Modems, a cumulative discount of [*] will be applied to the combined
per Modem cost for the entire Modem base, including the newly ordered Modems.
(c) For Modem orders that result in a total installed Modem base of
greater than [*] Modems, a cumulative discount of [*] will be applied to the
combined per Modem cost for the entire Modem base, including the newly ordered
Modems.
2.3 Price Changes. In the event that changes to government regulations
-------------
affect the services provided in this Agreement and result in savings or
additional costs to IMPSAT, IMPSAT agrees to pass through the total amount of
such savings or additional costs to AOL. AOL and IMPSAT further agree, at [*]
intervals or a mutually agreeable time period, to in good faith evaluate and
adjust prices quoted in Paragraph 2.1 ("Network Charges"), which may have been
influenced by changes in inflation (e.g. referencing the IGP-DI rate), increased
efficiency (e.g. better tools requiring fewer support staff), or reduced costs
structures (e.g. increased capacity). IMPSAT hereby agrees that the foregoing
covenant is a material term of this Agreement.
2.4 Payment Terms. At such point that AOL accepts Modems in accordance
-------------
with this Agreement, IMPSAT will invoice AOL on a monthly basis the charges
specified in this Paragraph 2 for all services provided to AOL under this
Agreement. Invoices shall identify applicable taxes as agreed upon by the
parties. All payments due to IMPSAT under this Agreement shall be invoiced in
arrears to AOL. All undisputed invoices shall be payable within [*] days of
receipt of the invoice. In the event that AOL disputes an invoice, AOL shall pay
only the undisputed portion of the invoice, until the dispute is resolved. AOL
or its designee shall pay vendor invoices forwarded by IMPSAT for Modems. IMPSAT
acknowledges that it is AOL's billing policy not to honor any invoices for
services performed more than [*] days before the receipt of the invoice by AOL.
(a) In the event AOL fails to pay IMPSAT any undisputed amount due in
accordance with the payment schedule herein proposed, IMPSAT shall provide AOL
with notice of such non-payment and if, within [*] days after receipt of such
notice AOL has not paid, then AOL shall pay IMPSAT, as damages for financial
distress, a fine of [*] of the undisputed
4
<PAGE>
amount, plus interest of [*] per month of the undisputed amount, in addition to
the amount originally due, calculated from the date such amount should have been
paid until its actual receipt by IMPSAT. Such value shall be adjusted in order
to compensate IMPSAT for inflationary losses, if any, as per Paragraph 2.3
("Price Changes").
(b) All invoices shall be considered undisputed unless, within the
seventeen (17) days following receipt of the invoice, AOL provides IMPSAT with a
notice of invoice in dispute, containing references to the actual invoice, and a
detailed explanation of the cause of dispute.
2.5 Market Pricing.
--------------
(a) Commencing [*], IMPSAT shall charge AOL Market Price, provided
that the Market Price is at least [*] lower than the then current contract
price. AOL will notify IMPSAT of changes in Market Price no more often than
twice every [*] months thereafter and IMPSAT will have [*] days following such
notice to modify the price accordingly. To the extent IMPSAT does not modify the
price accordingly, AOL can elect at its option, either to terminate its
unfulfilled purchase commitment or terminate the agreement, in whole or in part
and without liability, upon notice to IMPSAT.
(b) "Market Price" for any Dedicated Modem shall mean the price
offered to AOL by any Market Vendor for services reasonably similar to those
Services provided for a Dedicated Modem under this Agreement.
(c) "Market Vendor" shall mean any Vendor with similar service levels
and performance standards as the services included in this Agreement, that
offers to provide reasonably similar service to AOL in a manner which is not
illegal. Furthermore, said Vendor must offer to provide AOL, over a period of no
less than 12 months, with at least thirty percent (30%) of AOL's incremental
increase Dedicated Modem requirements over such period.
(d) The Volume Discounts indicated in Paragraph 2.2 will be canceled
upon the application of the Market Pricing and shall not be applicable to such
Market Pricing.
(e) To the extent necessary to compare hourly or similar pricing
offered to AOL pursuant to this Paragraph 2.5 with the pricing applicable to a
Dedicated Modem, the parties will use the average number of hours used per
Dedicated Modem per month by AOL during the preceding 12 months. Such hourly or
similar pricing being compared must be the peak pricing offered by the Vendor.
2.6 [*]
(a) Except for [*] that have [*] from [*] the services [*] by [*]
shall not [*] or [*] services [*] any other Applicable Purchaser [*] that are
[*] those [*] available [*] hereunder, or (ii) [*] Applicable Purchaser [*].
"Applicable Purchaser" shall mean any party [*] that is obligated to purchase,
[*] Dial-Up Access Ports from IMPSAT.
