EXHIBIT 10.13
[*]=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.
CONFIDENTIAL
STRATEGIC INTERACTIVE SERVICES
AND MARKETING AGREEMENT
This Strategic Interactive Services and Marketing Agreement (the
"Agreement"), effective as of June 12, 2000 (the "Effective Date"), is made and
entered into by and between America Online Latin America, Inc., a Delaware
corporation having its principal place of business at 0000 X. Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("AOLA"), herein represented by its
Chief Executive Officer, Xx. Xxxxxxx Xxxxxxxxx and AOLB Brasil Ltda., a
Brazilian limited liability quota company, with head offices in the city of Sao
Paulo, enrolled with the CNPJ no. 03.032.579/0001-62 ("AOLB"), herein
represented by its President, Xx. Xxxxxx Xxxxxx; and Banco Itau S.A., a
Brazilian bank, with head offices in the city of Sao Paulo, State of Sao Paulo,
at Rua Boa Vista 176, enrolled with the CNPJ No. 60.701.190/0001-04 ("Itau"),
herein represented by its President, Mr. Roberto Egydio Setubal and its
Executive Vice President, Xx. Xxxxxx Xxxx Xxxxx Xxxxxxxx (each a "Party" and
collectively the "Parties"). Capitalized terms used but not defined in the body
of this Agreement shall be as defined on Exhibit A attached hereto.
INTRODUCTION
WHEREAS, AOLA owns and licenses online information and communications
services, including the AOLB Service that is operated and distributed through
its subsidiary AOLB;
WHEREAS, Itau owns, operates and distributes interactive Financial
Services, including a proprietary online banking service, and conducts such
Financial Services through many devices and technologies;
WHEREAS, AOLA proposed that the Parties enter into the transactions
contemplated in this Agreement and the Related Agreements; and
WHEREAS, Itau desires to have AOLB provide Itau's financial services
content to individuals through the AOLB Network and AOLB is willing to provide
such content through the AOLB Network, all in accordance with the terms and
conditions hereof;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows.
TERMS
1. CUSTOMIZATION, LAUNCH AND ROLL-OUT OF CO-BRANDED SERVICE
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1.1 In General. AOLB will create, at no cost to Itau, the Co-Branded
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Service and the Customized Client for distribution in accordance with
this Agreement. The customizations to be performed shall consist of
the following initial customizations (the "Initial Deliverables"): (a)
the Co-Branded Welcome Screen; (b) the Custom Toolbar Icon; (c) the
Special Edition Finance Channel; (d) the Itau Window; and (e) links
from the Itau Window and Itau Programmable
Area to the Itau Interactive Sites. AOLB shall host the Itau Online
Area at no cost to Itau. The Initial Deliverables shall not include
the programming of Content into the areas created as part of such
customizations. AOLB shall be responsible for ensuring that during the
Term the Co-Branded Service shall be identical in all material
respects to the AOLB Service in terms of both technology and breadth
of Content, except to the extent the Co-Branded Service is modified in
accordance with this Agreement. Any upgrades to the AOLB Service
technology shall be promptly implemented with respect to the Co-
Branded Service, except to the extent such upgrade implementation is
necessarily different as a result of modifications of the Co-Branded
Service or the Customized Client (e.g., the Special Edition Finance
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Channel and the Custom Toolbar Icon) made in accordance with this
Agreement. In the event any upgrade cannot be implemented as a result
of the modifications to the Customized Client or the Co-Branded
Service, AOLB shall use commercially reasonable efforts to promptly
develop and implement on a priority basis a work around that permits
the Co-Branded Service to receive the benefits of such upgrade. AOLB
shall strive to make the Co-Branded Service substantially comparable
in material respects with the America Online brand Internet access
service offered in the United States, but Itau acknowledges that AOLB
selects the Content and functionality it desires for use in the
Territory and that certain Content and functionality may not be
available on commercially reasonable terms in the Territory, and as a
result, the Co-Branded Service shall differ from the comparable
America Online brand Internet access service offered in the United
States.
1.2 Technical Operating Plan. The particular customizations to be
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incorporated in the Co-Branded Service (including the Initial
Deliverables) and the Customized Client shall be set forth in greater
detail in a technical operating plan (the "Technical Operating Plan").
The Technical Operating Plan shall be consistent with the technical
operating guidelines attached hereto as Exhibit E and shall be
developed and mutually agreed upon by AOLB and Itau as soon as
commercially possible after the Effective Date, but in no event later
than thirty (30) days after the Effective Date. The Technical
Operating Plan shall also specify certain customizations to Itau's
systems to facilitate the implementation of the Co-Branded Service and
Customized Client and Itau's obligations with respect thereto. The
Technical Operating Plan shall be reviewed biannually by the Technical
Committee and updated by mutual written agreement of AOLB and Itau as
appropriate.
1.3 Timing for Initial Deliverables. AOLB shall develop the Initial
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Deliverables in accordance with the Technical Operating Plan. Each of
AOLB and Itau agree to use all reasonable efforts to complete the
customizations in the Technical Operating Plan for which such Party is
responsible in order to remain on schedule with their target to
conduct the Initial Launch of the Co-Branded Service in accordance
with the Technical Operating Plan within six (6) months after the
Effective Date, and each such Party shall bear its own expenses for
performing such customizations. Each of AOLB and Itau shall have the
right to test any customization provided by the other for conformance
with the Technical Operating Plan and the terms of this Agreement.
AOLB and Itau shall mutually agree upon appropriate testing
procedures. In the event at any time either of such Parties is unable
to provide a particular customization in the manner set forth in
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the Technical Operating Plan, AOLB and Itau shall mutually agree upon
on an alternative customization designed to provide the other of such
Parties with comparable value.
1.4 Launch and Rollout of Co-Branded Service.
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1.4.1 Rollout in the Initial Cities.
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(a) In General. Within five (5) days after the Effective Date,
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Itau shall provide AOLB with a list of the cities in which
Itau desires initially to offer the Co-Branded Service.
Such list shall include the Test Cities. Promptly
thereafter AOLB and Itau shall discuss and mutually agree
upon the final list of cities in which the Co-Branded
Service will initially be Launched (each an "Initial City"
and collectively the "Initial Cities"). The initial
Technical Operating Plan shall include a timeline
indicating when the Co-Branded Service shall be available
to Itau Customers in such Initial Cities (the "Launch
Schedule"). The Parties have agreed upon specifications
for AOLB's network capacity and other criteria attached
hereto as Exhibit G-1 (the "Launch Criteria") in the
Initial Cities. The Launch Criteria include the
connectivity test set forth on Exhibit G-2 (the
"Connectivity Test"). Itau shall conduct the Connectivity
Test in each Initial City and in the event Itau believes
the Connectivity Test has not been met in any such city,
AOLB and Itau shall promptly reperform such test.
(b) Test Marketing Campaign. For the Initial Launch, Itau and
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AOLB will conduct a limited test roll-out and marketing
campaign in a limited number of mutually agreed upon Test
Cities [*]for the purpose of measuring Itau Customer
response to Itau's marketing activities and determining
whether adjustments to such proposed Launch Schedule,
Launch Criteria or marketing activities are warranted. The
Parties intend to be ready to commence such test roll-out
and marketing campaign within [*] months after the
Effective Date. After such test AOLB and Itau shall agree
upon a final timeline for the Launch of the Co-Branded
Service in the Initial Cities and the implementation of
the marketing activities under the Marketing Plan, and
shall incorporate such timeline into the Technical
Operating Plan.
1.4.2 Rollout in Additional Cities.
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During the Term, Itau shall notify AOLB of any cities (other
than the Initial Cities) in which it desires to offer the Co-
Branded Service (each new city, an "Additional City" and,
collectively, the "Additional Cities"). As part of the
Technical Operating Plan, and on an ongoing basis, AOLB and
Itau shall agree upon a plan for network expansion and roll-out
of the Co-Branded Service and the timing therefore, in the
Additional Cities ("Network Expansion Plan"). The Parties
intend that the roll-out and performance criteria for the
Additional Cities shall be reasonably comparable to the Launch
Criteria for the Initial Cities. Unless otherwise
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agreed by AOLB and Itau, the Connectivity Test will be used in
the Network Expansion Plan to determine whether the Co-Branded
Service and the local network to support it are ready for roll-
out in an Additional City. Itau shall conduct the Connectivity
Test in each Additional City in which AOLB and Itau agree to
Launch the Co-Branded Service and in the event Itau believes
the Connectivity Test has not been met in any such Additional
City, AOLB and Itau shall promptly reperform such test. All
such Connectivity Testing shall be completed within thirty (30)
days after Itau commences such testing. The Network Expansion
Plan shall provide sufficient time for the Connectivity Test to
be completed. AOLB shall also conduct the quality assurance
test set forth on Section 1 of Exhibit G-1 each time it
releases a new version of the Co-Branded Client.
1.5 Remedies for Launch and Roll-Out Problems.
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1.5.1 Remedies for Launch Problems in the Test Cities. AOLB and Itau
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shall work together to test the implementation of the roll-out
of the Co-Branded Service and shall mutually certify in writing
that the Launch Criteria have been met with respect to the Test
Cities. AOLB shall satisfy the Launch Criteria in all of the
Test Cities within 315 days after the Effective Date (the
"Termination Period"). Such Termination Period shall be
reasonably extended to the extent such delay is directly
attributable to the action or inaction of Itau or to a Force
Majeure Event (such period, an "Extension Period"). If AOLB and
Itau dispute certification, whether the Launch Criteria have
been satisfied in all of the Test Cities within the Termination
Period, whether an Extension Period is warranted, or the length
of such an Extension Period, then AOLB and Itau shall have the
right to refer any or all of the foregoing issues to Forty Five
Day Arbitration. In the event that either AOLB and Itau
mutually agree in writing, or a Forty Five Day Arbitration
ruling determines that AOLB failed to satisfy the Launch
Criteria in any of the Test Cities within the Termination
Period (including any Extension Period), then Itau may
terminate this Agreement upon written notice to AOLB within
fifteen days (15) after the date the written agreement or
arbitral ruling was rendered without payment of any amounts
hereunder. Any such written agreement must be signed by the
President of AOLB and a comparable officer of Itau to be
effective.
1.5.2 Remedies for Roll-out Problems in Other Cities. In the event
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that Itau believes that AOLB failed to roll-out the Co-Branded
Service in accordance with the Network Expansion Plan for the
Additional Cities, or to satisfy the Connectivity Test in the
Initial Cities other than the Test Cities, and as a direct
consequence of such failure Itau reasonably appears likely to
be unable to meet the Verified Member Reference Numbers or the
Total Verified Member Numbers (collectively, the "Member
Numbers"), at Itau's request within five (5) days after such
failure, the Technical Committee will meet to discuss the
matter. In the event the Technical Committee cannot agree on
whether such failure occurred, whether the time for achieving
such Member Numbers should be extended by a reasonable period
of time (a "Tolling Period"), or the
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length of such Tolling Period within five (5) days after
referral of the matter to the Technical Committee, the matter
shall be escalated to the President of AOLB and a comparable
officer of Itau who shall in good faith attempt to reach
agreement on such Tolling Period. In the event that such
officers mutually agree on a Tolling Period, such agreement
shall be stated in writing and signed by such officers within
48 hours thereafter. In the event that such officers fail to
reach agreement within five (5) days after referral of the
issue to such officers, Itau shall have the right to refer to
Forty Five Day Arbitration within thirty (30) days thereafter,
the issues of: (a) whether AOLB failed to roll-out the Co-
Branded Service in the Additional Cities as per the Network
Expansion Plan; (b) whether AOLB failed to satisfy the
Connectivity Test in the Initial Cities (other than the Test
Cities); (c) whether as a direct consequence of either or both
of such failures Itau appears reasonably likely to be unable to
meet the Member Numbers and is thus entitled to a Tolling
Period; and (d) if such a Tolling Period is warranted, the
equitable length of such Tolling Period.
1.6 Relationship with AOLB/Itau Subscribers.
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1.6.1 In General. The Co-Branded Service shall be provided to
AOLB/Itau Subscribers under the Terms of Service contract
between AOLB and each AOLB/Itau Subscriber, the current form of
which is attached hereto as Exhibit L. AOLB shall consider in
good faith any changes to the Terms of Services contract for
the Co-Branded Service reasonably requested by Itau. AOLB/Itau
Subscribers shall receive e-mail addresses in the form
xxxxxxxxxx@xxx.xxx. Itau acknowledges and agrees that AOLB uses
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a system to confirm mailing addresses and CPF numbers of
registering customers, and that, if AOLB reasonably believes an
AOLB/Itau Subscriber has entered a false address or CPF number
and neither such AOLB/Itau Subscriber nor Itau provides AOLB
with a correct address or CPF number within twenty-five (25)
days after registration despite electronic notice to Itau
within three (3) days of such discovery and commercially
reasonable efforts by AOLB to repeatedly notify such AOLB/Itau
Subscriber of the problem, AOLB may terminate such AOLB/Itau
Subscriber. AOLB shall use commercially reasonable efforts to
provide electronic notice to Itau of AOLB's intent to terminate
such AOLB/Itau Subscriber prior to such termination.
1.6.2 Collection and Use of Member Information. Itau may collect AOLB
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Member screennames from public or private areas of the AOLB
Network, including through the Itau Online Area, provided that
Itau complies with the provisions of this Section 1.6.2. Itau
shall ensure that any survey, questionnaire or other means of
collecting AOLB Member names, screennames, addresses or other
identifying information ("Member Information") conducted via
the Co-Branded Service including requests directed to specific
AOLB Member screennames and automated methods of collecting
screennames (an "Information Request") complies with (i) all
applicable laws and regulations, (ii) AOLB's applicable Terms
of Service, and (iii) any privacy policies which have been
issued by AOLB in writing during the Term (the
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"AOLB Privacy Policies"). Each Information Request shall
clearly and conspicuously specify to the AOLB Members at issue
the purpose for which Itau shall restrict use of the Member
Information collected through an Information Request. Except as
required by law, in no event shall Itau (i) provide Member
Information to any third party (except to the extent
specifically (a) permitted under the AOLB Privacy Policies or
(b) authorized by the AOLB Members in question) or (ii)
otherwise use any Member Information in violation of the terms
of this Agreement. This Section shall not limit Itau's rights
with respect to Member Information collected other than via the
Co-Branded Service or AOLB Network.
1.7 Ownership and Use of Data.
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1.7.1 Compliance with Laws and Privacy Policies. Each Party's use of
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any data relating to the AOLB/Itau. Subscribers gathered or
provided in connection with this Agreement shall be subject to
all applicable laws, rules and regulations and consistent with
such Party's privacy policies (including, without limitation,
Brazilian banking secrecy laws).
1.7.2 Ownership of Data. As between AOLB and Itau, AOLB shall own all
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data related to use of the AOLB Service and the Co-Branded
Service by the AOLB/Itau Subscribers (e.g., traffic data) and
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Itau shall own all Customer Financial Data.
1.7.3 Provision of Traffic Data. AOLB shall provide Itau with certain
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mutually agreed upon aggregated traffic information collected
by AOLB regarding the Co-Branded Service and the usage of the
Itau Online Area.
1.7.4 Additional Privacy and Security Requirements. AOLB understands
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the importance of respecting the privacy of AOLB/Itau
Subscribers. Accordingly, (a) AOLB shall not disclose any
personally identifying data about an AOLB/Itau Subscriber to a
third party (including AOLA's or AOLB's shareholders or
Affiliates), or any aggregated data relating exclusively to
AOLB/Itau Subscribers, other than aggregated traffic data and
data required to be disclosed by applicable law, rule or
regulation or by order of a court or other similar authority,
except as permitted by such AOLB/Itau Subscriber; (b) AOLB
shall not identify any individual subscriber to a third party
(including AOLA's or AOLB's shareholders or Affiliates) as an
AOLB/Itau Subscriber or a customer of Itau; (c) AOLB shall not
retain any AOLB/Itau Subscribers' passwords or account numbers
related to the Itau Online Area or Itau's Financial Services
other than on a transitory basis in connection with the
transmission of such passwords and account numbers during the
course of a single user initiated session or in a manner
otherwise agreed to by Itau; (d) the Technical Committee will
agree on appropriate technological measures designed to protect
the security of AOLB/Itau Subscribers' passwords and password
protected information used in connection with the Itau Online
Area; and (e) AOLB shall not review the contents of any e-mail
correspondence of any AOLB/Itau Subscriber unless authorized by
such AOLB/Itau Subscriber that is not addressed to
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AOLB or its Affiliates, except as required by law or in
accordance with AOLB Privacy Policies. AOLB shall promptly
respond to and use commercially reasonable efforts to correct any
security concerns of which it is notified regarding the AOLB/Itau
Subscribers' use of the Co-Branded Service.
1.8 Co-Branded Welcome Screen. The Co-Branded Welcome Screen shall
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initially be substantially similar to the screen shot attached hereto
as Exhibit M. AOLB shall be responsible for programming the entire Co-
Branded Welcome Screen and AOLB shall receive no payments from Itau
therefor. The portion of such Co-Branded Welcome Screen allocated to
Itau shall be referred to herein as the "Itau Programmable Area" and
the portion allocated to AOLB shall be referred to herein as the "AOLB
Programmable Area." AOLB and Itau intend to program the Co-Branded
Welcome Screen in accordance with the following principles: (a) the
Co-Branded Welcome Screen shall appear in front of the AOLB "Hoje"
page on the Co-Branded Service; (b) the Co-Branded Welcome Screen's
size should be as large as possible while still allowing the AOLB/Itau
Subscriber to see and access the AOLB "Hoje" page; (c) the AOLB and
Itau brands should be equally presented with equal emphasis on the Co-
Branded Welcome Screen; (d) the Content of AOLB on the AOLB
Programmable Area and the Content of Itau on the Itau Programmable
Area will be easily distinguishable; (e) the proportion between the
Itau Programmable Area and AOLB Programmable Area may be changed only
when AOLB and Itau agree upon such change; (f) whenever AOLB or Itau
has a larger presence on the Co-Branded Welcome Screen than the other
in a calendar quarter, the other shall receive an equivalently larger
presence in the next calendar quarter; (g) if AOLB agrees, Itau may
use the area around the Co-Branded Welcome Screen that is not occupied
by other windows to promote its brand; and (h) the Co-Branded Welcome
Screen may be "minimized" by AOLB/Itau Subscribers, but may not be
"closed." Market research will be conducted to evaluate the
effectiveness and appeal of the Co-Branded Welcome Screen to AOLB/Itau
Subscribers, and the costs of such market research shall be shared
equally between AOLB and Itau. The Itau Programmable Area shall be
programmed by AOLB and its designees exclusively with Financial
Services Content and links to Financial Services Content selected by
Itau in its sole discretion, including promotions for Itau and links
to the Itau Interactive Sites. Such Content shall be provided and
maintained by Itau in accordance with Articles 4 and 5. The AOLB
Programmable Area shall be programmed and maintained by AOLB in its
sole discretion and shall contain such promotions and links to Content
and services available on the Co-Branded Service as determined by AOLB
subject to the provisions of this Agreement.
1.9 Advertising.
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1.9.1 In General. Except as otherwise provided in this Agreement,
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AOLB may market and promote Financial Services (including the
Financial Services of competitors of Itau) on the AOLB Service,
the Co-Branded Service and the rest of the AOLB Network.
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1.9.2 Restrictions on Advertising on the Co-Branded Service.
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(a) AOLB shall not display Advertisements for any third-
party Financial Institutions or third-party Financial
Services on the following pages and areas of the Co-
Branded Service: (i) the Co-Branded Welcome Screen;
(ii) the Special Edition Finance Channel; (iii) the
AOLB "Welcome" screen; (iv) the AOLB "Hoje" screen;
(b) AOLB shall not display Advertisements for any third-
party Financial Institution(s) that are banks or any
products or services that are branded with the name of
any such Financial Institution(s) that are banks on the
following areas of the Co-Branded Service: (i) the
"Caixa Post Online" area (ii) the "Servico ao
Assinante" area (collectively, together with the pages
and areas set forth in (a) above, the "Covered Pages");
(c) AOLB may display Advertisements for a third party
Financial Institution or for the Financial Services of
any third party on any pages of the Co-Branded Service
other than the Covered Pages;
(d) In addition, within fifteen (15) days after the
Effective Date, Itau may provide AOLB with a list (the
"Restricted Advertising List") of up to five (5)
entities ("Restricted Advertisers") and up to five (5)
Content categories (e.g., pornography, weapons)
("Restricted Content Catagories") which, in each case,
Itau reasonably believes their promotion or inclusion
on the Co-Branded Service would adversely affect Itau's
good reputation or business (e.g., an entity adverse to
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Itau in litigation). Such entities may not include an
AOLB Party or any of their Affiliates. AOLB shall not
include on the Covered Pages any Advertising for a
Restricted Advertiser or Content within a Restricted
Content Category. AOLB may include Content within a
Restricted Content Category or an Advertisement for a
Restricted Advertiser on any pages of the Co-Branded
Service other than the Covered Pages. Itau may amend
such Restricted Advertising List on a bi-annual basis
upon fifteen (15) days prior written notice to include
alternative entities or Content categories meeting the
criteria set forth above, provided however, that Itau
may not increase the total number of such entities or
Content categories. The provisions of this Section
1.9.2(d) shall not preclude any Advertising for an
entity or category pursuant to Agreements entered into
prior to the date such Restricted Advertising List is
amended to restrict Advertisements for such entity or
Content category; provided that, AOLB shall (i) use
commercially reasonable efforts to minimize the
prominence of such businesses or content of the Covered
Pages to the extent consistent with such agreements;
(ii) not renew or extend such agreements, or agree to
enlarge their scope, in a manner that conflicts with
Itau's rights under this Agreement; and (iii) terminate
such agreements to the extent they conflict with Itau's
rights hereunder at the earliest date AOLB can do so
without a penalty or loss of revenue; and
(e) On the Co-Branded Service: (i) AOLB shall not include
any pop-up Advertisements that appear during the
initial log-on by the AOLB/Itau Subscriber (except pop-
up Advertisements
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purchased by Itau); (ii) AOLB shall not include any
pop-up Advertisements that appear in front of or on
top of the Covered Pages or any pages of the Itau
Interactive Sites; (iii) AOLB shall not create
additional screens other than the password prompt
screen that appear during the initial log-on prior to
or simultaneous with the Co-Branded Welcome Screen, the
AOLB "Welcome" screen, or the AOLB "Hoje" screen,
without Itau's prior written consent. The foregoing
shall not preclude pop-ups and open windows regarding
Co-Branded Service features and functionality (e.g.,
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buddy lists, AOLB search, instant messaging) and
noncommercial notices to customers, regardless of
whether such pop-ups appear on top of or in the area
surrounding the Covered Pages. Such noncommercial
notices may not include promotions for the products or
services of any Persons (including AOLA, and AOLB and
their respective Affiliates) other than pop-up
Advertisements for Itau, provided, however, that such
notices may include promotions or offers for products
or services of AOLA, AOLB, Itau and their respective
Affiliates which promotions or offers are for products
and services that do not require any additional payment
from a subscriber.
The limitations set forth in this Section 1.9.2 shall not in
any way limit the display of news and other Content feeds on
the Covered Pages. Upon receipt of notice of a violation of
the provisions of this Section 1.9.2, AOLB shall promptly
remove any Advertisement or Content in violation of this
Section 1.9.2. In the event that AOLB breaches the
provisions of this Section 1.9.2 and fails to cure such
breach within twenty-four hours after receipt of written
notice thereof, AOLB shall provide Itau, at no cost to Itau,
Advertising inventory on the Co-Branded Service, the AOLB
Service, or some combination thereof, comparable in value to
five times the value of the violating promotion it provided
to the other advertiser during the violation period based on
AOLB's standard rate card.
1.9.3 Targeting of AOLB/Itau Subscribers.
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(a) AOLB shall not sell, nor authorize third parties to
sell, Advertisements targeted specifically to the Co-
Branded Service or the AOLB/Itau Subscribers (an
Advertisement appearing on the Co-Branded Service that
also appears on the AOLB Service shall be deemed not to
constitute a targeted Advertisement);
(b) AOLB will not engage in, nor authorize any other third
party to engage in (or to use data collected from the
Itau Online Area or the Co-Branded Service to engage
in), online or offline marketing of third party
Financial Institutions or third party Financial
Services directly targeted to AOLB/Itau Subscribers.
The inclusion of Content related to Financial Services
or Financial Institutions on any pages of the Co-
Branded Service other than the Covered Pages shall not
constitute prohibited online marketing so long as such
Content also appears on the AOLB Service.
1.10 Itau Online Area. Beginning on the Effective Date, AOLB in
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consultation with Itau shall develop the Itau Online Area in
accordance with its standard design and content publishing guidelines.
AOLB and Itau will cooperate to review, and
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to the extent Itau reasonably believes necessary, Itau may redesign,
the Itau Interactive Sites to facilitate seamless integration and fast
connections between the Co-Branded Service and the Itau Interactive
Sites. The Itau Online Area shall include only Financial Services
Content and links to Financial Services Content. The inclusion of any
Content other than Financial Services Content and links to Financial
Services Content in the Itau Online Area, (such as Content for social
causes supported by Itau) shall be subject to AOLB's prior written
approval. Content directly related to the sale of property repossessed
by Itau shall be deemed to be Financial Services Content for purposes
of this Section 1.10. No page of an Itau Interactive Site directly
linked to from the Itau Online Area shall include any promotions for
any Access Providers (including its branded products and services)
other than AOLB, and Itau shall not directly link to an Interactive
Site of an Access Provider from the Itau Online Area. Itau shall not
include a link to any Access Provider on any page of any Linked
Interactive Site that is an Itau Interactive Site that can be accessed
within one "click" of the Itau Online Area. Except as otherwise
provided in this Agreement, Itau may include any Advertisements
(including for an ISP Product) of any Person (including an Access
Provider) on the Itau Interactive Sites and Independent Financial
Services Portal.
1.11 Special Edition Finance Channel.
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1.11.1 In General. In accordance with the terms of this Agreement,
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AOLB will develop a Special Edition Finance Channel to
replace the Standard Finance Channel on the Co-Branded
Service. The Special Edition Finance Channel will contain
certain editorial content and services that are different
than the finance channel generally available on the AOLB
Service (the "Standard Finance Channel"). The Content and
Advertisements included in the Special Edition Finance
Channel shall comply with the restrictions set forth in
Section 1.9 and, as provided herein, shall not include any
Content from a Restricted Content Category or Advertisements
from Restricted Advertisers. The Special Edition Finance
Channel shall not display any trademark, service xxxx, logo,
brand or indicia of source of any other Financial
Institution, except in news and other Content feeds. The
main screen of the Special Edition Finance Channel will look
substantially similar to the screen shot attached hereto as
Exhibit K, and all other screens of the Special Edition
Finance Channel shall be substantially similar to the
Standard Finance Channel; provided, however, that any
promotions that are provided pursuant to a separate
agreement between AOLB and Itau or its Affiliates shall
expire in accordance with the terms of such agreement (e.g.,
- -
banner ads for Itau). The Parties shall work together to
determine what Content is included on the Special Edition
Finance Channel in accordance with Section 1.9 and this
Section 1.11, but the look and feel of the Special Edition
Finance Channel shall be determined by AOLB and shall be
substantially the same as the look and feel of the Standard
Finance Channel. AOLB shall, except as otherwise agreed by
AOLB and Itau: (a) in its discretion in accordance with this
Section 1.11, program the main screen of the Special Edition
Finance Channel primarily with Content used in the Standard
Finance Channel (excluding any Content prohibited pursuant
to Section 1.9), (b) promote Itau as an Anchor Tenant of the
Special Edition Finance Channel provided that such Anchor
Tenant button shall only link to Financial Services Content
and information of general interest and applicability
comparable to the Content provided by other Anchor Tenants,
(c) at Itau's option, instead of (b) above, in the event
Itau develops an Independent Financial Services Portal as
provided in Section 12.4.1, promote such Independent
Financial Services Portal as an Anchor Tenant of the Special
Edition Finance Channel and (d) program all of the buttons
(but in no event less than three buttons) in the Finance
Center (linking to Financial Services)
-10-
on the Special Edition Finance Channel to link to sites
selected by Itau, provided however, that such buttons shall
not link directly to an Interactive Site of an Access
Provider and the first page linked to from such button shall
not include a promotion for, or a link to a site of, an
Access Provider. AOLB and Itau shall regularly consult
regarding updating such links and the use of other Content
provided or available from Itau. No buttons on the Special
Edition Finance Channel shall directly link to Financial
Services or Financial Institutions other than Itau and, as
applicable, its designees.
1.11.2 Production. AOLB will be responsible for programming the
----------
Special Edition Finance Channel in accordance with this
Agreement and will make available and train personnel to
perform such programming in accordance with the terms
hereof. AOLB agrees that in the event that a negative news
story derogatory of Itau is provided as a feed or headline
on the Co-Branded Service, at Itau's request, AOLB will
promptly distribute an Itau statement or press release
regarding such story or headline on the Co-Branded Service
in connection with such news story. AOL shall include
appropriate disclaimers on the Co-Branded Service indicating
that Content for the Co-Branded Service provided by third
parties is neither provided nor endorsed by Itau. The text
and location of such disclaimers shall be mutually agreed
upon.
1.11.3 Payment of Costs. Itau shall pay AOLB's reasonable, actual
------- -- -----
direct costs associated directly with creating, programming,
providing Content and maintaining the Special Edition
Finance Channel (the "Finance Channel Fee"), which payment
shall not exceed Brazilian Reais $150,000 per year (as
adjusted annually at the beginning of each calendar year for
inflation) without Itau's written approval, provided,
however that Itau shall not be responsible for any fees
attributable to Content used on both the Standard Finance
Channel and the Special Edition Finance Channel unless such
Content is acquired pursuant to new agreements entered into
after the Effective Date or renewals of agreements existing
as of the Effective Date. In the event that AOLB renews or
enters into new agreements for Content included on the
Special Edition Finance Channel, then as part of the Finance
Channel Fee Itau shall be responsible for paying a Content
fee equal to a percentage of AOLB's cost associated with
providing Content under such new or renewed agreements,
which percentage shall be based on the ratio of AOLB/Itau
Subscribers to all subscribers of the AOLB Service
(including for purposes of this Section 1.11.3, any other
Co-Branded versions of the AOLB Service offered in the
Territory). If such Content fees would result in exceeding
the cap on the Finance Channel Fee set forth above, AOLB
shall consult with Itau and provide Itau with such
information as necessary for Itau to determine the fees
associated with obtaining such Content for display on the
Special Edition Finance Channel. In the event Itau does not
approve payments in excess of the cap on the Finance Channel
Fee within a reasonable period of time after requested by
AOLB, AOLB shall have the right to not include such Content
in the Special Edition Finance Channel. Notwithstanding the
foregoing, AOLB will not withhold any Content from the
Special Edition Finance Channel that AOLB has the right to
distribute on the Special Edition Finance Channel without
paying any additional incremental costs. AOLB will use
commercially reasonable efforts to obtain the right to
distribute on the Special Edition Finance Channel all
Content included on the Standard Finance Channel for no
greater fee than the fee charged for the right to distribute
such Content on the Standard Finance Channel.
1.11.4 Advertising. AOLB will have the exclusive right to sell
-----------
Advertisements on the Special Edition Finance Channel and
shall be entitled to retain one hundred percent (100%) of
the revenue received by AOLB or its agents from such
Advertisements. All such Advertising shall comply with the
requirements set forth in this Agreement.
-11-
1.12 Performance Standards.
---------------------
1.12.1 Tier 1 Failure. In the event Itau reasonably believes a Tier
--------------
1 Failure has occurred in a particular city after the Launch
of the Co-Branded Service in such city, Itau may provide
AOLB with written notice of such Tier 1 Failure. The
methodology for determining a Tier 1 Failure will be as
follows: Itau will [*] If in light of the results of these
tests Itau claims that there was a Tier 1 Failure, AOLB and
Itau will conduct system tests to validate or invalidate
this claim promptly, but in no event will such testing
commence more than ten (10) Business Days after receipt of
notice from Itau. If a Tier 1 Failure is determined, AOLB
shall use commercially reasonable efforts to resolve any
Tier 1 Failure promptly. If notwithstanding such efforts,
AOLB fails to cure such Tier 1 Failure within five (5) days
after receipt of such notice, then as its sole remedy for
such Tier 1 Failure, Itau shall have the right freely to
inform AOLB/Itau Subscribers in such city of means of
accessing Itau's interactive Financial Services and related
Content other than the Co-Branded Service by specifically
identifying the brands of other Access Providers until such
time as AOLB cures such Tier 1 Failure.
1.12.2 Tier 2 Failure.
--------------
(a) In the event Itau reasonably believes a Tier 2 Failure
has occurred in a particular city after the Launch of
the Co-Branded Service in such city, Itau may provide
AOLB with written notice of such Tier 2 Failure. The
methodology for determining a Tier 2 Failure will be as
follows: Itau will [*] If in light of the results of
these tests, Itau notifies AOLB that there was a Tier 2
Failure, AOLB and Itau will conduct tests to validate
or invalidate this claim promptly, but in no event will
such testing commence more than ten (10) Business Days
after receipt of such notice from Itau. If a Tier 2
Failure is determined, AOLB shall use commercially
reasonable efforts to promptly resolve such Tier 2
Failure. If notwithstanding such efforts, AOLB fails to
cure such Tier 2 Failure within fifteen (15) days after
receipt of such notice, then as its sole remedy for
such Tier 2 Failure, Itau shall be relieved of its
obligation not to market and otherwise promote Access
Providers and ISP Products in such city as set forth in
Section 2.3.1 of this Agreement until such time as AOLB
cures such Tier 2 Failure in such city.
(b) In the event that a Tier 2 Failure has occurred and as
a direct consequence of such failure Itau reasonably
appears likely to be unable to meet the Member Numbers,
then, at Itau's request within ten (10) days after such
Tier 2 failure, the Technical Committee shall promptly
convene and discuss in good faith a Tolling Period. In
the event that the Technical Committee is unable to
reach agreement on such a Tolling Period within five
(5) days after the establishment of such failure, the
matter shall be escalated to the President of AOLB and
a comparable officer of Itau who shall, in good faith,
attempt to reach agreement on
-12-
such Tolling Period. In the event that despite such
good faith efforts such officers cannot reach agreement
on such a Tolling Period within five (5) days after the
referral of the issue to such officers, there shall be
no Tolling Period for such Tier 2 Failure and no Party
shall be entitled to refer such matter to an arbitrator
or court of competent jurisdiction. In the event that
the Technical Committee or such officers reach
agreement on a Tolling Period within such periods, such
agreement shall be reduced to writing and signed by the
President of AOLB and a comparable officer of Itau
within 48 hours thereafter and the Member Numbers shall
be tolled by such Tolling Period.
-13-
1.12.3 Tier 3 Failure. In the event Itau reasonably believes a
--------------
material failure of the Co-Branded Service has occurred
which results in the Co-Branded Service being continuously
inaccessible to thirty-five (35%) percent of all AOLB
Service access lines at any time after the Launch of the Co-
Branded Service in the Initial Cities, Itau may notify AOLB
of such failure and upon receipt of such notice AOLB shall
promptly commence tracking and reporting on the
accessibility of the AOLB Service. If a Tier 3 Failure is
determined: (i) AOLB shall use commercially reasonable
efforts to resolve such failure; and (ii) Itau shall be
relieved of its obligation not to market or otherwise
promote ISP Products or Access Providers in the affected
Cities as set forth in Section 2.3.1 of this Agreement until
such time as AOLB cures such failure in the affected cities.
