<PAGE>
As filed with the Securities and Exchange Commission on March 24, 2000
Registration No. 333-95051
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICA ONLINE LATIN AMERICA, INC.
(Exact name of registrant as specified in its charter)
Delaware 7370 65-0963212
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
6600 N. Andrews Avenue
Suite 500
Fort Lauderdale, FL 33309
(954) 229-2100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------
Charles M. Herington
Chief Executive Officer
America Online Latin America, Inc.
6600 N. Andrews Avenue
Suite 500
Fort Lauderdale, FL 33309
(954) 229-2100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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With copies to:
Michael L. Fantozzi, Esq. Marc S. Rosenberg, Esq.
Peter S. Lawrence, Esq. Cravath, Swaine & Moore
Mintz, Levin, Cohn, Ferris, Worldwide Plaza
Glovsky and Popeo, P.C. 825 Eighth Avenue
One Financial Center New York, NY 10019
Boston, MA 02111 (212) 474-1000
(617) 542-6000
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Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered or
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of all estimated expenses, all
of which we will pay, in connection with the issuance and distribution of the
securities being registered:
<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 182,160
Nasdaq National Market Listing Fee............................. 95,000
NASD Filing Fee................................................ 30,500
Printing and Engraving Fees.................................... 300,000
Legal Fees and Expenses........................................ 1,450,000
Accounting Fees and Expenses................................... 700,000
Blue Sky Fees and Expenses..................................... 5,000
Transfer Agent and Registrar Fees.............................. 2,000
Director and Officer Insurance................................. 200,000
Miscellaneous.................................................. 50,340
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Total........................................................ $3,015,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers.
Our restated certificate of incorporation provides that we shall indemnify
to the fullest extent authorized by the Delaware General Corporation Law, each
person who is involved in any litigation or other proceeding because such
person is or was a director or officer of AOL-LA or is or was serving as an
officer or director of another entity at our request, against all expense, loss
or liability reasonably incurred or suffered in connection with such service.
Our restated certificate of incorporation provides that the right to
indemnification includes the right to be paid expenses incurred in defending
any proceeding in advance of its final disposition; provided, however, that
such advance payment will only be made upon delivery to us of an undertaking,
by or on behalf of the director or officer, to repay all amounts advanced if it
is ultimately determined that such director is not entitled to indemnification.
If we do not pay a proper claim for indemnification in full within 60 days
after we receive a written claim for such indemnification, our restated by-laws
authorize the claimant to bring an action against us and prescribe what
constitutes a defense to such action.
Section 145 of the Delaware General Corporation Law permits a corporation to
indemnify any director or officer of the corporation against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any action, suit or
proceeding brought because such person is or was a director or officer of the
corporation, if such person acted in good faith and in a manner that he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he or
she had no reason to believe his or her conduct was unlawful. In a derivative
action, (i.e., one brought by or on behalf of the corporation), indemnification
may be provided only for expenses actually and reasonably incurred by any
director or officer in connection with the defense or settlement of such an
action or suit if such person acted in good faith and in a manner that he or
she reasonably believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification shall be provided if such person
shall have been adjudged to be liable to the corporation, unless and only to
the extent that the court in which the action or suit was brought shall
determine that the defendant is fairly and reasonably entitled to indemnify for
such expenses despite such adjudication of liability.
Our restated certificate of incorporation contains a provision, permitted by
the Delaware General Corporation Law, that generally eliminates the liability
of a director to us or our stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liabilities arising:
. from any breach of the director's duty of loyalty to us or our
stockholders;
II-1
<PAGE>
. from acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law relating to
unlawful payment of dividends or unlawful stock purchase or redemption of
stock; and
. from any transaction from which the director derived an improper personal
benefit.
We intend to enter into insurance policies insuring our directors and
officers against certain liabilities that they may incur in their capacity as
directors and officers.
Additionally, reference is made to the Underwriting Agreement to be filed as
Exhibit 1.1 hereto, which provides for indemnification by the underwriters of
AOL-LA, our directors and officers who sign the Registration Statement and
persons who control AOL-LA, under certain circumstances.