(b) As long as AOL has purchased [*]:
5
<PAGE>
(i) the charges hereunder shall each be [*] provided by IMPSAT
[*] similar services than the contained herein [*] from IMPSAT [*]
that is [*] of the corresponding [*] that AOL is committed [*] under
this Agreement;
(ii) the Charges shall each be [*] provided by IMPSAT for [*]
similar services [*] contained herein [*] from IMPSAT at any point in
time [*] that is [*], but [*], of the corresponding [*] AOL is
committed [*] under this Agreement; and
(iii) the Charges shall each be [*] provided by IMPSAT [*]
similar services than the contained herein [*] from IMPSAT at any
point in time [*] of the [*] AOL is committed [*] under this Agreement
(iv) If at any time during the [*] by this Paragraph 2.6, then
IMPSAT [*] in accordance with this Section 2.6 effective as of the
date [*] required by this Section 2.6 ---
---
(c) AOL shall have [*] with respect to any [*] provided by, or
arranged to be provided by, IMPSAT [*] For example, this Paragraph would entitle
AOL to [*].
(i) allocated to resolve network difficulties or to provide
network disaster recovery;
(ii) allocated in conjunction with IMPSAT's offer of new
technology, infrastructure or data-related services to its Customers;
(d) AOL shall have the right [*], pursuant to [*] set forth in this
Agreement and pursuant to a mutually agreed-upon process that is consistent with
[*] available to [*] after the Effective Date. AOL shall have the right [*]
- -
(e) AOL may audit IMPSAT's compliance with this Section pursuant to
Article 7 of the Agreement. In addition, upon AOL's request from time to time,
[*] compliance by IMPSAT with this Section. In the event that [*] in accordance
with this Paragraph 2.6 AOL shall [*] the Agreement [*].
-
3. Acceptance Testing.
------------------
3.1 Acceptance Criteria and Data. Newly activated Modem Boxes will be
----------------------------
subject to an acceptance test by AOL. Each acceptance test shall last for a
period of six (6) days. AOL shall have the option of rejecting a Modem Box and
associated circuits which meets or exceeds one or more of the following failure
thresholds: (a) [*] of user sessions terminate without a user-initiated logoff
sequence; (b) [*] of user calls fail to connect to the Modem Box (such data will
be provided by IMPSAT for the Modem Boxes on a daily basis. The six day
acceptance period will be contingent upon receiving this data on a daily basis
beginning with a Modem Box activation); (c) greater than [*] of user calls which
successfully connect to the Modem Box fail to connect to the AOL front end.
IMPSAT shall provide to AOL all of the performance data necessary to conduct the
acceptance tests on a daily basis during the testing period. If such data is
not received by AOL daily, the applicable Modem Box shall automatically be
deemed rejected. In the event that a newly activated Modem Box is rejected after
the six (6) day acceptance test because of failures and/or problems not
attributable to IMPSAT but to circumstances alien to IMPSAT such as, but not
limited, to customer modem incompatibilities and/or insolvable hardware
restrictions on AOL's required equipment, the failure thresholds stated in this
paragraph will be reevaluated and any modifications will be mutually agreed upon
in writing by AOL and IMPSAT.
6
<PAGE>
3.2 Notice of Failure. In the event that a newly activated Modem Box
-----------------
meets or exceeds any of the failure thresholds specified in Paragraph 3.1
("Acceptance Criteria and Data") within the six (6) day test period, AOL may, at
-
its option, send IMPSAT an e-mail notice of rejection, specifying the failure
thresholds which were met or exceeded during the test. In determining
acceptance, AOL shall not hold IMPSAT accountable for problems due to AOL's
client software. Provided that all relevant daily performance data has been
provided to AOL as required by Paragraph 3.1 ("Acceptance Criteria and Data")
any Modem Boxes that have not been rejected by AOL by the end of the sixth day
following activation will be deemed accepted.
3.3 Rejected Modem Boxes. Rejected Modem Boxes shall be removed from
--------------------
service pending further troubleshooting and corrective action by IMPSAT.
Following such troubleshooting and corrective action by IMPSAT, IMPSAT may re-
activate the Modem Boxes for customer use, and a new six-day acceptance period
shall commence. No fees shall be charged to AOL during the period in which
IMPSAT is implementing troubleshooting and corrective action or during the
subsequent new six (6) day testing period.
3.4 Payment Obligations. The payment obligation of AOL for any Modem Box
-------------------
begins at the end of the six (6) day testing period and only upon acceptance of
such Modem Box by AOL.
4. Technical and Operational Requirements. IMPSAT shall provide services that
--------------------------------------
meet the specifications as set forth in this Paragraph 4 and in Exhibit B
("Operational Requirements"):
4.1 Netserver and Backbone Capacity.
-------------------------------
(a) from the netserver to the backbone, there will be no more than
[*] Modems per T1 line or [*] Modems per E1 line;
(b) the backbone is sized for aggregate dial and Internet traffic.
(c) the IWAN lines to AOL shall be sized at [*] of peak utilization as
measured over recurring five-minute windows.