If the Co-Branded Service remains inaccessible to thirty-
five (35%) percent of all AOLB Service access lines for a
period of thirty (30) consecutive days other than as a
result of a Force Majeure Event, such failure shall be
deemed a "Tier 3 Failure." In the event Itau believes a Tier
3 Failure has occurred, at Itau's request, the Technical
Committee shall promptly convene within forty-eight (48)
hours after such request to determine whether a Tier 3
Failure has occurred. In the event the Technical Committee
is unable to reach agreement on whether a Tier 3 Failure has
occurred within five (5) days after referral of the matter
to the Technical Committee, the matter shall be escalated to
the President of AOLB and a comparable officer of Itau, who
shall in good faith attempt to reach agreement on whether a
Tier 3 Failure has occurred. In the event, such officers
cannot reach agreement on whether a Tier 3 Failure has
occurred, within five (5) days after the matter has been
referred to them, Itau may refer such matter to Forty Five
Day Arbitration, provided, however, that such referral must
occur within thirty (30) days after the alleged Tier 3
Failure. In the event that the Technical Committee or such
officers reach agreement on whether a Tier 3 Failure
occurred within such periods, such agreement shall be
reduced to writing and signed by the President of AOLB and a
comparable officer of Itau within 48 hours after such
agreement.
1.12.4 Resolution of Disagreements. Except as otherwise provided in
---------------------------
this Section 1.12 any disagreements regarding whether a Tier
1 Failure, Tier 2 Failure or Tier 3 Failure has occurred
shall be resolved by Forty Five Day Arbitration in
accordance with the procedures set forth in Section 13.4 of
this Agreement.
1.12.5 Tracking and Reporting. The Technical Committee will
----------------------
mutually agree upon (i) the type and frequency of an
appropriate set of reports to track the performance under
this Agreement; and (ii) procedures for tracking the
accessibility of the Co-Branded Service.
1.13 E-mail Provision. Itau agrees that it will offer, on the Itau
----------------
Interactive Sites, to each Itau Customer an e-mail address from AOLB
as the means to receive communications from Itau. The xxxx@xxx.xxx (or
------------
such other domain name as mutually agreed by AOLB and Itau) assigned
to Itau Customers will be the default e-mail address where Itau will
send electronic bank correspondence to Itau Customers, unless
requested otherwise by the Itau Customers. Subject to
-14-
Section 1.9.3, AOLB can use the xxxx@xxx.xxx (or such other domain
------------
name as mutually agreed) e-mail address to send promotional
information to Itau Customers, which communications will be subject to
the prior written approval of Itau, which such approval shall not be
unreasonably delayed or withheld. Promptly after the Effective Date,
Itau and AOLB will work to make the xxxx@xxx.xxx (or such other domain
------------
name as mutually agreed) address and e-mail accessible on Itau's
Interactive Sites, as the preferred way to receive e-mail from Itau.
AOLB shall bear all reasonable actual direct costs incurred in
connection with establishing such e-mail functionality. Nothing in
this Section 1.13 shall obligate Itau to alter its corporate e-mail
functionality or addresses.
1.14 Billing.
-------
1.14.1 Development of Detailed Plan. As soon as commercially
----------------------------
practicable after the Effective Date, but no later than
sixty (60) days thereafter, the Parties shall develop a
detailed plan for implementing the billing and customer
support obligations in accordance with the Technical
Operating Plan and Finance Plan.
1.14.2 Billing Services. Except as provided below and subject to
----------------
the Technical Operating Plan, Itau shall xxxx all AOLB/Itau
Subscribers (excluding those AOLB/Itau Subscribers that
elect other billing options as provided below) on behalf of
AOLB for all charges owed to AOLB related to such AOLB/Itau
Subscribers' use of the Co-Branded Service in excess of the
free hours ("Subscriber Fees"), and collect all amounts due
therefor (the "Billing Services"). Itau shall provide the
Billing Services for a fee equal to Itau's reasonable,
actual direct costs of performing such services (the
"Billing Services Fee") which Billing Services Fee shall be
no greater than the market price customarily charged by Itau
for comparable quantities of similar services and
competitive with the market prices of other providers for
similar services. As described in more detail in the
Technical Operating Plan, AOLB/Itau Subscribers may elect
billing options pursuant to which Persons other than Itau
provide billing services. With respect to AOLB/Itau
Subscribers for whom Itau provides billing services who fail
to timely pay some or all Subscriber Fees, Itau may elect
to: (a) terminate such AOLB/Itau Subscriber's account for
the Co-Branded Service within fifteen (15) days after the
date such late payment was due (provided that such AOLB/Itau
Subscriber may reactivate such account upon full payment of
all amounts owed within six (6) months of the date of such
termination), in which case Itau shall be responsible for
the Hours Payments with respect to such AOLB/Itau Subscriber
and AOLB shall be responsible for all other fees associated
with such subscribers' use of the Co-Branded Service or (b)
pay to AOLB the Subscriber Fees due from such AOLB/Itau
Subscriber until such time as Itau elects to terminate such
AOLB/Itau Subscriber in accordance with the Technical
Operating Plan and the Finance Plan. As part of the
Technical Operating Plan, the Parties shall develop a means
of coordinating with respect to terminating such AOLB/Itau
Subscribers or, at AOLB's option, converting such AOLB/Itau
Subscriber into a subscriber of the AOLB Service, in which
-15-
case such subscriber shall no longer be an AOLB/Itau
Subscriber and shall no longer access the Co-Branded Service
and Itau shall no longer pay any fees to AOLB for such
subscriber's use of the AOLB Service. The Parties shall
cooperate to design and develop a system that permits the
exchange of relevant data related to billing so that Itau
may xxxx such AOLB/Itau Subscribers using its existing
billing system (such billing system modified for the billing
of AOLB/Itau Subscribers, the "Billing System"). Itau shall
be responsible for ensuring that the Billing System complies
with all applicable laws related to billing consumers for
transactions of the type contemplated in this Agreement.
Each Party shall own all right, title and interest in and to
any software and other materials created by such Party with
respect to its systems.
1.15 Customer Support. Subject to the allocation of responsibilities set
----------------
forth in this Section 1.15, each of AOLB and Itau shall respond
promptly and professionally to questions, comments, complaints and
other reasonable requests regarding the Itau Online Area or the Co-
Branded Service by AOLB/Itau Subscribers or at the request of the
other Party and shall cooperate and assist the other in promptly
answering the same. Pursuant to the Technical Operating Plan, AOLB
shall operate a customer support call center and shall be responsible
for responding to all questions related to the Co-Branded Service
other than questions pertaining to the Licensed Content. Itau shall be
responsible for responding to all questions related to the Licensed
Content and the Financial Services available thereby, and AOLB as the
primary recipient of customer support calls shall transfer all such
calls regarding such questions to Itau. Each Party shall ensure that
it has sufficient customer support services available to promptly
respond to such questions. Itau may assume all customer support for
the Co-Branded Service in accordance with the Finance Plan and the
Technical Operating Plan.
1.16 In-Kind Promotion. As part of the consideration for this Agreement,
-----------------
AOLB and Itau are providing each other with certain in-kind
consideration in connection with the following activities: (a) AOLB is
providing Itau with distribution and carriage, including with regard
to the Special Edition Finance Channel, the Co-Branded Service and the
Anchor Tenancy granted to Itau and (b) Itau is providing AOLB with
certain brand co-marketing and promotion. AOLB and Itau shall use
commercially reasonable efforts to identify and agree upon the value
of such in-kind activities. In the event AOLB and Itau so identify and
mutually agree upon an in-kind value that has been provided by each of
AOLB and Itau to the other, a third party experienced in media
valuation shall confirm such value at AOLB's expense. If AOLB and Itau
so agree, AOLB and Itau shall invoice each other for this amount
annually on each anniversary of the Effective Date; provided, however,
that neither AOLB nor Itau shall be obligated to pay any amount in
excess of the in-kind value of its activities. In the event that
despite such commercially reasonable efforts and the escalation of the
issue to the President of AOLB and a comparable officer of Itau, AOLB
and Itau do not so agree, they shall not be entitled to invoice each
other for any in-kind activities nor shall either be entitled to refer
such matter to an arbitrator or court of competent jurisdiction.
-16-
2. MARKETING OF CO-BRANDED SERVICE.
2.1 Promotion of the Co-Branded Service.
-----------------------------------
2.1.1 Marketing Committee and Technical Committee. The Parties shall
-------------------------------------------
establish: (a) a marketing committee ("Marketing Committee")
to review the implementation of the Marketing Plan developed
pursuant to Section 2.1.2 below and (b) a technical committee
(the "Technical Committee") to oversee the implementation of
the technical and operational aspects of this Agreement
(including the development and rollout of new devices and
connectivity) and the obligations of the Parties set forth in
the Technical Operating Plan. The Marketing Committee and the
Technical Committee shall each consist of two representatives
of each of AOLB and Itau. The initial representatives shall be
designated by the Parties promptly after the Effective Date.
The Technical Committee representatives shall be appropriately
qualified and the Marketing Committee representatives shall be
senior officials of each Party. The Marketing Committee and
the Technical Committee shall each meet regularly, in no event
less than quarterly, at mutually agreed upon locations and
times. At each quarterly meeting, the Marketing Committee
shall review the effectiveness of the Marketing Plan and Itau
may accept the Marketing Committee's proposed recommendations
for modifications thereto. Each Party shall bear any costs it
incurs in connection with its participation on the Marketing
Committee and the Technical Committee.
2.1.2 Marketing Activities. The Co-Branded Service shall be Co-
--------------------
Branded as determined by the Marketing Committee and, unless
otherwise mutually agreed, the branding for the Co-Branded
Service shall contain both the Itau and the America Online
brands. Itau's offering, marketing and promotion of the Co-
Branded Service and Customized Client shall be in accordance
with a marketing plan developed by Itau in its sole discretion
in consultation with the Marketing Committee as soon as
commercially practicable after the Effective Date but in no
event later than [*] days thereafter (the "Marketing
Plan"). The initial Marketing Plan shall describe Itau's
intended marketing efforts for the first Marketing Year. Each
Marketing Plan shall be reasonably consistent with the
Marketing Guidelines. The Marketing Plan shall some marketing
activities in each of the Initial Cities and any New Cities.
In each of the first five (5) Marketing Years, Itau shall
perform at least the Minimum Marketing Commitments. Without
limiting Itau's obligations hereunder, AOLB acknowledges that
Itau shall not be obligated to spend a particular amount of
money on, or commit a particular amount of resources for,
either specific or overall marketing activities hereunder
unless otherwise mutually agreed or specified in a Marketing
Plan. After the first anniversary of the Launch Date, the
Marketing Plan may be updated regularly by Itau in its
discretion, in consultation with the Marketing Committee to
reflect the marketing efforts Itau reasonably believes are
necessary to achieve the Verified Member Reference Numbers.
The Co-Branded Service shall be marketed and promoted as the
premier and the principal means of accessing Itau's
interactive Financial Services and
-17-
related Content by means of ISP Products. During the five (5)
year period beginning on the Launch Date, Itau shall engage in
a commercially reasonable level of marketing that Itau
reasonably believes is sufficient to meet the Verified Member
Reference Numbers. After such five (5) year period Itau shall
engage in a commercially reasonable level of marketing. Itau
shall use commercially reasonable efforts to provide the
Customized Client primarily to Itau Customers and, in the
absence of approval from AOLB, such approval not to be
unreasonably withheld, Itau shall not (a) acquire or use third
party databases or mailing lists of non-Itau Customers for the
specific purpose of distributing Customized Clients or
marketing or otherwise promoting the Co-Branded Service or (b)
engage in any marketing efforts for the Co-Branded Service not
designed to benefit Itau Customers or reasonably targeted
towards increasing the use of Itau's Financial Services by
Itau and non-Itau Customers or increasing the amount of
customers of Itau. This Section shall not prohibit Itau from
purchasing general online or offline media advertisements
promoting the Co-Branded Service or from using mass marketing
techniques or third party databases to promote its Financial
Services to non-Itau Customers, or from mentioning the Co-
Branded Service in such advertisements, but Itau shall not
distribute Customized Clients in connection with such
promotion without AOLB's prior consent. Itau shall pay all
expenses related to Itau's marketing and promotion of the Co-
Branded Service and Customized Client and shall pay AOLB for
AOLB's reasonable direct costs of providing and delivering all
marketing materials requested by Itau (except to the extent
expressly provided otherwise in Section 2.2). AOLB and Itau
will discuss and agree upon measures to facilitate the
migration of members of the AOLB Service who are Itau
Customers to become AOLB/Itau Subscribers. Itau acknowledges
that a primary means for accomplishing such migration shall be
through promotion on the AOLB Service purchased by Itau.
2.1.3 Benefits for Itau Customers. In order to encourage Itau
---------------------------
Customers to register for the Co-Branded Service, Itau shall
provide to approved Itau Customers that register for the Co-
Branded Service an amount of free hours determined by Itau in
its reasonable discretion subject to this Section 2.1.3. As
part of the registration process set forth in the Technical
Operating Plan, promptly after each Itau Customer registers
for the Co-Branded Service, Itau shall notify AOLB whether
such customer is approved by Itau for free hours (an "Approved
Subscriber"). If such Itau Customer is an Approved Subscriber,
such customer shall become an AOLB/Itau Subscriber. If such
Itau Customer is not an Approved Subscriber, such Itau
Customer shall not receive the Co-Branded Service or become an
AOLB/Itau Subscriber, but AOLB may provide such Customer the
opportunity to register for the AOLB Service. During the first
five (5) years of the Term, Itau shall provide each Approved
Subscriber a minimum of one free hour per month of access and
use of the Co-Branded Service. Thereafter, AOLB and Itau shall
mutually agree on the minimum number of free hours to be
provided to future Approved Subscribers, provided that, in the
event that AOLB and Itau do not so agree, the maximum number
of free hours Itau
-18-
shall be required to offer future Approved Subscribers shall
be one-half hour per month. Subject to the foregoing minimum
numbers of hours and the Finance Plan, Itau shall provide each
Approved Subscriber with such number of free hour(s) per month
as determined by Itau. Itau may offer such Approved Subscriber
additional hours on the Co-Branded Service, in Itau's sole
discretion, at a discount provided that Itau pays the fees
required in Section 2.1.4. Itau may increase or reduce the
number of hours it provides to an Approved Subscriber at any
time, such change to be effective upon the commencement of
such Approved Subscriber's next billing cycle; provided that
(i) if such change will decrease the number of hours provided
to more than 10% of the Upsold Subscribers in any six (6)
month period, AOLB and Itau must mutually agree on such change
before Itau may implement such change with respect to such
Upsold Subscribers, and (ii) if such change will decrease the
number of hours provided to more than 10% of the Approved
Subscribers who are not Upsold Subscribers in any six (6)
month period, Itau shall provide to AOLB written notice sixty
(60) days before it may implement such change with respect to
such Approved Subscribers. For each Approved Subscriber who is
an Upsold Subscriber, Itau shall either provide the number of
free hour(s) determined by Itau with respect to the payment
plan selected by such Upsold Subscriber or offer a discounted
package, all as provided in the Finance Plan.
2.1.4 Payment For Free Hours for AOLB/Itau Subscribers. Each month
------------------------------------------------
(other than the first month of any free trial period) for each
AOLB/Itau Subscriber whether or not an Upsold Subscriber, Itau
shall pay to AOLB the amounts (the "Hours Payments") set forth
in a finance plan agreed between the Parties (the "Finance
Plan"), which Finance Plan shall be consistent with the
guidelines attached hereto as Exhibit F. The amount Itau shall
pay for each free hour (or fraction thereof) provided to
AOLB/Itau Subscribers, or for each discounted hour (or
fraction thereof) provided to AOLB/Itau Subscribers, and the
amount for each AOLB/Itau Subscriber that is inactive shall be
as set forth in the Finance Plan. The Finance Plan will also
contain the methodology for calculating costs for free hours
for ISP Products not available from AOLB as of the Effective
Date. The Finance Plan shall be reviewed biannually by the
Technical Committee and updated as appropriate by mutual
agreement of AOLB and Itau in writing signed by authorized
officers of AOLB and Itau of a vice president level. In the
event the Technical Committee is unable to reach agreement on
any such updates, either AOLB or Itau may escalate the issue
to the President of AOLB and a comparable officer of Itau who
shall in good faith attempt to reach agreement on such
updates. In the event such officers cannot reach agreement,
the then-current Finance Plan or guidelines in Exhibit F, as
the case may be, shall remain in effect.
2.1.5 Trial Period for Itau Customers. Itau Customers who register
-------------------------------
for the Co-Branded Service shall be offered a free trial
period as set forth in the Finance Plan. At all times during
the Term, Itau Customers that register for the Co-Branded
Service shall receive the benefit of any more favorable then-
available free trial period offers from AOLB (e.g., first six
- -
months free to customers of a particular Financial Institution
or other
-19-
Person) other than offers extended by AOLB (alone or in
conjunction with other Persons other than Financial
Institutions) to classes of consumers based on their social
needs or charitable purpose, such as schools, school children,
handicapped consumers and underprivileged consumers. AOLB
shall use commercially reasonable efforts to prevent
terminated AOLB/Itau Subscribers from registering for a free
offer for the AOLB Service within twelve (12) months after the
date of termination for each such AOLB/Itau Subscriber. In the
event that Itau desires not to provide free hours to a non-
Itau Customer that registers for the Co-Branded Service, Itau
shall notify AOLB, no later than one month after such Person's
registration for the Co-Branded Service. Such Persons shall
have the option to: (i) become AOLB Members of the AOLB
Service, in which case such Person shall not be an AOLB/Itau
Subscriber; or (ii) terminate his or her subscription to the
Co-Branded Service.
2.1.6 Joint Marketing of Co-Branded Service. AOLB may include Itau
-------------------------------------
in marketing the Co-Branded Service and the AOLB Service to
entities entering marketing agreements with AOLB in the
Territory where (i) AOLB reasonably believes that Itau can add
value to such relationship and Itau agrees to offer such
value, or (ii) Itau has an existing business relationship with
such entity, and such entity desires Itau's participation in
such relationship. AOLB will in its discretion identify such
opportunities during the quarterly meetings of the Management
Committee as well as on an ad hoc basis. Except as provided in
Sections 1.9 and 6.1 and elsewhere in this Agreement, nothing
in this Agreement shall restrict AOLB's right, at its expense
to use the AOLB Programmable Space and to conduct a reasonable
number of online marketing campaigns to encourage AOLB/Itau
Subscribers to use more than the free hours allocated to such
AOLB/Itau Subscribers by Itau, and AOLB shall consult with
Itau prior to conducting any offline campaign specifically for
such purpose.
2.2 Itau Distribution of Customized Client.
--------------------------------------
Subject to Article 6, Itau shall distribute CD-ROMs containing the
Customized Client in accordance with the Marketing Plan and this
Agreement. Itau shall use commercially reasonable efforts to
distribute such CD-ROMs primarily to Itau Customers. Itau shall pay
AOLB for all expenses related to production and delivery of the CD-
ROMs containing the Customized Client requested by Itau, except that
AOLB shall provide the first three (3) million CD-ROMs containing the
Customized Client at its expense (not including any packaging, kits or
marketing materials). The final marketing materials and kits
containing the CD-ROMs will be mutually agreed upon in accordance with
Section 6.1. Neither AOLB nor Itau shall unreasonably withhold its
approval of such materials or kits. AOLB shall charge Itau its
reasonable, actual direct cost of producing and delivering CD-ROMs.
At Itau's option, AOLB shall provide Itau with a goldmaster CD-ROM
with the then-current version of the Customized Client and Itau may
reproduce the CD-ROMs on its own for the sole purpose of distributing
such CD-ROMs in accordance with this Agreement. AOLB shall use
commercially reasonable efforts to provide Itau with requested CD-ROMs
within
-20-
thirty (30) days of receiving a written order for such CD-ROMs
from Itau; provided, however, that AOLB shall have no obligation to
fulfill any orders for CD-ROMs until ninety (90) days after the date
AOLB has completed the Initial Deliverables. Itau acknowledges and
agrees that AOLB requires at least thirty (30) days to complete the
preparation and delivery of CD-ROMs containing the Customized Client.
If AOLB fails to deliver to Itau the numbers of CD-ROMs reasonably
requested by Itau in accordance with the Marketing Plan within sixty
(60) days after such CD-ROMs are requested in writing by Itau: (a) if
as a direct consequence of such failure Itau reasonably appears likely
to be unable to meet the Minimum Marketing Commitments during such
Marketing Year then, at Itau's request within fifteen (15) days after
the date of such failure, the Marketing Committee will meet to agree
upon a reasonable reduction in the Minimum Marketing Commitments for
such Marketing Year reflecting the extent to which Itau is precluded
from meeting such Minimum Marketing Commitments as a direct
consequence of such failure; and, in addition, (b) if as a direct
consequence of such failure to deliver CD-ROMs Itau reasonably appears
likely to be unable to satisfy the Member Numbers, then, at Itau's
request within fifteen (15) days after the date of such failure, the
Marketing Committee will meet to agree upon a reasonable Tolling
Period for achieving such Member Numbers. In the event the Marketing
Committee is unable to reach agreement on whether such a reduction
and/or tolling is warranted and/or the extent of such reduction or
duration of such Tolling Period within fifteen (15) days after the
referral of the issue to the Marketing Committee, either Party may
refer such disagreement for resolution to Forty Five Day Arbitration
within thirty (30) days thereafter.
2.3 Exclusivity Regarding Itau Marketing.
------------------------------------
2.3.1 In General. Nothing in this Agreement shall limit the right of
----------
Itau and its Affiliates to freely distribute their content and
services on ISP Products, including ISP Products of third
parties competitive with AOLB. Except as provided in this
Section 2.3 hereafter, within the Territory, Itau (including,
for all purposes of the remainder of this Section 2.3, its
Affiliates that are Financial Institutions) shall not: (a)
offer any ISP Product other than that of AOLB, (b) brand or
Co-Brand any ISP Product (other than AOLB's); or (c) (i)
license, authorize or affirmatively assist any Person
(including Itau's non-Financial Institution Affiliates) in
promoting any ISP Product (other than AOLB's), or (ii) market
or otherwise promote any ISP Product (other than AOLB's),
except to the extent necessary to inform Itau Customers that
Itau Financial Services Content is available on or through
such ISP Products. In the event that it is necessary to inform
Itau Customers that Itau Financial Services Content is
available on or through an ISP Product (other than AOLB's):
(i) Itau shall not mention any brand of an Access Provider
(other than AOLB) if it can inform Itau Customers of such
availability without mentioning any brand of such an Access
Provider (other than AOLB) (e.g., by mentioning only the type
- -
of ISP Product), and (ii) such information and promotion shall
in any event be significantly less prominent and of
significantly more limited scope than Itau's promotion of the
Co-Branded Service. If Itau forms a Portal Entity, and such
Portal Entity is a non-Financial Institution Affiliate of
Itau, then Itau shall not license, authorize or otherwise
affirmatively
-21-
assist such Portal Entity in targeting any Advertisements for
any ISP Product directly to Itau Customers or AOLB/Itau
Subscribers. Notwithstanding anything contained herein, this
Section 2.3 applies only to products and services intended
primarily for individuals and shall not limit Itau's rights
with respect to the branding, Co-Branding, offering, marketing
or promoting of products and services for conducting business-
to-business transactions not involving individual consumers.
The Itau Service shall be treated the same as ISP Products for
purposes of subpart (c) of this Section 2.3.1 and other
related provisions thereto, provided, however, that for so
long as the Itau Service provides access controlled by Itau to
selected Internet sites on a single server or a limited (i.e.,
small) number of servers and the Itau Service does not provide
general access to the Internet network (e.g., without having
functionality where a user can access Internet sites, other
than those sites selected by Itau as provided above), Itau's
rights to inform Itau Customers that Itau Financial Services
Content is available on or through the Itau Service shall,
notwithstanding any other provision of this Agreement, include
the right to identify or describe how to join or subscribe to
the Itau Service, provided however, that all such information
and promotion of the Itau Service shall in any event be
significantly less prominent and of significantly more limited
scope than Itau's promotion of the Co-Branded Service. Itau's
offering, branding, Co-Branding, marketing and promotion of
Non-ISP Products with Access Providers shall be addressed on a
product-by-product basis as provided in Section 12.2. Nothing
in this Section 2.3 shall restrict Itau's ability to offer,
brand, Co-Brand, customize, market or promote Non-ISP Products
with any Person, including an Access Provider, and including
by mentioning the brand name of such Access Provider (e.g. a
Co-Branded Affinity Card or wallet technology), however (i)
any such activities regarding such Person's ISP Products shall
be fully subject to this Section 2.3; and (ii) Itau may not
combine a Non-ISP Product offering of an Access Provider
permitted pursuant to Section 12.2 with another Non-ISP
Product offering of an Access Provider for which Itau did not
approach AOLB as required in Section 12.2. Itau's ability to
execute an agreement with an Access Provider for the financing
of a general purpose device that is capable of connecting to
the Internet (e.g. a PC financing deal) shall be addressed in
accordance with Section 12. After complying with the
provisions of Section 12, Itau may execute an agreement with
such Access Provider in accordance with the following
terms:(i) any of such Access Provider's software installed on
such device shall be limited to the standard version of such
software; (ii) such offer shall be targeted to the general
marketplace and not to the customers of Itau; (iii) no free
hours may be directly targeted to Itau Customers; and (iv) the
brand name or logo of Itau shall be incorporated in any
Advertisements or other promotions for such offer in a less
prominent manner than the brand name or logo of the Access
Provider.
2.3.2 New ISP Products.
----------------
(a) In General. It is the intention of AOLB and Itau to
----------
create a Co-Branded version of all of the ISP Products
that AOLB offers in the Territory. During the Technical
Committee meetings, AOLB and Itau shall regularly
discuss: (i) the introduction of new ISP Products in
the Territory; and (ii) technological changes to then-
current ISP Products.
-22-
(b) New ISP Products Offered by AOLB. On or before the date
--------------------------------
AOLB intends to make available a new ISP Product in the
Territory, AOLB shall offer Itau the opportunity to
create a Co-Branded version of such ISP Product by
calling a meeting of the Technical Committee and
presenting the request at such meeting. At such
meeting, AOLB shall advise Itau of the date that it
intends to introduce such ISP Product in the Territory.
Within two (2) weeks after such meeting, Itau will
notify AOLB whether it desires to commence offering a
Co-Branded version of such ISP Product in the
Territory, and on what date it intends to commence
marketing and promoting such ISP Product. If Itau
elects to offer a Co-Branded version of such ISP
Product in the Territory, then such Co-Branded version
shall be incorporated into this Agreement in accordance
with Section 2.3.2(d) below. If Itau either elects (a)
not to create a Co-Branded version of such ISP Product;
or (b) not to commence marketing and promotion of such
ISP Product within the Territory within the reasonable
time period for promotion requested by AOLB (which time
period shall not be less than nine (9) months, then
AOLB may market and otherwise promote such ISP Product
with other Financial Institutions in accordance with
Section 2.3.2(e) below.
(c) New ISP Products Not Offered by AOLB. If: (i) (x) an
------------------------------------
ISP Product is available in the Territory from third
parties and not from AOLB or (y) a third party has
approached Itau regarding its ISP Product that will be
available in the Territory in the near future and (ii)
it is important to Itau's core business to be able to
market and otherwise promote such ISP Product, then
Itau may request that AOLB offer such ISP Product by
calling a meeting of the Technical Committee and
presenting the request at such meeting. At such
meeting, Itau shall advise AOLB of the activities it
desires to engage in with respect to such ISP Product
and the date on which it wishes to commence such
activities. Within two (2) weeks after such meeting,
AOLB will notify Itau whether AOLB intends to offer
such ISP Product in the Territory, and on what date it
intends to commence offering such ISP Product. If AOLB
elects to offer such ISP Product in the Territory
within the reasonable time period requested by Itau
(which time period shall be no less than nine (9)
months except with respect to an ISP Product related to
televisions such as "Web TV," in which case such time
period shall be no less than twelve (12) months, then
such Co-Branded version of the ISP Product shall be
incorporated into this Agreement in accordance with
Section 2.3.2(d) below. If AOLB elects (a) not to offer
such ISP Product in the Territory, or (b) not to offer
such ISP Product in the Territory within the reasonable
time period requested by Itau, then Itau may market and
otherwise promote such ISP Product and the brand of
other Access Providers in accordance with Section
2.3.2(f) below.
-23-
(d) Rights and Obligations of the Parties When Itau Elects
------------------------------------------------------
to Offer a Co-Branded Version of a New AOLB ISP
-----------------------------------------------
Product. If Itau elects to create a Co-Branded version
-------
of an AOLB ISP Product in the Territory pursuant to
Section 2.3.2(b) or 2.3.2(c), Itau shall market and
promote such ISP Product under the terms and conditions
of this Agreement, to the extent applicable and, where
applicable, the terms "Co-Branded Service" and "AOLB
Service" shall be deemed to include such ISP Product,
provided, however that any assessments of comparability
between the Co-Branded Service and the AOLB Service
shall be made on an ISP Product-by-ISP Product basis.
To the extent the terms and conditions herein are
inapplicable, the Parties shall meet and in good faith
work to agree upon adjustments to such inapplicable
terms and conditions in a manner that is consistent
with and best reflects the spirit of the relationship
between the Parties under the Agreement. For the
avoidance of doubt, a Party's obligation under this
Section 2.3.2 and Sections 2.3.3 and 2.3.5 to discuss
certain subjects with another Party shall not include
an obligation to discuss with such other Party's
Affiliates. In the absence of such an agreement, either
AOLB or Itau may refer the issue of (i) the
applicability of the terms and conditions of this
Agreement to such ISP Product and, (ii) if such terms
and conditions are not applicable, equitable
adjustments to such terms and conditions, to nonbinding
mediation for resolution in accordance with Section
13.7. With respect to the Co-Branded version of such
ISP Product: (a) in no event shall AOLA or AOLB be
required to pay any additional amounts to Itau,
provided however, that AOLB shall perform at its
expense such initial Co-Branded customizations for the
Co-Branded version of such ISP Product as are mutually
agreed; (b) in no event shall Itau be obligated to
increase its marketing obligations hereunder; and (c)
in no event shall the Parties alter the amount of any
payments set forth in Section 11.2.5, or the Member
Numbers. Additionally, the Co-Branded version of such
ISP Product shall be substantially the same as AOLB's
generally available version of such ISP Product in
terms of both technology and breadth of Content, except
to the extent such Co-Branded ISP Product is modified
in accordance with this Agreement. If such new ISP
Product is a Free Internet Access Service in the
Territory, Itau shall not be obligated to pay any fee
in connection with Itau Customers' subscription to, or
use of, such ISP Product. When AOLB introduces the Co-
Branded version of such new ISP Product, Itau shall
market and promote such new ISP Product as the premier
and the principal means of accessing Itau's interactive
Financial Services and related Content through such ISP
Product in the Territory.
(e) Rights and Obligations of the Parties When Itau Elects
------------------------------------------------------
Not to Offer a Co-Branded Version of a New AOLB ISP
---------------------------------------------------
Product. If Itau pursuant to Section 2.3.2(b) elects
-------
not to create a Co-Branded version of a new ISP Product
in the Territory or will
-24-
not commence marketing or promotion of a new ISP Product in
the Territory in the period of time reasonably requested by
AOLB (which time period shall be no less than nine (9) months
then, except as otherwise agreed by AOLB in writing, AOLB may
enter into any agreement with another Financial Institution
regarding such ISP Product, provided that such agreement
complies with the provisions of this Agreement.
Notwithstanding the foregoing, in the event that AOLB's only
reasonable option with respect to the offering, marketing or
promotion of such ISP Product with a Financial Institution in
the Territory is to enter into an agreement that would violate
the provisions of Section 7.1, then AOLB shall notify Itau in
writing of its intent to enter into such an agreement. AOLB
may not enter into any such agreement during the two-week
period immediately following Itau's receipt of such notice. If
during such two-week period, Itau notifies AOLB in writing
that it desires to create a Co-Branded version of such new ISP
Product in the Territory within the initial time period
requested by AOLB pursuant to Section 2.3.2(b), then the
Parties shall follow the procedures set forth in Section
2.3.2(d) hereof. Alternatively, if, during such two week
period, Itau: (a) fails to respond to AOLB's notice, or (b)
notifies AOLB in writing that it does not desire to create a
Co-Branded version of such new ISP Product in the Territory
within the initial time period requested by AOLB (which time
period shall be no less than nine (9) months), then AOLB may
immediately terminate its exclusivity obligations under
Sections 7.1 and 2.3 with respect to such ISP Product by
written notice to Itau at any time within thirty (30) days
thereafter, and may enter into such agreement with any
Financial Institution. If AOLB terminates its exclusivity
obligations in accordance with the foregoing, then Itau may,
at its option, by written notice to AOLB within thirty (30)
days after such termination, elect to: (i) terminate its
exclusivity obligations under Section 2.3 with respect to such
ISP Product, or (ii) terminate its exclusivity obligations
under Section 2.3 with respect to all current and future ISP
Products. If Itau elects to terminate all of its obligations
under Section 2.3 with respect to all current and future ISP
Products in the Territory, then AOLB may, at its option, by
written notice to Itau within thirty (30) days after such
termination: (x) terminate its exclusivity obligations under
Sections 2.3 and 7.1 with respect to all current and future
ISP Products in the Territory, or (y) terminate this Agreement
in its entirety. In the event Itau's election under this
Section is to terminate only its exclusivity obligations under
Section 2.3 with respect to such ISP Product in the Territory,
then AOLB shall not promote the version of the ISP Product
that it Co-Branded with a third party Financial Institution
unless it is promoting the Co-Branded Service, in which case
it will promote such other version less prominently than it
promotes the Co-Branded Service.
-25-
(f) Rights and Obligations of the Parties When AOLB Does Not Offer
--------------------------------------------------------------
a New ISP Product. If AOLB pursuant to Section 2.3.2(c) elects
-----------------
not to offer a particular new ISP Product in the Territory or
will not commence offering a new ISP Product in the Territory
in the period of time reasonably requested by Itau (which time
period shall be no less than nine (9) months, except as
otherwise agreed by Itau in writing, Itau may enter into any
agreement with another Access Provider regarding such ISP
Product, provided that such agreement complies with the
provisions of this Agreement. Notwithstanding the foregoing,
in the event that Itau's only reasonable option with respect
to distributing Content and Financial Services in the
Territory through such ISP Product with an Access Provider is
to enter into an agreement that would violate the provisions
of Section 2.3.1, then Itau shall notify AOLB in writing of
its intent to enter into such an agreement. Itau may not enter
into any such agreement during the two-week period immediately
following AOLB's receipt of such notice. If during such two-
week period, AOLB notifies Itau in writing that it desires to
offer such new ISP Product in the Territory within the initial
time period requested by Itau pursuant to Section 2.3.2(c),
then the Parties shall follow the procedures set forth in
Section 2.3.2(d) hereof. Alternatively, if, during such two
week period, AOLB: (a) fails to respond to Itau's notice, or
(b) notifies Itau in writing that it does not desire to offer
such new ISP Product in the Territory within the initial time
period requested by Itau, then Itau may immediately terminate
its exclusivity obligations under Section 2.3 with respect to
such ISP Product by written notice to AOLB at any time within
thirty (30) days thereafter, and may enter into such agreement
with any Access Provider. If Itau terminates its exclusivity
obligations in accordance with the foregoing, then AOLB may,
at its option, by written notice to Itau within thirty (30)
days after such termination, elect to: (i) terminate its
exclusivity obligations under Sections 2.3 and 7.1 with
respect to such ISP Product, or (ii) terminate its exclusivity
obligations under Sections 2.3 and 7.1 with respect to all
current and future ISP Products. If AOLB elects to terminate
all of its obligations under Section 2.3 and Section 7.1, then
Itau may, at its option, by written notice to AOLB within
thirty (30) days after such termination: (x) terminate its
exclusivity obligations under Section 2.3 with respect to all
current and future ISP Products, or (y) terminate this
Agreement in its entirety. In the event AOLB elects not to
terminate its obligations under Sections 2.3 and 7.1 or
terminates only such obligations with respect to such ISP
Product, Itau shall not promote such ISP Product in the
Territory in connection with such Access Provider as
prominently as it promotes the Co-Branded Service.