Indemnification of AOL and the Cisneros Group
Each of our restated certificate of incorporation and the stockholders'
agreement between AOL, the Cisneros Group and us provides that we will
indemnify AOL and the Cisneros Group to the fullest extent authorized by the
Delaware General Corporation Law if we or any of our stockholders or any other
person bring an action against AOL or the Cisneros Group seeking damages or
other relief based on a breach or alleged breach of a fiduciary or other duty
by AOL or the Cisneros Group based on AOL or the Cisneros Group engaging or
investing in any business activity, including those that might be similar to
and in competition with us, or based on the pursuit by AOL or the Cisneros
group of an investment or a business opportunity or prospective economic
advantage in which we could have an interest or expectancy. Each of our
restated certificate of incorporation and the stockholders' agreement further
provides that the right to indemnification includes the right to be paid
expenses incurred in defending any proceeding in advance of its final
disposition; provided, however, that such advance payment will only be made
upon delivery to us of an undertaking, by or on behalf of AOL or the Cisneros
Group, to repay all amounts advanced if it is ultimately determined that AOL or
Cisneros Group is not entitled to indemnification. If we do not pay a proper
claim for indemnification in full within 60 days after we receive a written
claim for such indemnification, our restated certificate of incorporation and
the stockholders' agreement authorize AOL or the Cisneros Group to bring an
action against us and prescribe what constitutes a defense to such action.
Item 15. Recent Sales of Unregistered Securities.
In the three years preceding the filing of this Registration Statement, we
have sold the following securities that were not registered under the
Securities Act as summarized below.
(a) Issuances of Capital Stock
On , 2000, we entered into a contribution agreement with AOL, Riverview
Media Corp., a wholly owned subsidiary of the Cisneros Group, and AOL Latin
America, S.L. under which we will issue shares of our series B preferred
stock to AOL and shares of our series C preferred stock to Riverview Media
Corp. and two current executives and one former executive of the Cisneros Group
in exchange for their contribution to us of all their interests in AOL Latin
America S.L. AOL contributed a royalty free license in exchange for shares of
our series B preferred stock. We recorded the value of the license at AOL's
historical cost basis, which was zero. The Cisneros Group has agreed to
contribute an aggregate amount of $100 million for our series C preferred
stock. To date, the Company has received $74.4 million, which was recorded as
received.
(b) Issuance of Warrant
On , 2000, we will issue a warrant to AOL to purchase any combination
of shares of series B preferred stock or class A or class B common stock
at a per share exercise price equal to the initial public offering price.
II-2
<PAGE>
(c) Grant of Stock Options
Pursuant to our 2000 Stock Option Plan, immediately prior to the
effectiveness of our initial public offering, we will issue options to purchase
an aggregate of shares of Class A common stock at the initial public
offering price.
The sale and issuance of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated
under Section 3(b) of the Securities Act, as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under Rule 701. The
recipient of securities in each such transaction represented their intention to
acquire the securities for investment only and not with the view to or for the
sale in connection with any distribution thereof and appropriate legends will
be affixed to the share certificates and instruments issued in such
transactions. All recipients had adequate access, through their relationships
with AOL-LA, to information about us.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<C> <S> <C>
*1.1 Form of Underwriting Agreement.
@3.1 Restated Certificate of Incorporation of America Online Latin
America, Inc. to be effective upon completion of the initial
public offering.
@3.2 Restated By-laws of America Online Latin America, Inc. to be
effective upon completion of the initial public offering.
*4.1 Form of class A Common Stock Certificate.
*5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
on the legality of securities being registered.
@10.1 Form of America Online Latin America, Inc. 2000 Stock Option
Plan.
@+10.2 Form of Stockholders' Agreement by and among America Online
Latin America, Inc., America Online, Inc. and Riverview Media
Corp., dated as of , 2000.
@10.3 Contribution Agreement by and among America Online Latin
America, Inc., AOL Latin America, S.L., America Online, Inc. and
Riverview Media Corp., dated as of , 2000.
@10.4 Registration Rights Agreement by and among America Online Latin
America, Inc.,
America Online, Inc. and Riverview Media Corp., dated as of ,
2000.
@+10.5 Form of AOL License Agreement by and between America Online,
Inc. and America Online Latin America, Inc., dated as of ,
2000.
@+10.6 Form of AOL Online Services Agreement by and between America
Online, Inc. and America Online Latin America, Inc., dated as of
, 2000.
@10.7 Form of Warrant to be issued by America Online Latin America,
Inc. to America Online, Inc., dated as of , 2000.
*10.8 Letter of employment for Charles M. Herington, dated February
26, 1999.