4.2 Access and Connection Protocol. IMPSAT shall provide support for the
------------------------------
following AOLnet access methods, access technology, connection protocols and hub
architecture:
(a) the proprietary AOL P3 protocol
(b) PPP
(c) TCP/IP
(d) UDP
(e) ISDN synchronous & asynchronous (v.120), if available
(f) 128K Multi-link ISDN, if available
(g) L2TP
7
<PAGE>
(h) xDSL
(i) 1-way Cable
(j) Routing to multiple services including but not limited to AOL and
any other AOL-offered service as requested by AOL, provided that the user's
TCP/IP connection terminates at a site, which is subject to subparagraph (l)
below.
(k) Routing to resale customers that may be part of AOL's overall
network allocation, provided that the user's TCP/IP connection terminates at a
site which is subject to subparagraph (l) below.
(l) Routing to other AOL-specified sites in addition to, Reston,
Virginia, Manassas, Virginia, and Dulles, Virginia, provided that the cost of
routing to the other AOL-specified sites does not exceed the cost of routing the
equivalent traffic to Reston, Manassas, or Dulles, subject to prior agreement by
IMPSAT and AOL on how IP routing is implemented.
4.3 IP Addresses. IMPSAT shall acquire and manage IP addresses for all
------------
protocols utilized by AOL during the term of this Agreement. Each individual
[*] shall be provided [*] such that [*] and IMPSAT further agrees that IP
-
addresses be allocated in contiguous class C/24 blocks. AOL shall be provided
the source IP addresses prior to use two weeks in advance of implementation
within the network. IMPSAT acknowledges and agrees that it must assign IP
addresses in connection with its implementation of the PPP protocol in a manner
that permits AOL to reliably identify the location and identity of users.
4.4 IETF Standards. IMPSAT shall, in its network design and topology,
--------------
comply with IETF approved and adopted standards applicable to the access methods
set forth in Paragraph 4.2 ("Access and Protection Protocol").
4.5 Domain Name Services. IMPSAT shall provide domain name service as
--------------------
follows:
(a) resolve domain name service queries to AOL destinations
(b) support domain name service for AOL service access to the AOL
domain and any zones resident on AOL name servers
(c) maintaining domain name service servers
(d) support AOL in the acquisition of IP address blocks as requested
by AOL
(e) IMPSAT shall not require return of address blocks currently in
use by AOL and shall provide additional blocks from the allocated IMPSAT space
in accordance with the rules of ARIN.
4.6 Changes in Operating Requirement. AOL may direct changes to the
--------------------------------
operating requirements described in this Paragraph 4 to provisioned bandwidth,
AOLnet access methods, access technology, and hub architecture, and IMPSAT will
respond promptly with any adjusted pricing related to such request. In the
event that such changes necessitate an extension of the timeframe originally
scheduled for the installation of Modems, the installation schedule shall be
extended the same amount of time required to execute such changes.
8
<PAGE>
5. Network Performance.
-------------------
5.1 Service Performance Levels. The network shall perform in accordance
--------------------------
with the service performance levels set forth in Exhibit A ("Service Performance
Levels"). AOL shall notify IMPSAT in the event that the network fails to meet
the Service Performance Levels in two consecutive months or on an average over a
three-month period. IMPSAT shall have three (3) months following the receipt of
such notice to cure such failure. If IMPSAT fails to cure such failure within
such three (3) month period, AOL may, at its sole option, either (i) terminate
this Agreement for default, in accordance with Paragraph 8.2 ("Termination") or
(ii) suspend the minimum network order commitments of Paragraph 1.1
("Commitments") until such time as the network meets or exceeds the Service
Performance Levels (based on average measurements over three (3) calendar
months). For purposes of the foregoing, suspending the minimum network order
commitments shall mean that for each month until the network has been brought
into compliance with the Service Performance Levels, AOL shall have no
obligation to place any orders for network capacity with IMPSAT for such month.
Further, AOL shall have no obligation following any period of suspension to make
up for any network capacity orders not made during such period of suspension
5.2 IMPSAT shall ensure that the network be Year 2000 compliant and shall
represent and warrant to such compliance. Year 2000 compliant shall mean:
(a) Business processes and procedures must contain no logical or
arithmetic inconsistencies and will function without interruption prior to,
during and after Year 2000.
(b) The Year 2000 must have the ability to recognize and manage
business processes and procedures that occur in association with the leap year.
(c) All interfaces and processes must be able to handle the data
storage, display and output of date driven information as it relates to the
century, in order to eliminate date ambiguity.
(d) Successfully and reliably process date relevant functions and
data containing dates from, into and between the twentieth and twenty-first
centuries.
(e) The above definitions apply, provided that all other products
(e.g., hardware, software, and firmware) interfacing with AOL and CompuServe
properly exchange date data with it.
5.3 Architectural Independence.
(a) Alternate Carriers. In the event that IMPSAT determines that
------------------
another carrier's offerings represent a superior value, or other factors which
may make another carrier's offerings preferable, IMPSAT may utilize a carrier
other than its current carrier for the network or any portion thereof. IMPSAT
acknowledges AOL's goal is to achieve architectural independence among its
service providers to minimize the probability that a single failure could impact
more than one AOL service provider. IMPSAT shall solicit AOL's input prior to
the use of a carrier other than its current carrier.