-26-
2.3.3 Noncompetitive AOLB ISP Products.
--------------------------------
(a) Review of Competitiveness. During the Term, the Technical
-------------------------
Committee shall regularly discuss the quality of the
technology used in the Co-Branded versions of the ISP
Products in the Territory. In the event that Itau
believes that (i) AOLB's technology with respect to any
such ISP Product in the Territory is not as a whole
competitive with similar ISP Products offered by third
parties, and (ii) AOLB or Itau is losing its market share
with respect to ISP Products or Financial Services,
respectively, relative to its five (5) largest
competitors in the Territory directly as a result of such
lack of competitiveness, the Technical Committee shall
discuss Itau's concerns and attempt to determine a
mutually agreeable means of addressing such concerns. In
the event that, notwithstanding such attempts, AOLB and
Itau cannot agree on such a means, Itau may refer the
matter to Forty-Five Day Arbitration. If either the
Technical Committee determines or Itau receives a final
arbitral ruling that (A) such AOLB ISP Product when
considered as a whole is not technologically competitive
with similar ISP Products offered by third parties and
(B) AOLB or Itau is losing its market share with respect
to ISP Products or Financial Services, respectively,
relative to its five (5) largest in the Territory
directly as a result of such lack of competitiveness,
then (b) AOLB and Itau shall within forty-eight hours
thereafter unless otherwise mutually agreed convene the
Technical Committee to discuss this matter. If during
such meeting, AOLB advises Itau that, within the
reasonable time period requested by Itau (which time
period shall be no less than nine (9) months): (i) it
will not modify such ISP Product in accordance with the
recommendations of the Technology Committee or the
arbitral ruling or (ii) it cannot develop or acquire such
competitive technology, then Itau may market and promote
versions of such third-party ISP Product in the Territory
in accordance with Section 2.3.3(b).
(b) Rights With Respect to Non-Competitive Technology. If an
-------------------------------------------------
AOLB ISP Product is determined by the Technical Committee
or a final arbitral ruling not to be technologically
competitive as a whole pursuant to Section 2.3.3(a), and
AOLB elects not to cure the lack of competitiveness of
such ISP Product within the reasonable time period
requested by Itau (which time period shall be no less
than nine (9) months), except as otherwise agreed in
writing, Itau may enter into any agreement with another
Access Provider regarding such ISP Product, provided that
such agreement complies with the provisions of this
Agreement. Notwithstanding the foregoing, in the event
that Itau's only reasonable option with respect to
distributing Content and Financial Services through a
substantially similar third-party ISP Product is to enter
into an agreement that violates Section 2.3.1, then Itau
shall notify AOLB in writing of its intent to enter into
such an agreement. Itau may not enter into any such
agreement during the two-week period immediately
following
-27-
AOLB's receipt of such notice. If during such two-week
period, AOLB notifies Itau in writing that it desires to
cure the lack of competitiveness of such ISP Product
within the reasonable time period requested by Itau, AOLB
shall cure such lack of competitiveness and Itau shall
not enter any agreement that violates Section 2.3.
Alternatively, if, during such two-week period, AOLB (a)
fails to respond to Itau's notice, or (b) notifies Itau
in writing that it does not desire to cure such lack of
competitiveness within the initial time period requested
by Itau, then Itau may immediately terminate its
exclusivity obligations under Section 2.3.1 with respect
to such ISP Product by written notice to AOLB at any time
within thirty (30) days thereafter, and may enter into
such agreement with any Access Provider. If Itau
terminates its exclusivity obligations in accordance with
the foregoing, then AOLB may, at its option, by written
notice to Itau within thirty (30) days after such
termination, elect to (i) terminate its exclusivity
obligations under Sections 2.3 and 7.1 and with respect
to such ISP Product, or (ii) terminate its exclusivity
obligations under Sections 2.3 and 7.1 with respect to
all current and future ISP Products. If AOLB elects to
terminate all of its obligations under Sections 2.3 and
7.1, then Itau may, at its option, by written notice to
AOLB within thirty (30) days after such termination: (x)
terminate its exclusivity obligations under Sections 2.3
with respect to all current and future ISP Products, or
(y) terminate this Agreement in its entirety. In the
event AOLB elects not to terminate its obligations under
Sections 2.3 and 7.1 or terminates only such obligations
with respect to such ISP Product, Itau shall not promote
such ISP Product in connection with such Access Provider
as prominently as it promotes the Co-Branded Service.
(c) PC Narrowband. Notwithstanding anything contained herein,
-------------
the provisions of this Section 2.3.3 shall not apply to
the Co-Branded Service for personal computers accessible
through narrowband connectivity during the first five (5)
years of the Term.
2.3.4 Interpretation.
--------------
(a) For purposes of this Agreement: (i) the term "promote"
(including any variations thereof) shall include any
activities and information that (a) are designed to or
have the effect of advancing or furthering recognition or
value associated with the brands associated with the
applicable ISP Product or (b) identify or describe how to
join or subscribe to an ISP Product offering, provided,
however, that (c) the use of a brand name shall not "per
se" be deemed to constitute promotion; (ii) the term
"inform" (including any variations thereof) shall mean
advertising or notifying individuals of the availability
of Itau's Financial Services by means of an ISP Product
(other than AOLB's) without (a) advancing or furthering
recognition or
-28-
value associated with the brands associated with the
applicable ISP Product or (b) identifying or describing
how to join or subscribe to an ISP Product offering
except as otherwise provided in Sections 2.3.1 or 2.3.2;
and (iii) identifying an ISP Product without identifying
any associated brand name or logo shall be deemed to
constitute "informing", however, the identification of
such ISP Product shall be less prominent than the
promotion of the Co-Branded Service.
(b) The Parties acknowledge that the following activities are
examples of activities permitted hereunder: (i) Itau may
promote the URL's for the Itau Interactive Sites and the
availability of Itau's products and services at such URL
without limitation; (ii) Itau may sponsor, or permit its
Content and services to be used in connection with (e.g.,
- -
sponsored by Itau), a channel or area offered on a portal
and may advertise such sponsorships including by placing
an advertisement stating, for example, that the "Yahoo
Finance Channel is Sponsored by Itau and is available at
xxx.xxxxx.xxx," so long as the advertisement does not
also specify any ISP Product or the brand name or logo of
an Access Provider (e.g., access Yahoo via UOL); (iii) in
- -
the event that it is necessary to identify the brand name
of an Access Provider or ISP Product in order to inform
Customers of the availability of Itau's Content and
services on a particular ISP Product, Itau may identify
such brand name in connection with such ISP Product for
so long as it remains necessary; and (iv) Itau may
respond to an unsolicited customer inquiry and in such
response may inform of a brand name of an Access Provider
or ISP Product to the extent necessary or expressly
requested. For purposes of this Agreement brand names
shall be deemed not to include logos.
2.3.5 Acquired ISP Products. In the event that an AOLB Party
---------------------
acquires any Access Provider which offers, provides or
operates one or more ISP Products offered in the Territory,
such AOLB Party shall offer Itau the opportunity to Co-Brand
such acquired ISP Product(s) offered in the Territory (if AOLB
intends to continue offering such ISP Product(s)) at the
earlier of (i) six (6) months after such AOLB Party completes
the acquisition of such Access Provider, and (ii) such time as
such AOLB Party determines its strategy with respect to such
acquired ISP Product(s), including whether or not it will
winddown or terminate such ISP Product; provided, however,
that to the extent one or more of such ISP Product(s) were
requested by Itau pursuant to Section 2.3.2(c) and AOLB
elected to offer such ISP Product in the Territory within the
reasonable time period requested by Itau, the opportunity to
Co-Brand such ISP Product(s) shall be offered to Itau promptly
after such AOLB Party completes the acquisition of such Access
Provider, but in no event later than the date AOLB agreed to
offer such ISP Product in the Territory pursuant to Section
2.3.2(c). Within two (2) weeks after such offer, Itau will
notify AOLB whether it desires to commence offering a Co-
Branded version of such ISP Product in the Territory, and on
what date it intends to commence marketing and promoting such
ISP Product. In the event that Itau agrees to Co-Brand such
ISP Product, then such Co-Branded version shall be
incorporated into this Agreement in
-29-
accordance with Section 2.3.2(d). If Itau elects not to create
a Co-Branded version of such ISP Product, then AOLB may market
and otherwise promote such ISP Product with other Financial
Institutions in accordance with Section 2.3.2(e).
2.4 Restrictions on Equity Investments. During the Term, Itau shall not acquire
----------------------------------
Voting Control of, or a twenty percent (20%) or more Equity Interest in,
any Access Provider in the Territory or an entity set forth on Exhibit H
(an "AOLB Designated Entity"). The foregoing sentence shall not preclude
Itau from acquiring Voting Control of or more than a twenty percent (20%)
Equity Interest in a Portal Entity unless and until such Portal Entity or
such Independent Financial Services Portal is or becomes an Access
Provider, in which case Itau shall be required to come into compliance with
the provisions of this Section 2.4 within six (6) months after such Portal
Entity or Independent Financial Services Portal becomes an Access Provider.
AOLB may amend Exhibit H on a bi-annual basis upon fifteen (15) days prior
written notice, so long as the total number of entities listed on Exhibit H
does not exceed five (5) and such list only includes Horizontal Portals. In
addition, such entities may not include Itau or any of its Affiliates. The
provisions of this Section 2.4 shall not preclude Itau from maintaining
Voting Control or retaining any Equity Interest in any Person, provided
that such Voting Control or Equity Interest was acquired prior to the date
Exhibit H is amended to restrict Itau's Equity Interest in such Person.
This Section 2.4 shall not preclude Itau from acquiring Voting Control of
or any level of Equity Interest in any Person that owns or controls such an
Access Provider or AOLB Designated Entity so long as the assets of such
Access Provider or AOLB Designated Entity do not comprise more than twenty
percent (20%) of the assets of such Person. In the event Itau has or
acquires Voting Control or Equity Interests in any Person that owns or
controls such an Access Provider or AOLB Designated Entity in violation of
this Section 2.4 or otherwise ends up in violation of this Section as a
result of a recapitalization, stock repurchase, reverse stock split or
other similar transaction not within the control of Itau, Itau shall have
six (6) months from such date to come into compliance with the provisions
of this Section 2.4 with respect to such Person. Itau shall have six (6)
months from the Effective Date to come into compliance with this Section
2.4 with respect to any Voting Control or Equity Interests held as of the
Effective Date. Any such noncompliance during such six (6) month periods
shall not be a breach of this Section 2.4.
2.5 Acquisitions. In the event Itau acquires an entity that has entered an
------------
agreement, contract or other arrangement ("Competing Arrangement")
inconsistent with Itau's obligations under Section 2.3, Itau promptly shall
meet with AOLB to discuss such Competing Arrangement and agree upon means
to minimize the effects of such Competing Arrangement on Itau's ability to
fulfill the intent and spirit of this Agreement, and unless the Parties
agree otherwise, Itau shall: (a) not renew or extend such Competing
Arrangement, or agree to enlarge its scope; (b) terminate such Competing
Arrangement at the earliest date Itau can do so without a penalty; (c)
cease and desist from any activities in connection with such Competing
Arrangement that are inconsistent with Section 2.3 and not required by such
Competing Arrangement; and (d) to the maximum extent possible under such
Competing Arrangement, use commercially reasonable efforts to bring such
entity's operations into compliance with Section 2.3, such as by migrating
Itau Customers from the ISP Product that is the subject of such
-30-
Competing Arrangement to an AOLB/Itau Co-Branded version of such ISP
Product at the earliest possible date given such Competing
Arrangement.
3. LICENSE
-------
3.1 License to AOLB. During the Term, Itau hereby grants AOLB and its
---------------
Affiliates a worldwide, nonexclusive, nonassignable license (a) to
use, reproduce, display, adapt, store, perform, distribute, transmit
the Itau Online Area and the Licensed Content (or any portion thereof)
through the AOLB Network or the Co-Branded Service as appropriate
solely in connection with this Agreement, (b) to link to the Itau
Interactive Sites and other Linked Interactive Sites (or any portion
thereof) as appropriate solely in connection with this Agreement and,
(c) to the extent necessary or appropriate for the delivery of the
Itau Interactive Site and Linked Interactive Sites to AOLB/Itau
Subscribers, to reproduce, display, adapt, store, perform, distribute
and transmit the Itau Interactive Sites and Linked Interactive Sites
(or any portion thereof) in the ordinary course of operation of the
AOLB Network or the Co-Branded Service.
3.2 AOLB Tools. AOLA and AOLB hereby grant Itau a non-exclusive, non-
----------
assignable, royalty-free license during the Term to use publishing
tools, (which are then generally made available by AOLB to its
interactive content providers,) solely in connection with this
Agreement. Itau recognizes that (i) AOLB provides all such publishing
tools on an "as is" basis, without warranties of any kind, and (ii)
AOLB may withdraw or modify its publishing tools at any time,
provided, however, that, in the event Itau requires alternative
proprietary AOLB tools to perform its obligations under this
Agreement, AOLB shall make such alternative tools available on a
royalty-free basis.
3.3 License to Itau. In the event AOLB and Itau agree to include links
---------------
from the Itau Interactive Sites to publicly available pages within the
AOLB Network, AOLB hereby grants to Itau the right to link to such
pages (or any portion thereof) as appropriate solely in connection
with this Agreement.
3.4 Duty to Inform. Each Party shall use commercially reasonable efforts
--------------
to promptly inform the other of any information related to the Itau
Online Area, the Linked Interactive Sites, the Co-Branded Service or
this Agreement that it becomes aware has led or is reasonably likely
to lead to a claim, demand or liability of or against another Party
and/or its respective Affiliates by any third party.
4. MANAGEMENT
----------
4.1 Management Committee. A "Management Committee," comprised of
--------------------
representatives of AOLB and Itau shall meet on a quarterly basis
during the Term to review the commercial relationship under this
Agreement between the Parties, including without limitation to: (i)
discuss the findings of the Marketing Committee and the Technical
Committee and any issues raised by such Committees, (ii) discuss
opportunities and future cooperation on projects; (iii) discuss
opportunities to co-market to potential special projects; and
-31-
(iv) discuss different plans and packages of free hours that Itau
will offer to Itau Customers.
4.2 Management of Itau Online Area. Itau shall review, delete, edit,
------------------------------
create, update and otherwise manage the Licensed Content and all
Content available on or through (a) the Linked Interactive Sites that
are Itau Interactive Sites or (b) those portions of the Itau Online
Area programmed by Itau. To the extent Itau programs any portion of
the Itau Online Area, such portion shall be programmed in accordance
with the terms of this Agreement and any reasonable generally
applicable guidelines and service standards for interactive content
providers published by AOLA or AOLB and provided to Itau or made
available on the Co-Branded Service except to the extent such
guidelines or standards conflict with the provisions of this Agreement
or otherwise materially adversely affect Itau's rights hereunder. Itau
shall use commercially reasonable efforts to ensure that Content
included within the Linked Interactive Sites that are Itau Interactive
Sites and the Itau Online Area (on the areas that Itau programs
therein) is reasonably current, accurate and well-organized. Neither
AOLA nor AOLB shall have any obligations with respect to the Licensed
Content available on or through the Itau Online Area and any Linked
Interactive Sites, including, but not limited to, any duty to review
or monitor any such Content. AOLB shall have the right to remove or
deactivate any links to the Linked Interactive Sites, and to remove
(or direct Itau to remove) any Content from the Itau Online Area,
which, as reasonably determined by AOLB: (i) violates the Terms of
Service, (ii) violates the AOLB Privacy Policies, or (iii) violates
any applicable law, rule or regulation; provided that AOLB shall use
commercially reasonable efforts to notify Itau in advance of such
deactivation or removal, except in circumstances which by their nature
require more immediate action.
4.3 Editorial Control of Content and Services. Except as expressly
-----------------------------------------
provided otherwise in this Agreement: (a) AOLB will have complete
editorial and commercial control of the Co-Branded Service (except
with respect to those areas of the Itau Online Area programmed by
Itau, the Linked Interactive Sites and the Covered Pages) and the AOLB
Service, and (b) Itau will have complete editorial and commercial
control of the Itau Interactive Sites, and the portions of the Itau
Online Area programmed by Itau. Itau will have the exclusive use of
the Keyword "Itau" throughout the Co-Branded Service and AOLB Service
which will link to the Itau Online Area or a page of an Itau
Interactive Site (or, if mutually agreed by AOLB and Itau, another
location) provided that such linked to page does not include any
promotions for an Access Provider. Itau acknowledges that its
utilization of a Keyword will not create in it, nor will it represent
it has, any right, title or interest in or to such Keyword, other than
the right, title and interest Itau holds in Itau's trademarks
independent of the Keyword.
4.4 Overhead Accounts. Itau shall be granted a reasonable number of
-----------------
"overhead accounts" for the Co-Branded Service for the exclusive
purpose of enabling it and its agents to facilitate the cooperation
between the Parties. An overhead account is an account for access to
the Co-Branded Service made available to Itau by AOLB on a free basis
subject to the provisions of and for the purposes set forth in this
Section 4.4. Itau shall be responsible for the actions taken under or
through its overhead accounts, which actions are subject to the Terms
of Service
-32-
and shall pay for any surcharges, including, without limitation,
premium charges, transaction charges and applicable communication
surcharges, incurred by any overhead account issued to Itau, but Itau
shall not be liable for charges incurred by any overhead account
relating to AOLB's standard subscription and usage charges. Upon the
termination of this Agreement, all overhead accounts, related screen
names and any associated usage credits or similar rights shall
automatically terminate. Neither AOLA nor AOLB shall have any
liability for loss of any data or Content related to any overhead
account or its proper termination. Individuals using the Co-Branded
Service through an overhead account shall not be counted as Verified
Members for purposes of this Agreement.
5. PRODUCTION, TRAINING AND SUPPORT
--------------------------------
5.1 Production Work. In the event that Itau requests AOLB's
---------------
production assistance in connection with: (a) maintenance of the Itau
Online Area once AOLB has provided to Itau the tools necessary to
perform such maintenance; (b) a major redesign of or addition to the
features or functionality of the Itau Online Area (e.g., a change to
- -
an existing screen format or construction of a new custom form); (c)
development work requested by Itau or; (d) construction and
maintenance of an advertising, sponsorship or promotional area or
online "store," other than as contemplated herein, Itau shall work
with AOLB to develop detailed written specifications for the requested
production assistance (the "Specs"). Following receipt of the final
Specs, AOLB shall notify Itau of: (i) AOLB's availability to perform
the requested production work; (ii) the proposed fee or fee structure
based on AOLB's reasonable, actual direct cost, if any, for the
requested production and maintenance work; and (iii) the estimated
schedule for such development work. To the extent the Parties reach
agreement regarding implementation of agreed-upon Specs, such
agreement shall be reflected in a separate work order signed by the
Parties.
5.2 Training and Support Programs. Itau may register for standard training
-----------------------------
programs that AOLB offers regarding design, development and management
of Itau Online Areas, including, without limitation, training programs
regarding AOLB's chat management and publishing tools programs. Itau
shall be responsible for paying travel and lodging costs associated
with its participation in any AOLB training programs.
6. PROMOTIONAL MATERIALS; TRADEMARKS
---------------------------------
6.1 Promotional Materials/Press Releases. Itau on the one hand and the
------------------------------------
AOLB Parties on the other, shall upon the reasonable request of such
other Party, submit for such other Party's prior written approval,
which shall not be unreasonably withheld or delayed, any marketing,
advertising, press releases or other promotional materials related to
the Co-Branded Service, the Itau Online Area, and/or referencing such
other Party and/or its trade names, trademarks and service marks (the
"Promotional Materials"); provided, however, that any Party's factual
reference to the existence of a business relationship among the
Parties shall not require the approval of any other Party. Once
approved, the
-33-
Promotional Materials may be used by a Party and its Affiliates for
the purpose of promoting the Itau Online Area and the Content
contained therein and the Co-Branded Services in accordance with this
Agreement and reused for such purposes until such approval is
withdrawn with reasonable prior notice. In the event such approval is
withdrawn, existing inventories of Promotional Materials may be
depleted unless such materials are inconsistent with the terms of this
Agreement.
6.2 Trademark License. In designing and implementing the Promotional
-----------------
Materials and subject to the other provisions contained herein, Itau
shall be entitled to use the AOLB Marks; and AOLA, AOLB and their
respective Affiliates shall be entitled to use the Itau Marks;
provided that such Party or Affiliate: (i) does not create a unitary
composite xxxx involving a Xxxx of the other Party without the prior
written approval of such other Party and (ii) displays symbols and
notices clearly and sufficiently indicating the trademark status and
ownership of the other Party's Marks in accordance with applicable
trademark law and practice. Each Party may at any time add additional
trade names, trademarks and/or service marks to its Marks, and to the
extent the Parties agree to Co-Brand or jointly offer any additional
product or service the trade names, trademarks and/or service marks of
each Party used to identify such product or service shall be deemed to
be added to its Marks for purposes of this Agreement.
6.3 Rights. Each Party acknowledges that its utilization of another
------
Party's Marks will not create in it, nor will it represent it has, any
right, title or interest in or to such Marks other than the licenses
expressly granted herein. Each Party agrees not to do anything
contesting or interfering with the trademark rights of another Party.
6.4 Quality Standards. Each Party agrees that the nature and quality of
-----------------
its products and services supplied in connection with another Party's
Marks shall conform to reasonable quality standards communicated in
writing by such other Party for use of its trademarks. Each Party
agrees to supply such other Party, upon request, with a reasonable
number of samples of any Promotional Materials publicly disseminated
by such Party which utilize such other Party's Marks. Each Party shall
comply with all applicable laws, rules and regulations and obtain any
required government approvals or enter into any required registered
user agreements pertaining to use of another Party's Marks.
6.5 Infringement Proceedings. Each Party agrees to promptly notify each
------------------------
other Party of any unauthorized use of such other Party's Marks of
which it has actual knowledge. Each Party shall have the sole right
and discretion to bring proceedings alleging infringement of its Marks
or unfair competition related thereto; provided, however, that each
Party agrees to provide the other Parties, at such other Parties'
expense, with its reasonable cooperation and assistance with respect
to any such infringement proceedings to the extent such proceedings
arise out or of relate to this Agreement.
7. AOLA/AOLB EXClUSIVITY
---------------------
7.1 In General. Each of AOLA and AOLB (and, for the purposes of this
----------
Article 7, Sections 2.3.2, 2.3.3 and 2.3.5 all references to AOLA and
AOLB shall be
-34-
deemed to include any Affiliates which they directly or indirectly
control or, in the case of AOLB only, are under common control with,
but not in any circumstances America Online, Inc.), hereby agrees that
within the Territory: (a) it shall not Co-Brand an ISP Product with a
Financial Institution or create any new or special brand for an ISP
Product for a Financial Institution; (b) it shall not customize an ISP
Product for a Financial Institution in substantially the same manner
as all of the customizations performed hereunder; (c) it shall not
offer an ISP Product identified by a special brand designed primarily
for use by one or more Financial Institutions for the provision of
Financial Services (e.g., "Banknet"); (d) it shall not enter into an
- -
agreement with a Financial Institution for the acquisition of
subscribers to the AOLB Service pursuant to which it offers such
Financial Institution's customers discounted or free hours for more
than twelve (12) months, except with respect to an ISP Product for
which no hourly usage fee is charged; (e) during the period commencing
on the Launch Date and continuing for six (6) months after the Launch
Date, it shall not enter any agreements with Financial Institutions
for the acquisition of such Financial Institution's customers as
subscribers to the AOLB Service; (f) if either AOLA or AOLB enters
into an agreement with a Financial Institution to develop, operate
and/or take and Equity Interest in an Independent Financial Services
Portal as permitted under Section 12.4.3, it shall not target any
Advertisements for such Independent Financial Services Portal to Itau
Customers or AOLB/Itau Subscribers; and (g) except with respect to an
ISP Product for which no hourly usage fee is charged, it may not enter
into an agreement or series of agreements for the acquisition of
subscribers to the AOLB Service permitted under (d) above with the
same Person or pursuant to which a promotion involving free or
discounted hours is offered to such third party's subscribers in the
Territory on a more frequent basis than as set forth in the following
schedule:
---------------------------------------------------------------------
Number Of Months That A Free Time That Must Lapse Before
Hours or Discounted Hours AOLB May Offer Same Party
Promotion Is Offered In The Another Promotion Involving Free
Territory Time On The AOLB Service
("Waiting Period")
---------------------------------------------------------------------
1 month 3 months
---------------------------------------------------------------------
2 months 3 months
---------------------------------------------------------------------
3 months 4 months
---------------------------------------------------------------------
4 months 5 months
---------------------------------------------------------------------
5 months 6 months
---------------------------------------------------------------------
or more months The same number of
months after the duration
of the free offer.
---------------------------------------------------------------------
AOLB shall use commercially reasonable efforts to prevent subscribers
who have received free hours on the AOLB Service from signing up for
another offer (other than a Free Internet Access Service) providing
additional free hours on the AOLB Service within six months
thereafter. Notwithstanding anything contained herein, this Article 7
and Sections 2.3.2 and 2.3.3 apply only to products and services
intended primarily for individuals and shall not limit
-35-
AOLA's or AOLB's rights with respect to products and services for
conducting business-to-business transactions not involving individual
consumers. Notwithstanding this Section 7.1, AOLB shall be permitted
to use marketing and promotional materials (including CD-ROMs) which
include the trademarks, tradenames, brand names, service marks or
logos of AOLB Parties and Financial Institutions in conjunction with
promotions permitted under (d) and (g) above at any time after the
first six (6) months after the Launch Date, provided, however, that
-------- -------
(i) such promotions must be directly targeted to the Financial
Institution's customers; (ii) AOLB shall not advertise or market such
offering in off-line mass media not directly targeted to such
Financial Institutions' customers (e.g., on television, on the radio,
- -
in newspapers, or in magazines); and (iii) AOLB shall be permitted to
advertise and market such promotion online, through in-store
promotions in the branches of such Financial Institutions, on the
packaging of the products themselves (e.g., via stickers on the
- -
packaging of the CD-ROM kit with the brand of the Financial
Institution) and in any other media directly targeted to such
Financial Institution's customers. In the event AOLB conducts a
promotion in the Territory pursuant to (d) or (g) above at any time
after the first six (6) months after the Launch Date, AOLB shall have
the right to continue to deplete any reasonable inventories of such
marketing and promotional materials (including CD-ROMs) after the
expiration of the twelve (12) month period, for a reasonable time
period after the expiration of the promotion, not to exceed two (2)
months, provided, however, that: (i) such inventories may not exceed
ten percent (10%) of the total inventory used in conjunction with such
promotion; (ii) neither AOLA nor AOLB may produce any more CD-ROMs
after the expiration of the twelve month period and (iii) the Waiting
Period with respect such Person shall be extended by 1.5 months for
each month after the permitted twelve (12) month period that such
promotion continues. The period during which AOLB is depleting such
inventories by distributing them in the marketplace as permitted
hereunder shall be considered part of the time period for the
promotion. AOLA's and AOLB's offering, branding, Co-Branding,
customizing, marketing and promotion of Non-ISP Products with
Financial Institutions shall be addressed on a product-by-product
basis as provided in Section 12.1. Nothing in this Section 7.1 or
Section 2.3, shall restrict AOLA or AOLB's ability to offer, brand,
Co-Brand, customize, market or promote Non-ISP Products with any
Person, including a Financial Institution, and including by
mentioning the brand name of such Financial Institution (e.g. a
- -
Co-Branded
Affinity Card, wallet technology), however (i) any such activities
regarding ISP Products with such Financial Institutions shall be fully
subject to this Section 7.1 and Section 2.3 and (ii) neither AOLA nor
AOLB may combine a Non-ISP Product offering with a Financial
Institution permitted pursuant to Section 12.1 with another Non-ISP
Product offering of a Financial Institution for which AOLA or AOLB did
not approach Itau as required in Section 12.1. Features and
functionality offered as part of the AOLB Network shall be deemed to
be Non-ISP Products unless and until such feature or functionality
itself provides access to the Internet. AOLA and AOLB's ability to
execute an agreement with a Financial Institution for the financing of
a general purpose device that is capable of connecting to the Internet
(e.g. a PC financing deal) shall be addressed in accordance with
Article 12. After complying with the provisions of Article 12, AOLA
and/or AOLB may execute an agreement with such Financial Institution
in accordance with the following terms: (i) any of AOLB's software
installed on such device shall be limited to a version of its client
software not customized for the Financial Institution; (ii) such offer
shall be targeted to the general marketplace and not to the customers
of such Financial Institution; (iii) no free hours may be directly
targeted to such Financial Institution's customers; and (iv) the brand
name or logo of the Financial Institution shall be incorporated in any
Advertisements or other promotions for such offer in a less prominent
manner than the brand name or logo of AOLA and AOLB.
-36-
7.2 Restrictions on Equity Investments. During the Term, neither AOLA nor
----------------------------------
AOLB shall acquire Voting Control of, or a twenty percent (20%) or
more Equity Interest in any Financial Institution operating in the
Territory (a "Brazilian Financial Institution"). The foregoing
sentence shall not preclude AOLA or AOLB from acquiring Voting Control
of or more than a twenty percent (20%) Equity Interest in a Portal
Entity unless and until such Portal Entity or such Independent
Financial Services Portal is or becomes a Brazilian Financial
Institution, in which case AOLA and AOLB shall be required to come
into compliance with the provisions of this Section 7.2 within six (6)
months after such Portal Entity or Independent Financial Services
Portal receives a license as a Financial Institution in the Territory
from the Brazilian Central Bank, SUSEP or CVM, as the case may be.
This Section 7.2 shall not preclude AOLA or AOLB from acquiring Voting
Control of or any level of Equity Interest in any Person that owns or
controls a Brazilian Financial Institution (e.g., a regional bank
holding company) so long
- -
as the assets of the Brazilian Financial Institution do not comprise
more than twenty percent (20%) of the assets of such Person. In the
event AOLA or AOLB has or acquires Voting Control or Equity Interests
in any entity that owns or controls a Brazilian Financial Institution
in violation of this Section 7.2 or otherwise ends up in violation of
this Section as a result of a recapitalization, stock repurchase,
reverse stock split or other similar transactions not within the
control of AOLA or AOLB, AOLA and AOLB shall have six (6) months from
such date to come into compliance with the provisions of this Section
7.2 with respect to such Person. AOLA and AOLB shall have six (6)
months from the Effective Date to come into compliance with this
Section 7.2 with respect to any Voting Control or Equity Interests
held as of the Effective Date. Any such noncompliance during such six
(6) month periods shall not be a breach of this Section 7.2.
7.3 Competing Arrangements. In the event AOLA or AOLB acquires an entity
----------------------
that has entered Competing Arrangement inconsistent with its
obligations under this Article 7 or Section 2.3.2 or 2.3.3, AOLA or
AOLB, as the case may be, promptly shall meet with Itau to discuss
such Competing Arrangement and agree upon means to minimize the
effects of such Competing Arrangement on AOLA's or AOLB's ability to
fulfill the intent and spirit of this Agreement, and unless the
Parties agree otherwise, AOLA or AOLB, as the case may be, shall (a)
not renew or extend such Competing Arrangement, or agree to enlarge
its scope; (b) terminate such Competing Arrangement at the earliest
date AOLA or AOLB can do so without a penalty; (c) cease and desist
from any activities in connection with such Competing Arrangement that
are inconsistent with this Article 7 or Section 2.3.2 or 2.3.3 and not
required by such Competing Arrangement; and (d) to the maximum extent
possible under such Competing Arrangement, use commercially reasonable
efforts to bring such entity's operations into compliance with this
Article 7 and Section 2.3.2 or 2.3.3, such as by migrating users from
the ISP Product that is the subject of such Competing Arrangement to
an AOLB/Itau Co-Branded version of such ISP Product at the earliest
possible date given such Competing Arrangement.
8. VERIFIED MEMBERS AND REVENUES.
-----------------------------
8.1 Verified Member Reference Numbers.
---------------------------------
For purposes of this Agreement, the following shall constitute the
"Verified
-37-
Member Reference Numbers":
----------------------------------------------------------------------
Anniversary Date Verified Member Reference Numbers
----------------------------------------------------------------------
First Anniversary Date 250,000 Verified Members
----------------------------------------------------------------------
Second Anniversary Date 500,000 Verified Members
----------------------------------------------------------------------
Third Anniversary Date Weighted Revenue Percentage of 39%
----------------------------------------------------------------------
Fourth Anniversary Date 2,000,000 Verified Members and Weighted
Revenue Percentage of 46%
----------------------------------------------------------------------
Fifth Anniversary Date Weighted Revenue Percentage of 56%
----------------------------------------------------------------------
8.2 Reimbursement for Failure to Achieve Verified Member Reference
--------------------------------------------------------------
Numbers.
-------
8.2.1 In General. The Parties acknowledge that the totality of their
----------
rights and obligations under the Related Agreements, including
the number of Shares issued to Itau on the Effective Date, were
determined based on acquiring a certain amount of subscribers
and revenue, and that the failure to achieve those amounts
would, unless rectified, result in AOLA and AOLB receiving less
value from the Related Agreements than contemplated by the
Parties. Accordingly, in the event of such a failure, AOLA
shall be entitled to receive from Itau Reference Payments as
provided in this Article 8 and elsewhere in this Agreement.
8.2.2 Reference Payments.
------------------
(a) For purposes of this Agreement, there shall be computed a
"Reference Payment" as of each of the first five (5)
Anniversary Dates. The amount of any Reference Payment as
of a particular Anniversary Date shall be: (i) the Payment
Amount multiplied by the Minimum Aggregate Percentage set
forth below for such Anniversary Date, less (ii) the sum
of (x) the aggregate percentages earned pursuant to the
Earned Percentage Schedule set forth in Exhibit I on or
prior to such Anniversary Date multiplied by the Payment
Amount, plus (y) all Reference Payments previously made.
(b) The Minimum Aggregate Percentage for any Anniversary Date
shall be:
-----------------------------------------------
Anniversary Date Minimum Aggregate
Percentage
-----------------------------------------------
First Anniversary Date 2%
-----------------------------------------------
Second Anniversary Date 6%
-----------------------------------------------
Third Anniversary Date 8%
-----------------------------------------------
Fourth Anniversary Date 11%
-----------------------------------------------
-38-
-----------------------------------------------
Fifth Anniversary Date 12%
-----------------------------------------------
8.2.3 Initial Computation of Reference Payment.
-------------------------------------------
(a) Within thirty (30) days after each of the first five (5)
Anniversary Dates, AOLA and AOLB shall compute the Reference
Payment in accordance with this Section 8.2, and shall send
written notice (a "Notice of Reference Payment") to Itau by
facsimile setting forth such computation. If the computed
Reference Payment as of a particular Anniversary Date is
greater than zero, Itau shall pay the amount of such Reference
Payment in cash to AOLA or AOLB (as designated by AOLA in its
sole discretion) in accordance with the terms of this Section
8.2.3. If the Reference Payment as of a particular Anniversary
Date is less than or equal to zero, Itau shall have no
obligation to pay such Reference Payment to AOLA or AOLB as of
such Anniversary Date.