*10.9 Amended and Restated ODC Guarantee Agreement, dated as of
December 15, 1998.
@+10.10 Agreement by and between Embratel and AOL Brasil Ltda., dated as
of October 18, 1999.
+10.11 Agreement by and between Netstream Telecom Ltda. and AOL Brasil
Ltda., dated as of September 24, 1999.
@21.1 Subsidiaries of America Online Latin America, Inc.
@23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(see Exhibit 5.1)
@24.1 Powers of Attorney.
</TABLE>
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* To be filed by amendment.
+ Confidential treatment has been requested for portions of this exhibit. These
portions have been omitted and filed separately with the Commission.
@ Previously filed.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Amendment No. 4 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Sao Paulo, Brazil, on March 24, 2000.
America Online Latin America, Inc.
/s/ Charles M. Herington
By: _________________________________
Charles M. Herington
Chief Executive Officer
As required by the Securities Act of 1933, this Amendment No. 4 to the
Registration Statement has been signed by the following persons in the
capacities held on the dates indicated.
<TABLE>
<S> <C> <C>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ Charles M. Herington Chief Executive Officer March 24, 2000
______________________________________ (principal executive
Charles M. Herington officer)
* Chief Financial Officer March 24, 2000
______________________________________ (principal financial and
Javier Aguirre accounting officer)
* Director March 24, 2000
______________________________________
Steven I. Bandel
* Director March 24, 2000
______________________________________
Gustavo A. Cisneros
* Director March 24, 2000
______________________________________
Ricardo J. Cisneros
* Director March 24, 2000
______________________________________
Miles R. Gilburne
* Director March 24, 2000
______________________________________
J. Michael Kelly
* Director March 24, 2000
______________________________________
Michael Lynton
* Director March 24, 2000
______________________________________
Robert S. O'Hara, Jr.
</TABLE>
II-4
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<TABLE>
<S> <C> <C>
<CAPTION>
Signature Title Date
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<S> <C> <C>
* Director March 24, 2000
______________________________________
Cristina Pieretti
* Director March 24, 2000
______________________________________
Robert W. Pittman
* Director March 24, 2000
______________________________________
Gerald Sokol, Jr.
</TABLE>
* By executing his name hereto, Charles M. Herington is signing this document
on behalf of the persons indicated above by the powers of attorney duly
executed by these persons and filed with the Securities and Exchange
Commission.
/s/ Charles M. Herington
By: _________________________________
Charles M. Herington
(Attorney-in-fact)
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<C> <S> <C>
*1.1 Form of Underwriting Agreement.
@3.1 Restated Certificate of Incorporation of America Online Latin
America, Inc. to be effective upon completion of the initial
public offering.
@3.2 Restated By-laws of America Online Latin America, Inc. to be
effective upon completion of the initial public offering.
*4.1 Form of class A Common Stock Certificate.
*5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
on the legality of securities being registered.
@10.1 Form of America Online Latin America, Inc. 2000 Stock Option
Plan.
@+10.2 Form of Stockholders' Agreement by and among America Online
Latin America, Inc., America Online, Inc. and Riverview Media
Corp., dated as of , 2000.
@10.3 Contribution Agreement by and among America Online Latin
America, Inc., AOL Latin America, S.L., America Online, Inc. and
Riverview Media Corp., dated as of , 2000.
@10.4 Registration Rights Agreement by and among America Online Latin
America, Inc.,
America Online, Inc. and Riverview Media Corp., dated as of ,
2000.
@+10.5 Form of AOL License Agreement by and between America Online,
Inc. and America Online Latin America, Inc., dated as of ,
2000.
@+10.6 Form of AOL Online Services Agreement by and between America
Online, Inc. and America Online Latin America, Inc., dated as of
, 2000.
@10.7 Form of Warrant to be issued by America Online Latin America,
Inc. to America Online, Inc., dated as of , 2000.
*10.8 Letter of employment for Charles M. Herington, dated February
26, 1999.
*10.9 Amended and restated ODC Guarantee Agreement, dated as of
December 15, 1998.
@+10.10 Agreement by and between Embratel and AOL Brasil Ltda., dated as
of October 18, 1999.
+10.11 Agreement by and between Netstream Telecom Ltda. and AOL Brasil
Ltda., dated as of September 24, 1999.
@21.1 Subsidiaries of America Online Latin America, Inc.
@23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(see Exhibit 5.1)
@24.1 Powers of Attorney.