(b) International Circuits. During the term of this Agreement but not
----------------------
before two years from the Effective Date, AOL may decide to obtain or build
international transit capacity for connecting the portion of the AOLnet network
located in Argentina or other parts of Latin America to AOL data centers located
outside of Latin America. In the event of such an occurrence, AOL agrees to
explore opportunities with IMPSAT to either re-evaluate the current
International circuit agreement and give IMPSAT the first option to meet
competitive pricing or to assist in the procurement of a new international
circuit. AOL shall [*].
9
<PAGE>
5.4 IMPSAT Representation. IMPSAT represents and warrants that any and all
----------------------
the equipment used in the implementation of a Modem and Modem Box, as defined
above have been certified through the equipment supplier by the relevant
authorities in Argentina and in accordance with the applicable laws and
regulations.
6. Project Management. IMPSAT shall set up an AOL project team, staffed with
------------------
a IMPSAT Vice-President and a dedicated AOL project manager (both subject to
AOL's approval in its sole discretion), who will be responsible for building,
maintaining, and operating AOLnet and the AOL Internet access. The IMPSAT
project manager shall be AOL's primary point of contact and [*], for guidance
and advice.
7. Audits.
------
7.1 Each party reserves the right to [*] other [*] and [*] compliance with
the terms of this Agreement. This [*] and any other [*] Agreement [*] of the [*]
shall be performed by [*] as follows: (i) following at least [*] prior written
notice to [*]; (ii) at the [*]; (iii) in a reasonable [*]; (iv) in a [*] and (v)
in compliance with the [*]. Unless the parties mutually agree otherwise, the
number of [*] shall not exceed [*]. Nothing contained in this paragraph is
intended to allow [*] the disclosure of which would violate the terms of an
agreement [*]. Materials of [*] reviewed by such [*] shall be deemed
confidential and their use by the [*] shall be limited to [*] and any [*] shall
not contain any confidential information of [*] execute a nondisclosure
agreement acceptable to the current [*] containing the substantive provisions of
this paragraph. Any report or other information produced or reviewed [*] shall
not be [*]. Except to such person with a need to know. The foregoing [*] and/or
[*] shall be made available to [*]. Each party shall [*] and shall [*] not less
the term of this Agreement or such other longer period as may be required by [*]
disclosure of [*] that relate to this Agreement.
7.2 In the event of [*] of Paragraph 2.6, AOL will agree to [*] with the
following[*]:1) AOL shall [*] only in the event AOL has reason to believe [*] in
compliance with Paragraph 2.6, 2) AOL shall [*] or, in the event [*], AOL shall
use IMPSAT's [*] if accepted by AOL, 3) AOL will [*] compliance or noncompliance
with Paragraph 2.6, and 4) AOL shall [*] disclosure of [*].
8. Term and Termination.
--------------------
8.1 Term. The term of this relationship shall be three (3) years from the
----
Effective Date. The Agreement may be renewed at the option of AOL for
additional one-year periods upon six months notice to IMPSAT. At the end of the
Agreement, the parties will implement a six-month transition period to allow for
the orderly migration of IMPSAT's customers and AOL's assumption of management
and control of the network. The parties will resolve all transition issues in
an equitable manner.
8.2 Termination. Either party shall have the right to terminate for
-----------
material breach, provided that any such breach is uncured after thirty (30) days
written notice. The parties hereby acknowledge that breach of any pricing
provision in Paragraph 2 ("Fees") and Paragraph 10 ("Certain Conditions") shall
be considered material. If any undisputed amounts due and owing by AOL remain
unpaid ninety (90) days after date of invoice, then IMPSAT will provide notice
thereof to AOL and if AOL does not pay with ten (10) business days after receipt
of such notice, then IMPSAT may terminate this Agreement immediately upon
written notice without penalty. Upon such termination, each party will work
reasonably with the other party and such party's designees to ensure a smooth
and timely transition of the network control and management to AOL within one
hundred eighty (180) days of the effective date of termination.
10
<PAGE>
In the event of any termination, IMPSAT will transfer ownership of the telephone
numbers in the network to AOL or its designee, subject to the regulatory
feasibility of this procedure, if any.
9. Confidentiality. Except as required by applicable law or stock exchange
---------------
regulation, the parties agree that all disclosures of confidential and/or
proprietary information before and during the term of this Agreement shall
constitute confidential information of the disclosing party. Such confidential
information shall include, but not be limited to, AOL usage statistics, calling
patterns, ANI data, and all member information. Each party shall use
commercially reasonable efforts to ensure the confidentiality of such
information supplied by the disclosing party, or which may be acquired by either
party in connection with or as a result of the provision of the services under
this Agreement. Each party agrees that it shall not disclose, use, modify,
copy, reproduce, or otherwise divulge such confidential information. Each party
further agrees to hold harmless and indemnify the other party in the event of
any disclosure by such party.