(b) If the Notice of Reference Payment states that no Reference
Payment is due from Itau, then AOLA, AOLB and Itau shall
jointly execute and deliver to the Escrow Agent a Note Release
Certificate (as defined in the Escrow Agreement) instructing
the Escrow Agent to release to Itau the Reference Payment Notes
(as defined in the Escrow Agreement) applicable to such
Anniversary Date.
(c) If the Notice of Reference Payment states that a Reference
Payment is due from Itau, then, unless Itau shall dispute the
Reference Payment in accordance with Section 8.2.4, Itau shall
pay the Reference Payment to AOLA or AOLB (as designated by
AOLA in its discretion) in cash no later than the date that is
ten (10) Business Days after receipt by Itau of such Notice of
Reference Payment. Upon such payment, AOLA, AOLB and Itau shall
jointly execute and deliver to the Escrow Agent a Note Release
Certificate instructing the Escrow Agent to release to Itau the
Reference Payment Notes applicable to such Anniversary Date.
8.2.4 Disputes Regarding Reference Payment.
------------------------------------
(a) If Itau receives a Notice of Reference Payment stating that a
Reference Payment is due, and it either disputes the amount of
the Reference Payment or fails to pay the full amount of such
Reference Payment in cash to AOLA or AOLB (as designated by
AOLA in its sole discretion) within ten (10) Business Days of
the receipt by Itau of such Notice of Reference Payment, then:
(1) In the case where Itau disputes the amount of the
Reference Payment, Itau shall, within ten (10) days of
receipt of such Notice of Reference Payment, deliver
written notification to AOLA, AOLB and the Auditor
-39-
selected in accordance with Section 8.2.6 that a dispute
exists with respect to such Reference Payment; or
(2) In the case where Itau fails to pay the full amount of
such Reference Payment in cash to AOLA or AOLB within ten
(10) Business Days of the receipt of a Notice of Reference
Payments, AOLA and AOLB shall deliver written notification
to Itau and the Auditor selected in accordance with
Section 8.2.6 that a dispute exists with respect to such
Reference Payment.
(b) Upon receipt of a notice stating that a dispute exists, the
Auditor shall immediately commence an Audit in accordance with
this Section 8.2 with respect to the Reference Payment in
dispute. The Audit shall be completed no later than thirty (30)
days after receipt of such notice by the Auditor.
(c) At the conclusion of the Audit, the Auditor shall prepare,
complete and sign two (2) original Audit Certificates
(Reference Payments) in the form attached to the Escrow
Agreement. The amount of the Reference Payment set forth in the
Audit Certificate (Reference Payments) shall be the amount
computed by the Auditor pursuant to the Audit. The Auditor
shall immediately deliver one of such Audit Certificates
(Reference Payments) to AOLA and AOLB and one to Itau,
provided, however, that:
(1) If the Auditor is unable to complete the Audit because of
the failure of AOLA and AOLB to provide information
sufficient to enable the Auditor to compute the applicable
Reference Payment, the Auditor shall not issue an Audit
Certificate (Reference Payments) until such time as AOLA
and AOLB shall provide such information; or
(2) If the Auditor is unable to complete the Audit because of
the failure of Itau to provide information sufficient to
enable the Auditor to compute the applicable Reference
Payment, the amount of such Reference Payment shall be
deemed to be the amount claimed by AOLA and AOLB in the
Notice of Reference Payment. The Auditor shall prepare,
complete and sign two (2) original Audit Certificates
(Reference Payments) in the form attached to the Escrow
Agreement. The amount of the computed Reference Payment in
such Audit Certificates (Reference Payments) shall be
equal to the amount claimed by AOLA and AOLB in the Notice
of Reference Payment. The Auditor shall immediately
deliver one of such Audit Certificates (Reference
Payments) to AOLA and AOLB and one to Itau. AOLA and AOLB
shall be entitled to deliver such Audit Certificate
(Reference
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Payments) to the Escrow Agent for the purpose of
releasing the Reference Payment Notes from escrow
in accordance with the terms of the Escrow
Agreement.
(d) In the case of an Audit Certificate (Reference
Payments) that computes a Reference Payment as of the
first Anniversary Date or as of the second Anniversary
Date:
(1) If such Audit Certificate (Reference Payments)
states that the Reference Payment is less than the
amount set forth in the Notice of Reference
Payment, then, within ten (10) days of receipt of
such Audit Certificate (Reference Payments), AOLA
and AOLB shall determine whether to seek
Methodology Arbitration in accordance with Section
8.2.5 hereof.
(A) If AOLA and AOLB do not seek Methodology
Arbitration within ten (10) days of receipt
of such Audit Certificate (Reference
Payments), and such Audit Certificate
(Reference Payments) states that the
Reference Payment is less than or equal to
zero, then AOLA, AOLB and Itau shall jointly
execute and deliver to the Escrow Agent a
Note Release Certificate instructing the
Escrow Agent to release to Itau the Reference
Payment Notes applicable to such Anniversary
Date.
(B) If AOLA and AOLB seek Methodology Arbitration
within ten (10) days of receipt of such Audit
Certificate (Reference Payments), then, upon
receipt of the decision of the arbitrator,
the Auditor shall re-issue an Audit
Certificate (Reference Payments) in
accordance with the arbitrator's decision as
provided in Section 8.2.5 and shall deliver
an original of such re-issued Audit
Certificate (Reference Payments) to AOLA,
AOLB and Itau.
(C) If the re-issued Audit Certificate (Reference
Payments) states that the Reference Payment
is less than or equal to zero, then AOLA,
AOLB and Itau shall jointly execute and
deliver to the Escrow Agent a Note Release
Certificate instructing the Escrow Agent to
release to Itau the Reference Payment Notes
applicable to such Anniversary Date.
(D) If the re-issued Audit Certificate (Reference
Payments) states that the Reference Payment
is greater than zero, then Itau shall pay the
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Reference Payment to AOLA or AOLB (as
designated by AOLA in its sole discretion) in
cash no later than the date that is ten (10)
Business Days after receipt by Itau of such
re-issued Audit Certificate (Reference
Payments). Upon such payment, AOLA, AOLB and
Itau shall jointly execute and deliver to the
Escrow Agent a Note Release Certificate
instructing the Escrow Agent to release to
Itau the Reference Payment Notes applicable
to such Anniversary Date. If Itau fails to
make such payment to AOLA or AOLB (as
designated by AOLA in its sole discretion),
AOLA and AOLB shall be entitled to deliver
the re-issued Audit Certificate (Reference
Payments) to the Escrow Agent for the purpose
of releasing the applicable Reference Payment
Notes from escrow in accordance with the
terms of the Escrow Agreement.
(2) If such Audit Certificate (Reference Payments)
states that the Reference Payment is greater than
zero, then, within ten (10) days of receipt of
such Audit Certificate (Reference Payments), Itau
shall determine whether to seek Methodology
Arbitration in accordance with Section 8.2.5
hereof; provided, however, Itau shall not be
entitled to seek Methodology Arbitration if such
Audit Certificate (Reference Payments) was issued
pursuant to Section 8.2.4(c)(2) hereof on account
of the failure of Itau to provide information
sufficient to enable the Auditor to compute the
applicable Reference Payment.
(A) If Itau does not seek Methodology Arbitration
within ten (10) days of receipt of such Audit
Certificate (Reference Payments), then Itau
shall pay the Reference Payment to AOLA or
AOLB (as designated by AOLA in its sole
discretion) in cash no later than the date
that is ten (10) Business Days after receipt
by Itau of such Audit Certificate (Reference
Payments). Upon such payment, AOLA, AOLB and
Itau shall jointly execute and deliver to the
Escrow Agent a Note Release Certificate
instructing the Escrow Agent to release to
Itau the Reference Payment Notes applicable
to such Anniversary Date. If Itau fails to
make such payment to AOLA or AOLB, in AOLA's
discretion, AOLA and AOLB shall be entitled
to deliver the Audit Certificate (Reference
Payments) to the Escrow Agent for the purpose
of releasing the applicable
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Reference Payment Notes from escrow in
accordance with the terms of the Escrow
Agreement.
(B) If Itau seeks Methodology Arbitration within
ten (10) days of receipt of such Audit
Certificate (Reference Payments), then, upon
receipt of the decision of the arbitrator,
the Auditor shall re-issue an Audit
Certificate (Reference Payments) in
accordance with the arbitrator's decision as
provided in Section 8.2.5 and shall deliver
an original of such re-issued Audit
Certificate (Reference Payments) to AOLA,
AOLB and Itau.
(C) If the re-issued Audit Certificate (Reference
Payments) states that the Reference Payment
is less than or equal to zero, then AOLA,
AOLB and Itau shall jointly execute and
deliver to the Escrow Agent a Note Release
Certificate instructing the Escrow Agent to
release to Itau the Reference Payment Notes
applicable to such Anniversary Date.
(D) If the re-issued Audit Certificate (Reference
Payments) states that the Reference Payment
is greater than zero, then Itau shall pay the
Reference Payment to AOLA or AOLB (as
designated by AOLA in its sole discretion) in
cash no later than the date that is ten (10)
Business Days after receipt by Itau of such
re-issued Audit Certificate (Reference
Payments). Upon such payment, AOLA, AOLB and
Itau shall jointly execute and deliver to the
Escrow Agent a Note Release Certificate
instructing the Escrow Agent to release to
Itau the Reference Payment Notes applicable
to such Anniversary Date. If Itau fails to
make such payment to AOLA or AOLB (as
designated by AOLA in its sole discretion),
AOLA and AOLB shall be entitled to deliver
the re-issued Audit Certificate (Reference
Payments) to the Escrow Agent for the purpose
of releasing the applicable Reference Payment
Notes from escrow in accordance with the
terms of the Escrow Agreement.
(e) In the case of an Audit Certificate (Reference
Payments) that computes a Reference Payment after the
second Anniversary Date:
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(1) If such Audit Certificate (Reference Payments)
states that the Reference Payment is less than or
equal to zero, then AOLA, AOLB and Itau shall
jointly execute and deliver to the Escrow Agent a
Note Release Certificate instructing the Escrow
Agent to release to Itau the Reference Payment
Notes applicable to such Anniversary Date.
(2) If such Audit Certificate (Reference Payments)
states that the Reference Payment is greater than
zero, then Itau shall pay the Reference Payment to
AOLA or AOLB (as designated by AOLA in its sole
discretion), in cash no later than the date that
is ten (10) Business Days after receipt by Itau of
such Audit Certificate (Reference Payments). Upon
such payment, AOLA, AOLB and Itau shall jointly
execute and deliver to the Escrow Agent a Note
Release Certificate instructing the Escrow Agent
to release to Itau the Reference Payment Notes
applicable to such Anniversary Date. If Itau fails
to pay such Reference Payment to AOLA or AOLB (as
designated by AOLA in its sole discretion), within
ten (10) Business Days of the receipt of such
Audit Certificate (Reference Payments), then AOLA
and AOLB shall be entitled to deliver such Audit
Certificate (Reference Payments) to the Escrow
Agent for the purpose of releasing a Reference
Payment Note from escrow in accordance with the
terms of the Escrow Agreement.
8.2.5 Methodology Arbitration.
-----------------------
(a) If the Auditor has issued an Audit Certificate
(Reference Payments) with respect to the computation of
a Reference Payment as of the first Anniversary Date or
as of the second Anniversary Date, and either AOLA,
AOLB or Itau disputes such Reference Payment computed
by the Auditor, such Party may seek arbitration of such
dispute ("Methodology Arbitration"), which arbitration
shall be limited solely to a determination by the
arbitrator as to whether or not the Auditor has
utilized an appropriate methodology in computing the
Reference Payment in accordance with this Agreement;
provided, however, Itau shall not be entitled to seek
-------- -------
Methodology Arbitration with respect to an Audit
Certificate (Reference Payments) if such Audit
Certificate (Reference Payments) states that Itau has
failed to provide information sufficient to enable the
Auditor to compute the applicable Reference Payment.
The arbitrator shall not consider any other issues or
claims during such arbitration, including, without
limitation, any claims that a Party has breached or
violated other provisions of this Agreement, or that a
Party has defenses,
-44-
claims, counterclaims, offsets or setoffs under any
other provision of this Agreement.
(b) Arbitration pursuant to this Section 8.2.5 shall be
Forty-Five Day Arbitration. The arbitrator's decision
shall be delivered to AOLA, AOLB, Itau and the Auditor.
(c) Upon receipt of the arbitrator's decision, the Auditor
shall re-issue an Audit Certificate (Reference
Payments) to AOLA, AOLB and Itau in accordance with the
following procedure: (i) if the arbitrator's decision
concludes that the Auditor has utilized an appropriate
methodology in computing the Reference Payment in
accordance with this Agreement, the Auditor shall
prepare a new Audit Certificate (Reference Payments)
and shall deliver an original of such Audit Certificate
(Reference Payments) within three days to each of AOLA,
AOLB and Itau; or (ii) if the arbitrator's decision
concludes that the Auditor has not utilized an
appropriate methodology in computing the Reference
Payment in accordance with this Agreement, the Auditor
shall re-compute the Reference Payment in accordance
with the arbitrator's decision within thirty (30) days
of the date of issuance of such decision, and shall
deliver an original Audit Certificate (Reference
Payments) to each of AOLA, AOLB and Itau.
8.2.6 Audit.
-----
(a) For purposes of this Agreement, AOLA, AOLB and Itau
shall mutually agree upon an auditor (the "Auditor") no
later than six (6) months prior to each Anniversary
Date. In the event that AOLA, AOLB and Itau do not
mutually agree upon an Auditor by such date, on or
before the date that is five (5) months prior to such
Anniversary Date AOLA and AOLB shall, by written notice
to Itau, nominate an independent auditing firm to be
the Auditor and Itau shall, by written notice to AOLA
and AOLB, nominate an independent auditing firm to be
the Auditor; provided that, if either AOLA and AOLB, or
Itau, shall fail to make such written nomination on or
before the date that is five (5) months prior to such
Anniversary Date, then the Auditor shall be the firm
nominated by the other party. Any firm nominated to be
the Auditor shall (i) be one of the so-called "Big-5"
accounting firms (or their successors), (ii) shall not
have been retained or employed by AOLA, AOLB or Itau
during the past year, and (iii) is not at the time of
such nomination retained or employed by a competitor of
AOLA, AOLB, or Itau; provided, however, a firm that is
retained or employed by a competitor of AOLA, AOLB or
Itau may be nominated if there are no other firms that
satisfy (i) and (ii) of this sentence. If a written
nomination is made by AOLA and AOLB, and a written
nomination is also made by Itau, both in accordance
with this Section 8.2.6(a), the Auditor shall be
selected from such
-45-
nominated firms by random drawing within ten (10) days
after the date that is five (5) months prior to such
Anniversary Date. The selected firm shall be required
to execute an agreement acknowledging the terms and
provisions of this Agreement and shall agree to conduct
all Audits (as defined below) in accordance with the
terms and provisions of this Agreement, whereupon such
firm shall be appointed the Auditor hereunder, and
shall be authorized and obligated to carry out the
tasks of the Auditor pursuant to this Agreement.
(b) In the event that the Auditor fails to deliver an Audit
Certificate as required by the terms of this Agreement,
AOLA, AOLB or Itau, upon written notice to the other
parties and to the Auditor, shall have the right to
seek to replace such Auditor with a new Auditor. Upon
receipt of such a notice, AOLA, AOLB and Itau shall
immediately confer and shall mutually agree upon a new
Auditor within thirty (30) days of receipt of such
notice. In the event that AOLA, AOLB and Itau do not
mutually agree upon a new Auditor by such date, within
thirty (30) days thereafter AOLA and AOLB shall, by
written notice to Itau, nominate an independent
auditing firm to be the Auditor and Itau shall, by
written notice to AOLA and AOLB, nominate an
independent auditing firm to be the Auditor; provided
that, if either AOLA and AOLB, or Itau, shall fail to
make such written nomination on or before such date,
then the Auditor shall be the firm nominated by the
other party. Any firm nominated to be the Auditor shall
(i) be one of the so-called "Big-5" accounting firms
(or their successors), (ii) shall not have been
retained or employed by AOLA, AOLB or Itau during the
past year, and (iii) is not at the time of such
nomination retained or employed by a competitor of
AOLA, AOLB, or Itau; provided, however, a firm that is
retained or employed by a competitor of AOLA, AOLB or
Itau may be nominated if there are no other firms that
satisfy (i) and (ii) of this sentence. If a written
nomination is made by AOLA and AOLB, and a written
nomination is also made by Itau, both in accordance
with this Section 8.2.6(b), the Auditor shall be
selected from such nominated firms by random drawing
within ten (10) days after such nominations are made.
The selected firm shall be required to execute an
agreement acknowledging the terms and provisions of
this Agreement and shall agree to conduct all Audits
(as defined below) in accordance with the terms and
provisions of this Agreement, whereupon such firm shall
be appointed the Auditor hereunder, and shall be
authorized and obligated to carry out the tasks of the
Auditor pursuant to this Agreement, including, without
limitation, delivering any overdue Audit Certificates
within thirty (30) days of such Auditor's appointment.
(c) When requested in accordance with the terms of this
Agreement, the Auditor shall be authorized to conduct
one of the following types of audits (each, an "Audit")
under this Agreement: (i) an
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audit to determine the amount, if any, of any Reference
Payment, including the completion of an Audit
Certificate (Reference Payments) in the form attached
to the Escrow Agreement certifying as to such results,
and (ii) an audit to determine whether or not the
Caymans Financial Test has been satisfied as of a
particular date, including the completion of an Audit
Certificate (Caymans Financial Test) in the form
attached to the Escrow Agreement certifying as to such
determination. When conducting an Audit, the Auditor
shall verify the information provided to it by the
Parties, to the extent practicable under the
circumstances, including, without limitation, the time
available for making its determination as provided in
this Agreement.
(d) Before issuing any Audit Certificate (Reference
Payments) which states that a Party has failed to
provide sufficient information to enable the Auditor to
compute a Reference Payment, the Auditor shall confer
with such Party and shall afford such Party a
reasonable opportunity to provide such information.
(e) The Auditor shall not conduct an Audit concerning
Reference Payments with respect to any time period, and
shall not issue an Audit Certificate (Reference
Payments) relating to any time period, if the duration
of such time period is the subject of pending Forty-
Five Day Arbitration or if, as a result of a decision
rendered pursuant to such Forty-Five Day Arbitration,
such time period has been tolled and has not yet
expired; provided, however, upon the expiration of any
-------- -------
such arbitration or tolling period, the Auditor shall
immediately conduct such Audit in accordance with the
terms of this Agreement.
8.3 Special Rules in the Event of Pendency of Arbitral
Proceedings.
If an arbitral proceeding is commenced in which Itau claims
that a Material AOLB Breach has occurred and, during the
pendency of such arbitral proceeding, any Reference Payment
becomes due, then the following shall apply in lieu of any
inconsistent provisions of this Agreement:
(a) Whenever a Reference Payment is required to be
determined during the pendency of an arbitration
relating to, or arising out of, an alleged Material
AOLB Breach, such determination shall also include a
determination of that portion of such Reference
Payment, if any, equal to the Type I Pro Rata Reference
Payment that would be due in the event that it is
determined that a Material AOLB Breach has occurred
(the "Pre-Breach Reference Payment") and that portion
of such Reference Payment equal to the difference
between such Reference Payment and the Pre-Breach
Reference Payment (the "Post-Breach Reference
Payment").
(b) If, during the pendency of an arbitration relating to,
or arising out of, an alleged Material AOLB Breach, a
Reference Payment becomes due and
-47-
payable hereunder, Itau shall pay to AOLA and AOLB (as
designated by AOLA in its sole discretion) in cash that
portion of such Reference Payment equal to the Pre-
Breach Reference Payment. The making of such payment
shall not entitle Itau to a release of any Reference
Payment Note held in escrow pursuant to the terms of
the Escrow Agreement.
(c) If Itau pays the Pre-Breach Reference Payment as
required by Section 8.3(b) above, Itau shall not be
required to pay that portion of such Reference Payment
equal to the Post-Breach Reference Payment unless and
until the arbitrator determines that a Material AOLB
Breach has not occurred or, if a Material AOLB has
occurred, Itau elects pursuant to Section 11.2.3 to
continue this Agreement, whereupon Itau shall have ten
(10) Business Days from the later of (i) the date of
receipt of such arbitrator's decision, and (ii) the
date of such election under Section 11.2.3, to pay the
amount of such Post-Breach Reference Payment in full in
cash to AOLA or AOLB (as designated by AOLA in its sole
discretion).
(1) If (i) the Post-Breach Reference Payment becomes
due and payable in accordance with Section 8.3(c)
above, and (ii) Itau fails to make such payment,
then AOLA and AOLB shall be entitled to deliver to
the Escrow Agent a Certificate of Release of
Reference Payment Note (in the form attached to
the Escrow Agreement) for the purpose of releasing
the applicable Reference Payment Note to AOLA and
AOLB. In such event, (i) the amount that AOLA or
AOLB may collect under such Reference Payment Note
shall be limited to the amount of the Post-Breach
Reference Payment, and (ii) Itau shall be entitled
to exercise its rights of substitution in
accordance with Section 9.1.5(a).
(d) If Itau fails to pay the Pre-Breach Reference Payment
as required by Section 8.3(b) above:
(1) The amount of any applicable Reference Payment
shall be calculated as if no Material AOLB Breach
had been alleged or had occurred, and (ii) nothing
contained in this Section 8.3 shall delay or
affect the issuance of an Audit Certificate
(Reference Payment) pursuant to the provisions of
Sections 8.2.4, 8.2.5 and 8.2.6 hereof for the
purpose of releasing the applicable Reference
Payment Note from escrow in accordance with the
terms of the Escrow Agreement.
(2) In lieu of the procedure contained in Section
9.1.5(a), in the event that the Escrow Agent
delivers a Reference Payment Note to AOLA and AOLB
pursuant to the Escrow Agreement (a "Released
Reference Payment Note") on account of the failure
by Itau to pay the Pre-Breach Reference Payment as
required by Section 8.3(b) above, then Itau shall
be entitled to substitute two (2) new promissory
notes (each, a "Substituted Reference Payment
Note") for the Released Reference Payment Note.
Both Substituted Reference Payment Notes shall be
identical in all
-48-
respects to the Released Reference Payment Note except that
one of the Substituted Reference Payment Notes shall have a
stated principal amount equal to the Pre-Breach Reference
Payment, and one Substituted Reference Payment Note shall
have a stated principal amount equal to the Post-Breach
Reference Payment. Itau shall not be entitled to exercise
its option to substitute any Substituted Reference Payment
Notes in accordance with the terms of this subsection unless
Itau shall, within five (5) days of the delivery by the
Escrow Agent of the Released Reference Payment Note to AOLA
and AOLB, deliver to AOLA and AOLB by hand delivery or by
reputable overnight mail (i) both of the Substituted
Reference Payment Notes, and (ii) a signed Certificate of
Deposit of Post-Breach Reference Payment Note (in the form
attached to the Escrow Agreement). Upon receipt of such
Substituted Reference Payment Notes and such signed
Certificate of Deposit of Post-Breach Reference Payment
Note, AOLA and AOLB shall simultaneously deliver the
Released Reference Payment Note to Itau by hand delivery or
by reputable overnight mail service, and (ii) AOLA and AOLB
shall simultaneously deliver the Substituted Reference
Payment Note having a stated principal balance equal to the
Post-Breach Reference Payment, along with the completed
Certificate of Deposit of Post-Breach Reference Payment
Note, to the Escrow Agent by hand delivery or by reputable
overnight mail service. Such Substituted Reference Payment
Notes, collectively, shall, for all purposes of this
Agreement and the Escrow Agreement, be deemed to be the
Reference Payment Note (Brazil) or Reference Payment Note
(Caymans), as the case may be, for which such Substituted
Reference Payment Notes were substituted in accordance with
the terms of this subsection.
(3) If a Substituted Reference Payment Note is delivered to the
Escrow Agent in accordance with Section 8.3(d)(2) above,
such Note shall be held in escrow by the Escrow Agent until
the arbitrator determines whether a Material AOLB Breach has
occurred.
(A) If the arbitrator determines that a Material AOLB
Breach has occurred, and if Itau does not elect to
continue this Agreement in accordance with Section
11.2.3 hereof, Itau shall be entitled to receive such
Substituted Reference Payment Note, and AOLA, AOLB and
=
Itau shall jointly execute a Note Release Certificate
directing the Escrow Agent to release such Substituted
Reference Payment Note to Itau.
(B) If the arbitrator determines that a Material AOLB
Breach has not occurred, or if the arbitrator
determines that a Material AOLB Breach has occurred but
Itau elects to continue this Agreement in accordance
with Section 11.2.3 hereof, then Itau shall have ten
(10) Business Days
-49-
from the date of receipt of such arbitrator's decision
to pay the amount of such Substituted Reference Payment
Note in full in cash to AOLA or AOLB (as designated by
AOLA in its sole discretion). If Itau fails to make
such payment, then AOLA and AOLB shall be entitled to
deliver to the Escrow Agent a Certificate of Release of
Reference Payment Note (in the form attached to the
Escrow Agreement) for the purpose of releasing such
Substituted Reference Payment Note to AOLA and AOLB.
(e) All payments made by Itau to AOLA or AOLB on account of any
Reference Payment shall be applied first to satisfy that portion
constituting the Pre-Breach Reference Payment and then to satisfy
that portion constituting the Post-Breach Reference Payment.
(f) Except as otherwise expressly provided herein, the rights and
obligations of the Parties with respect to any Reference Payment
shall continue in full force and effect in accordance with the
provisions of this Section 8, and the rights and obligations of
the Parties with respect to Reference Payments shall apply to
Pre-Breach Reference Payments with the same force and effect.
8.4 Termination of Exclusivity.
--------------------------
If by any of the first four Anniversary Dates, Itau does not acquire
the number of Verified Members set forth in the table below (the
"Total Verified Member Numbers") then the AOLB Parties may by written
notice to Itau within sixty (60) days after such Anniversary Date
elect to release the AOLB Parties from their obligations under Section
7.1 and 2.3 and Itau from its obligations under Section 2.3.
------------------------------------------------------------------
Anniversary Date Total Cumulative Verified
Members
------------------------------------------------------------------
First Anniversary Date 100,000
------------------------------------------------------------------
Second Anniversary Date 200,000
------------------------------------------------------------------
Third Anniversary Date 300,000
------------------------------------------------------------------
Fourth Anniversary Date 450,000
------------------------------------------------------------------
If AOLA or AOLB elects to relieve the Parties of their exclusivity
obligations, Itau in its sole discretion may terminate this Agreement
by written notice to AOLA and AOLB within thirty (30) days after
receipt of such notice from AOLA or AOLB.
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9. ESCROW ARRANGEMENT AND CAYMANS FINANCIAL TEST.
---------------------------------------------
9.1 Escrow Arrangement.
------------------
9.1.1 In General. Upon the satisfaction of the closing conditions set
forth in the Stock Subscription Agreement, Itau, AOLA, AOLB and
The Bank of New York (the "Escrow Agent") shall enter into an
Escrow Agreement substantially in the form attached hereto as
Exhibit N (the "Escrow Agreement"), pursuant to which Itau will
place in escrow the Reference Payment Notes (Brazil), the
Reference Payment Notes (Caymans), the Termination Fee Notes
(Brazil) and the Termination Fee Notes (Caymans) (as such terms
are defined in the Escrow Agreement) (collectively, the
"Notes"), which Notes shall be released by the Escrow Agent
only upon the occurrence of certain conditions provided
therein.
9.1.2 Issuance and Delivery of Notes.
-------------------------------
(a) Simultaneously with the execution of the Escrow
Agreement, Itau will issue and deliver the Reference
Payment Notes (Brazil) and the Termination Fee Notes
(Brazil), and the Grand Caymans branch of Itau shall
issue and deliver the Reference Payment Notes (Caymans)
and the Termination Fee Notes (Caymans), to the Escrow
Agent pursuant to the Escrow Agreement.
(b) Each of AOLA and AOLB expressly acknowledges and agrees
that each Reference Payment Note (Brazil) and each
Reference Payment Note (Caymans) corresponding to a
given Anniversary Date evidences the Reference Payment
that may be due as of such Anniversary Date and which
is computed in accordance with the provisions of
Article 8 hereof. Payment to AOLA or AOLB of all or any
portion of such Reference Payment, or all or any
portion of the amounts due under the corresponding
Reference Payment Note (Brazil) or Reference Payment
Note (Caymans), shall be a pro tanto discharge of the
corresponding obligations of Itau for such Reference
Payment and of Itau and Itaucorp under such Reference
Payment Note (Brazil) and Reference Payment Note
(Caymans), as applicable.
(c) Each of AOLA and AOLB expressly acknowledges and agrees
that each Termination Fee Note (Brazil) and each
Termination Fee Note (Caymans) corresponding to a given
Anniversary Date evidences the Termination Fee that may
be due as of such Anniversary Date. Payment to AOLA or
AOLB of all or any portion of such Termination Fee, or
all or any portion of the amounts due under the
corresponding Termination Fee Note (Brazil) or
Termination Fee Note (Caymans), shall be a pro tanto
discharge of the corresponding obligations of Itau for
such Termination Fee and of Itau and Itaucorp under
such Termination Fee Note (Brazil) and Termination Fee
Note (Caymans), as applicable.
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9.1.3 Amounts Realizable Under Notes.
------------------------------
(a) Each of AOLA and AOLB expressly acknowledges and agrees
that, notwithstanding the stated principal amount of
any Reference Payment Note (Brazil) or any Reference
Payment Note (Caymans) corresponding to a particular
Anniversary Date, AOLA and AOLB shall only be entitled
to collect the amount of the actual Reference Payment
determined as of such Anniversary Date in accordance
with Article 8 hereof.
(b) Each of AOLA and AOLB expressly acknowledges and agrees
that, notwithstanding the stated principal amount of
any Termination Fee Note (Brazil) or any Termination
Fee Note (Caymans) corresponding to a particular
Anniversary Date, AOLA and AOLB shall only be entitled
to collect the amount of the actual Termination Fee
computed under this Agreement.
(c) Neither AOLA nor AOLB shall knowingly or willfully
collect more under a Reference Payment Note or a
Termination Fee Note than they are entitled to collect
in accordance with the terms of this Agreement. If AOLA
or AOLB knowingly or willfully collects any such excess
amount, AOLA and AOLB shall, within ten (10) Business
Days of the date that they first have knowledge that
they have received such excess, pay such excess to
Itau, together with interest at a rate per annum equal
to the lesser of 9% and the maximum rate permitted by
law. The rights of Itau under this Section 9.1.3(c)
shall be in addition to any and all other rights Itau
may have under any applicable law on account of AOLA's
or AOLB's knowing or willful collection of such excess
amount.
9.1.4 Launch Date Certificate.
-----------------------
AOLA, AOLB and Itau agree that, upon a determination under this
Agreement of the Launch Date, they will jointly execute and
deliver to the Escrow Agent a Launch Date Certificate in the
form attached to the Escrow Agreement.
9.1.5 Substitution of Reference Payment Notes.
---------------------------------------
(a) Subject to the provisions of Section 8.3(b), in the
event that (i) the Escrow Agent delivers one of the
Reference Payment Notes (Brazil) or the Reference
Payment Notes (Caymans) to AOLA or AOLB pursuant to the
Escrow Agreement (a "Released Reference Payment Note")
on account of the determination of a Reference Payment
pursuant to Section 8 hereof, and (ii) the actual
Reference Payment determined pursuant to Section 8
hereof is less than the stated principal amount of the
Released Reference Payment Note evidencing the
obligation to pay such Reference Payment, then Itau
shall be entitled to substitute a new promissory note
(a "Substituted
-52-
Reference Payment Note") for the Released Reference
Payment Note. The Substituted Reference Payment Note
shall be identical in all respects to the Released
Reference Payment Note except that the Substituted
Reference Payment Note shall have a stated principal
amount equal to such Reference Payment. Itau shall not
be entitled to exercise its option to substitute a
Substituted Reference Payment Note in accordance with
the terms of this subsection unless Itau shall deliver
such Substituted Reference Payment Note to AOLA and
AOLB by hand delivery or by reputable overnight mail
service within five (5) days of the delivery by the
Escrow Agent of the Released Reference Payment Note to
AOLA and AOLB. Upon receipt of a Substituted Reference
Payment Note by AOLA and AOLB, (i) AOLA and AOLB shall
simultaneously deliver the Released Reference Payment
Note to Itau by hand delivery or by reputable overnight
mail service, and (ii) such Substituted Reference
Payment Note shall, for all purposes of this Agreement
and the Escrow Agreement, be deemed to be the Reference
Payment Note (Brazil) or Reference Payment Note
(Caymans), as the case may be, for which such
Substituted Reference Payment Note was substituted in
accordance with the terms of this subsection.
(b) In the event that (i) the Escrow Agent delivers any one
or more of the Reference Payment Notes (Brazil) or the
Reference Payment Notes (Caymans) to AOLA or AOLB
pursuant to the Escrow Agreement (collectively, the
"Released Acceleration Payment Notes") on account of
the determination of an Acceleration Payment, and (ii)
the actual Acceleration Payment is less than the
aggregate stated principal amounts of all of the
Released Acceleration Payment Notes evidencing the
obligation to pay such Acceleration Payment, then Itau
shall be entitled to substitute one new promissory note
for all of the Released Acceleration Payment Notes (the
"Substituted Acceleration Payment Note"). The
Substituted Acceleration Payment Note shall be
identical in all respects to the Released Acceleration
Payment Notes except that the Substituted Acceleration
Payment Note shall have a stated principal amount equal
to such Acceleration Payment. Itau shall not be
entitled to exercise its option to substitute a
Substituted Acceleration Payment Note in accordance
with the terms of this subsection unless Itau shall
deliver such Substituted Acceleration Payment Note to
AOLA and AOLB by hand delivery or by reputable
overnight mail service within five (5) days of the
delivery by the Escrow Agent of the Released
Acceleration Payment Notes to AOLA and AOLB. Upon
receipt of a Substituted Acceleration Payment Note by
AOLA and AOLB, (i) AOLA and AOLB shall simultaneously
deliver all of the Released Acceleration Payment Notes
to Itau by hand delivery or by reputable overnight mail
service, and (ii) such Substituted Acceleration Payment
Note shall, for all purposes of this Agreement and the
Escrow Agreement, be deemed to be the Reference Payment
Notes (Brazil)
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or the Reference Payment Notes (Caymans), as the case
may be, for which such Substituted Acceleration Payment
Note was substituted in accordance with the terms of
this subsection.
9.1.6 Substitution of Termination Fee Note. In the event that (i) the
------------------------------------
Escrow Agent delivers any of the Termination Fee Notes (Brazil)
or the Termination Fee Notes (Caymans) to AOLA or AOLB pursuant
to the Escrow Agreement (a "Released Termination Fee Note"),
and (ii) the actual Termination Fee is less than the stated
principal amount of the Released Termination Fee Note
evidencing the obligation to pay such Termination Fee, then
Itau shall be entitled to substitute a new promissory note (a
"Substituted Termination Fee Note") for the Released
Termination Fee Note. The Substituted Termination Fee Note
shall be identical in all respects to the Released Termination
Fee Note except that the Substituted Termination Fee Note shall
have a stated principal amount equal to such computed
Termination Fee. Itau shall not be entitled to exercise its
option to substitute a Substituted Termination Fee Note in
accordance with the terms of this subsection unless Itau shall
deliver such Substituted Termination Fee Note to AOLA and AOLB
by hand delivery or by reputable overnight mail service within
five (5) days of the delivery by the Escrow Agent of the
Released Termination Fee Note to AOLA and AOLB. Upon receipt of
a Substituted Termination Fee Note by AOLA and AOLB, AOLA and
AOLB shall simultaneously deliver the Released Termination Fee
Note to Itau by hand delivery or by reputable overnight mail
service, and (ii) such Substituted Termination Fee Note shall,
for all purposes of this Agreement and the Escrow Agreement, be
deemed to be the Termination Fee Note (Brazil) or Termination
Fee Note (Caymans), as the case may be, for which such
Substituted Termination Fee Note was substituted in accordance
with the terms of this subsection.