</TABLE>
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* To be filed by amendment.
+ Confidential treatment has been requested for portions of this exhibit.
These portions have been omitted and filed separately with the Commission.
@ Previously filed.
<PAGE>
EXHIBIT 10.11
[*]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS WITH ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF
1933, AS AMENDED.
FIRST AMENDMENT TO THE MASTER AGREEMENT FOR DATA
COMMUNICATIONS AND VALUE ADDED SERVICES
(BRAZIL)
By this instrument, the parties, on the one side:
AOL Brasil Ltda., a company with offices in the city of Sao Paulo, State of Sao
Paulo, at Avenida Luiz Carlos Berrini, 716, conj 12, enrolled with the CNPJ
under no. 03.032.579/0001-62 ("AOL") herein represented by its President, Mr.
Francisco Loureiro, and
on the other side;
Netstream Telecom Ltda., a company with offices in the city of Sao Paulo, State
of Sao Paulo, at Av. Pres. Juscelino Kubitschek, 1830, Torre 2 - 9o andar,
enrolled with the CNPJ under no. 02.667.694/0001-40 ("NETSTREAM") herein
represented by its legal representatives,
WHEREAS NETSTREAM and AOL executed on May 3, 1999 the Master Agreement For Data
Communications And Value Added Services in Brazil, (hereinafter referred to as
"Original Agreement");
WHEREAS NETSTREAM and AOL have subsequently negotiated and agreed upon on some
of the conditions of the Original Agreement
WHEREAS, AOL is an Internet and online service provider which desires to build a
proprietary AOLnet data communications network in Brazil;
WHEREAS, AOLnet is defined to be the subset of AOL's member 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, NETSTREAM is a provider of data communications services and value added
services, including Internet access services;
WHEREAS, NETSTREAM has agreed to build out a portion of AOLnet in Brazil and
provide communications services and value added services to AOL;
NOW, THEREFORE, in consideration of the mutual promises set forth herein, the
parties agree to amend and consolidate the Original Agreement which shall be
valid as follows:
1. Scope of Services. NETSTREAM shall install, activate, maintain, and operate
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Modems for AOL's nationwide dial-up network in AOL-designated cities in Brazil,
as set forth in Exhibit C ("Deployment Plan"). The parties further agree to
negotiate in good faith regarding future
1
<PAGE>
expansion of AOL-designated cities within Brazil. 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 Section 2.1("Network
Charges") from a specified location in Brazil 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 NETSTREAM a minimum of [*] Modems
-----------
by the first anniversary of the Effective Date, a minimum of [*] Modems by the
second anniversary of the Effective Date, and a minimum of [*] Modems by the
third anniversary of the Effective Date for the buildout of AOLnet in Brazil;
provided, however, that NETSTREAM meets all required performance criteria as
determined by AOL in its sole discretion. 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
month NETSTREAM fails to meet any of its installation commitments, AOL's minimum
commitment for all following months shall be [*] of the percentage by which
NETSTREAM 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.
1.2 NETSTREAM Obligations. NETSTREAM shall deploy any capacity requests
---------------------
accepted by NETSTREAM within [*] days of acceptance. NETSTREAM also agrees to
make available to AOL copies of all co-location agreements with NETSTREAM's co-
location providers. The parties agree that NETSTREAM [*]. NETSTREAM also agrees
to [*], at AOL's sole discretion and cost, within [*] days after AOL's request
for such [*]. If NETSTREAM refuses to accept a capacity request or does not
deploy a capacity request within [*] days after accepting such request, AOL
shall be free to request installation of such capacity from another provider.
Further, any such capacity request that NETSTREAM refuses or does not timely
fulfill shall nevertheless be counted towards AOL's minimum commitment as
specified in Section 1.1 ("Commitments").
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 NETSTREAM, including any service termination or service
activation costs, will be reimbursed by AOL. AOL shall retain control of how the
users connect to the network and how the network connects to AOL. NETSTREAM
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.
NETSTREAM shall determine the location of actual Modem installation, and
NETSTREAM shall also identify the number and location of spare Modems necessary
to ensure compliance with the performance specifications described in Exhibit A.
1.4 Future Orders. AOL, in its sole discretion, may consider placing future
-------------
orders with NETSTREAM for [*] Modems by the first anniversary of the Effective
Date, [*] Modems by the second anniversary of the Effective Date, and [*] Modems
by the third anniversary of the
2
<PAGE>
Effective Date; provided, however, that nothing in this paragraph shall
constitute a commitment by AOL to place such orders.