9.1 The non disclosure obligation shall not be applicable to:
(a) Information that is in or becomes part of the public domain
without violation of this Agreement by the receiving party;
(b) Information that was known to be in the possession of the
receiving party on a non-confidential basis prior to the disclosure thereof to
the receiving party by the disclosing party, as evidenced by written records;
(c) Information that was developed independently by the receiving
party's employees;
(d) Information that is disclosed to the receiving party by a third
party under no obligation of confidentiality to the disclosing party and without
violation of this Agreement by the receiving party; or
(e) Information that is authorized by the disclosing party in writing
for disclosure or release by the receiving party.
10. Certain Conditions.
------------------
10.1 AOL shall have the right to [*]. IMPSAT shall [*] provided that AOL
[*] AOL shall enter into [*] and IMPSAT shall not [*]
-
10.2 AOL and IMPSAT will analyze and agree upon the best structure to [*]
10.3 IMPSAT shall, at its expense, translate this Agreement into Spanish
language and the parties shall mutually agree upon and execute a Spanish
translation hereof;
10.4 The parties agree that once the [*] framework is established, they
shall negotiate in good faith [*] (at appropriate levels) [*] will receive, [*],
for the termination of [*] related to the [*] rendering of the Services
contemplated in this Agreement. Further, if, at any time during the term of this
Agreement, IMPSAT [*], then [*] agrees to [*] at appropriate levels. Within 10
days of AOL's written request, [*] IMPSAT's compliance with this Section 10.4.
IMPSAT hereby agrees that the foregoing covenant is a material term of this
Agreement.
11
<PAGE>
10.5 While IMPSAT is in good standing with this Agreement, AOL shall 1)
provide [*] with the right of [*] to procures [*] and 2) exert best efforts to
[*] requested by AOL.
11. Indemnity.
---------
11.1 IMPSAT agrees to indemnify, defend, and hold AOL harmless from
damages, losses, or liabilities (including reasonable attorneys' fees) arising
from (i) any third party claims of intellectual property rights infringement
arising from the use of any IMPSAT-developed materials; (ii) any third party
claims arising out of a breach by IMPSAT of this Agreement; and (iii) any third
party claims relating to any physical damage to property or personal injury
caused by IMPSAT; (iv) any tax claims resulting from deficiencies in the taxes
paid by IMPSAT in connection with this Agreement and (v) any third party claims
by employees of IMPSAT arising out of IMPSAT's relationship with AOL or any
employee, labor, or social security obligations of IMPSAT.
11.2 AOL agrees to indemnify, defend and hold IMPSAT harmless from
damages, losses, or liabilities (including reasonable attorneys' fees) arising
from (i) any third party claims arising out of a breach by AOL of this
Agreement; (ii) any third party claims relating to any physical damage to
property or personal injury caused by AOL; and (iii) any tax claims resulting
from deficiencies in the taxes paid by AOL in connection with this Agreement.
12. Limitation of Liability. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
-----------------------
STATED OR IMPLIED HEREIN, NEITHER PARTY SHALL HAVE ANY LIABILITY WHATSOEVER FOR
ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES (INCLUDING LOST
PROFITS) SUFFERED BY THE OTHER OR BY ANY ASSIGNEE OR OTHER TRANSFEREE OF THE
OTHER, EVEN IF INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES, WHICH
INCLUDES, BUT IS NOT LIMITED TO, LOSS OF PROFITS, REVENUES OR BUSINESS
OPPORTUNITIES.
13. Ownership and Remedies upon Termination or Expiration. IMPSAT shall retain
------------------------------------------------------
title and ownership to the dial-up network equipment, including but not limited
to, Modems and related equipment; provided, however, that as a condition of such
ownership, the parties agree that (i) AOL, in its sole discretion, shall
determine the technology and vendor of choice for the Modems and related
equipment, and IMPSAT agrees to implement any new technology on an expedited
basis for AOL,; (ii) AOL shall recoup all of the economic benefit of any
endorsement by AOL of a specified technology or vendor for the Modems and
related equipment; (iii) AOL shall own the telephone numbers to each of the
dial-up points of presence, and IMPSAT shall not transfer such telephone numbers
to any third party without written permission from AOL; and (iv) IMPSAT shall
not enter into any lease agreements regarding the Modems without prior written
approval from AOL. Upon termination of this Agreement arising from a material
uncured breach by IMPSAT, the parties agree that (i) AOL (or its designee) shall
be allowed to manage the operation of the AOL portion of the network utilizing
AOL personnel and staff and IMPSAT equipment and software at IMPSAT locations,
and IMPSAT shall permit such AOL personnel and staff to have free and
unobstructed access to such IMPSAT locations for the purpose of managing such
operations, all [*] to AOL for [*] after the effective date of termination; (ii)
the parties shall implement a six month transition period to allow for AOL's
assumption of management and control of the network; and (iii) IMPSAT agrees to
the ability of AOL to seek injunctive relief and specific performance regarding
the remedies set forth herein as non-performance would cause AOL irreparable
harm. IMPSAT shall not encumber or permit the
12
<PAGE>
Modems to be encumbered by any liabilities, liens, claims, charges, security
interests or encumbrances of any kind other than such encumbrances as existed at
the time IMPSAT obtained the Modems. Notwithstanding anything to the contrary in
this Agreement, any changes in the AOL telephone numbers shall require prior
written approval from AOL. AOL shall also retain title and ownership to all data
contained in written reports prepared and delivered to AOL hereunder. Any
software developed by IMPSAT incidental to the performance of services for AOL,
the cost of which is charged to, and reimbursed by, AOL shall be jointly owned
by IMPSAT and AOL without need for accounting, and IMPSAT may not use such
software for the benefit of a third party unless IMPSAT: (a) pays to AOL the
cost that was charged to AOL for the development of such software or (b) pays to
AOL one-half of the economic benefit derived therefrom. Notwithstanding the
foregoing, in no event shall IMPSAT use such software for the benefit of any
entity reasonably construed to be a competitor of AOL. IMPSAT further agrees to
execute any and all necessary documentation to perfect AOL's ownership rights in
such software as reasonably requested by AOL. IMPSAT further agrees that it has
no ownership rights or usage rights (except as necessary to fulfill its
obligations as set forth in this Agreement) to any AOL proprietary information
or software provided hereunder, including but not limited to any AOL proprietary
information or AOL software which may be incorporated into written material or
software delivered under this Agreement.