9.1.7 Prohibition Against Simultaneous Possession of Notes.
----------------------------------------------------
(a) Each of AOLA and AOLB expressly acknowledges and agrees
that they will not simultaneously have possession of a
Reference Payment Note (Brazil) and a Reference Payment
Note (Caymans) corresponding to the same Anniversary
Date.
(b) Each of AOLA and AOLB further expressly acknowledges
and agrees that they will not simultaneously have
possession of a Termination Fee Note (Brazil) and a
Termination Fee Note (Caymans).
9.1.8 Release of Note Upon Full Payment.
---------------------------------
(a) If AOLA and AOLB shall have possession of a Reference
Payment Note (Brazil) or a Reference Payment Note
(Caymans) with respect to a particular Anniversary
Date, and the amount of the Reference Payment owing as
of such Anniversary Date evidenced by such Note is paid
in full, AOLA and AOLB shall (i) return such Note in
their possession to Itau, and (ii) jointly
-54-
execute with Itau a Note Release Certificate
instructing the Escrow Agent to release from escrow and
deliver to Itau the Reference Payment Note in the
custody of the Escrow Agent that evidences the
obligation to pay such Reference Payment.
(b) If AOLA and AOLB shall have possession of a Termination
Fee Note (Brazil) or a Termination Fee Note (Caymans),
and the amount of the Termination Fee evidenced by such
Note is paid in full, AOLA and AOLB shall (i) return
such Note in their possession to Itau, and (ii) jointly
execute with Itau a Note Release Certificate
instructing the Escrow Agent to release from escrow and
deliver to Itau the Termination Fee Note in the custody
of the Escrow Agent that evidences the obligation to
pay such Termination Fee.
9.1.9 Acknowledgement of Validity and Enforceability of Notes. Itau
-------------------------------------------------------
expressly acknowledges and agrees that all of the Reference
Payment Notes (Brazil) and all of the Termination Fee Notes
(Brazil) are valid and enforceable promissory notes under the
laws of Brazil, and Itau hereby waives any right to dispute the
validity or enforceability of such Notes under the laws of
Brazil. Itau further expressly acknowledges and agrees that all
of the Reference Payment Notes (Caymans) and all of the
Termination Fee Notes (Caymans) are valid and enforceable
promissory notes under the laws of the Caymans Islands, and
Itau hereby waives any right to dispute the validity or
enforceability of such Notes under the laws of the Caymans
Islands.
9.1.10 Terms of Escrow. AOLA, AOLB and Itau expressly acknowledge and
---------------
agree that the Notes shall only be released from the escrow
created by the Escrow Agreement upon the terms and conditions
contained in the Escrow Agreement. If any conflicts arise
between the terms of this Agreement and the terms of the Escrow
Agreement with respect to the subject matter of the Escrow
Agreement, the terms of the Escrow Agreement shall control.
9.1.11 Release of Notes Does Not Constitute Payment. Notwithstanding
--------------------------------------------
anything to the contrary contained in this Agreement, the
obligation of Itau to pay all Reference Payments and the
Termination Fee in full in cash shall not be satisfied or
discharged merely by the release of any of the Notes from
escrow pursuant to the terms of the Escrow Agreement. Itau
acknowledges and agrees that the Notes evidence its obligation
to pay Reference Payments and the Termination Fee, that such
Notes are a vehicle by which AOLA and AOLB may seek to enforce
such obligations of Itau, and that such obligations shall not
be deemed to be satisfied or discharged until AOLA and AOLB
receive full payment of such obligations in cash.
-55-
9.2 Non-Impairment of Arbitration Rights; Overpayments or Underpayments.
----------------------------------------------------------------------
9.2.1 Non-Impairment of Arbitration Rights. In addition to all other
------------------------------------
rights of the Parties under Articles 8 and 11, AOLA, AOLB and
Itau shall be entitled to arbitration under Article 13 of any
dispute in respect of the calculation of any amounts due from
any Party under this Agreement, including, without limitation,
Termination Fees, Acceleration Payments, and Reference
Payments; provided, however, the commencement of such
-------- -------
arbitration shall not delay or affect (i) the rights of
any Party to deliver to the Escrow Agent an Audit Certificate
(Reference Payments), an Audit Certificate (Caymans Financial
Test) or an arbitration award or decision that would result in
the release of any of the Notes at the times and in the manner
permitted by the provisions of this Agreement, and (ii) the
obligations of the Escrow Agent to release any Notes from
escrow or otherwise comply with the terms of the Escrow
Agreement.
9.2.2 Overpayments. In the event that (i) any Party commences an
------------
arbitration with respect to the computation of amounts owing
under this Agreement, and (ii) it is determined by the
arbitrator that a Party (the "Overpaid Party") has been paid or
has collected from a Party (the "Overpaying Party") more than
the amount that is actually owed to the Overpaid Party, then,
within ten (10) Business Days of receipt of such arbitrator's
decision, the Overpaid Party shall be obligated to return such
excess to the Overpaying Party, together with interest on such
excess computed at the rate of the lower of 9% per annum
compounded monthly and the maximum rate permitted by law, with
such interest accruing from the date of receipt of such excess
by the Overpaid Party. The payment to, or collection by the
Overpaid Party of such excess amount shall not constitute a
breach or default by the Overpaid Party under this Agreement
9.2.3 Underpayments. In the event that (i) any Party commences an
-------------
arbitration with respect to the computation of amounts owing
under this Agreement, and (ii) it is determined by the
arbitrator that a Party (the "Underpaid Party") has been paid
or has collected from a Party (the "Underpaying Party") less
than the amount that is actually owed to the Underpaid Party,
then, within ten (10) Business Days of receipt of such
arbitrator's decision, the Underpaying Party shall be obligated
to pay such deficiency to the Underpaid Party together with
interest on such deficiency computed at the rate of the lower
of 9% per annum compounded monthly and the maximum rate
permitted by law, with such interest accruing from the date
such deficiency was owed to the Underpaid Party. The failure
to pay such deficiency to the Underpaid Party prior to the date
that is ten (10) Business Days after receipt of the
arbitrator's decision shall not constitute a breach or default
by the Underpaying Party under this Agreement.
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9.3 Caymans Financial Test.
----------------------
9.3.1 Definition of Caymans Financial Test.
------------------------------------
At all times from and after the Launch Date through and
including the date of full payment of all Reference
Payments, Acceleration Payments and Termination Fees,
Itau shall comply with all of the following covenants
(collectively, the "Caymans Financial Test"):
(a) As of any day, the Grand Caymans branch of Itau
shall maintain an excess of assets over all
liabilities of at least 125% of an amount (the
"CFT Amount") equal to the maximum amount of all
Reference Payments, Acceleration Payments and
Termination Fees that could become due and payable
from Itau to AOLA or AOLB from and after such day
pursuant to the terms of this Agreement.
(b) The Grand Caymans branch of Itau shall maintain
its existence in the Cayman Islands and shall
maintain at least US$75,000,000 in cash, cash
equivalents (e.g., deposit accounts or
certificates of deposit) or marketable securities
in its own name, all of which shall be physically
located within the Caymans Islands, the United
States of America or in a country that is a member
of the Organisation for Economic Cooperation and
Development; provided, however; such minimum
-------- -------
amount shall decrease by $3,750,000 on the
first day of each quarter of each of the first
five (5) Anniversary Years.
(c) As of any day, Itau shall (i) maintain physical
possession of stock certificates in the Cayman
Islands representing at least three fourths of all
of the Shares that are subject, as of such day, to
the lock up provisions as provided in the
Registration Rights and Stockholders Agreement, or
(ii) if title to such stock has been transferred
to an unrelated financial institution pursuant to
a repurchase agreement whereby such financial
institution is obligated to resell such stock to
Itau, Itau's rights under such repurchase
agreement shall be subject to execution and levy,
directly or indirectly, pursuant to a Cayman
Islands judgment in a jurisdiction other than
Brazil; provided, however, that such stock may be
-------- -------
transferred to an Affiliate of Itau organized
under the laws of any of the jurisdictions listed
on Exhibit O hereto (such list may be supplemented
from time to time with the consent of AOLA and
AOLB, such consent not to be unreasonably withheld
or delayed, it being understood and agreed that
AOLA and AOLB shall be required to give such
consent if the laws of a proposed supplemental
jurisdiction are such that it would not materially
impair AOLA's or AOLB's ability to execute on a
judgment, or exercise rights and remedies, against
such stock in such supplemental jurisdiction as
compared with the jurisdictions listed on Exhibit
O as of the date of this Agreement), if such
Affiliate first delivers a guaranty, collateral
-57-
or other security to AOLA and AOLB, in form and
substance reasonably satisfactory to AOLA and
AOLB, unconditionally guaranteeing or otherwise
securing full payment of all of the obligations of
Itau under this Agreement and the Notes.
9.3.2 Provision of Relevant Information. Information necessary
---------------------------------
to determine whether or not Itau satisfies the Caymans
Financial Test shall be provided to AOLA and AOLB as
follows:
(a) Within thirty (30) days of the end of each of
Itau's fiscal quarters, Itau shall deliver a
certificate to AOLA and AOLB in the form of
Exhibit C attached hereto (a "Caymans Financial
Test Certificate"), signed by the President or
Chief Financial Officer of Itau, certifying that
Itau complies with all of the components of the
Caymans Financial Test.
(b) As soon as available, but in no event later than
one hundred twenty (120) days after the end of
each of Itau's fiscal years, Itau shall provide to
AOLA and AOLB a copy of its audited financial
statements and the consolidating audited financial
statements of its branches located outside of
Brazil.
(c) Within fifteen (15) days of receipt by Itau of a
written request made by AOLA and AOLB, Itau shall
deliver to AOLA and AOLB a Caymans Financial Test
Certificate, signed by the President or Chief
Financial Officer of Itau, certifying that Itau
complies with all of the components of the Caymans
Financial Test; provided, however, AOLA and AOLB
-------- -------
shall be entitled to make such a request only once
each fiscal quarter.
9.3.3 Failure to Satisfy Caymans Financial Test.
-----------------------------------------
(a) If at any time AOLA and AOLB send written notice
to Itau that AOLA and AOLB contend that Itau has
failed to satisfy the Caymans Financial Test, Itau
shall be required within thirty (30) days of
receipt thereof, unless Itau disputes such
contention in accordance with Section 9.3.3(b)
below, to provide to AOLA and AOLB additional
guaranties, collateral or other security, in form
and substance reasonably satisfactory to AOLA and
AOLB, in the amount by which Itau has failed to
satisfy the Caymans Financial Test.
(b) If Itau disputes a contention by AOLA and AOLB
that it has failed to satisfy the Caymans
Financial Test, such dispute shall be submitted to
the Auditor appointed pursuant to Section 8.2.6
hereof, who shall, within thirty (30) days of such
submission, determine whether or not the Caymans
Financial Test has been satisfied and shall report
such determination in writing to AOLA, AOLB and
Itau. If the Auditor determines that the Caymans
Financial Test has not been satisfied, the Auditor
shall also issue an original Audit Certificate
(Caymans Financial Test) to each of
-00-
XXXX, XXXX and Itau in the form attached to the
Escrow Agreement, including (i) a determination of
the maximum amount of all Reference Payments,
Acceleration Payments and Termination Fees that
could become due and payable from Itau to AOLA or
AOLB from and after the date of such Audit
Certificate (Caymans Financial Test), and (ii) an
identification of the largest Termination Fee Note
remaining in escrow at the time and the fewest
number of Reference Payment Notes remaining in
escrow at the time that, together, represent the
lowest principal amount necessary to cover such
Reference Payments, Acceleration Payments and
Termination Fees. Within ten (10) days of receipt
by Itau of such Audit Certificate (Caymans
Financial Test), Itau shall provide to AOLA and
AOLB additional guaranties, collateral or other
security, in form and substance reasonably
satisfactory to AOLA and AOLB, in the amount by
which Itau has failed to satisfy the Caymans
Financial Test. If Itau shall fail to provide such
additional guaranties, collateral or other
security, AOLA and AOLB shall be entitled to
deliver such Audit Certificate (Caymans Financial
Test) to the Escrow Agent for the purpose of
releasing to AOLA and AOLB (i) the largest
Termination Fee Note remaining in escrow at the
time, and (ii) the lowest principal amount of
Reference Payment Notes (Brazil) or Reference
Payment Notes (Caymans) necessary to cover the
maximum amount of all Reference Payments,
Acceleration Payments and Termination Fees that
could become due and payable from Itau to AOLA or
AOLB from and after such day pursuant to the terms
of this Agreement. If the Auditor determines that
the Caymans Financial Test has been satisfied, an
Audit Certificate (Caymans Financial Test) shall
not be issued by the Auditor.
(c) If Itau offers to provide additional guaranties,
collateral or other security on account of a
failure to satisfy the Caymans Financial Test, but
AOLA and AOLB do not agree that the additional
guaranties, collateral or other security offered
by Itau are sufficient, such disagreement shall be
submitted to Forty-Five Day Arbitration. The
decision of the arbitrator shall be delivered to
AOLA, AOLB and Itau. If Itau does not comply with
the decision of such arbitrator within ten (10)
days of receipt thereof, AOLA and AOLB shall be
entitled to deliver the Audit Certificate (Caymans
Financial Test) to the Escrow Agent for the
purpose of releasing to AOLA and AOLB (i) the
largest Termination Fee Note remaining in escrow
at the time, and (ii) the lowest principal amount
of Reference Payment Notes (Brazil) or Reference
Payment Notes (Caymans) necessary to cover the
maximum amount of all Reference Payments,
Acceleration Payments and Termination Fees that
could become due and payable from Itau to AOLA or
AOLB from and after such day pursuant to the terms
of this Agreement.
-59-
(d) In the event that (i) the Escrow Agent delivers
any one or more of the Notes to AOLA and AOLB
pursuant to the Escrow Agreement (collectively,
the "Released CFT Notes") on account of the
failure of Itau to comply with the Caymans
Financial Test, and (ii) the actual maximum amount
of all Reference Payments, Acceleration Payments
and Termination Fees that could be become due and
payable from Itau to AOLA or AOLB under the terms
of this Agreement is less than the aggregate
stated principal amounts of all of the Released
CFT Notes, then Itau shall be entitled to
substitute one new promissory note (the
"Substituted CFT Note") for all of the Released
CFT Notes. The Substituted CFT Note shall be
identical in all respects to the Released CFT
Notes except that the Substituted CFT Note shall
have a stated principal amount equal to the actual
maximum amount of all Reference Payments,
Acceleration Payments and Termination Fees that
could become due under the terms of this
Agreement. Itau shall not be entitled to exercise
its option to substitute a Substituted CFT Note in
accordance with the terms of this subsection
unless Itau shall deliver such Substituted CFT
Note to AOLA and AOLB by hand delivery or by
reputable overnight mail service within five (5)
days of the delivery by the Escrow Agent of the
Released CFT Notes to AOLA and AOLB. Upon receipt
of a Substituted CFT Note by AOLA and AOLB, (i)
AOLA and AOLB shall simultaneously deliver all of
the Released CFT Notes to Itau by hand delivery or
by reputable overnight mail service, and (ii) such
Substituted CFT Note shall, for all purposes of
this Agreement and the Escrow Agreement, be deemed
to be the Termination Fee Note (Brazil) or the
Termination Fee Note (Caymans), and the Reference
Payment Notes (Brazil) or the Reference Payment
Notes (Caymans), as the case may be, for which
such Substituted CFT Note was substituted in
accordance with the terms of this subsection.
(e) The amount that AOLA and AOLB shall be entitled to
collect under either (i) the Reference Payment
Notes and the Termination Fee Note that were
released from escrow, or (ii) the Substituted CFT
Note, shall be limited to the CFT Amount,
notwithstanding the fact that the aggregate face
amounts of such notes may be greater.
(f) After AOLA and AOLB have obtained possession of
any Released CFT Notes, Itau shall have thirty
(30) days in which to pay into an interest bearing
escrow account the CFT Amount (the "Cash Escrow")
pursuant to an escrow agreement that shall be
reasonably acceptable to AOLA, AOLB and Itau. The
escrow agent appointed pursuant to such escrow
agreement (the "Cash Escrow Agent") shall be a
United States bank or trust company with assets of
at least $50,000,000 and with a place of business
in New York, New York. Within ten (10) days after
payment of such amount into escrow, AOLA and AOLB
shall deliver the Released CFT Notes to Itau by
hand delivery or by reputable overnight mail
-60-
service, and AOLA, AOLB and Itau shall jointly
execute a Note Release Certificate (as defined in
the Escrow Agreement) instructing the Escrow Agent
to release to Itau all of the Notes remaining in
escrow.
(g) If (i) the CFT Amount is not paid into escrow
pursuant to a mutually acceptable escrow agreement
among AOLA, AOLB and Itau within such thirty (30)
days, and (ii) AOLA and AOLB realize cash from the
collection of such Notes, such cash shall be paid
into the Cash Escrow and AOLA and AOLB shall act
as the Cash Escrow Agent in accordance with the
terms of this Section 9.3.3(h).
(1) If Itau fails to pay Reference Payments,
Acceleration Payments or the Termination Fee
as required pursuant to this Agreement and
such failure would have resulted in the
release of one or more Reference Payment
Notes or a Termination Fee Note from escrow
in accordance with the terms of the Escrow
Agreement, a portion of the Cash Escrow shall
be released to AOLA and AOLB in an amount
sufficient to satisfy Itau's obligation to
make such payments. The establishment of the
Cash Escrow shall not relieve Itau of its
obligation in the first instance to pay all
Reference Payments, Acceleration Payments and
the Termination Fee as required by the terms
of this Agreement.
(2) At any time that the balance of the Cash
Escrow exceeds the CFT Amount as of such
time, the Cash Escrow Agent shall return such
excess to Itau.
(3) At any time that this Agreement is
terminated, the Cash Escrow Agent shall
return the entire balance of the Cash Escrow
to Itau, provided, however, if, at the time
-------- -------
of such termination, the amount of any
Reference Payments, Acceleration Payments or
a Termination Fee for periods prior to such
termination have not yet been determined in
accordance with the terms of this Agreement,
or, if determined, have not yet been paid by
Itau, the Cash Escrow shall not be returned
to Itau until such Reference Payments,
Acceleration Payments and/or Termination Fee
are determined or paid, as the case may be,
at which time the amount of any unpaid
Reference Payments, Acceleration Payments
and/or Termination Fee shall be paid to AOLA
or AOLB (as designated by AOLA in its sole
discretion) from the Cash Escrow and the
balance of the Cash Escrow shall be returned
to Itau.
(h) The Cash Escrow Agent shall deposit the Cash
Escrow into an interest bearing account; provided,
that, the Cash Escrow may be invested only in
certain types of investments that shall be
-61-
mutually agreed upon by AOLA, AOLB and Itau at the
time of the creation of the Cash Escrow, it being
understood and agreed that such types of
investments shall be those which will minimize the
risk of loss of the principal amount of the Cash
Escrow.
10. PAYMENTS AND REPORTING
----------------------
10.1 Equity. As part of the transactions contemplated hereby and that
------
certain Regulation S Stock Subscription Agreement, of even date
herewith, Itau and Banco Xxxxxx, X.X. ("Xxxxxx"), an Affiliate
of Itau (the "Subscription Agreement"), AOLA is to issue and
sell to Itau and Xxxxxx upon the consummation of the initial
public offering (the "IPO") of AOLA's Class A Common Stock (the
"Common Stock") the Shares at the Purchase Price.
10.2 Payments.
--------
10.2.1 Subscriber Payments. Itau agrees to pay AOLB all
-------------------
Subscriber Fees collected by or on behalf of Itau or
its agents within three (3) Business Days after the day
on which such amounts are collected. AOLB and Itau
acknowledge that Itau's performance of billing services
pursuant to Section 1.14 shall be as an agent to AOLB
and that fees received by Itau from AOLB/Itau
Subscribers shall be paid to AOLB and considered
revenues to AOLB.
10.2.2 Reference Payments.
------------------
Except as otherwise provided in this Agreement and the
Related Agreements, all payments due from Itau
hereunder pursuant to Article 8 and 9 and any Reference
Payments and Pro-Rata Fees shall be made to AOLA or
AOLB (as designated by AOLA in its sole discretion), by
means of a wire transfer of United States dollars in
immediately available funds on or before the date due
to an account specified in writing by AOLA to Itau.
10.2.3 Acceleration Payments.
---------------------
(a) In the event an Acceleration Payment is due to
AOLA or AOLB upon termination of this Agreement,
AOLA or AOLB may send a written notice to Itau
stating the amount of such Acceleration Payment
and Itau shall pay the full amount of the
Acceleration Payment in cash to AOLA or AOLB (as
designated by AOLA in its sole discretion) by
means of a wire transfer of United States Dollars
in immediately available funds within ten (10)
Business Days after the date such written notice
was sent to an account specified in writing by
AOLA to Itau. If Itau fails to make such payment
within such ten (10) Business Day period or if
Itau disputes the amount of the Acceleration
Payment claimed by AOLA or AOLB, the Acceleration
Payment, notwithstanding Section 13.5, shall be
determined as part of the arbitral proceeding
pursuant to Section 13.3 in which such termination
was awarded or, in the event there is no such
arbitral proceeding,
-62-
the determination of the Acceleration Payment may
be submitted to Forty-Five Day Arbitration
pursuant to Section 13.4 by any Party. Any such
dispute shall be waived if not claimed during any
arbitration relating to such termination. One copy
of the decision and award of the arbitrator shall
be delivered to AOLA and AOLB and one copy shall
be delivered to Itau.
(b) If the arbitration award determines that the
Acceleration Payment is equal to or less than
zero, then AOLA, AOLB and Itau shall jointly
execute and deliver to the Escrow Agent a Note
Release Certificate instructing the Escrow Agent
to release to Itau all of the Reference Payment
Notes in accordance with the terms of the Escrow
Agreement.
(c) If the arbitration award determines that the
Acceleration Payment is greater than zero, then
Itau shall pay the full amount of the Acceleration
Payment in cash to AOLA or AOLB (as designated by
AOLA in its sole discretion) within ten (10)
Business Days of receipt of such arbitration
award. If Itau fails to make such payment, AOLA
and AOLB shall be entitled to deliver such
arbitrator's award to the Escrow Agent for the
purpose of releasing the remaining Reference
Payment Notes from escrow in accordance with the
terms of the Escrow Agreement.
10.2.4 Termination Fee.
---------------
(a) If Itau is required to pay a Termination Fee
pursuant to this Agreement, AOLA or AOLB may send
a written notice to Itau stating the amount of
such Termination Fee and Itau shall pay the full
amount of the Termination Fee calculated as
provided in this Agreement in cash to AOLA or AOLB
(as designated by AOLA in its sole discretion) by
means of a wire transfer of United States Dollars
in immediately available funds within ten (10)
Business Days after the date such written notice
was sent to an account specified in writing by
AOLA to Itau. If Itau fails to make such payment
within such ten (10) Business Day period or if
Itau disputes the amount of the Termination Fee
claimed by AOLA or AOLB, the amount of the
Termination Fee, notwithstanding Section 13.5,
shall be determined as part of the arbitral
proceeding pursuant to Section 13.3 in which such
termination was awarded or, in the event there is
no such arbitral proceeding, the determination of
the Termination Fee may be submitted to Forty-Five
Day Arbitration pursuant to Section 13.4 by any
Party. Any such dispute shall be waived if not
claimed during any arbitration relating to such
termination. One copy of the decision and award of
the arbitrator shall be delivered to AOLA and AOLB
and one copy shall be delivered to Itau. If Itau
fails to pay the Termination Fee determined by the
arbitrator, AOLA and AOLB shall be entitled to
deliver such arbitrator's award to the Escrow
Agent for the purpose of
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releasing the applicable Termination Fee Note from
escrow in accordance with the terms of the Escrow
Agreement.
(b) If such arbitration award determines a Termination
Fee of zero, then AOLA, AOLB and Itau shall
jointly execute and deliver to the Escrow Agent a
Note Release Certificate instructing the Escrow
Agent to release to Itau all of the Termination
Fee Notes in accordance with the terms of the
Escrow Agreement.
10.2.5 Billing Service Fee, Finance Channel Fee and Other
--------------------------------------------------
Payments. Except as otherwise provided herein, all
--------
Billing Services Fees due from AOLB hereunder and any
other payments payable by AOLB or AOLA to Itau
hereunder shall be made to Itau by means of a wire
transfer of Brazilian Reais (or any successor official
Brazilian currency) in immediately available funds
within fifteen (15) Business Days after AOLB's receipt
of an invoice therefor. Except as otherwise provided
herein, all Finance Channel Fees due from Itau
hereunder and any other payments payable by Itau to
AOLA or AOLB hereunder (other than those set forth in
Section 10.2.1-10.2.4) shall be made to AOLB by means
of a wire transfer of Brazilian Reais (or any successor
official Brazilian currency) in immediately available
funds within fifteen (15) Business Days after AOLB's
receipt of an invoice therefor.
10.3 Late Payments; Interest and Inflation. All payments not made on
-------------------------------------
or before the due date specified herein shall be subject to
interest at the lower of the rate of nine percent (9%) per annum
compounded monthly or the maximum amount permitted by law per
annum until such payment is made in full including if such
payments are delayed due to a Force Majeure Event. Furthermore,
in case such payments not made on or before the due date
specified herein, are required to be converted into Reais, for
any reason whatsoever, then the same shall also be adjusted for
inflation by the General Market Price Index variance supplied by
the Fundacao Xxxxxxx Xxxxxx (IGPM-FGV), or in case of its
extinction, by a comparable index. Any interest and/or adjustment
for inflation shall be accrued "pro rata temporis" from the
respective due date specified herein, until the date of the
effective payment.
10.4 Remission Abroad; Payment in Brazil.
-----------------------------------
If necessary, Itau shall, subject to all applicable laws, rules
and regulations, use all reasonable efforts to obtain all
necessary approvals to ensure that monies due by Itau to AOLA in
United States dollars under this Agreement may be immediately
remitted abroad. To the extent this Agreement requires Itau to
pay AOLA or AOLB in United States dollars and payment in such
currency is prohibited by law, rule or regulation in Brazil, Itau
shall instead pay AOLB in Reais at the exchange rate set by Banco
Central do Brasil - PTAX 0800 option 5 for the day such payment
first becomes due and payable. Payments to AOLA under this
Agreement shall be made to AOLA in a jurisdiction designated in
its sole discretion.
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10.5 Reporting.
---------
10.5.1 Promotional Commitments. Each of AOLB and Itau shall provide
-----------------------
the other with regular reports (no less frequently than
monthly) describing any promotional activities it has
undertaken pursuant to this Agreement. In reporting any
promotion, such Party shall describe the nature of
promotion, its duration and any other relevant information
regarding the promotion.
10.5.2 Distribution. Itau shall provide AOLB with quarterly reports
------------
setting forth (i) the total number of Customized Client CDs
distributed, and (ii) future forecasts regarding
distribution of Customized Client CDs and other relevant
information reasonably requested by AOLB.
10.5.3 Verified Members Reporting. AOLB shall provide Itau with (i)
--------------------------
quarterly reports setting forth the total number of
AOLB/Itau Subscribers as of the end of such quarter and (ii)
within thirty (30) days after the each Anniversary Date a
report setting forth the aggregate number of Verified
Members on such Anniversary Date.
10.6 Auditing Rights. Each Party shall maintain complete, clear and
---------------
accurate records of all expenses, revenues, fees, transactions,
performance tests and related documentation (including agreements) in
connection with the performance of this Agreement ("Records"). All
such Records shall be maintained for a minimum of five (5) years
following termination of this Agreement. For the sole purpose of
ensuring compliance with this Agreement, each Party shall have the
right, at its expense, to direct an independent certified public
accounting firm subject to strict confidentiality restrictions to
conduct a reasonable and necessary copying and inspection of portions
of the Records of another Party that are directly related to each
Party's performance and amounts payable to the auditing Party pursuant
to this Agreement. Any such audit may be conducted after ten (10)
business days prior written notice and shall be conducted during
normal business hours.
10.7 Taxes. No taxes or imposts of any nature whatsoever (including without
-----
limitation income tax withheld at source) will levy on any payments
due by any Party under this Agreement. It shall be the responsibility
of the paying Party to ensure that no such taxes or imposts are levied
and, if necessary, the paying Party shall gross up all amounts due to
another Party so as to secure that the Party to whom such amounts are
paid actually receives said amounts net of any taxes or imposts of any
kind.
11. TERM, RENEWAL AND TERMINATION
-----------------------------
11.1 Term; Renewal; Nonrenewal. Unless earlier terminated as set forth
-------------------------
herein, the term of this Agreement shall commence on the Effective
Date and continue until the date ten (10) years from the Effective
Date (the "Term"). AOLA, AOLB and Itau agree to meet no later than
twelve (12) months before the expiration of the Term to negotiate
equitable terms for renewing or extending this Agreement or the
relationship among the Parties, provided however, that no Party shall
be obligated to enter into any such extension or renewal. This
Agreement only shall be extended by mutual agreement in writing of
AOLA, AOLB and Itau. AOLA and AOLB shall be considered one Party for
purposes of this Article 11.
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11.2 Termination for Material Breach.
-------------------------------
11.2.1 Notice and Cure Periods. In the event that an AOLB Party
-----------------------
commits a Material AOLB Exclusivity Breach or Itau commits a
Material Itau Breach, and such breaching Party (the
"Breaching Party") fails to cure such breach within thirty
(30) days or, in the case of a Material Exclusivity Breach,
within ninety (90) days (such periods, the "Cure Periods"),
after written notice thereof (a "Breach Notice"), from the
other Party (the "Notifying Party"), the Notifying Party
shall have the right to terminate this Agreement upon receipt
of an arbitral ruling confirming such uncured Material Breach
as provided in this Section 11.2. In the event that an AOLB
Party commits a Material AOLB Breach other than a Material
AOLB Exclusivity Breach, Itau shall have the right to
terminate this Agreement upon receipt of an arbitral ruling
confirming such Material Breach as provided in this Section
11.2. Stopping the violating conduct shall not "per se" be
deemed to constitute a cure for a Material Breach.
11.2.2 Referral to Arbitration.
-----------------------
(a) Except for a Material AOLB Breach other than a Material
AOLB Exclusivity Breach, beginning on the date of the
Breach Notice, any Party shall have the right to refer to
arbitration the issue of whether such a Material Breach
has occurred and to seek injunctive or other relief from
such breaching conduct. In the event such Material Breach
is cured during the applicable Cure Period, the Notifying
Party shall not be entitled to terminate this Agreement
or to receive the Termination Fee.
(b) In the case of Material Exclusivity Breaches, if the
Breaching Party ceases the allegedly breaching activities
within ten (10) days after receipt of a Breach Notice,
the Breaching Party shall have the right to refer to
arbitration the issue of whether the activities at issue
violate the provisions of Section 2.3 and/or 7.1 hereof
as alleged, and if so, whether such breach has, or if
continued, would be reasonably likely to have a Material
Adverse Effect. If the arbitral decision holds either
that the allegedly breaching conduct does not constitute
a breach of Section 2.3 or 7.1, or that the breach does
not have and is not reasonably likely to have a Material
Adverse Effect, the allegedly Breaching Party may
recommence the allegedly breaching activities. If the
arbitral decision holds that the allegedly breaching
conduct (i) constitutes a breach of Section 2.3 or 7.1,
(ii) such conduct did not have a Material Adverse Effect,
and (iii) such conduct is reasonably likely to have a
Material Adverse Effect in the future, then so long as
the Breaching Party does not recommence any of the
breaching activities, the Notifying Party shall not be
entitled to terminate this Agreement. An arbitral
decision holding that the conduct constitutes a breach of
Section 2.3 or 7.1, but did not have and is not
reasonably likely to have a Material Adverse Effect shall
not
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preclude the Notifying Party from subsequently
referring to arbitration the issue of whether the same
conduct has or is reasonably likely to have a Material
Adverse Effect or from receiving any applicable remedies
in the event such conduct is determined by an arbitrator
to have a Material Adverse Effect; provided, however, any
claim in such a subsequent arbitration that the same
conduct has or is reasonably likely to have a Material
Adverse Effect may only be brought in the event of a
substantial change in the facts and circumstances
initially referred to arbitration.
11.2.3 Termination Rights, Termination Fees and Remedies for Material
--------------------------------------------------------------
Breaches.
--------
(a) Termination Rights for Material Exclusivity Breaches.
----------------------------------------------------
Upon receipt of an arbitral ruling affirming the
existence of a Material Exclusivity Breach that was not
cured during the applicable Cure Period, the Notifying
Party may at its option elect by written notice to the
Breaching Party within thirty (30) days after the date of
such ruling:
(1) To terminate the Agreement which termination shall
be effective immediately upon receipt by the
Breaching Party of such written notice of
termination; or
(2) To continue the Agreement, in which case the
Agreement shall remain in full force and effect
notwithstanding such final arbitral ruling, in which
case: (a) the Notifying Party may elect to continue
this Agreement notwithstanding such breach; and (b)
the Notifying Party may also elect by written notice
to the Breaching Party, within two (2) Business Days
after the award to be unilaterally relieved from the
exclusivity provisions hereunder. In the event a
Notifying Party elects (b) above, in the case of a
Material AOLB Exclusivity Breach, the provisions of
Section 2.3 shall no longer apply to Itau or its
Affiliates; and in the case of a Material Itau
Exclusivity Breach, the provisions of Section 7.1,
2.3.2 and 2.3.3 shall no longer apply to the AOLB
Parties or their Affiliates.
(3) In the event that a Party chooses option (2) above,
the arbitral panel shall be reconvened fifteen (15)
days after the initial ruling affirming the
existence of the Material Exclusivity Breach and if
the Breaching Party fails to cure the breach within
ten (10) days after such ruling as determined by the
arbitral panel, the Notifying Party may by written
notice delivered within fifteen (15) days of the
expiration of such ten (10) day period terminate the
Agreement, effective immediately upon receipt by
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the Breaching Party of such written notice of
termination.
(b) Termination Rights for Other Material Breaches. Upon
----------------------------------------------
receipt of an arbitral ruling affirming the
existence of a Material Breach (other than a
Material Exclusivity Breach) that was not cured
during the applicable Cure Period, the Notifying
Party may at its option elect by written notice to
the Breaching Party within thirty (30) days after
the date of such ruling:
(1) To terminate the Agreement which termination
shall be effective immediately upon receipt by
the Breaching Party of such written notice of
termination; or
(2) To continue the Agreement, in which case the
Agreement shall remain in full force and effect
notwithstanding such final arbitral ruling, in
which case the Notifying Party may elect to
continue this Agreement notwithstanding such
breach.
In the event that a Party chooses option (2) above,
the arbitral panel shall be reconvened fifteen (15)
days after the initial ruling affirming the
existence of the Material Breach and if the
Breaching Party fails to cure the breach within ten
(10) days after such ruling as determined by the
arbitral panel, the Notifying Party may by written
notice delivered within fifteen (15) days of the
expiration of such ten (10) day period terminate the
Agreement, effective immediately upon receipt by the
Breaching Party of such written notice of
termination.