2. Fees.
----
2.1 Network Charges. In exchange for the network services and value added
services to be provided hereunder, NETSTREAM will be paid the following for
Modems accepted by AOL, without taxes [*]:
(a) [*] for the Modems comprising the [*] (the "Base Price").
(b) [*] for the Modems comprising the [*] (the "Base Price"); provided,
however, that [*].
(c) The above pricing will only apply in the event that [*] from Netstream.
Should AOL choose to [*], NETSTREAM reserves the right to [*].
(d) The Base Price paid to NETSTREAM shall include all costs relating to
the management of the dial-up network, including but not limited to: (a) the
network circuit requirement (DS-3), a LEC circuit requirement of 1 PRI/T1 per
[*] Modems, and a backhaul requirement of 1 T1 per [*] 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) site maintenance;
(g) recurring co-location charges; (h) co- location installation fees; (i) other
one-time installation fees; (j) Modem management fees; (k) equipment lease
expenses at NETSTREAM sites; and (l) 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)
---------- -------------------------------
[*] bps [*]
DS-3s shall be defined as a network circuit with a 45-megabit capacity with
utilization no higher than [*].
(e) 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.
(f) Subject to Sections 10 and 11, 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 Section 2.4, provided
however, that in relation the international portion of the services the ICMS tax
shall not be applied.
(g) 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.
3
<PAGE>
2.2 Volume Discounts. In exchange for AOL committing to the capacity set
forth in Section 1.1 ("Commitments"), NETSTREAM 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
[*] and [*] 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
[*] and [*] 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 [*] in this Agreement and
-------------
[*], Netstream agress to [*]. AOL and NETSTREAM further agree, at 12-month
intervals or when mutually agreed, to in good faith evaluate and adjust prices
quoted in Section 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). NETSTREAM 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, NETSTREAM will invoice AOL on a monthly basis the charges
specified in this Section 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 NETSTREAM under this Agreement shall be invoiced in
arrears to AOL. All undisputed invoices shall be payable within [*] days of
receipt of the invoice. AOL or its designee shall pay vendor invoices forwarded
by NETSTREAM for Modems. NETSTREAM 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 NETSTREAM any undisputed amount [*]
due in accordance with the payment schedule herein proposed, NETSTREAM shall
provide AOL with notice of such non-payment and if, within 10 days after receipt
of such notice AOL has not paid, then AOL shall pay NETSTREAM, as damages for
financial distress, a fine of [*], plus interest of [*] per month, in addition
to the amount originally due, calculated from the date such amount should have
been paid until its actual receipt by NETSTREAM. Such value shall be [*].
2.5 [*]
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
4
<PAGE>
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 NETSTREAM 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. NETSTREAM 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.
3.2 Notice of Failure. In the event that a newly activated Modem Box meets
-----------------
or exceeds any of the failure thresholds specified in Section 3.1 ("Acceptance
Criteria and Data") within the six (6) day test period, AOL may, at its option,
send NETSTREAM 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 NETSTREAM accountable for problems due to AOL's client software.
Provided that all relevant daily performance data has been provided to AOL as
required by Section 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 NETSTREAM.
Following such troubleshooting and corrective action by NETSTREAM, NETSTREAM 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 NETSTREAM 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. NETSTREAM shall provide services
--------------------------------------
that meet the specifications as set forth in this Section 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;
(b) the backbone is sized for aggregate dial and Internet traffic. The DS-3
lines at AOL shall be sized at [*] of peak utilization as measured over
recurring five-minute windows.
4.2 Access and Connection Protocol. NETSTREAM shall provide support for the
------------------------------
following AOLnet access methods, access technology, connection protocols and hub
architecture:
(a) the proprietary AOL P3 protocol
5
<PAGE>
(b) PPP
(c) TCP/IP
(d) UDP
(e) ISDN synchronous
(f) ISDN asynchronous (v.120)
(g) 128K Multi-link ISDN
(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 NETSTREAM
and AOL on how IP routing is implemented.
4.3 IP Addresses. NETSTREAM shall [*] during the term of this Agreement.
------------
Each [*] shall be provided [*] such that [*] and NETSTREAM 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. NETSTREAM 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. NETSTREAM shall, in its network design and topology,
--------------
comply with IETF approved and adopted standards applicable to the access methods
set forth in Section 4.2.