14. General.
-------
14.1 Governing Law. This Agreement shall be governed and construed under
-------------
the laws of the Argentine Republic and the district court of Buenos Aires,
District Capital, Argentina, are hereby elected to settle any disputes arising
here from, with the exclusion of any other no matter how privileged it may be.
14.2 Press Release. The terms of this Agreement are confidential, and
-------------
neither party shall disclose to any third party (other than bankers and lenders,
and legal and other professional advisers with a need to know) the terms and
conditions of this Agreement, provided however, that the parties may disclose
the existence of this agreement. Such obligations shall apply except as
required by law or government regulation. In addition, any press release or
public announcement with respect to this Agreement shall be subject to the
mutual approval of the parties, unless such major press releases or public
announcements are required by law.
14.3 Force Majeure.
-------------
(a) During the term of this Agreement, neither party shall be in
default of its obligations to the extent that its performance is delayed or
prevented by outside causes beyond its reasonable control and could not have
been reasonably contemplated, including but not limited to acts of God, natural
disasters, bankruptcy of a vendor, strikes and other labor disturbances, acts of
war or civil disturbance, or other equivalent or comparable events.
(b) In such event, the non-performing party will be excused from any
further performance obligations so affected for as long as such circumstances
prevail and such party continues to use commercially reasonable efforts to
recommence performance without delay. AOL shall not be obligated to continue to
make the payments to IMPSAT as provided in this Agreement during any such period
of delay.
13
<PAGE>
(c) Any party so delayed in its performance will immediately notify
the party to whom performance is due by telephone (to be confirmed promptly in
writing) and describe in reasonable detail the circumstances causing such delay.
(d) If any of the circumstances described in this paragraph
prevent, hinder, or delay performance of the Services necessary for the
performance of AOL's critical functions for more than [*] then AOL may terminate
this Agreement without penalty as of a date specified by AOL in a notice of
termination to IMPSAT. For the avoidance of doubt, at all times, AOL may procure
such services from an alternate source.
14.4 Assignment.
----------
(a) Neither party may assign this Agreement or its rights or
obligations under this Agreement to a third party without the prior written
consent of the other party, whose consent shall not be unreasonably withheld.
(b) In the event of the consummation of a reorganization, merger,
or consolidation or sale or other disposition of [*].
(c) In the event of the consummation of a reorganization, merger,
or consolidation or sale or other disposition of [*].
14.5 Notices. All notices or reports permitted or required under this
-------
Agreement shall be in writing and shall be delivered by personal delivery,
telegram, or facsimile transmission or by registered mail, return receipt
requested. Notices shall be sent to the signatories of this Agreement at the
address set forth at the beginning of this Agreement or such other address as
either party may specify in writing. Notices shall be effective upon receipt.
In the case of AOL, any and all notices to be provided to AOL under this
Agreement must also be provided to the attention of its General Counsel.
14.6 No Agency. Nothing contained herein shall be construed as creating
---------
any agency, partnership, or other form of joint enterprise between the parties.
14.7 Full Power. Each party warrants that it has full power to enter into
----------
and perform this Agreement, and the person signing this Agreement on such
party's behalf has been duly authorized and empowered to enter into this
Agreement. Each party further acknowledges that it has read this Agreement,
understands it, and agrees to be bound by it.
14.8 IMPSAT represents and warrants that it has all the necessary permits
and authorizations to fulfil its obligations under this agreement.
14.9 Survival. Paragraphs 2.4 ("Payment Terms"), 8.2 ("Termination"), 9
--------
("Confidentiality"), 10 ("Certain Conditions"), 11 ("Indemnity"), 12
------------------
("Limitation of Liability"), 13 ("Ownership") and 14 ("General") of this
Agreement shall survive cancellation, termination or expiration of this
Agreement.