(c) Termination Fee. The Parties acknowledge that the
---------------
totality of their rights and obligations under this
Agreement and the Related Agreements, including the
number of Shares granted to Itau, were determined
based on the assumption that AOLA and AOLB would
have the benefit of Itau's obligations under
Sections 2.3 and 2.1.3 throughout the Term and that
AOLA's and AOLB's failure to enjoy such benefit for
the Term would, unless rectified, result in AOLA and
AOLB receiving substantially less value from this
Agreement and the Related Agreements than
contemplated by the Parties. Accordingly, in the
event, AOLA or AOLB terminates the Agreement
pursuant to this Section 11.2 during the first five
Anniversary Years for a Material Itau Exclusivity
Breach or a Material Marketing Breach, to compensate
the AOLB Parties for such loss of value, Itau shall
pay to AOLA or AOLB, (as determined by AOLA in its
sole discretion), as the AOLB Parties' sole and
exclusive remedy for such Material Breach, the
Termination Fee. In the event, AOLA or AOLB
terminates the Agreement pursuant to this Section
11.2 after the first five Anniversary Years for a
Material Itau Exclusivity Breach or a Material
Marketing Breach, AOLA and AOLB shall be entitled to
any available
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remedies at law or in equity. The Parties agree that
such Termination Fee is reasonable in light of the
damages the AOLB Parties would suffer in the event
the agreement is terminated due to a Material Itau
Exclusivity Breach or Material Marketing Breach
during the first five (5) Anniversary Years. Upon
termination of the Agreement and payment of such
Termination Fee (which Termination Fee shall be
reduced by the amount of any Reference Payments Itau
has paid to AOLA or AOLB for any Anniversary Date
occurring after the Breach Date), Itau shall be
relieved from the obligation to pay any Reference
Payments for Anniversary Dates which occur after the
Breach Date and Itau shall be required to pay a Type
I Pro-Rata Reference Payment for the Anniversary
Year in which the Breach Date occurs.
(d) Remedies Upon Termination For Material Payment
----------------------------------------------
Breaches. In the event the AOLB Parties terminate
--------
the Agreement pursuant to this Section 11.2 for a
Material Payment Breach, in addition to any amounts
due, or for which the payment obligation has accrued
prior to such Termination Date, as the AOLB Parties
sole and exclusive remedy for such Material Payment
Breach, the Type I Acceleration Payment shall become
immediately due and payable upon the Termination
Date. Upon termination of the Agreement and payment
of such Type I Acceleration Payment, Itau shall be
relieved from the obligation to pay any Reference
Payments for Anniversary Dates which occur after the
Breach Date.
(e) Remedies Upon Termination for Material Launch
---------------------------------------------
Failure. In the event Itau terminates the Agreement
-------
pursuant to Section 11.2 for a Material Launch
Failure as Itau's sole and exclusive remedy, Itau
shall be relieved of its obligation to pay (i) any
Reference Payments hereunder and (ii) any other fees
or other amounts which became due and for which the
payment obligation accrued after the Breach Date.
(f) Remedies Upon Termination for Other Material AOLB
-------------------------------------------------
Breaches. In the event Itau terminates the Agreement
--------
pursuant to Section 11.2 for a Material AOLB Breach
(other than a Material Launch Failure) as Itau's
sole and exclusive remedy, Itau shall be relieved of
its obligation to pay any Reference Payments for
Anniversary Dates which occurred after the Breach
Date and Itau shall be required to pay a Type I Pro-
Rata Reference Payment for the Anniversary Year in
which the Breach Date occurred.
11.3 Termination for Failure to Co-Brand a New ISP Product. AOLB
-----------------------------------------------------
shall have the right to terminate this Agreement as provided in
Section 2.3.2(e). In the event that AOLB elects to terminate
this Agreement pursuant to Section 2.3.2(e), as Itau's sole and
exclusive remedy, Itau shall be relieved of its obligation to
pay any Reference Payments for Anniversary Dates which occur
after the
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Termination Date and Itau shall be required to pay a Type II
Pro-Rata Reference Payment for the Anniversary Year in which the
Termination Date occurs.
11.4 Termination for Failure to Offer a New ISP Product. Itau shall
--------------------------------------------------
have the right to terminate this Agreement as provided in
Section 2.3.2(f). In the event that Itau elects to terminate
this Agreement pursuant to Section 2.3.2(f), as AOLA and AOLB's
sole and exclusive remedy, the Type II Acceleration Payment
shall become immediately due and payable upon the Termination
Date. Upon payment of such Type II Acceleration Payment, Itau
shall be relieved of its obligation to pay any Reference
Payments for Anniversary Dates which occur after the Termination
Date.
11.5 Termination In Connection With Noncompetitive ISP Products. Itau
----------------------------------------------------------
shall have the right to terminate this Agreement as provided in
Section 2.3.3(b). In the event Itau elects to terminate this
Agreement pursuant to Section 2.3.3(b), as AOLB's sole and
exclusive remedy, the Type II Acceleration Payment shall become
immediately due and payable upon the Termination Date. Upon
payment of such Type II Acceleration Payment, Itau shall be
relieved of its obligation to pay any Reference Payments for
Anniversary Dates which occur after the Termination Date.
11.6 Termination for Change of Control.
---------------------------------
(a) Upon consummation of an AOLA Change of Control, Itau
shall have the right, exercisable in its sole discretion
for thirty (30) days thereafter, to terminate this
Agreement immediately upon written notice to AOLA;
provided that, if such AOLA Change of Control occurs, and
the Successor is not described in clauses (i) or (ii) of
the second succeeding sentence, then such right shall be
exercisable by Itau for sixty (60) days after such AOLA
Change in Control. In the event Itau elects not to
terminate this Agreement upon an AOLA Change of Control,
then any successor-in-interest of AOLA or AOLB shall be
bound by and must consent in writing to be bound by the
provisions of this Agreement to the same extent as AOLA
or AOLB, as the case may be. In the event that Itau
elects to terminate this Agreement pursuant to this
Section 11.6(a), and any such Successor is (i) a
Financial Institution, or (ii) is a member of any Related
Group that includes any Financial Institution that is one
of the top twenty Financial Institutions in the Territory
(ranked by the aggregate assets within the Territory of
all members of a Group that are Financial Institutions as
of the latest date prior to the date AOLA Change in
Control as of which such information is available), then
as Itau's sole and exclusive remedy, Itau shall be
relieved of its obligation to pay any Reference Payments
for Anniversary Dates which occur after the Termination
Date and Itau shall be required to pay a Type II Pro-Rata
Reference Payment for the Anniversary Year in which the
Termination Date occurs. In the event that Itau elects to
terminate this Agreement pursuant this Section 11.6(a),
and such Successor is not described in clauses (i) or
(ii) of the immediately preceding sentence, then as
AOLB's sole and exclusive remedy, the Type II
Acceleration Payment shall become immediately due and
payable upon the Termination Date. Upon payment of such
Type II Acceleration Payment, Itau shall be relieved of
its obligation to pay any Reference Payments for
Anniversary Dates which occur after the Termination Date.
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(b) Upon consummation of an Itau Change of Control, AOLA and
AOLB shall have the right, exercisable in its sole
discretion for thirty (30) days thereafter, to terminate
this Agreement immediately upon written notice to Itau;
provided that, if such Itau Change of Control occurs and
the Successor is not described in clauses (i) or (ii) of
the second succeeding sentence, then such right shall be
exercisable by AOLA and AOLB for sixty (60) days after
such Itau Change in Control. In the event neither AOLA
nor AOLB elects to terminate this Agreement upon an Itau
Change of Control, then any successor-in-interest of Itau
shall be bound by and must consent in writing to be bound
by the provisions of this Agreement to the same extent as
Itau. In the event that AOLB elects to terminate this
Agreement pursuant this Section 11.6(b), and such
Successor is (i) an Access Provider or a Designated
Entity as of such Termination Date, or (ii) is a member
of any Related Group that includes any Access Provider or
Designated Entity, then as AOLB's sole and exclusive
remedy, the Type II Acceleration Payment shall become
immediately due and payable upon the Termination Date. In
the event that AOLB elects to terminate this Agreement
pursuant this Section 11.6(b), and such Successor (i) is
not an Access Provider or a Designated Entity as of such
Termination Date and (ii) is not a member of any Related
Group that includes any Access Provider or Designated
Entity, then as Itau's sole and exclusive remedy, Itau
shall be relieved of its obligation to pay any Reference
Payments for Anniversary Dates which occur after the
Termination Date and Itau shall be required to pay a Type
II Pro-Rata Reference Payment for the Anniversary Year in
which the Termination Date occurs.
11.7 Termination In Connection With Failure to Achieve Total Verified
----------------------------------------------------------------
Member Numbers. Itau shall have the right to terminate this
--------------
Agreement as provided in Section 8.4. In the event Itau elects
to terminate this Agreement pursuant to Section 8.4, as AOLA and
AOLB's sole and exclusive remedy, the Type II Acceleration
Payment shall become immediately due and payable upon the
Termination Date. Upon payment of such Type II Acceleration
Payment, Itau shall be relieved of its obligation to pay any
Reference Payments for Anniversary Dates which occur after the
Termination Date.
11.8 Termination for Certain Equity Matters. If (i) the Subscription
--------------------------------------
Agreement is terminated at any time prior to the issuance of the
Shares to the Purchasers (as that term is defined in the
Subscription Agreement), or (ii) AOLA ceases to be a subject to
the provisions of Section 13 of the Securities Exchange Act of
1934, as amended (an "AOLA Privatization Event"), then AOLA and
Itau shall negotiate in good faith for a period not to exceed
thirty (30) days regarding modifications to this Agreement
necessary or desirable to obtain for AOLA and Itau the benefits
sought to be obtained hereby and by the Related Agreements in
light of such changes. If the Parties are unable to reach
agreement on such modifications, Itau shall have the right,
exercisable in its sole discretion for thirty (30) days
thereafter, to terminate this Agreement immediately upon written
notice to AOLA thereof. In addition, if an AOLA Privatization
Event occurs, Itau shall have the right to terminate this
Agreement at any time after the end of the fifth Anniversary
Year of this Agreement upon thirty (30) days prior written
notice to AOLA and AOLB. In the event Itau elects to terminate
this Agreement pursuant to (i) above, Itau shall be relieved of
its obligation to pay any Reference Payments. In the event Itau
elects to terminate this Agreement pursuant to this Section 11.8
due to an AOLA Privatization Event, Itau shall be relieved of
its obligation to pay any Reference Payments for Anniversary
Dates which occur after the Termination Date and Itau shall be
required to pay a Type II Pro-Rata
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Reference Payment for the Anniversary Year in which the
Termination Date occurs. If the Termination Date for an AOLA
Privatization Event occurs during the fourth or fifth
Anniversary Year of this Agreement, in addition to the Type II
Pro Rata Payment, Itau shall pay AOLB [*] within ten (10)
Business Days after the Termination Date.
11.9 Termination for Bankruptcy, Insolvency and Related Events.
---------------------------------------------------------
This Agreement shall terminate automatically in the event Itau
or AOLB: (a) becomes or is declared insolvent or bankrupt; (b)
is the subject of any proceeding related to its liquidation or
insolvency (whether voluntary or involuntary) which is not
dismissed within ninety (90) calendar days; (c) makes an
assignment for the benefit of creditors or (d) ceases to do
business in the normal course. In the event AOLB terminates this
Agreement pursuant to this Section 11.9, as AOLB's sole and
exclusive remedy, the Type II Acceleration Payment shall become
immediately due and payable. Upon payment of such Acceleration
Payment, Itau shall be relieved of its obligation to pay any
Reference Payments for Anniversary Dates which occur after the
Termination Date. In the event Itau elects to terminate this
Agreement pursuant to this Section 11.9, Itau shall be relieved
of its obligation to pay any Reference Payments for Anniversary
Dates which occur after the Termination Date and Itau shall be
required to pay a Type II Pro-Rata Reference Payment for the
Anniversary Year in which the Termination Date occurs.
11.10 Survival. Except as otherwise expressly provided herein, all
--------
rights granted to and obligations undertaken by the Parties
hereunder shall terminate immediately upon termination of this
Agreement, except for this Section 11.10 and the following
rights and obligations, which shall survive in accordance with
their terms:
(a) The provisions of Sections 1.6.2, 1.7.1, 1.7.4, 8.2.3,
8.2.4, 8.2.5, 8.2.6, 9.1.2(b), 9.1.2(c), 9.1.3, 9.1.5,
9.1.6, 9.1.7, 9.1.8, 9.1.9, 9.1.11, 9.2, 9.3.3(f),
9,3.3(g), 9.3.3(h), 11.10, 11.11 and Article 13 of the body
of this Agreement;
(b) The obligation to pay AOLB any and all Subscriber Fees
collected by Itau, its agents or independent contractors;
(c) The obligation to pay any fees or other payments which
became due or for which the payment obligation accrued on
or prior to the Termination Date, except where this
Agreement expressly provides that such Party is relieved of
such payment obligations;
(d) Exhibit A; and
(e) In Exhibit B, Sections II, III, IV, V and VI.
For purposes of this Section 11.10, any Termination Fee payable
hereunder shall be deemed to accrue as of the Termination Date,
and any Reference Payments shall be deemed to accrue as of the
Anniversary Date with respect to which they are to be
calculated, however, Pro-Rata Reference Payments and
Acceleration
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Payments shall be deemed to accrue as of the Trigger Date
applicable to such payments.
11.11 Wind Down.
---------
11.11.1 Co-Branded Service.
------------------
Upon expiration or termination of this Agreement,
unless otherwise mutually agreed, AOLB shall continue
to make the Co-Branded Service available to AOLB/Itau
Subscribers as set forth in this Agreement and Itau
shall continue to pay the Hours Payment and the Finance
Channel Fee (in an amount not to exceed one-half of the
inflation-adjusted cap set forth in Section 1.11.3) for
a period of [*] after the termination of this
Agreement, AOLB and Itau shall mutually agree upon and
commence implementing a transition plan designed to
ensure an orderly transition of the AOLB/Itau
Subscribers from the Co-Branded Service and reduce
disruption to the AOLB/Itau Subscribers.
11.11.2 Billing.
-------
Upon the expiration or termination of this Agreement,
AOLB may at its option provide AOLB/Itau Subscribers
with the AOLB Service instead of the Co-Branded
Service. AOLB and Itau shall, at AOLB's option, either
enter into an agreement under which Itau shall continue
to provide Billing Services for the AOLB/Itau
Subscribers on AOLB's behalf, or implement a plan under
which Itau shall migrate all such Billing Services to
AOLB or its designee within a period of one hundred
eighty (180) days, in which case AOLB shall continue to
pay Itau the Billing Services Fee during such 180-day
period.
11.11.3 Informing AOLB/Itau Subscribers. Upon expiration or
-------------------------------
termination of this Agreement, AOLB agrees to: (a)
create a cul-de-sac screen in the AOLB Network
explaining the steps necessary to access Itau Financial
Services available at URL: xxx.Xxxx.xxx.xx (or such
successor locator for Itau's home page as designated by
Itau provided that such domain name does not reference
another Access Provider or AOLB Designated Entity as of
the expiration or termination date) and promote for a
period of three (3) months after expiration or
termination of this Agreement such screen by means of a
link on the "Welcome" screen presented to AOLB/Itau
Subscribers after expiration or termination of this
Agreement, and (b) not deactivate the Custom Toolbar
Icon or the link from such icon to the location that
such icon linked to immediately prior to such
expiration or termination date (or such other location
as mutually agreed) for a period of six (6) months;
both (a) and (b) only as long as Itau does not offer,
market or otherwise promote on the page accessible at
such URL, the products or services of any other Access
Provider or AOLB Designated Entity as of the expiration
or termination date.
11.11.4 Marketing Restrictions.
----------------------
(a) For a period of [*] after expiration or
termination of the Agreement, Itau agrees (i) not
specifically to target, or to
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authorize or permit any third party to target, the
AOLB/Itau Subscribers or the AOLB Members in any
online or offline marketing or promotional
activities with respect to products and services
of Access Providers, AOLB Designated Entities as
of termination or expiration or ISP Products, (ii)
not to disparage AOLA or AOLB or otherwise make
statements directly comparing Itau's new access
program to the AOLB Service or Co-Branded Service;
and (iii) not to use the AOLB Network to
distribute, market or promote any ISP Products
except as provided below nor the AOLB Designated
Entities listed as of such expiration or
termination date, nor to authorize or permit any
third party to use the AOLB Network to distribute,
market or promote any ISP Products specifically
targeted to the AOLB/Itau Subscribers or AOLB
Members except with the express written permission
of AOLB. The following activities by Itau shall
not be considered violations of this Section: (a)
continuing to use an XXX.xxx domain name; (b)
sending e-mail to former AOLB/Itau Subscribers
that continue to maintain an XXX.xxx domain name,
provided that such e-mails comply with (i) and
(ii) above; (c) sending e-mails to former
AOLB/Itau Subscribers informing such individuals
of an ISP Product of which the Parties did not
agree to create a Co-Branded version of such ISP
Product pursuant to this Agreement, and (d)
including promotions for ISP Products and AOLB
Designated Entities on pages of the Itau
Interactive Sites other than those subject to
restrictions pursuant to Section 11.9.2.
(b) For a period of [*] after expiration or
termination of the Agreement, AOLB agrees (i) not
specifically to target, or to authorize or permit
any third party to target, the AOLB/Itau
Subscribers in any online or offline marketing or
promotional activities with respect to (A)
Financial Services offered by third-parties or (B)
Financial Institutions, and (ii) not to disparage
Itau or otherwise make statements directly
comparing Itau's Financial Services with the
Financial Services of any new Financial
Institution partners.
11.12 Release of Certain Notes From Escrow Upon Termination.
-----------------------------------------------------
In the event this Agreement is terminated pursuant to this
Section 11, there shall be released from escrow any Notes
evidencing obligations of Itau hereunder for which Itau
cannot be liable. AOLA, AOLB and Itau shall jointly
execute and deliver to the Escrow Agent a Note Release
Certificate in the form attached to the Escrow Agreement
directing that such Notes be released from escrow and
delivered to Itau.
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12. ADDITIONAL OPPORTUNITIES.
12.1 Itau Opportunities.
------------------
12.1.1 Brazilian Financial Services. AOLB and Itau shall meet and
----------------------------
discuss reasonable terms under which, upon mutual agreement
of the Parties, AOLB may fulfill its corporate and general
administrative Financial Services needs in the Territory
(including the billing of all AOLB Members) from Itau, and
AOLB shall fulfill such Financial Services from Itau so long
as such Financial Services are available from Itau in the
manner required by AOLB and are competitively priced;
provided that the foregoing shall not require AOLB to
terminate any existing agreements for such Financial
Services.
12.1.2 Online Promotions. From time to time during the Term, AOLB
-----------------
will offer Itau the opportunity, before it offers such
opportunity to a Financial Institution that is a bank (or any
other product or service that is branded with the name of any
such Financial Institution that is a bank), to engage in
special promotions in certain special temporary areas (not
existing channels or areas) created for the AOLB Service
(e.g., a carnival area) on agreeable terms and conditions for
- -
a mutually agreed fee, subject to any agreements existing as
of the Effective Date. The foregoing will not apply to the
renewal of any such areas. Itau acknowledges that certain
AOLB areas contain multiple promotions. AOLB and Itau shall
meet and discuss other opportunities such as sponsoring other
"channels" of the AOLB Service upon agreeable terms and
conditions.
12.1.3 Future Opportunities. Except as provided in 12.1.2, if AOLA
--------------------
or AOLB desires to partner (including with respect to
offering, branding, Co-Branding, marketing or promoting Non-
ISP Products) with a Financial Institution other than Itau
with respect to Non-ISP Products in the Territory, except
marketing or promotion of the AOLB Service and/or AOLB
Network and Advertising on the AOLB Service and/or AOLB
Network, AOLA or AOLB, as the case may be, shall approach
Itau and discuss the opportunity for Itau to provide such
products or services (e.g., an electronic wallet, an
- -
electronic credit card for making purchases on the Internet,
a Co-Branded credit card, a secure online payment system) on
mutually agreeable terms, subject to any agreements existing
as of the Effective Date. AOLA and AOLB shall not close any
such agreement with a third-party Financial Institution prior
to talking with Itau. In the event AOLA or AOLB enters into
an Agreement with another Financial Institution in the
Territory pursuant to this Section 12.1.3 regarding the
provision of a Non-ISP Product feature or functionality on
the AOLB Network, AOLA and AOLB may promote such feature or
functionality with or without the other Financial
Institution's brand name or logo: (a) in any manner online
other than on the Covered Pages, and (b) in offline media and
general advertisements and promotions for AOLA and AOLB
products and services, provided that any advertisements and
promotions by AOLA or AOLB primarily for such feature or
functionality may not include the other Financial
Institution's brand name or logo.
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12.1.4 Advertising Discount. AOLB shall extend to Itau a twenty
--------------------
percent (20%) discount off its standard rate card for
Advertising on the AOLB Service or Co-Branded Service for
Advertisements purchased after the Effective Date by Itau for
its products or services, provided that AOLB is not required
to pay any commission or provide any discount to any third
party retained by or on behalf of Itau with respect to the
sale of such Advertisements (e.g., an advertising agency).
- -
12.2 AOLB Opportunities.
------------------
12.2.1 Future Opportunities. If Itau desires to partner (including
--------------------
with respect to offering, branding, Co-Branding, marketing or
promoting Non-ISP Products) with an Access Provider other
than AOLB with respect to Non-ISP Products in the Territory,
except (i) marketing or promotion of the Itau Interactive
Sites and Independent Financial Services Portal and
Advertising on the Itau Interactive Sites and the Independent
Financial Services Portal, and (ii) the provision of
Financial Services to an Access Provider, Itau shall approach
AOLB and discuss the opportunity for AOLB to provide such
products or services (e.g., search) on mutually agreeable
- -
terms, subject to any agreements existing as of the Effective
Date. Itau shall not close any such agreement with a third-
party Access Provider prior to talking with AOLB.
12.2.2 AOLB Opportunities. The Parties shall meet and discuss
------------------
reasonable terms under which, upon mutual agreement of the
Parties, AOLB may: (i) provide Content to the Itau
Interactive Sites; (ii) develop a Co-Branded ATM; (iii)
develop a shopping site within the Itau Interactive Sites
with the following branding: "Itau Shopping powered by
America Online." The Parties shall also meet and discuss, and
may mutually agree upon, a means of giving AOLB traffic
credit for the use of the Itau Online Area and the Itau
Interactive Sites.
12.2.3 Personal Computer Financing. Itau agrees to use all
---------------------------
reasonable efforts to cause its Affiliate, Itautec, to offer
together with AOLB a competitive personal computer financing
arrangement to the market. The Parties shall meet and discuss
such relationship.
12.3 Other Territories. The Parties shall meet and discuss entering a non-
-----------------
exclusive arrangement for [*] similar to the arrangement set forth in
this Agreement but on terms to be mutually agreed upon, subject to
any then-existing exclusive commitments of AOLB or AOLA.
12.4 Financial Services Portal
-------------------------
12.4.1 Itau Right to Develop an Independent Financial Services
-------------------------------------------------------
Portal
------
Itau shall have the right to pursue the development,
operation and promotion of an Independent Financial Services
Portal in the Territory, and Itau may operate such an
Independent Financial Services Portal through a separate
legal entity (a "Portal Entity"). Except as permitted under
this Section 12.4, neither AOLA nor AOLB may develop or
operate an Independent Financial Services Portal in the
Territory. Notwithstanding the foregoing, Itau acknowledges
and agrees that AOLB has a finance channel
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on the AOLB Service and that AOLA and AOLB may continue to
operate, develop, advertise, promote and include content on
(including content of other Independent Financial Services
Portals and Portal Entities) such finance channel and
comparable areas on other AOL Network properties without
restriction due to this Section 12.4.1.
12.4.2 AOLA and AOLB Option to Participate in such Independent
-------------------------------------------------------
Financial Services Portal.
-------------------------
(a) In the event that Itau desires to Co-Brand or brand an
Independent Financial Services Portal in the Territory
with an AOLB Designated Entity (designated at the time
Itau desires to enter into such Co-Branding or branding
arrangement) or Access Provider, or offer any Equity
Interest in a Portal Entity to an AOLB Designated Entity
(designated at the time Itau desires to offer such
Equity Interest) or Access Provider, Itau shall first
notify AOLB in writing (such notice, a "Portal Notice")
and offer AOLB the right on reasonable terms to Co-Brand
or brand such Independent Financial Services Portal
and/or invest in such Portal Entity, as the case may be.
If AOLB and Itau after good faith negotiations are
unable to reach agreement on the terms of such
participation within thirty (30) days after the date of
such notice, during the one year period thereafter, Itau
may offer such opportunity to any AOLB Designated Entity
or Access Provider, provided, however, that the initial
offer made by Itau to such third party must be on terms
and conditions comparable to and no more favorable as a
whole than those offered to AOLB.
(b) In the event that an Access Provider or Designated
Entity approaches Itau with an opportunity to Co-Brand,
brand or invest in an Independent Financial Services
Portal or Portal Entity, prior to entering into any such
agreement, Itau must first offer AOLB the opportunity to
Co-Brand, brand, and/or invest, as the case may be, on
the same terms as those offered by the Access Provider
or AOLB Designated Entity. AOLB must notify Itau within
ten (10) Business Days of receipt of written notice
setting forth the terms of the offer whether it wishes
to reject such offer, accept such offer, or make a
counter-proposal to Itau regarding such offer. If AOLB
notifies Itau that it does not desire to Co-Brand,
brand, and/or invest, as the case may be, on such terms,
or AOLB and Itau are unable to reach agreement on the
terms of such Co-Branding, Branding and/or investment
within thirty (30) days after the date of such notice,
during the one year period thereafter, Itau may enter
into an agreement with the AOLB Designated Entity or
Access Provider that made the initial proposal;
provided, however, that the agreement between Itau and
such Access Provider or Designated Entity shall be on
terms and conditions not materially more favorable as a
whole to such Access Provider or Designated Entity than
those offered to AOLB taking into account the relative
benefits provided and obligations incurred by the
Parties.
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(c) In the case of both (a) and (b) above, if Itau does not
enter such agreement within one year after the
expiration of the thirty (30) day periods set forth
above, then before entering into an agreement for the
Co-Branding or branding of an Independent Financial
Services Portal with an AOLB Designated Entity or Access
Provider, or offering any Equity Interest in a Portal
Entity to an AOLB Designated Entity or Access Provider,
Itau shall again provide AOLB with a Portal Notice and
comply with the provisions of this Section 12.4.2.
(d) In the event that Itau and AOLB do not reach an
agreement and thereafter Itau enters into an agreement
for the branding or Co-Branding of an Independent
Financial Services Portal with an AOLB Designated Entity
or Access Provider, or the provision of an Equity
Interest in a Portal Entity to an AOLB Designated Entity
or Access Provider, in accordance with this Section
12.4.2 then (a) at Itau's request, AOLB shall promote
such Independent Financial Services Portal as an
Anchor Tenant of the Special Edition Finance Channel as
provided in Section 1.11.1 and (b) Itau shall ensure
that no Advertisements for any AOLB Designated Entity,
ISP Product or Access Provider appear within one click
of the Covered Pages.
12.4.3 AOLA and AOLB Right to Develop an Independent Financial
-------------------------------------------------------
Services Portal.
---------------
In the event that Itau enters into an agreement with an
AOLB Designated Entity or Access Provider with respect to
an Independent Financial Services Portal, then thereafter
notwithstanding this Section 12.4 the AOLB Parties may
freely develop and operate, themselves or with third
parties, including a Financial Institution, Independent
Financial Services Portals, and/or take Equity Interests
in any Portal Entity, and such Portal Entity and
Independent Financial Services Portal shall not be subject
to the terms of this Agreement other than this Section
12.4 and 7.2, provided, however, that neither AOLA nor
AOLB may directly link to such an Independent Financial
Services Portal from the Covered Pages.
12.5 Non-Application to Affiliates. For the avoidance of doubt, except
-----------------------------
as expressly set forth in this Article 12, each Party's obligation
under this Article 12 to discuss certain matters with another
Party shall apply only to such other Party, and not to such other
Party's Affiliates.
13. Applicable Law; Arbitration; MEDIATION.
--------------------------------------
13.1 Applicable Law. This Agreement shall be governed by and construed
--------------
and interpreted in accordance with the law of the State of New
York,. without reference to the conflict of laws provisions thereof
except for N.Y. G.O.L. (S)(S) 5-1401 and 5-1402.
13.2 Resolution of Disputes. Any dispute, controversy or claim arising
----------------------
out of or relating to this Agreement, or the breach, termination or
validity thereof ("Dispute"), shall be decided by arbitration
administered by the American Arbitration Association ("AAA") in
accordance with the International Arbitration
-78-
Rules of the AAA ("Rules"). For the purpose of any arbitration
held pursuant to this Article 13, the AOLB Parties shall act as
one Party and Banco Itau shall act as one Party for the purpose
of the appointment of arbitrators and for general conduct of
the arbitration. The arbitration shall be conducted in New York
in the English language and the award shall be rendered in New
York. Any judicial proceeding by a Party seeking to set aside,
vacate or modify an arbitral award issued hereunder shall be
filed in the United States District Court for the Southern
District of New York or the New York State Courts located in
New York, New York and shall be subject to the Federal
Arbitration Act, 9 U.S.C. secs. 1 et seq. The Parties hereto
consent to the exclusive jurisdiction of the aforesaid courts
for any judicial consideration of an arbitration award
hereunder. Each arbitration shall be commenced by, and on the
date of, the serving of a statement of claim by the claimant on
the respondent ("Commencement"). The claimant shall
simultaneously file such statement of claim with the AAA. The
arbitral award shall be final and binding and the prevailing
Party may enter such award in any court having jurisdiction.
The panel shall order all expenses and costs of an arbitration,
including reasonable counsel and consultant fees, to be paid by
the non-prevailing Party. In a proceeding in which both Parties
prevail on different issues in dispute, the panel shall provide
in its award for an apportionment of such expenses and costs
reasonably reflecting the relative significance of the issues
decided. Any disputes as to the reasonableness of counsel fees
or other expenses or costs of the prevailing Party shall be
decided by the same panel. The arbitral award shall incorporate
the amount of costs and fees to be paid by the non-prevailing
Party. By agreeing to arbitration, the Parties do not intend to
deprive any court of its jurisdiction to issue a pre-arbitral
injunction, pre-arbitral attachment, or other order in aid of
arbitration proceedings and the enforcement of any award.
Without prejudice to such provisional remedies as may be
available under the jurisdiction of a court, the arbitral
tribunal shall have full authority to grant provisional
remedies or to order any Party or Parties to request that a
court modify or vacate any temporary or preliminary relief
issued by that court, and to award damages for the failure of
any Party to comply with the arbitral tribunal's orders to that
effect. The Parties shall use commercially reasonable efforts
to facilitate the expeditious resolution of any Disputes.
13.3 Arbitration Procedure. In addition to the provisions of Section
---------------------
13.2, in respect to all arbitration proceedings hereunder other
than Forty Five Day Arbitration, the following schedule and
content of proceedings shall be applicable except when agreed
by the Parties otherwise or upon ruling by the tribunal upon
good cause shown by the tribunal or a Party (all time periods
set forth in this section are calendar days):
(a) Within twenty (20) days after Commencement, the
respondent shall file with the AAA and serve on the
claimant a statement of defense and any counterclaim it
wishes to assert involving a Dispute under the Agreement,
subject to the limitations on joinder and consolidation
of claims provided in Section 13.5 herein.
(b) Within five (5) days after Commencement, the Parties
shall request the AAA to provide a list of fifteen (15)
qualified arbitrators who have indicated availability to
sit as arbitrators on the schedule set forth herein and
their relevant biographical data. Within ten (10) days
after receipt of
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such list, each Party shall return said list to the AAA
in which it shall have stricken five (5) of the
arbitrators and ranked the remaining arbitrators 1
through 10, 1 being the Party's first choice. Unless the
Parties agree to request an additional list from the AAA,
and thus to repeat the process with the same timing, the
AAA shall select three (3) arbitrators as promptly as
possible having the highest combined preference based
upon the rankings of the Parties. Upon written notice by
the AAA to the Parties of the arbitrators selected, the
panel shall be seated. The arbitrator who shall serve as
the chair of the tribunal shall not be a citizen or
permanent resident of the United States or Brazil.
(c) Within forty (40) days after Commencement, the Parties
shall exchange requests for documents relevant to the
Dispute. Objections to said requests shall be submitted
to the panel within ten (10) days after receipt of such
requests and shall be ruled upon by the panel within
fifteen (15) days thereafter or within fifteen (15) days
after the panel is seated, whichever is later. All
requested documents shall be produced within thirty (30)
days after the document request or within ten (10) days
after receipt by the Parties of a ruling on the request.
(d) Within ninety (90) days after the panel is seated, the
claimant shall submit to the AAA and serve upon the
respondent a brief of its factual and legal arguments
accompanied by copies of all documents it expects to
offer in evidence at the hearing and sworn witness
statements of all witnesses it will call at hearing,
which sworn witness statements shall serve as the direct
testimony of such witnesses. Within sixty (60) days after
receipt of the claimant's submissions, the respondent
shall submit and serve its brief, documents and sworn
witness statements. If respondent has filed
counterclaims, claimant shall have a further period of
fifteen (15) days to submit a brief, documents and sworn
witness statements in reply thereto. Upon leave of the
panel, a Party may offer additional evidence at hearing
for purposes of rebuttal and impeachment.
(e) Within ten (10) days after all submissions under
subparagraph (d) are made, the Parties shall submit to
each other and the tribunal a list of the opposing
Party's expert witnesses it wishes to depose, which shall
be allowed as of right. Such depositions shall be limited
to no more than six hours per individual deposed. Within
thirty (30) days thereafter, all depositions shall be
completed.
(f) Within thirty (30) days after the completion of
depositions (or if none are requested, within forty (40)
days after the submission of all briefs), the panel shall
conduct a hearing. Subject to objection being sustained
by the panel to any evidence contained in the witness
statements, the witness statements shall constitute the
direct testimony of the Parties, and all witnesses shall
be made available for cross-examination at the hearing.
(g) Within thirty (30) days after the completion of the
hearing, the panel shall render its award accompanied by
a reasoned decision in writing.
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13.4 Forty Five Day Arbitration. In addition to the arbitration
--------------------------
provisions set forth in Section 13.2 above, in respect to any
Dispute as to which "Forty Five Day Arbitration" is called for
in this Agreement, the following specific schedule and content
of proceedings shall be adhered to by the Parties, unless
otherwise mutually agreed:
(a) Within thirty (30) days after the execution of this
Agreement, the Parties shall pre-select a single
arbitrator to hear any such Dispute and at least two
additional back-up arbitrators who will, in the order
ranked by the Parties, serve if the first chosen
arbitrator is unable to serve on the schedule required
hereunder. If the Parties are unable to agree on the
arbitrators within said thirty (30) days, either or both
Parties shall immediately request the AAA to make such
selection after furnishing the Parties a list of no less
than ten (10) qualified arbitrators. The proposed
arbitrators shall not be citizens or permanent residents
of the United States or Brazil. Within ten (10) days
after receipt of such list, each Party shall return said
list to the AAA in which it shall have stricken three (3)
of the arbitrator candidates and ranked the remaining
arbitrator candidates remaining on the list 1 through 7,
1 being the Party's first choice. The AAA shall select
one arbitrator and two back-up arbitrators in order of
their combined ranking by the Parties. Upon selection,
the arbitrators shall be provided a copy of this
Agreement and other information either Party considers
useful to the arbitrator for purposes of being prepared
to consider such Dispute. As provided in Section 13.2,
the place of arbitration shall be New York and the award
shall be rendered in New York; however, the arbitrator
shall have discretion to hold evidentiary hearings in
Brazil or elsewhere where appropriate to expedite the
proceeding.