4.5 Domain Name Services. NETSTREAM 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
6
<PAGE>
(c) maintaining domain name service servers
(d) support AOL in the acquisition of DNS address blocks as requested by
AOL
(e) NETSTREAM shall not require return of address blocks currently in use
by AOL and shall provide additional blocks from the allocated NETSTREAM space in
accordance with the rules of APNIC.
4.6 Changes in [*]. AOL may [*] described in this Section 4 to [*] and
--------------
Netstream will [*]. In the event that such [*] 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 [*].
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 NETSTREAM in the event that the network fails to meet
or exceed the Service Performance Levels in two consecutive months or on an
average over a three-month period. NETSTREAM shall have three (3) months
following the receipt of such notice to cure such failure. If NETSTREAM 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
Section 8.2 ("Termination") or (ii) suspend the minimum network order
commitments of Section 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
NETSTREAM 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 NETSTREAM 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.
7
<PAGE>
(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 NETSTREAM determines that another
------------------
carrier's offerings represent a superior value, or other factors which may make
another carrier's offerings preferable, NETSTREAM may utilize a carrier other
than its current carrier for the network or any portion thereof. NETSTREAM
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. NETSTREAM shall [*].
(b) International Circuits. During the term of this Agreement, AOL may
----------------------
decide to purchase an International circuit for connecting the portion of the
AOLnet network located in Brazil to the portion of the AOLnet network located in
the United States. Alternatively, or in addition, AOL or AOL US (i.e., America
Online, Inc. and/or its affiliates) may decide to offer their own backbone
services for bringing network traffic from Brazil and other parts of Latin
America to AOL data centers located in the United States. If any of the
above-described circumstances (or circumstances comparable thereto) occur, AOL
agrees to explore opportunities with NETSTREAM to either re-evaluate the current
International circuit agreement or to assist in the procurement of a new
International circuit. AOL shall have the right, which right may be exercised in
its sole discretion at any time without penalty, to terminate any provisions of
this Agreement (including the applicable provisions for the payment of fees)
that pertain to the provision of backbone services between Brazil and AOL data
centers in the United States.
5.4 NETSTREAM Representation. NETSTREAM represents and warrants that any
------------------------
and all Modem and Modem Box, as defined above have been certified by the
relevant authorities in Brazil and in accordance with the applicable laws and
regulations.
6. Project Management. NETSTREAM shall set up an AOL project team, staffed
------------------
with a NETSTREAM 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
NETSTREAM project manager shall be AOL's primary point of contact and [*], for
guidance and advice.
7. Audits. Each party reserves the right to audit the other party's
------
relevant books and records to verify the audited party's compliance with the
terms of this Agreement. This audit and any other audit permitted under this
Agreement by one party of the books and records of the other party shall be
performed by an independent certified public accounting firm as follows: (i)
following at least ten (10) business days' prior written notice to the audited
party; (ii) at the auditing party's sole cost and expense; (iii) in a reasonable
scope and duration; (iv) in a manner so as not to interfere with the audited
party's business operations; and (v) in compliance with the audited party's
security requirements. Unless the parties mutually agree otherwise, the number
of audits that each party may conduct shall not exceed one per year. Nothing
contained in this paragraph is intended to allow either party access to or
review of confidential
8
<PAGE>
information, the disclosure of which would violate the terms of an agreement
with any third party. Materials of the audited party reviewed by such
independent certified public accounting firm in the course of the audit shall be
deemed confidential and their use by the independent certified public accounting
firm shall be limited to the conduct of the audit and any resulting report shall
not contain any confidential information of the audited party or any third
party. Such accounting firm shall, prior to conducting such audit, execute a
nondisclosure agreement acceptable to the audited party containing the
substantive provisions of this paragraph. Any report or other information
produced or reviewed by the auditor shall not be distributed within the auditing
party except to such persons with a need to know. The foregoing report and/or
information shall be made available to the audited party on request. Each party
shall maintain complete and accurate records and shall retain such records for a
period not less than the term of this Agreement or such other longer period as
may be required by applicable law, rule, or regulation. The disclosure of any
documents, records or any other information shall be limited to portion of the
documents, records or information that relate to this Agreement.