14.10 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties with respect to the subject matter hereof. This Agreement
may only be changed by mutual agreement of authorized representatives of the
parties in writing.
14
<PAGE>
14.11 Waiver. No failure on the part of either party to exercise, and no
------
delay in exercising any right or remedy hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by law.
14.12 Language and Counterparts. This Agreement may be executed in Spanish
-------------------------
and English, provided however that the Spanish version shall always prevail in
the event of any disputes concerning this Agreement. This Agreement may be
executed in several counterparts and exchanged via facsimile, each of which
shall be deemed an original, but all of which, when taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the Effective Date.
AOL ARGENTINA , IMPSAT S.A..
By: /s/ GUSTAVO GARRIDO By: /s/ Marcelo Girotti
--------------------------- ----------------------------
Name: GUSTAVO GARRIDO Name: Marcelo Girotti
Title: GERENTE Title: CEO IMPSAT ARGENTINA
Date: December 23, 1999 Date: 12/31/99
------------------------- ---------------------------
Name: /s/ Horacio Sajoux
--------------------------
Title: Executive Director
Date: December 23, 1999
15
<PAGE>
EXHIBIT A
Service Performance Levels
I. Reports
-------
IMPSAT will provide to AOL the following reports:
1. Usage Reports
A. Daily reports on hourly usage by modem by city
B. Daily reports on percentage of ineffective calls
2. Daily reports on circuit utilization, including but not limited to E1s, DS-
3s, OC-3s. These reports will include (i) 5 minute in and out bit rates; (ii)
packet loss (average, median and 95/th/ percentile for each major router pair);
(iii) round trip delays between major router pairs.
3. Read only access by AOL to SNMP variables on AOL demarcation routers
II. Service Level Requirements
--------------------------
IMPSAT shall meet or exceed the AOLnet network average in the following areas:
1. Connection Success (getting connected to the AOL service)
A. [*]
B. [*]
C. Training
D. Ineffectives
E. Customer Reported Problems
2. Connection Quality (staying connected)
A. Percentage of [*]
B. [*]
C. [*]
3. Problem Resolution
A. Modem Availability
B. Trouble Tickets Resolution Time
C. Service Down Time
<PAGE>
4. Ability to Fill Orders
A. Modem Plan
B. Backbone Capacity Plan
2
<PAGE>
EXHIBIT B
---------
Operational Requirements
------------------------
Network Engineering
IMPSAT agrees to provide network engineering to address operational
and long-term planning issues.
II. Operations
IMPSAT will continue to provision, staff, and operate a Network
Operations Center ("NOC") with dedicated support for AOL. The scope of this task
will include the following IMPSAT support and value added services for the
network:
A. Operation of the NOC and co-located systems with trained and
qualified personnel on a continuous 24 hours per day, 7 days per
week basis.
B. Operation of all NOC equipment, monitoring, and fault isolation
functions.
C. Coordinating the dispatch maintenance representatives for
corrective maintenance activities and recording information in a
Problem Report ("PR") as follows:
1. In the Buenos Aires metropolitan area, the IMPSAT field
service will respond within [*] hour for all repairs
that cannot be completed through remote means
2. IMPSAT will provide field service within [*] hours for
all repairs that cannot be completed through remote
means for all other locations.
3. Initiation of a corrective maintenance request, plus
recording the time that the call is received by the
IMPSAT maintenance representative.
4. Upon arrival of the maintenance representative at the
site, the NOC confirms the reported problems and
records the site arrival time with the representative.
5. Upon notification to the NOC by the on-site maintenance
representative of any of the following conditions, AOL
representatives are conferred with for advice or
assistance: work stoppage, delay, denial of access to
the equipment.
6. Upon restoration of service by the maintenance
representative, the NOC confirms operation of the
equipment and records the time when service was
restored and the reason for the outage in concert with
the maintenance representative.
D. Initiation of PRs, maintenance of a log of all PRs, coordination
of PRs with support personnel and tracking of problems until
resolution using a commercial trouble reporting system.
<PAGE>
E. Utilizing the SNMP capabilities and IMPSAT diagnostic software
resident in the NOC for:
1. Daily testing of modems and local access numbers
2. Measurements of the usage of each modem several times
during each 24 hour period
3. Monitoring and recording the backbone and trunk
availability and utilization
4. Accounting for the disposition of each call placed to
AOLnet (i.e. how many calls were placed, how many calls
were sent successfully to AOL, how many calls were lost
in the network due to routing problems, how many calls
were sent to AOL, but AOL did not accept them, etc.)
F. Providing on-site analyst support Monday through Friday
(excluding IMPSAT holidays) during normal working hours. A
dedicated access number shall be maintained for AOL's exclusive
use, which shall always be operational. Analyst support is
defined as including the following:
1. Supporting short-term and long-term AOLnet problem
identification, analysis, and resolution.