(b) Immediately upon commencement, the party initiating the
arbitration shall contact the first ranking pre-selected
arbitrator and request their service on the schedule set
forth herein. In the event that person is not able to
commit to this schedule, the back-up arbitrators shall be
similarly contacted in their order of ranking. The first
arbitrator in the ranking to commit to the schedule shall
be the selected arbitrator. Within five (5) days after
the notice by either Party to the other Party and the
selected arbitrator of such a Dispute, the arbitrator
shall meet with the Parties and determine the information
to be provided by the Parties and the schedule upon which
the arbitration shall proceed; provided, however, that
such proceedings shall unless the Parties agree otherwise
be concluded and a final award rendered no more than
forty-five (45) days after the receipt by the Parties and
the selected arbitrator of the notice of the Dispute. An
award rendered hereunder shall be valid and binding
notwithstanding the failure of the arbitrator to render
the award within the schedule set forth herein or as
mutually amended by the Parties. The Parties specifically
agree not to move to set aside or refuse enforcement of
such award on the basis that it was not timely rendered
and irrevocably waive any right to do so.
13.5 Joinder and Consolidation of Claims. In order to facilitate
-----------------------------------
the comprehensive resolution of related disputes, all claims
between any of the Parties to this
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Agreement that arise out of the same facts and circumstances
and are arbitrable under this Agreement and/or any of the
Related Agreements, may be brought in a single arbitration.
Upon the request of any Party to an arbitration proceeding
constituted under this Agreement or any of the Related
Agreements, the arbitral tribunal shall consolidate the
arbitration proceeding with any other arbitration proceeding
involving any of the Parties hereto relating to this Agreement
and/or the Related Agreements if the arbitrators determine
that (i) there are issues of fact or law common to the
proceedings so that a consolidated proceeding would be more
efficient than separate proceedings, and (ii) no Party would
be unduly prejudiced as a result of such consolidation through
undue delay or otherwise. Unless mutually agreed by the
Parties, there shall be no joinder or consolidation of a
Dispute subject to Forty Five Day Arbitration with any other
Dispute (regardless of whether such other Dispute is also
subject to Forty Five Day Arbitration). In the event of
different rulings on consolidation by the arbitration tribunal
constituted hereunder and a tribunal constituted under the
Escrow Agreement, the ruling of the arbitration tribunal
constituted first in time shall control, and unless the
Parties otherwise agree, such arbitral tribunal shall serve as
the arbitral tribunal for any consolidated arbitration.
13.6 Effect of Awards. In the case of all arbitration proceedings
----------------
hereunder, the award of the single arbitrator or tribunal
shall be final and fully effective as between the Parties when
the award is issued to the Parties without regard to the
filing by any Party of judicial proceedings seeking to set
aside, vacate or modify the award. In the event that judicial
proceedings are filed as to any award and a final judicial
determination is made setting aside, vacating or modifying the
award, the Parties shall take all appropriate actions to
comply with such determination, including the revocation or
unwinding of any actions taken or restoration of any payments
made pursuant to the arbitral award with interest thereon at
the prevailing rate.
13.7 Mediation. In the event any Party refers the issue of the
---------
applicability of the terms and conditions of this Agreement to
such ISP Product to mediation as provided in Section 2.3.2(d),
prior to either Party commencing arbitration, the Parties
shall engage in nonbinding mediation with the assistance of a
mutually agreeable mediator knowledgeable about Internet-
related technologies for a period of no less than thirty (30)
days. If the Parties are unable to agree upon a mediator, such
mediator shall be selected by the AAA. The mediation shall be
conducted at a time and place mutually agreeable to the
Parties. No statements made by any Party or the mediator
during the mediation process shall be admissible in any
arbitration. In the event, notwithstanding such good faith
efforts, the Parties are unable to agree in writing on the
terms of a resolution within forty-five (45) days of the
receipt by a Party of notice of referral of the Dispute to
mediation, any Party may refer the issue to Forty-Five Day
Arbitration for resolution; however, the arbitrators shall
only have the right to decide the applicability of existing
terms of the Agreement to such ISP Product and may not impose
new terms.
13.8 Performance During Dispute Resolution Proceedings. The Parties
-------------------------------------------------
shall continue to perform their obligations hereunder during
the pendency of any arbitral or mediation proceeding; and the
Parties shall pay each other for services
-82-
rendered and payment obligations that accrue during such
proceeding, except, as set forth in Section 8.3.
14. ADDITIONAL REGULATORY PROVISIONS
--------------------------------
14.1 Brazilian Bank Registration. In the event AOLB believes it
---------------------------
necessary to obtain any registration with the Brazilian
Central Bank in connection with the transactions contemplated
by this Agreement, Itau shall use commercially reasonable
efforts to cooperate and assist AOLB with such registration
and use commercially reasonable efforts to provide AOLB with
any information reasonably requested by AOLB or the Brazilian
Central Bank in connection with such registration.
14.2 Brazilian Regulatory Authorities. The Parties shall within
--------------------------------
fifteen (15) business days counted from the date hereof submit
the necessary data and applications related to the
transactions contemplated hereby and in the Related Agreements
to the competent antitrust authorities in Brazil. The Parties
shall mutually cooperate in good faith to timely provide all
data required by said authorities. All costs to file and
process the abovementioned applications, including filing and
attorneys' fees, shall be equally borne by the AOLB Parties
and Itau, provided that any fines levied shall be borne by the
Party responsible for the activities related to such fine.
Each Party shall use all reasonable efforts to cooperate with
Brazilian regulatory authorities in any investigation or
regulatory matters relating to the transactions contemplated
hereby, including in connection with any competition analysis,
and shall promptly and in good faith respond to any requests
from such regulatory authorities and make any filings or other
submissions to such regulatory authorities. Each Party shall
also notify the other Party of any such regulatory matters and
provide reasonable assistance to the other Party in connection
therewith. In the event any provision or aspect of this
Agreement is determined to be invalid or illegal (such
provision or aspect an "Invalid Provision"), the Agreement
shall remain in full force and effect but shall be modified to
remove such Invalid Provision, provided, however, that if the
removal of such Invalid Provision would materially affect the
rights or obligations of the Parties hereunder, the Agreement
shall be restructured by the Parties in a manner designed to
ensure that each of the Parties receives comparable benefits
and has comparable obligations as prior to the removal of such
Invalid Provision, and in the unlikely event that the
transaction contemplated by this Agreement is ultimately
rejected by the competent antitrust authorities, and the
Parties cannot despite good faith efforts find an alternative
legal form to work around the rejection, the transactions
contemplated herein and in the Related Agreements shall be
undone.
15. TERMS AND CONDITIONS. The terms and conditions set forth on Exhibit B
--------------------
attached hereto are hereby made a part of this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-83-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the Effective Date.
AOLB BRASIL LTDA. BANCO ITAU S.A.
By: /s/ Manoel X.X. Xxxxxx By: /s/ Xxxxxxx Setubal
___________________________________ _________________________________________
Print Name:___________________________ Print Name:__________________________________
Title: Title: President and Chief Executive Officer
________________________________ _______________________________________
By: /s/ Xxxxxx X.X. Xxxxxxxx
__________________________________________
Print Name:__________________________________
Title: Executive Vice President
_______________________________________
AMERICA ONLINE LATIN AMERICA,
INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
___________________________________
Print Name:___________________________
Title:________________________________
WITNESSES:
1. /s/ Xxxx X. Xxxxxxxx
____________________________________
(Name and ID)
2. /s/ Heli xx Xxxxxxx
____________________________________
(Name and ID)
-84-
EXHIBIT A
DEFINITIONS
The following definitions shall apply to this Agreement:
1. "AAA" has the meaning set forth in Section 13.2.
---
2. "Acceleration Payment" means an amount equal to the following:
--------------------
(a) if the Trigger Date is on or before the first Anniversary Date,
the Payment Amount multiplied by the difference of 12% less the percentage
earned under paragraph 1 of Exhibit I (where for the purposes of such
calculation the term "Anniversary Date" shall mean the Trigger Date).
(b) if the Trigger Date is after the first Anniversary Date and on or
before the second Anniversary Date, (i) the Payment Amount multiplied by
the result of (A) 12%, less (B) the percentage that was earned on the first
Anniversary Date calculated under paragraph 1 of Exhibit I, less (C) the
percentage earned under paragraph 2 of Exhibit I (where for the purposes of
such calculation the term "Anniversary Date" shall mean the Trigger Date),
less (ii) all Reference Payments previously made.
(c) if the Trigger Date is after the second Anniversary Date and on or
before the third Anniversary Date, (i) the Payment Amount multiplied by the
result of (A) 12%, less (B) the sum of the percentages that were earned on
the first and second Anniversary Dates calculated under paragraphs 1 and 2
of Exhibit I, less (C) the percentage earned under paragraph 3 of Exhibit I
(where for the purposes of such calculation: the term "Anniversary Date"
shall mean the Trigger Date; the term "Third Anniversary Percentage" shall
mean 0.4, multiplied by the number of days from the second Anniversary Date
to and including the Trigger Date, divided by the number of days from the
second Anniversary Date to and including the third Anniversary Date,
multiplied by the result of (i) 5% less (ii) the Second Year Anticipation
Percentage; and, in place of the twelve month period referenced therein the
period beginning on the second Anniversary Date and ending on the Trigger
Date shall be used), less (ii) all Reference Payments previously made.
(d) if the Trigger Date is after the third Anniversary Date and on or
before the fourth Anniversary Date, (i) the Payment Amount multiplied by
the result of (A) 12%, less (B) the sum of the percentages that were earned
on the first, second and third Anniversary Dates calculated under
paragraphs 1 through 3 of Exhibit I, less (C) the percentage earned under
paragraph 4 of Exhibit I (where for the purposes of such calculation: the
term "Anniversary Date" shall mean the Trigger Date; the term "Fourth
Anniversary Percentage" shall mean 0.4, multiplied by the number of days
from the third Anniversary Date to and including the Trigger Date, divided
by the number of days from the third Anniversary Date to and including the
fourth Anniversary Date, multiplied by the result of (i) 5% less (ii) the
Second Year Anticipation Percentage; and, in place of the twelve month
period referenced therein the period beginning on the third Anniversary
Date and ending on the Trigger Date shall be used), less (ii) all Reference
Payments previously made.
(e) if the Trigger Date is after the fourth Anniversary Date and on or
before the fifth Anniversary Date, (i) the Payment Amount multiplied by the
result of (A) 12%, less (B) the sum of the percentages that were earned on
the first, second third and fourth Anniversary Dates calculated under
paragraphs 1 through 4 of Exhibit I, less (C) the percentage earned under
paragraph 5 of Exhibit I (where for the purposes of such calculation: the
term "Anniversary Date" shall mean the Trigger Date; the term "Fourth
Anniversary Amount" shall mean 0.2, multiplied
A-1
by the number of days from the fourth Anniversary Date to and including the
Trigger Date, divided by the number of days from the fourth Anniversary
Date to and including the fifth Anniversary Date, multiplied by the result
of (i) 5% less (ii) the Second Year Anticipation Percentage; and, in place
of the twelve month period referenced therein the period beginning on the
fourth Anniversary Date and ending on the Trigger Date shall be used), less
(ii) all Reference Payments previously made.
3. "Access Provider" means any entity that offers or provides an ISP product.
---------------
4. "Advertising" or "Advertisement" means advertisements, promotions,
----------- -------------
sponsorships or buttons.
5. "Additional City" has the meaning set forth in Section 1.4.2.
---------------
6. "Affiliate" means, for purposes of this Agreement, as to any Person, any
---------
other Person that, directly or indirectly, Controls, is under common
Control with, or is Controlled by, that Person.
7. "Agreement" means the body of this Agreement and the Exhibits attached
---------
hereto. In the event of any conflict between the terms and conditions in
the body of this Agreement and those in the Exhibits, the terms and
conditions in the body of this Agreement shall prevail.
8. "America Online, Inc." means America Online, Inc. and any successors
--------------------
thereto.
9. "Anchor Tenant" means a prominent and dedicated placement on a particular
-------------
channel in the location specifically designated by AOLB for Content anchor
tenants within such channel.
10. "Anniversary Date" means the date that is one year after the Initial
----------------
Launch, as may be adjusted by any Tolling Period, and each successive one
year anniversary of such date as may be adjusted by any Tolling Period.
11. "Anniversary Year" means the period from an Anniversary Date to and
----------------
including the next Anniversary Date, as such Anniversary Dates may be
adjusted as provided in this Agreement.
12. "AOLA Change of Control" shall mean the first to occur of the following:
----------------------
(a) the date on which AOL and ODC do not own, collectively, shares of
capital stock of AOLA representing more than fifty percent (50%) of the
voting power entitled to be cast at elections for directors ("Voting
------
Power") of AOLA (with AOL owning at least the same Voting Power of AOLA as
-----
does ODC); (b) the date on which AOL and ODC do not, collectively, have the
right to elect either (i) at least a majority of the Board of Directors of
AOLA or (ii) at least a majority of the members of the Special Committee of
the Board of Directors of AOLA (as such term is defined in the Restated
Certificate of Incorporation of AOLA), so long as such Special Committee is
constituted and empowered as set forth in the Restated Certificate of
Incorporation; (c) any Person or Persons other than AOL and ODC acquires
any general power to prevent AOLA's Board of Directors or shareholders from
taking action on a substantial range of corporate actions without the
approval of such Person or Persons other than pursuant to covenants and
agreements of AOLA contained in any loan documents, indentures or similar
agreements entered into in connection with a bona fide indebtedness for
money borrowed by AOLA after the date hereof; or (d) the date on which XXXX
xxxxx, leases, exchanges or otherwise transfers, directly or indirectly (in
one transaction or a series of related transactions), at least sixty
percent (60%) by fair market value of the assets of AOLA to any Person;
provided, however, that an AOLA Change of Control shall not be deemed to
-------- -------
have occurred (other than pursuant to clause (c) or (d)) so long as either
of the following conditions (i) or (ii) is met:
A-2
(i) AOL, together with any Subsidiary, not less than seventy-five
percent (75%) of the outstanding equity securities and Voting Power of
which are owned, directly or indirectly, by AOL (or any entity that owns
not less than seventy-five percent (75%) of the outstanding equity
securities and Voting Power of AOL), owns capital stock representing more
than 50% of the Voting Power of the capital stock of AOLA and has the right
to elect a majority of the Board of Directors of AOLA; or
(ii) AOL, together with any Subsidiary, not less than seventy-five
percent (75%) of the outstanding equity securities and Voting Power of
which are owned, directly or indirectly, by AOL (or any entity that owns
not less than seventy-five percent (75%) of the outstanding equity
securities and Voting Power of AOL) and another third party, collectively
own more than 50% of the Voting Power of AOLA, and pursuant to an agreement
jointly have the right to elect a majority of the Board of Directors of
AOLA, but only if each of the following conditions is satisfied:
(A) AOL owns at least the same Voting Power of AOLA as does such
third party;
(B) Such third party is not a Financial Institution and is not a
member of any Group that includes any Financial Institution that is
one of the top twenty Financial Institutions in the Territory (ranked
by the aggregate assets of all members of the Group which are
Financial Institutions in the Territory as of the latest date prior to
the date such AOLA Change in Control would otherwise be deemed to have
occurred for which such information is available); and
(C) Such third party is not an Internet service provider that
has any significant marketing or Co-Branding agreement with any
Financial Institution.
Notwithstanding the foregoing, an AOLA Change of Control shall not occur in
the case of any merger or consolidation or sale, assignment or other
transfer of the assets of AOLA if the successor entity or the entity to
which such assets of AOLA are sold, assigned or transferred is owned by AOL
or AOL and ODC (or any Subsidiary, not less than seventy-five percent (75%)
of the outstanding equity securities and Voting Power of which are owned,
directly or indirectly, by AOL or ODC, as applicable (or any entity that
owns not less than seventy-five percent (75%) of the outstanding equity
securities and Voting Power of AOL or ODC, as applicable)) or any third
party that if such entity were substituted for AOLA in the foregoing
definition, there would not be an AOLA Change of Control, and Itau and
Banco Xxxxxx have not less than the same proportionate interest in such
successor entity vis-a-vis AOL and ODC as they had in the AOLA immediately
prior to consummation of such sale, lease, assignment or transfer..
13. "AOLB Client" means the proprietary software developed, owned and
-----------
distributed by AOLB for use in the Territory in connecting to and using the
AOLB Service.
14. "AOLB Designated Entity" has the meaning set forth in Section 2.4.
----------------------
15. "AOLB Look and Feel" means the distinctive and particular elements of
------------------
graphics, design, organization, presentation, layout, user interface,
navigation, trade dress and stylistic convention (including the digital
implementations thereof) that are used in the Co-Branded Service and the
total appearance and impression substantially formed by the combination,
coordination and interaction of these elements; provided that the "AOLB
Look and Feel" shall not include the Licensed Content.
A-3
16. "AOLB Marks" means the following trademarks, trade names and service marks:
----------
the AOLB name, the AOLB triangle logo and such other trademarks, trade
names and service marks as authorized by AOLB for use by Itau hereunder.
17. "AOLB Member(s)" means authorized users of the AOLB Network, including
--------------
AOLB/Itau Subscribers and any sub-accounts using the AOLB Network under an
authorized master account.
18. "AOLB Network" means the AOLB Service, the Co-Branded Service and any other
------------
products or services owned, controlled, operated, distributed or authorized
to be distributed by or through AOLA, AOLB or their respective Affiliates,
including XXX.Xxx, CompuServe, Digital City, Netscape, AIM and ICQ.
19. "AOLB Party" or "AOLB Parties" means, together, AOLA and AOLB.
---------- -------------
20. "AOLB Privacy Policies" has the meaning set forth in Section 1.6.2.
---------------------
21. "AOLB Programmable Area" has the meaning set forth in Section 1.8.
----------------------
22. "AOLB Service" means the standard narrowband personal computer version of
------------
the AOLB Brazil brand Internet online service, regardless of the means of
connectivity (e.g., wireless, wireline, satellite). The definition of AOLB
Service may be expanded to include additional ISP Products as provided
further in Section 2.3.2(d).
23. "AOLB/Itau Subscribers" means individuals who subscribe to the Co-Branded
---------------------
Service through the Customized Client using Itau's special promotion
identifier and for whom Itau pays the Hours Payment.
24. "AOLB Subscriber Revenue" means, for any Anniversary Date, the amount of
-----------------------
revenue AOLB receives for subscriptions to the Combined Services in the 12-
month period ending on such Anniversary Date.
25. "AOLB Total Revenue" means, for any Anniversary Date, the amount of revenue
------------------
of AOLB for such 12-month period directly related to the Combined Services.
26. "Approved Subscriber" has the meaning set forth in Section 2.1.3.
-------------------
27. "Audit" has the meaning set forth in Section 8.2.6(c).
-----
28. "Auditor" has the meaning set forth in Section 8.2.6(a).
-------
29. "Billing Servicing Fee" has the meaning set forth in Section 1.14.2.
---------------------
30. "Brazilian Financial Institution" has the meaning set forth in Section 7.2.
-------------------------------
31. "Breach Date" means the date the Material Breach first occurred as mutually
-----------
agreed or as determined by arbitration.
32. "Breach Notice" has the meaning set forth in Section 11.2.1.
-------------
33. "Breaching Party" has the meaning set forth in Section 11.2.1.
---------------
A-4
34. "Business Day" means any day other than a Saturday, Sunday or a day on
------------
which banking institutions in New York, Florida or Sao Paulo are authorized
or required by law to close.
35. "Cash Escrow" has the meaning set forth in Section 9.3.3(f).
-----------
36. "Caymans Financial Test" has the meaning set forth in Section 9.3.1.
----------------------
37. "Caymans Financial Test Certificate" has the meaning set forth in Section
----------------------------------
9.3.2.
38. "Closing" has the meaning set forth in the Subscription Agreement.
-------
39. "Co-Brand" means with respect to any two or more Persons and any particular
--------
product or service, the use of one or more of each such Persons'
trademarks, trade names or service marks to identify such product or
service, regardless of whether such Parties' trademarks, trade names,
service marks or logos are presented co-equally. Co-Brands shall not
include: (a) Anchor Tenancies on channels or other areas with more than one
Anchor Tenant, (b) the inclusion of Advertisements on a screen page; (c)
ingredient branding (e.g., powered by AOL) on a product, portal or other
Interactive Site provided that the powered by Party's brands are used
materially less prominently than the brand of the applicable product or
service; or (d) indications of sponsorship on a portal or other Interactive
Site provided that the sponsoring Party's brands are used materially less
prominently than the brand of the applicable product or service (e.g., AOLB
finance channel sponsored by Itau).
40. "Co-Branded Service" means the version of the AOLB Service for individuals
------------------
in the Territory, customized and Co-Branded as set forth in this Agreement.
The definition of Co-Branded Service may be expanded to include additional
ISP Products as provided further in Section 2.3.2(d).
41. "Co-Branded Welcome Screen" has the meaning set forth in Section 3 of the
-------------------------
Technical Operating Plan.
42. "Combined Services" means the AOLB Service and the Co-Branded Service.
-----------------
43. "Commencement" has the meaning set forth in Section 13.2.
------------
44. "Common Stock" has the meaning set forth in Section 10.1.
------------
45. "Competing Arrangement" has the meaning set forth in Section 2.5.
---------------------
46. "Confidential Information" means any information relating to or disclosed
------------------------
in the course of the Agreement, which is or should reasonably be understood
by the receiving Party to be confidential or proprietary to the disclosing
Party, including, but not limited to, the material terms of this Agreement,
information about AOLB Members, AOLB/Itau Subscribers, Itau Customers,
technical processes and formulas, source codes, product designs, sales,
cost and other unpublished financial information, product and business
plans, projections, and marketing data. "Confidential Information" shall
not include information (a) already lawfully known to or independently
developed by the receiving Party, (b) disclosed in published materials
without breach of any contractual or legal obligation, (c) generally known
to the public, or (d) lawfully obtained from any third party. Customer
Financial Data shall be deemed Confidential Information of Itau.
A-5
47. "Connectivity Test" shall have the meaning set forth in Section 1.4.1(a).
-----------------
48. "Content" means information, materials, intellectual property, features,
-------
products, services, Advertisements, pointers and software.
49. "Control" including its various tenses and derivatives (such as
-------
"controlled"), as used with respect to any Person, means an Equity Interest
of at least fifty percent (50%) of such Person or Voting Control of such
Person.
50. "Covered Pages" has the meaning set forth in Section 1.9.2(b).
-------------
51. "CPF" means Cadastro de Persoa Fisica.
---
52. "Cure Periods" has the meaning set forth in Section 11.2.1.
------------
53. "Custom Toolbar Icon" has the meaning set forth in Section 4 of Exhibit E.
-------------------
54. "Customer Financial Data" means personal and financial information provided
-----------------------
by an individual or Itau in connection with the use of the Itau Online Area
or Itau's online Financial Services and any other information that is
protected under Brazilian banking secrecy laws (e.g., checking account
- -
numbers, passwords for the use of the Financial Services and account
balances), including whether an individual has an Itau account and what
type of account they have.
55. "Customized Client" means the AOLB Client as customized for use in
-----------------
connection with the Co-Branded Service as provided in the Technical
Operating Plan.
56. "Dispute" has the meaning set forth in Section 13.2.
-------
57. "Documentation" means the documentation, brochures and similar materials
-------------
related to use of the Customized Client and Co-Branded Service which AOLA
or AOLB will provide to Itau for distribution to potential and existing
AOLB/Itau Subscribers.
58. "Effective Date" has the meaning set forth in the preamble of this
--------------
Agreement.
59. "Escrow Agent" has the meaning set forth in Section 9.1.1.
------------
60. "Escrow Agreement" has the meaning set forth in Section 9.1.1
----------------
61. "Equity Interest" means, with respect to any Person, any legal, beneficial
---------------
or equitable ownership, directly or indirectly, of any of the capital or
voting stock (or other ownership or voting interest, if not a corporation)
of such Person.
62. "Extension Period" has the meaning set forth in Section 1.5.1.
----------------
63. "Finance Center" means the vertical interactive area(s) on the Finance
--------------
Channel where AOLB promotes vertical Financial Services (e.g., home
- -
banking, insurance, online trading).
64. "Finance Plan" has the meaning set forth in Section 2.1.4.
------------
65. "Financial Institution" means any entity primarily engaged in the business
---------------------
of offering some or all of the Financial Services in the Territory.
A-6
66. "Financial Services" means (i) banking and financial services that by law
------------------
or regulation require a license or authorization from the Brazilian Central
Bank, the Superintendencia de Seguros Privados, or the Comissao de Valores
Mobiliarios to be offered to the public, and (ii) services related to the
administration of credit cards to persons resident in Territory.
67. "Force Majeure Event" has the meaning set forth in Exhibit B, Section IV.
-------------------
68. "Forty Five Day Arbitration" has the meaning set forth in Section 13.4.
--------------------------
69. "Free Internet Access Service" means an unlimited Internet access service
----------------------------
offered by AOLB at no charge to end-users and without subsidization of such
charges by a third party other than AOLB or its Affiliates.
70. "Group" means any aggregation of Persons that is under the direct or
-----
indirect Control of one Person, which one Person is not Controlled by any
other Person (i.e., has its equity securities held by more than one Person,
none of which has an Equity Interest of at least fifty percent (50%) of
such Person or Voting Control of such Person).
71. "Horizontal Portal" means any entity that aggregates and/or distributes a
-----------------
broad selection of interactive content and services (e.g., search, chat or
web-mail), whether such content and services are provided by such entity or
by a third party.
72. "Impressions" means user exposure to the applicable Advertising, as such
-----------
exposure may be reasonably determined and measured by AOLB in accordance
with its standard methodologies and protocols.
73. "Independent Financial Services Portal" means an Internet or other online
-------------------------------------
portal offering aggregated interactive Content (or navigation thereto)
provided by more than one third party Financial Institution and relating to
Financial Services but not to other topics. Such portal may also include
Content provided by AOLB or Itau. The Standard Financial Channel and the
Special Edition Finance Channel are specifically excluded from the
definition of an Independent Financial Services Portal as are any
equivalent areas on AOLB's other standard product and service offerings
(e.g., CompuServe, Netscape, XXX.xxx) comparable to those offered on such
- -
services as of the Effective Date.
74. "Information Request" has the meaning set forth in Section 1.6.2.
-------------------
75. "Initial Cities" has the meaning set forth in Section 1.4.1(a).
--------------
76. "Initial Deliverables" has the meaning set forth in Section 1.1.
--------------------
77. "Initial Launch" means the commencement of the general availability of the
--------------
Co-Branded Service in all of the Test Cities.
78. "Interactive Site" means any site on the Internet.
----------------
79. "Internet" means the Internet and any comparable, related or successor
--------
networks or technologies to the Internet.
80. "Invalid Provision" has the meaning set forth in Section 14.2.
-----------------
A-7
81. "ISP Product" means a product or service that is intended primarily for
-----------
individuals and provides access to the Internet, including products or
services for accessing the Internet through cellular telephones and
personal digital assistants. For purposes of this Agreement, except as
expressly provided in Section 2.3.1, the Itau Service shall not be
considered an ISP Product for so long as the Itau Service provides access
controlled by Itau to selected Internet sites on a single server or a
limited (i.e., small) number of servers and the Itau Service does not
provide general access to the Internet network (e.g., without having
- -
functionality where a user can access Internet sites, other than for those
sites selected by Itau as provided above). For the avoidance of doubt, only
Itau-controlled Internet sites will link to such limited number of third
party Internet sites and such third party sites may not link to any other
Internet sites of third parties or the Itau Service will be considered an
ISP Product.
82. "Itau" has the meaning set forth in the preamble of this Agreement.
----
83. "Itau Change of Control" shall mean the first to occur of the following:
----------------------
(a) the date on which any Person or Persons, other than (i) a Setubal or
Xxxxxxxx Family Member or (ii) any entity, not less than 50% of the
outstanding Voting Power of which is owned, directly or indirectly, by a
Setubal or Xxxxxxxx Family Member, owns or controls capital stock
representing more than 50% of the Voting Power of Itau or has the right to
elect a majority of the directors or other governing body of Itau, (b) the
date on which any third party acquires any general power to prevent the
Board of Directors or stockholders of Itau from taking action on a
substantial range of corporate actions without the approval of such Person
or Persons, other than pursuant to covenants and agreements of Itau
contained in any loan document, indentures or similar agreements entered
into in connection with a bona fide indebtedness for money borrowed by Itau
after the date hereof, or (c) the date on which Itau sells, leases, assigns
or otherwise transfers directly or indirectly (in one transaction or a
series of related transactions) at least sixty percent (60%) by fair market
value of its assets to any Person. Notwithstanding the foregoing, an Itau
Change of Control shall not occur in the case of any merger or
consolidation or sale, lease, assignment or other transfer of assets of
Itau, if the successor entity or the entity to which the assets of Itau are
sold, assigned or transferred is owned in such fashion that if such entity
were substituted for Itau in the foregoing definition, there would not be a
Change in Control.
84. "Itau Customers" means: (a) any individual who has a direct financial
--------------
relationship with Itau, Banco Xxxxxx or Banco Bemge or any Financial
Institution Affiliates thereof and (b) any individual that comes into
contact with the foregoing (by means of direct contact such as through
branch offices, events and fairs or by means of remote channels such as
through ATMs and Itau's call center). For purposes of this Agreement, all
employees of companies with a payroll relationship with Itau in which more
than fifty percent (50%) of the employees of such company also have a
direct banking relationship with Itau shall be considered Itau Customers.
85. "Itau Interactive Site" means any Interactive Site which is managed,
---------------------
maintained or owned by Itau or its agents, including the web pages located
at .
86. "Itau Marks" means the following trademarks, trade names and service marks:
----------
the Itau name and such other trademarks, trade names and service marks as
authorized by Itau for use by AOLB or AOLA hereunder.
87. "Itau Online Area" means the Itau Window, the Custom Toolbar Icon, the Itau
----------------
Programmable Area, and any other areas within the AOLB Service that are
developed, programmed or managed by Itau using AOL's proprietary publishing
tools pursuant to this Agreement.
A-8
88. "Itau Programmable Area" has the meaning set forth in Section 1.8.
----------------------
89. "Itau Service" means the proprietary Itau network (including its contents,
------------
services and links).
90. "Itau's Subscriber Revenue" means, for any Anniversary Date, the AOLB
-------------------------
Subscriber Revenue for the 12-month period ending on such Anniversary Date
received by AOLB from AOLB/Itau Subscribers for subscriptions to the Co-
Branded Service, plus the amount that Itau has paid to AOLB for free hours,
discounts and inactive AOLB/Itau Subscribers for use of the Co-Branded
Service over such 12-month period.
91. "Itau Window" has the meaning set forth in Section 3 of the Technical
-----------
Operating Plan.
92. "Launch" with respect to any city means, the commencement of the general
------
availability of the Co-Branded Service in such city.
93. "Launch Criteria" has the meaning set forth in Section 1.4.1(a).
---------------
94. "Launch Date" means the date of the Initial Launch.
-----------
95. "Launch Schedule" has the meaning set forth in Section 1.4.1(a).
---------------
96. "Licensed Content" means all Content provided by or on behalf of Itau for
----------------
distribution through the Itau Online Area, the Special Edition Finance
Channel, the AOLB Service, or the AOLB Network, pursuant to this Agreement.
97. "Linked Interactive Site" means any Interactive Site that is linked
-----------------------
(through a "pointer" or similar link) to any portion of the Itau Online
Area.
98. "Management Committee" has the meaning set forth in Section 4.1.
--------------------
99. "Marketing Committee" has the meaning set forth in Section 2.1.1.
-------------------
100. "Marketing Guidelines" means the Marketing Guidelines attached hereto as
--------------------
Exhibit D.
101. "Marketing Year" means the twelve-month period commencing on the Launch
--------------
Date and each successive twelve-month period thereafter.
102. "Marks" means the AOLB Marks and the Itau Marks.
-----
103. "Material Adverse Effect" means, in the case of Material Itau Exclusivity
------------------------
Breaches, a material adverse effect on the business, financial condition,
or results of the operations of AOLB, and in the case of Material AOLB
Exclusivity Breaches, a material adverse effect on the business, financial
condition, or results of the operations of Itau.
104. "Material AOLB Breach" means (i) a Material AOLB Exclusivity Breach, (ii)
--------------------
a breach entitling Itau to terminate this Agreement pursuant to Section
1.5.1 for AOLB's failure to satisfy the Launch Criteria or (iii) a Tier 3
Failure entitling Itau to terminate this Agreement pursuant to Section
1.12.3.
105. "Material AOLB Exclusivity Breach" means a breach by an AOL Party of the
--------------------------------
provisions of Section 7.1, 2.3.2 or 2.3.3, which breach has or is
reasonably likely to have a Material Adverse Effect.
A-9
106. "Material Breach" means a Material AOLB Breach or a Material Itau Breach.
---------------
107. "Material Itau Breach" means (i) a Material Itau Exclusivity Breach, (ii)
--------------------
a Material Marketing Breach or (iii) a Material Payment Breach.
108. "Material Itau Exclusivity Breach" means a breach of the provisions of
--------------------------------
Section 2.3, which breach has or is reasonably likely to have a Material
Adverse Effect.
109. "Material Marketing Breach" means a material breach of the Minimum
-------------------------
Marketing Commitments.
110. "Material Payment Breach" means a breach of Itau's obligations under this
-----------------------
Agreement to make a Reference Payment when such Reference Payment is due
unless the amount of such payment is the subject of Audit or Methodology
Arbitration.
111. "Member Information" has the meaning set forth in Section 1.6.2.
------------------
112. "Member Numbers" has the meaning set forth in Section 1.5.2.
--------------
113. "Methodology Arbitration" has the meaning set forth in Section 8.2.5(a).
-----------------------
114. "Minimum Marketing Commitments" means those minimum marketing commitments
-----------------------------
identified in Section 2(a) of the Marketing Guidelines.
115. "Network Expansion Plan" has the meaning set forth in Section 1.4.2.
----------------------
116. "Non-ISP Product" means a product or service other than an ISP Product.
---------------
For the avoidance of doubt, a computer that has the capability of
connecting to the Internet and that has embedded an ISP Product of more
than one Access Provider is not an ISP Product.
117. "Notes" has the meaning set forth in Section 9.1.1.
-----
118. "Notice of Reference Payment" has the meaning set forth in Section
---------------------------
8.2.3(a).
119. "Notifying Party" has the meaning set forth in Section 11.2.1.
---------------
120. "Other Revenue Factor" means, for any Anniversary Date, 1 minus the
--------------------
Subscriber Revenue Factor.
121. "Other Revenue Percentage" means, for any Anniversary Date, the Other
------------------------
Revenue Factor for such 12-month period multiplied by a fraction the
numerator of which is the number of Verified Members at such Anniversary
Date and the denominator of which is the total number of subscribers to
the Combined Services at such Anniversary Date.
122. "Party" and "Parties" has the meaning set forth in the preamble of this
----- -------
Agreement.
123. "Payment Amount" means 65% of the Purchase Price, divided by 0.12.
--------------
124. "Person" means a natural person, a corporation, a partnership, a limited
------
liability company, a trust, a joint venture, any governmental authority or
any other entity or organization.
125. "Portal Entity" has the meaning set forth in Section 12.4.1.
-------------
A-10
126. "Portal Notice" has the meaning set forth in Section 12.4.2.
-------------
127. "Promotional Materials" has the meaning set forth in Section 6.1.