8. Term and Termination.
--------------------
8.1 Term. The term of this relationship shall be [*] years from the
----
Effective Date. The Agreement may be renewed at the option of AOL for additional
one-year periods upon [*] notice to NETSTREAM. At the end of the Agreement, the
parties will implement a [*] transition period to allow for the orderly
migration of NETSTREAM'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 [*] days written
notice. The parties hereby acknowledge that breach of the agreement to evaluate
and adjust pricing pursuant to Section 2.3 shall be considered material. If any
undisputed amounts due and owing by AOL remain unpaid [*] days after date of
invoice, then NETSTREAM will provide notice thereof to AOL and if AOL does not
pay with [*] business days after receipt of such notice, then NETSTREAM 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. In the event of any termination, NETSTREAM 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. 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:
9
<PAGE>
(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. The parties also agree to the following certain
------------------
conditions:
10.1 In good faith, and in accordance with the applicable laws and in
mutual agreement, the parties will define the [*].
1.1 10.2 NETSTREAM will [*]. The definition of such [*] shall be
communicated by AOL to NETSTREAM until September 30, 1999.
10.3. NETSTREAM will [*] which it negotiates in its [*]. This [*]
would only apply to [*] and shall be valid for a [*] as of the Effective Date.
NESTSTREAM shall keep complete and accurate records of all [*] and any related
documentation (including contracts) connected to the execution of this Agreement
("Records"). All referred to Records shall be kept for a minimum period of
three (3) years after termination of this Agreement. For the exclusive purpose
of [*]. Such [*] may be performed after a 20-day prior written notice and shall
not be performed more frequently than every six (6) months.
10.4 The terms of this document in particular this Section shall
prevail upon any previous understandings of the parties.
10.5 AOL expressly declares that it has [*]; Section 10.1 (a) of
the MASTER AGREEMENT FOR DATA COMMUNICATIONS AND VALUE ADDED SERVICES (BRAZIL),
as well as [*], being the relationship of the parties exclusively regulated by
the terms of this Agreement.
11. Indemnity. NETSTREAM 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 [*] arising from [*]; (ii) any third
party claims arising out of [*]; and (iii) any third party claims relating to
[*]; (iv) any [*] resulting from [*] 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
10
<PAGE>
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. NETSTREAM 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) [*], and NETSTREAM agrees to [*]
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 NETSTREAM shall not transfer such telephone
numbers to any third party without written permission from AOL; and (iv)
NETSTREAM 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 NETSTREAM, the parties agree that (i) AOL shall be
allowed to manage the operation of the AOL portion of the network utilizing AOL
personnel and staff and NETSTREAM equipment and software at NETSTREAM locations,
and NETSTREAM shall permit such AOL personnel and staff to have free and
unobstructed access to such NETSTREAM locations for the purpose of managing such
operations, all at no charge to AOL for six months 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)
NETSTREAM agrees to the ability of AOL to seek injunctive relief and specific
performance regarding the remedies set forth herein. NETSTREAM shall not
encumber or permit the 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 NETSTREAM 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 [*] by NETSTREAM incidental to [*]
shall be [*] and NETSTREAM [*] unless NETSTREAM: (a) [*] or (b) [*].
Notwithstanding the foregoing, in no event shall NETSTREAM [*]. NETSTREAM
further agrees to [*] as reasonably requested by AOL. NETSTREAM further agrees
that it [*], including but not limited to any [*].
14. General.
-------
14.1 Governing Law. This Agreement shall be governed and construed under
-------------
the laws of the Federative Republic of Brazil and the central courts of the city
of Sao Paulo, State of Sao Paulo, are hereby elected to settle any disputes
arising herefrom, 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. 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.
11
<PAGE>
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
causes beyond its reasonable control, 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. [*]
(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 Section prevent, hinder,
or delay performance of the Services necessary for the performance of AOL's
critical functions for more than [*] hours, then AOL may terminate this
Agreement as of a date specified by AOL in a notice of termination to NETSTREAM.
For the avoidance of doubt, at all times, AOL may procure such services from an
alternate source.
14.4 Assignment. 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,
except that AOL may assign this agreement to a parent, subsidiary, affiliate, or
joint venture partner without NETSTREAM approval. In the event of the
consummation of a reorganization, merger or consolidation or sale or other
disposition of substantially all of the assets of NETSTREAM or the acquisition
by any individual, entity or group of beneficial ownership of more than a
controlling interest of NETSTREAM, AOL shall have the right to terminate this
Agreement without penalty. EXCEPT FOR THE CONTROL ACQUISITION OF NETSTREAM BY
AT&T or any of its subsidiaries or affiliates, and in such event, regardless of
who is the controlling shareholder, NETSTREAM or its successor or assigns shall
honor the obligations hereunder.