2. Ensuring that proper steps are taken to resolve the
problem
3. Identifying and tracking all software, baseline and
patches, deployed in the AOLnet and NOC platforms
4. Supporting the deployment of new software and hardware
to the AOLnet and NOC equipment as coordinated with AOL
5. Providing support to network provisioning requirements
6. Maintaining a technical library for the NOC
G. Performing on-call analyst support to AOLnet on a continuous 24
hour per day, 7 days per week basis. On-call analyst personnel
respond to urgent requests from the NOC in conjunction with the
on-site IMPSAT personnel. Procedures for the conduct of network
testing are in accordance with those developed in conjunction
with AOL representatives.
H. Providing operational support to AOLnet in the area of network
testing in association with provisioning actions. Such testing
shall be conducted from the NOC in conjunction with the on-site
IMPSAT installation team personnel.
I. Maintaining and providing updates and changes to NOC maps
J. Maintaining an authorized outage listing for NOC controller use
2
<PAGE>
K. Acting as AOL's agent in network security matters on a day-to-day
basis in accordance with commercially reasonable practices and
making recommendations for improvements
L. Using commercial teleconferencing facilities in the resolution of
network problems, escalation of problems, and planning activities
M. Providing electronic mail service support for the NOC via the
e-mail/DNS capability resident on the Sun workstations
N. Providing a facsimile service resident in the NOC equipment
O. Delivering the following reports to the AOL representatives
designated:
1. Daily modem and site usage
2. Daily call disposition reports
3. Weekly summary of the amount of time required to close
PRs
4. Daily ineffective call report
5. Daily backbone utilization statistics
6. Daily network latency and congestion statistics
7. Trace data as required to debug client and AOLnet
problems
AOL may request additional reports that assist in improving
AOLnet quality. IMPSAT will provide these additional reports, or
the raw data, subject to technical reasonableness.
III. Design and Topology of AOLnet
IMPSAT intends to continue to improve the network design to: reduce
risk, improve robustness, and enhance the price/performance of the transmission
system.
A. Traffic Assumptions
B. Location of Points of Presence
C. Network Architecture
D. Network Topology
AOL shall be allowed to establish a route of last resort on the IMPSAT
network. IMPSAT will manage such traffic and provision their network to
maintain a maximum circuit load as defined in Paragraph 2.1(d).
3
<PAGE>
IV. Network Support Organization
IMPSAT has structured the program so that we can both rapidly build
out a network and deliver quality service, and it can provide to AOL value added
services.
A. Program Management: The program management group is responsible
for the management of the project as a whole. The program
management team is led by a program executive who has direct and
immediate access to the senior management of IMPSAT
Communications and a program manager who reports to the program
executive. The program management team is the primary point of
contact between IMPSAT and AOL and coordinates the activity of
all functional groups within IMPSAT and is responsible for
project and financial management of the program.
B. Engineering: Network engineering handles the technical aspects of
the project, resolution of problems escalated by the NOC,
planning for future network expansion, and improving performance
and process. Engineering interacts directly with AOL and the NOC.
C. Deployment: The deployment team consists of field engineers and
technicians and others who have experience dealing directly with
local carriers, preparing sites, and installing equipment. Part
of the team will be based at IMPSAT to coordinate activities and
provide support for installers.
D. Operations: A NOC handles the operation and maintenance of the
network. The NOC is connected to AOL's central facilities,
including a direct telephone link to the AOL operations center.
The NOC's monitoring capability is set up to detect and correct
most network problems before they are visible to AOL or its
customers.
E. The NOC directs the maintenance activity based on input from the
monitoring systems and AOL. IMPSAT handles the large majority of
repair tasks over the telephone with technicians at the PoPs by
storing hardware at the PoPs, establishing working agreements
with the PoPs and other service providers and by providing
written procedures. When it is necessary to send technicians to
deal with problems, IMPSAT uses its existing infrastructure of
satellite offices and field engineers.
F. IMPSAT shall support AOL in the acquisition of DNS address blocks
as requested by AOL. IMPSAT shall not require return of address
blocks currently in use by AOL and shall provide additional
blocks from the allocated IMPSAT space as requested by AOL. The
provision at additional address blocks must continue for at least
the next two years, and IMPSAT must give AOL a minimum of one-
year notice should IMPSAT choose to terminate this service.
G. IMPSAT agrees not to restrict traffic to and from AOL unless
requested to do so by AOL or required to do so by court order or
applicable law.
H. IMPSAT shall manage the backbone and interconnection points with
other Internet providers and customers to minimize loss and delay
of AOL traffic. Such management shall include creation of new
interconnection points as required.
4
<PAGE>
I. Each party shall use reasonable efforts to aggregate routing
information sent to the other and to control the addition and
withdrawal of routing information.
J. IMPSAT shall announce AOL routing information at IMPSAT
interchange points as agreed by AOL.
5
<PAGE>
EXHIBIT C
Deployment Plan
AOL-Designated Cities
---------------------
[*]
[*]
[*]
[*]
6