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 AOL Latin America Management LLC, [Address to be
provided], to the attention of its General Counsel.
14.6 Injunctive Relief. It is understood and agreed that, notwithstanding
-----------------
any other provisions of this Agreement, breach of the provisions of this
Agreement by any party will cause the other party irreparable damage for which
recovery of money damages would be inadequate and that the innocent party may
therefore seek timely injunctive relief to protect its rights under this
Agreement in addition to any and all remedies at law.
12
<PAGE>
14.7 No Agency. Nothing contained herein shall be construed as creating any
---------
agency, partnership, or other form of joint enterprise between the parties.
14.8 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.
14.9 Survival. Sections 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.
14.11 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
-------------------------
Portuguese and English, provided however that the Portuguese 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 BRASIL Ltda. NETSTREAM TELECOM Ltda.
September 24, 1999 September 24, 1999
By: /s/ Francisco Loureiro By: /s/ Rance Hesketh
Name: Francisco Loureiro Name: Rance Hesketh
Title: President Title: Chief Commercial Officer
AOL Brasil Ltda. NetStream Telecom Ltda.
/s/ Claudio Baumann
Claudio Baumann
Date: _______________________ Date: _____________________________
Witnesses:
1._________________________ 2._________________________
Name: Name:
RG: RG:
13
<PAGE>
EXHIBIT A
Service Performance Levels
I. Reports
-------
NETSTREAM 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 T1s, DS-
3s, OC-3s. These reports will include (i) 5 minute in and out bit rates; (ii)
packet loss (average, median and 95th 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
--------------------------
NETSTREAM shall meet or exceed the AOLnet network average in the following
areas:
1. Connection Success (getting connected to the AOL service)
A. [*] Percentages (excluding busies)
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
------------------------
I. Network Engineering
NETSTREAM agrees to provide network engineering to address operational
and long-term planning issues.
II. Operations
NETSTREAM will continue to provision, staff, and operate a Network
Operations Center ("NOC") with dedicated support for AOL and a backup NOC at a
separate location at least 300 miles away. The scope of this task will include
the following NETSTREAM 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 Sao Paulo and Rio de Janeiro metropolitan areas, the
NETSTREAM field service will respond within [*] hour for all
repairs that cannot be completed through remote means
2. NETSTREAM 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
NETSTREAM 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.
<PAGE>
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.
E. Utilizing the SNMP capabilities and NETSTREAM 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
NETSTREAM 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
NETSTREAM 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 NETSTREAM
installation team personnel.
I. Maintaining and providing updates and changes to NOC maps
2
<PAGE>
J. Maintaining an authorized outage listing for NOC controller use
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. NETSTREAM will provide these additional reports,
or the raw data, subject to technical reasonableness.
III. Design and Topology of AOLnet
NETSTREAM 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
NETSTREAM network. NETSTREAM will manage such traffic and provision their
network to maintain a maximum circuit load as defined in Paragraph 2.1(d).
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IV. Network Support Organization
NETSTREAM 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 NETSTREAM Communications and a program
manager who reports to the program executive. The program management
team is the primary point of contact between NETSTREAM and AOL and
coordinates the activity of all functional groups within NETSTREAM 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 NETSTREAM 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. NETSTREAM 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,
NETSTREAM uses its existing infrastructure of satellite offices and
field engineers.
F. NETSTREAM shall support AOL in the acquisition of DNS address blocks
as requested by AOL. NETSTREAM shall not require return of address
blocks currently in use by AOL and shall provide additional blocks
from the allocated NETSTREAM space as requested by AOL. The provision
at additional address blocks must continue for at least the next two
years, and NETSTREAM must give AOL a minimum of one-year notice should
NETSTREAM choose to terminate this service.
G. NETSTREAM 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.
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H. NETSTREAM 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.
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. NETSTREAM shall announce AOL routing information at NETSTREAM
interchange points as agreed by AOL.
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EXHIBIT C
Deployment Plan
AOL-Designated Cities
- ---------------------
Sao Paulo
Rio de Janeiro
Belo Horizonte
Curitiba
Porto Alegre
Campinas
Salvador
Brasilia
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