---------------------
128. "Pro-Rata Reference Payment" means an amount equal to:
--------------------------
(a) if the Trigger Date occurred in the first quarter of the period
beginning on the Launch Date and ending on the first Anniversary Date, the
sum of (i) the Payment Amount multiplied by the result of (w) 0.005, less
(x) 0.005 multiplied by a fraction (but not greater than 1) the numerator
of which is the actual number of Verified Members and the denominator of
which is 62,500, plus (ii) the Payment Amount multiplied by the result of
(y) 0.00125, less (z) 0.00125 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members
and the denominator of which is 125,000;
(b) if the Trigger Date occurred in the second quarter of the period
beginning on the Launch Date and ending on the first Anniversary Date, the
sum of (i) the Payment Amount multiplied by the result of (w) 0.010, less
(x) 0.010 multiplied by a fraction (but not greater than 1) the numerator
of which is the actual number of Verified Members and the denominator of
which is 125,000, plus (ii) the Payment Amount multiplied by the result of
(y) 0.0025, less (z) 0.0025 multiplied by a fraction (but not greater than
1) the numerator of which is the actual number of Verified Members and the
denominator of which is 250,000;
(c) if the Trigger Date occurred in the third quarter of the period
beginning on the Launch Date and ending on the first Anniversary Date, the
sum of (i) the Payment Amount multiplied by the result of (w) 0.015, less
(x) 0.015 multiplied by a fraction (but not greater than 1) the numerator
of which is the actual number of Verified Members and the denominator of
which is 187,500, plus (ii) the Payment Amount multiplied by the result of
(y) 0.00375, less (z) 0.00375 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members
and the denominator of which is 375,000;
(d) if the Trigger Date occurred in the fourth quarter of the period
beginning on the Launch Date and ending on the first Anniversary Date, the
sum of (i) the Payment Amount multiplied by the result of (w) 0.020, less
(x) 0.020 multiplied by a fraction (but not greater than 1) the numerator
of which is the actual number of Verified Members and the denominator of
which is 250,000, less (ii) the Payment Amount multiplied by the result of
(y) 0.005, less (z) 0.005 multiplied by a fraction (but not greater than
1) the numerator of which is the actual number of Verified Members and the
denominator of which is 500,000;
(e) if the Trigger Date occurred in the first quarter of the period
beginning on the day after the first Anniversary Date and ending on the
second Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.0075, less (x) 0.0075 multiplied by a fraction (but
not greater than 1) the numerator of which is the result of the actual
number of Verified Members (at the Trigger Date or the first Anniversary
Date, whichever is greater) in excess of 250,000, and the denominator of
which is 62,500, plus (ii) the Payment Amount multiplied by the result of
(y) 0.00625, less (z) 0.00625 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members
and the denominator of which is 625,000;
(f) if the Trigger Date occurred in the second quarter of the period
beginning on the day after the first Anniversary Date and ending on the
second Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.015, less (x) 0.015 multiplied by a fraction (but not
greater than 1) the numerator of which is the result of the actual number
of Verified Members
A-11
(at the Trigger Date or the first Anniversary Date, whichever is greater)
in excess of 250,000, and the denominator of which is 125,000, plus (ii)
the Payment Amount multiplied by the result of (y) 0.0075, less (z)
0.0075 multiplied by a fraction (but not greater than 1) the numerator of
which is the actual number of Verified Members and the denominator of
which is 750,000;
(g) if the Trigger Date occurred in the third quarter of the period
beginning on the day after the first Anniversary Date and ending on the
second Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.0225, less (x) 0.0225 multiplied by a fraction (but
not greater than 1) the numerator of which is the result of the actual
number of Verified Members (at the Trigger Date or the first Anniversary
Date, whichever is greater) in excess of 250,000, and the denominator of
which is 187,500, plus (ii) the Payment Amount multiplied by the result
of (y) 0.00875, less (z) 0.00875 multiplied by a fraction (but not
greater than 1) the numerator of which is the actual number of Verified
Members and the denominator of which is 875,000;
(h) if the Trigger Date occurred in the fourth quarter of the period
beginning on the day after the first Anniversary Date and ending on the
second Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.030, less (x) 0.030 multiplied by a fraction (but not
greater than 1) the numerator of which is the result of the actual number
of Verified Members (at the Trigger Date or the first Anniversary Date,
whichever is greater) in excess of 250,000, and the denominator of which
is 250,000, plus (ii) the Payment Amount multiplied by the result of (y)
0.010, less (z) 0.010 multiplied by a fraction (but not greater than 1)
the numerator of which is the actual number of Verified Members and the
denominator of which is 1,000,000;
(i) if the Trigger Date occurred in the first quarter of the period
beginning on the day after the second Anniversary Date and ending on the
third Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.005 less the result of 0.10 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "First Calculation Amount"), less (x) the Reference
Percentage for the third Anniversary Date multiplied by the First
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.00125, less (z) 0.00125 multiplied by a fraction (but not
greater than 1) the numerator of which is the actual number of Verified
Members in excess of 1,000,000 and the denominator of which is 125,000;
(j) if the Trigger Date occurred in the second quarter of the period
beginning on the day after the second Anniversary Date and ending on the
third Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.01 less the result of 0.20 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "Second Calculation Amount"), less (x) the Reference
Percentage for the third Anniversary Date multiplied by the Second
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.0025, less (z) 0.0025 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members
in excess of 1,000,000 and the denominator of which is 250,000;
(k) if the Trigger Date occurred in the third quarter of the period
beginning on the day after the second Anniversary Date and ending on the
third Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.015 less the result of 0.30 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "Third Calculation Amount"), less (x) the Reference
Percentage for the third Anniversary Date multiplied by the Third
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.00375, less (z) 0.00375 multiplied by a fraction (but not
greater than 1) the
A-12
numerator of which is the actual number of Verified Members in excess of
1,000,000 and the denominator of which is 375,000;
(l) if the Trigger Date occurred in the fourth quarter of the period
beginning on the day after the second Anniversary Date and ending on the
third Anniversary Date, the sum of (i) the Payment Amount multiplied by the
result of (w) 0.02 less the result of 0.40 multiplied by the Second Year
Anticipation Percentage (such amount determined pursuant to this subpart
(w), the "Fourth Calculation Amount"), less (x) the Reference Percentage
for the third Anniversary Date multiplied by the Fourth Calculation Amount,
plus (ii) the Payment Amount multiplied by the result of (y) 0.005, less
(z) 0.005 multiplied by a fraction (but not greater than 1) the numerator
of which is the actual number of Verified Members in excess of 1,000,000
and the denominator of which is 500,000;
(m) if the Trigger Date occurred in the first quarter of the period
beginning on the day after the third Anniversary Date and ending on the
fourth Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.005 less the result of 0.10 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "Fifth Calculation Amount"), less (x) the Reference
Percentage for the fourth Anniversary Date multiplied by the Fifth
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.00625, less (z) 0.00625 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members in
excess of 1,000,000 and the denominator of which is 625,000;
(n) if the Trigger Date occurred in the second quarter of the period
beginning on the day after the third Anniversary Date and ending on the
fourth Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.01 less the result of 0.20 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "Sixth Calculation Amount"), less (x) the Reference
Percentage for the fourth Anniversary Date multiplied by the Sixth
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.0075, less (z) 0.0075 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members in
excess of 1,000,000 and the denominator of which is 750,000;
(o) if the Trigger Date occurred in the third quarter of the period
beginning on the day after the third Anniversary Date and ending on the
fourth Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.015 less the result of 0.30 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "Seventh Calculation Amount"), less (x) the Reference
Percentage for the fourth Anniversary Date multiplied by the Seventh
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.00875, less (z) 0.00875 multiplied by a fraction (but not greater
than 1) the numerator of which is the actual number of Verified Members in
excess of 1,000,000 and the denominator of which is 875,000;
(p) if the Trigger Date occurred in the fourth quarter of the period
beginning on the day after the third Anniversary Date and ending on the
fourth Anniversary Date, the sum of (i) the Payment Amount multiplied by
the result of (w) 0.02 less the result of 0.40 multiplied by the Second
Year Anticipation Percentage (such amount determined pursuant to this
subpart (w), the "Eighth Calculation Amount"), less (x) the Reference
Percentage for the fourth Anniversary Date multiplied by the Eighth
Calculation Amount, plus (ii) the Payment Amount multiplied by the result
of (y) 0.010, less (z) 0.010 multiplied by a fraction (but not greater than
1) the numerator of
A-13
which is the actual number of Verified Members in excess of 1,000,000 and
the denominator of which is 1,000,000;
(q) if the Trigger Date occurred in the first quarter of the period
beginning on the day after the fourth Anniversary Date and ending on the
fifth Anniversary Date, the Payment Amount multiplied by the result of (i)
0.0025 less the result of 0.05 multiplied by the Second Year Anticipation
Percentage (such amount determined pursuant to this subpart (w), the "Ninth
Calculation Amount"), less (ii) the Reference Percentage for the fifth
Anniversary Date multiplied by the Ninth Calculation Amount;
(r) if the Trigger Date occurred in the second quarter of the period
beginning on the day after the fourth Anniversary Date and ending on the
fifth Anniversary Date, the Payment Amount multiplied by the result of (i)
0.005 less the result of 0.1 multiplied by the Second Year Anticipation
Percentage (such amount determined pursuant to this subpart (w), the "Tenth
Calculation Amount"), less (ii) the Reference Percentage for the fifth
Anniversary Date multiplied by the Tenth Calculation Amount;
(s) if the Trigger Date occurred in the third quarter of the period
beginning on the day after the fourth Anniversary Date and ending on the
fifth Anniversary Date, the Payment Amount multiplied by the result of (i)
0.0075 less the result of 0.15 multiplied by the Second Year Anticipation
Percentage (such amount determined pursuant to this subpart (w), the
"Eleventh Calculation Amount"), less (ii) the Reference Percentage for the
fifth Anniversary Date multiplied by the Eleventh Calculation Amount;
(t) if the Trigger Date occurred in the fourth quarter of the period
beginning on the day after the fourth Anniversary Date and ending on the
fifth Anniversary Date, the Payment Amount multiplied by the result of (i)
0.01 less the result of 0.2 multiplied by the Second Year Anticipation
Percentage (such amount determined pursuant to this subpart (w), the
"Twelfth Calculation Amount"), less (ii) the Reference Percentage for the
fifth Anniversary Date multiplied by the Twelfth Calculation Amount.
129. "Purchase Price" has the meaning set forth in the Stock Subscription
--------------
Agreement.
130. "Records" has the meaning set forth in Section 10.5.
-------
131. "Reais" means the Brazilian currency as of the Effective Date, Reais, or
-----
any subsequent currency of Brazil customarily used as legal tender in
Brazil.
132. "Reference Payment" has the meaning set forth in Section 8.2.2.
-----------------
133. "Reference Percentage" means, for any Anniversary Date, a fraction (but
--------------------
not greater than one) the numerator of which shall be the Weighted Revenue
Percentage in the 12-month period ending on such Anniversary Date and the
denominator of which shall be: for the 12-month period ended on the third
Anniversary Date, 39%; for the 12-month period ended on the fourth
Anniversary Date, 46%; and for the 12-month period ended on the fifth
Anniversary Date, 56%.
134. "Related Agreements" means the Stock Subscription Agreement, the
------------------
Registration Rights and Stockholders Agreement, the Escrow Agreement, the
Notes and the Guarantee.
135. "Related Group" of a Person includes each other Person that directly or
-------------
indirectly Controls, is Controlled by or is under common Control with such
Person; provided, however, that for purposes of this definition, two or
more Persons shall each be deemed to Control another
A-14
Person if and only if they are parties to an agreement, understanding or
arrangement with respect to owning, voting, or disposing of equity
interests, or otherwise directing the management or policies of, such other
Person and the aggregate Equity Interest or Voting Control of such two or
more Persons would constitute "Control" of such other Person under
Definition No. 49 of this Exhibit A.
136. "Restricted Advertisers" has the meaning set forth in Section 1.9.2(d).
----------------------
137. "Restricted Advertising List" has the meaning set forth in Section
---------------------------
1.9.2(d).
138. "Restricted Content Categories" has the meaning set forth in Section
-----------------------------
1.9.2(d).
139. "Rules" has the meaning set forth in Section 13.2.
-----
140. "Shares" means the number of shares of AOLA Class A common stock ("Common
------
Stock") to be issued pursuant to the Subscription Agreement.
141. "Special Edition Financial Channel" shall mean the pages controlled by
---------------------------------
AOLB and contained within a mirror version of the Standard Finance Channel
created pursuant to and modified in accordance with this Agreement.
142. "Specs" has the meaning set forth in Section 5.1.
-----
143. "Standard Finance Channel" has the meaning set forth in Section 1.11.1.
------------------------
144. "Subscriber Fees" has the meaning set forth in Section 1.14.2.
---------------
145. "Subscriber Revenue Factor" means, for any Anniversary Date, the AOLB
-------------------------
Subscriber Revenue for the 12-month period ending on such Anniversary Date
divided by AOLB Total Revenue for such 12-month period.
146. "Subscriber Revenue Percentage" means, for any Anniversary Date, the
-----------------------------
Subscriber Revenue Factor for the 12-month period ending on such
Anniversary Date multiplied by a fraction the numerator of which is Itau's
Subscriber Revenue for such 12-month period and the denominator of which is
AOLB Subscriber Revenue for such 12-month period.
147. "Subscription Agreement" has the meaning set forth in Section 10.1.
----------------------
148. "Substituted Reference Payment Note" has the meaning set forth in Section
----------------------------------
9.1.5.
149. "Substituted Termination Fee Note" has the meaning set forth in Section
--------------------------------
9.1.6.
150. "Successor" means, that Person or Persons who: (a) in the event of an AOLA
---------
Change of Control, upon consummation of such AOLA Change of Control (i)
Controls AOLA, (ii) is a type of Person described in clause (c) of the
definition of AOLA Change of Control, or (c) is a successor-in-interest of
AOLA, including any transferee of assets described in clause (d) of the
definition of AOLA Change in Control; or (b) in the event of an Itau Change
of Control, upon consummation of such Itau Change of Control (i) Controls
Itau, (ii) is a type of Person described in clause (c) of the definition of
Itau Change of Control, or (c) is a successor-in-interest of Itau,
including any transferee of assets described in clause (c) of the
definition of Itau Change of Control.
A-15
151. "Technical Committee" has the meaning set forth in Section 2.1.1.
-------------------
152. "Technical Operating Plan" has the meaning set forth in Section 1.2.
------------------------
153. "Term" has the meaning set forth in Section 11.1.
----
154. "Termination Date" means the date this Agreement is terminated, which,
----------------
with respect to any termination event shall mean the date written notice of
termination is received by the non-terminating Party in accordance with the
provisions of this Agreement.
155. "Termination Fee" means an amount equal to:
---------------
(a) if the Material Breach occurred after the Effective Date but on
or before the Launch Date, 76% of the Purchase Price.
(b) if the Material Breach occurred after the Launch Date but on or
before the first Anniversary Date, 76% of the Purchase Price multiplied by
the result of the number of days from the date of such notice to and
including the first Anniversary Date plus 1460, divided by the result of
the number of days from the Launch Date to and including the first
Anniversary Date plus 1460.
(c) if the Material Breach occurred after the first Anniversary Date
but on or before the second Anniversary Date, 76% of the Purchase Price
multiplied by .80 multiplied by the result of the number of days from the
Material Breach to and including the second Anniversary Date plus 1095,
divided by the result of the number of days from the first Anniversary Date
to and including the second Anniversary Date plus 1095.
(d) if the Material Breach occurred after the second Anniversary Date
but on or before the third Anniversary Date, 76% of the Purchase Price
multiplied by .60 multiplied by the result of the number of days from the
Material Breach to and including the third Anniversary Date plus 730,
divided by the result of the number of days from the second Anniversary
Date to and including the third Anniversary Date plus 730.
(e) if the Material Breach occurred after the third Anniversary Date
but on or before the fourth Anniversary Date, 76% of the Purchase Price
multiplied by .40 multiplied by the result of the number of days from the
Material Breach to and including the fourth Anniversary Date plus 365,
divided by the result of the number of days from the third Anniversary Date
to and including the fourth Anniversary Date plus 365.
(f) if the Material Breach occurred after the fourth Anniversary Date
but on or before the fifth Anniversary Date, 76% of the Purchase Price
multiplied by .20 multiplied by the number of days from the Material Breach
to and including the fifth Anniversary Date, divided by the number of days
from the fourth Anniversary Date to and including the fifth Anniversary
Date.
156. "Termination Period" has the meaning set forth in Section 1.5.1.
------------------
157. "Territory" means Brazil.
---------
158. "Terms of Service" means AOLB's then-standard terms of service agreement
----------------
with AOLB Members (including the Rules of the Road) located at Keyword
"TOS".
A-16
159. "Test Cities" means the following cities: Sao Paulo, Rio De Janeiro,
-----------
Salvador, Belo Horizonte, Fortaleza, Brasilia, Curitiba, Recife, Porto
Alegre and Campinus.
160. "Tier 1 Failure" means a failure to comply with one or more of the
--------------
following performance criteria over an [*] day measurement period in a
particular city after the Launch of the Co-Branded Service in such city, other
than as a result of a Force Majeure Event:
(i) [*]; or
(ii) [*]; or
(iii) [*].
161. "Tier 2 Failure" means a material failure to comply with one or more of
--------------
the following performance criteria over a [*] day measurement period in a
particular city after the Launch of the Co-Branded Service in such city,
other than as a result of a Force Majeure Event:
(1) [*]; or
(2) [*]; or
(3) [*].
162. "Tier 3 Failure" has the meaning set forth Section 1.12.3.
--------------
163. "Tolling Period" has the meaning set forth in Section 1.5.2.
--------------
164. "Total Verified Member Numbers" has the meaning set forth in Section 8.3.
-----------------------------
165. "Trigger Date" means for any Type I Acceleration Payment, Type II
------------
Acceleration Payment, Type I Pro-Rata Reference Payment or Type II Pro-Rata
Reference Payment, the Breach Date or the Termination Date as provided in
the definition of such payment.
166. "Type I Acceleration Payment" means an Acceleration Payment in which, for
---------------------------
purposes of calculating such Acceleration Payment, the Trigger Date equals
the Breach Date.
167. "Type II Acceleration Payment" means an Acceleration Payment in which, for
----------------------------
purposes of calculating such Acceleration Payment, the Trigger Date equals
the Termination Date.
168. "Type I Pro-Rata Reference Payment" means a Pro-Rata Reference Payment in
---------------------------------
which, for purposes of calculating such Pro-Rata Reference Payment, the
Trigger Date equals the Breach Date.
169. "Type II Pro-Rata Reference Payment" means a Pro-Rata Reference Payment in
----------------------------------
which, for purposes of calculating such Pro-Rata Reference Payment, the
Trigger Date equals the Termination Date.
170. "Upsold Subscriber" means an AOLB/Itau Subscriber who registers to pay
-----------------
AOLB for a Co-Branded Service plan that: (i) provides such AOLB/Itau
Subscriber more hours of use of the Co-Branded Service than the number of
free hours Itau pays AOLB for such Subscriber, or (ii) is offered to such
Subscriber by Itau at a discount from AOLB's then-current market price
(where Itau pays AOLB the fee set forth in the Finance Plan).
A-17
171. "Verified Member Reference Numbers" has the meaning set forth in Section
---------------------------------
8.1.
172. "Verified Members" on any Anniversary Date of the Launch means any
----------------
AOLB/Itau Subscriber that accesses the Co-Branded Service in any two of the
three months immediately preceding such Anniversary Date, as well as any
AOLB/Itau Subscriber that first accesses the Co-Branded Service in the
month immediately preceding such Anniversary Date. In the event AOLB offers
a Free Internet Access Service and Itau elects to create a Co-Branded
version of such Free Internet Access Service, each Itau subscriber that has
an account on and uses such Co-Branded Free Internet Access Service and
satisfies the definition of a "Verified Member" will count as one-half of a
Verified Member. Notwithstanding the foregoing, any user of a single
account across multiple Co-Branded Services shall only be counted as one
Verified Member.
173. "Voting Control" means the ability, directly or indirectly, to direct the
--------------
voting of a majority of the directors of such Person's board of directors
or, if the Person does not have a board of directors, a majority of the
positions on any similar body, whether through appointment, voting
agreement or otherwise.
174. "Weighted Revenue Percentage" means, for any Anniversary Date, the sum of
---------------------------
the Subscriber Revenue Percentage for such Anniversary Date plus the Other
Revenue Percentage for such Anniversary Date.
A-18
EXHIBIT B
TERMS AND CONDITIONS
B-1
EXHIBIT B
TERMS AND CONDITIONS
I. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (i) such Party has
the full corporate right, power and authority to enter into this Agreement, to
grant the licenses granted hereunder and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; and (iv) such Party
acknowledges that the other Party makes no representations, warranties or
agreements related to the subject matter hereof that are not expressly provided
for in this Agreement. Itau represents and warrants to AOLA and AOLB that as of
the Effective Date, one million fifty thousand (1,050,000) Itau Customers have
registered with Itau for access and use of Itau's Financial Services through
either the Internet or the Itau Service.
II. CONFIDENTIALITY.
Each Party acknowledges that Confidential Information may be disclosed to the
other Party during the course of this Agreement. Each Party agrees that it
shall take reasonable steps, at least substantially equivalent to the steps it
takes to protect its own proprietary information to prevent the duplication or
disclosure of Confidential Information of the other Party, other than by or to
its employees, independent contractors or agents who has a need to know such
Confidential Information and who are subject to confidentiality obligations to
the Party receiving such Confidential Information. Notwithstanding the
foregoing, either Party may issue a press release or other disclosure containing
Confidential Information without the consent of the other Party, to the extent
such disclosure is required by law, rule, regulation or government or court
order. In such event, the disclosing Party will provide at least five (5)
business days prior written notice of such proposed disclosure to the other
Party.
III. RELATIONSHIP WITH AOLB MEMBERS
Unsolicited E-Mail. Itau may not send any AOLB Member unsolicited e-mail
------------------
communications on or through the AOLB Network without a "Prior Business
Relationship." For purposes of this Agreement Itau shall be deemed to have a
"Prior Business Relationship" with all AOLB/Itau Subscribers, and with respect
to all other AOLB Members a "Prior Business Relationship" means that such AOLB
Member has either (i) used services or purchased products offered by Itau or
(ii) voluntarily provided information to Itau through a contest, registration,
or other communication.
IV. LIMITATIONS ON LIABILITY; DISCLAIMER OF WARRANTIES
Liability. EXCEPT AS OTHERWISE PROVIDED IN THE "INDEMNITY" SECTION OF THIS
----------
EXHIBIT AND IN ARTICLE 11 OF THE BODY OF THIS AGREEMENT, UNDER NO CIRCUMSTANCES
SHALL ANY PARTY BE LIABLE TO ANY OTHER PARTY FOR ANY SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL LOSSES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE USE OF OR INABILITY TO USE THE AOLB NETWORK, ITAU INTERACTIVE SITES, LINKED
INTERACTIVE SITES OR ITAU ONLINE AREA.
No Additional Warranties. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EXCEPT AS
-------------------------
EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY
HEREBY SPECIFICALLY DISCLAIMS AND EXCLUDES, ANY REPRESENTATIONS, WARRANTIES, AND
CONDITIONS (INCLUDING ANY IMPLIED WARRANTIES REGARDING THE AOLB NETWORK, THE
ITAU ONLINE AREA, THE LINKED INTERACTIVE SITES OR THE ITAU INTERACTIVE SITES
(WHETHER RELATING TO PROFITABILITY OR OTHERWISE), ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES
ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE). ADDITIONALLY, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, EACH PARTY EXCLUDES ALL LIABILITY TO THE OTHER
FOR ANY OTHER IMPLIED TERMS AND CONDITIONS NOT EXPRESSLY STATED IN THIS
AGREEMENT (INCLUDING, WITHOUT LIMITATION, RELATING TO THE AOLB CLIENT, THE
CUSTOMIZED CLIENT, THE CO-BRANDED SERVICE, THE ITAU ONLINE AREA, THE ITAU
INTERACTIVE SITES, THE LINKED INTERACTIVE SITES, DOCUMENTATION OR THE AOLB
NETWORK). ADDITIONALLY, NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT,
THE INTERNET IS INHERENTLY INSECURE AND AOLA AND AOLB DO NOT REPRESENT, WARRANT
OR COVENANT THAT THE USE OF THE CO-BRANDED SERVICE WILL BE SECURE FROM HACKING
OR THAT UNAUTHORIZED THIRD PARTIES WILL BE UNABLE TO COLLECT INFORMATION ON
USERS AND USAGE OF THE CO-BRANDED SERVICE.
V. INDEMNIFICATION
Indemnities of the AOLB Parties. The AOLB Parties shall indemnify (and defend
-------------------------------
and hold harmless as appropriate) Itau and its Affiliates, and their respective
officers, directors, agents, distributors, franchisees and employees from any
and all third-party losses, claims, demands, liabilities, costs or expenses,
including reasonable attorneys' fees and disbursements ("Liabilities"), relating
to or resulting from (i) allegations that the portions of the Co-Branded Service
that are owned or directly controlled by the AOLB Parties, excluding any
Licensed Content, or the Customized Client (X) infringe any third party's U.S.
patent, copyright, trademark or trade secret rights, or (Y) violate any
applicable law, rule or regulation; (ii) the installation of the Customized
Client; (iii) allegations that Content created or produced by or on behalf of an
AOLB Party in the Territory infringes any third party's Brazilian copyright,
trademark or trade secret rights and (iv) the AOLB Parties' breach of any
applicable law, rule or regulation, including without limitation, the Brazilian
banking secrecy laws. To the extent AOLB receives any indemnification from
third parties regarding features, functionality or Content on the Co-Branded
Service controlled by such third party, AOLB shall provide Itau to the fullest
extent possible the benefit of such indemnification.
B-1
Indemnities of Itau. Itau shall indemnify (and defend and hold harmless as
-------------------
appropriate) the AOLB Parties and its Affiliates, and its and their respective
officers, directors, agents, distributors, franchisees and employees from any
and all Liabilities relating to or resulting from (i) allegations that the
portions of the Itau Interactive Sites and Licensed Content that are owned or
directly controlled by Itau (X) infringe any third party's U.S. patent,
copyright, trademark or trade secret rights; or (Y) violate any applicable law,
rule or regulation; (ii) Itau's marketing or promotion of the Co-Branded
Service, including without limitation any Liabilities arising directly from the
promotion by Itau of free hours on the Co-Branded Service, except to the extent
arising from materials provided by AOLA or AOLB; (iii) Itau's breach of any
applicable law, rule or regulation, including without limitation, the Brazilian
banking secrecy laws; and (iv) Itau's provision of Financial Services to
AOLB/Itau Subscribers, except to the extent such Liabilities are due to failures
due to the Co-Branded Service or AOLB Network. To the extent Itau receives any
indemnification from third parties regarding Licensed Content or features,
functionality or Content on the Linked Interactive Sites controlled by such
third party, Itau shall provide AOLB to the fullest extent possible the benefit
of such indemnification.
Claims. Each Party agrees to (i) promptly notify the other Party in writing of
------
any indemnifiable claim and give the other Party the opportunity to defend or
negotiate a settlement of any such claim at such other Party's expense and (ii)
reasonably cooperate with the other Party, at that other Party's expense, in
defending or settling such claim. In the event of any dispute between AOLB and
an Itau Customer relating to the Co-Branded Service (i) AOLB shall inform Itau
of such dispute or litigation, (ii) AOLB shall provide Itau the option to be
joined as a party to such dispute or litigation, and (iii) AOLB shall not
consent to the entry of judgment with respect to, or otherwise settle, such a
claim or dispute without the consent of Itau if such judgment or settlements
would be adverse to the interests of Itau, provided, however, that Itau shall
have the right to control the defense of any such claim to the extent it relates
to Itau's Financial Services.
VI. MISCELLANEOUS
Force Majeure. Should any circumstance beyond the reasonable control of any
-------------
Party occur which delays or renders impossible the performance of any of its
obligations under this Agreement, such obligation shall be postponed for such
time as such performance necessarily has had to be suspended or delayed on
account thereof, provided, however, that such Party shall notify the other Party
promptly after the occurrence of such force majeure event ("Force Majeure
Event"), and shall use all commercially reasonable efforts to reduce the effects
of such Force Majeure Event on such Party's performance hereunder, and in the
case of a telecommunications failure that affects no other Access Providers in
the Territory, AOLB shall use best efforts reasonable under the circumstances
to reduce the effects of such Force Majeure Event on such Party's performance
hereunder. In addition and upon the cessation of such Force Majeure Event, the
nonperforming Party shall immediately commence performance of its obligations
hereunder. Force Majeure Events shall include, without limitation, war,
revolution, invasion, insurrection, riots, mob violence, sabotage or other civil
disorders, act of God, strikes or other labor disputes, telecommunications
failures, acts, laws, regulations or rules of any government or governmental
agency, including Brazilian Central Bank approvals, and any other circumstances
beyond the reasonable control of the Party, the obligations of which are
affected thereby. Neither Party shall be liable for, or be considered in breach
of or default under this Agreement on account of, any delay or failure to
perform as required by this Agreement during the pendency of a Force Majeure
Event. In the event a Force Majeure Event occurs due to a telecommunications
failure that affects no other Access Providers in the Territory and the effect
of such Force Majeure Event would constitute a Tier 2 or Tier 3 Failure in a
particular city or cities if such effects were not due to a Force Majeure Event,
then, Itau shall be relieved of its obligation not to market and otherwise
promote Access Providers and ISP Products in such city or cities as set forth in
Section 2.3.1 of this Agreement until the cessation of such Force Majeure Event
in such city or cities.
Independent Contractors. The Parties to this Agreement are independent
-----------------------
contractors. Neither Party is an agent, representative or partner of the other
Party. Except as otherwise stated in the Agreement, neither Party shall have
any right, power or authority to enter into any agreement for or on behalf of,
or incur any obligation or liability of, or to otherwise bind, the other Party.
This Agreement shall not be interpreted or construed to create an association,
agency, joint venture or partnership between the Parties or to impose any
liability attributable to such a relationship upon either Party.
Notice. Any notice, approval, request, authorization, direction or other
------
communication under this Agreement shall be given in writing and shall be deemed
to have been delivered and given for all purposes, in the case of hand delivery,
on the date such notice is received by such party and, in the case of overnight
mail, on the day such notice is given to such overnight mail service, postage
pre-paid, and, in the case of mail, five (5) days after deposited in the mail
for delivery by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to AOLA and AOLB to:
AOL Latin America, Inc
000 X. Xxxxxxx Xxxxxx, Xxxxx 000.
Xxxx Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: President
If to Itau:
Banco Itau, X.X.
Xxx Xxx Xxxxx, 000
Xxx Xxxxx - XX - Xxxxxx
Attention: President and CEO
Fax: 00-00-000-0000
B-2
No Waiver. The failure of either Party to insist upon or enforce strict
---------
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
Return of Information. Upon the expiration or termination of this Agreement,
---------------------
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all Confidential Information,
documents, manuals and other materials belonging to the other Party except as
otherwise provided in this Agreement.
Entire Agreement. This Agreement (including the Exhibits attached hereto) and
----------------
the Related Agreements sets forth the entire agreement and supersedes any and
all prior agreements of the Parties with respect to the transactions set forth
herein. Neither Party shall be bound by, and each Party specifically objects
to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound thereby
specifically agrees to such provision in writing.
Amendment. No change, amendment or modification of any provision of this
---------
Agreement shall be valid unless set forth in a written instrument signed by both
Parties.
Further Assurances. Each Party shall take such action (including, but not
------------------
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
Assignment. Neither Itau nor AOLB shall assign this Agreement or any right,
----------
interest or benefit under this Agreement without the prior written consent of
the other. Subject to the foregoing, this Agreement shall be fully binding
upon, inure to the benefit of and be enforceable by the Parties hereto and their
respective successors and assigns.
Construction/Severability. In the event that any provision of this Agreement
-------------------------
conflicts with the law under which this Agreement is to be construed or if any
such provision is held invalid by a court with jurisdiction over the Parties to
this Agreement, such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law, and the remainder of this Agreement shall remain in full force
and effect.
Remedies. Except where otherwise specified, the rights and remedies granted to
--------
a Party under this Agreement are cumulative and in addition to, and not in lieu
of, any other rights or remedies which the Party may possess.
Compliance with Laws. Each Party shall comply with all applicable laws,
--------------------
including Brazilian banking secrecy laws, rules and regulations regarding
privacy, and no obligation hereunder shall be construed as requiring a Party to
take any action that would contravene such laws, rules and regulations.
Interpretation. All references to "including" in this Agreement shall mean
--------------
"including without limitation," and all references to "excluding" in this
Agreement shall mean "excluding without limitation." All meetings may be held in
person or by teleconference or other means mutually agreed to by the
participants.
Headings. The captions and headings used in this Agreement are inserted for
--------
convenience only and shall not affect the meaning or interpretation of this
Agreement.
Counterparts. This Agreement may be executed in counterparts with each executed
------------
copy deemed an original and all of which together shall constitute one and the
same document.
English Language. The English language version of this Agreement shall be
----------------
controlling, notwithstanding any translation thereof into another language.
B-3
EXHIBIT C
CAYMANS FINANCIAL TEST CERTIFICATE
----------------------------------
Reference is made to that certain Strategic Interactive Services and
Marketing Agreement, dated as of June 12, 2000 (the "Marketing Agreement"),
among America Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL
Brasil Ltda. ("AOLB"), a Brazilian limited liability quota company, and Banco
Itau, S.A. ("Itau"), a Brazilian banking institution. Capitalized terms not
defined herein shall have the meanings given to such terms in the Marketing
Agreement.
1. The undersigned is the president or highest ranking officer of the
Grand Caymans branch of Itau.
2. The undersigned submits this Caymans Financial Test Certificate in
connection with the Marketing Agreement, and for the purpose of
providing information necessary to determine whether or not Itau has
satisfied the Caymans Financial Test.
3. The undersigned hereby certifies to AOLA and AOLB that, as of the date
hereof,
(a) (i) The assets of the Grand Caymans branch of Itau are
$_____________________ (USD).
(ii) The liabilities of the Grand Caymans branch of Itau are
$_____________________ (USD).
(iii) The excess of the assets over the liabilities of the Grand
Caymans branch of Itau exceeds the maximum amount of all
Reference Payments, Acceleration Payments and Termination
Fees that could become due and payable from Itau to AOLA
or AOLB from and after the date hereof by at least 125%.
(b) The Grand Caymans branch of Itau has at least US $___________ in
cash, cash equivalents (e.g., deposit accounts or certificates of
deposit) or marketable securities in its own name, all of which
are physically located within the Caymans Islands, the United
States of America or in a country that is a member of the
Organisation for Economic Cooperation and Development.
(c) [Itau][______________, an Affiliate of Itau listed on Exhibit O
------- -
to the Marketing Agreement (as supplemented from time to time),]
has maintained physical possession of stock certificates in the
Cayman Islands representing at least three fourths of all of the
Shares that are subject, as of the CFT Measurement Date, to the
lock up provisions as provided in the Registration Rights and
Stockholders Agreement.
C-1
OR
(c) Title to the Shares that are subject, as of the CFT Measurement
Date, to the lock up provisions as provided in the Registration
Rights and Stockholders Agreement has been transferred to an
unrelated financial institution pursuant to a repurchase
agreement whereby such financial institution is obligated to
resell such stock to [Itau] [_____________, an Affiliate of Itau
listed on Exhibit O to the Marketing Agreement (as supplemental
------- -
from time to time)]. [Itau's] [________________'s] rights under
such repurchase agreement are subject, directly or indirectly, to
execution and levy pursuant to a Cayman Islands judgment in a
jurisdiction other than Brazil.
IN WITNESS WHEREOF, the undersigned has executed this Caymans Financial
Test Certificate as of the ____ day of _______, 20___.
_________________________________
Name:
Title:
C-2
EXHIBIT D
MARKETING GUIDELINES
1. BACKGROUND.
(a) The marketing plan described below is intended to stimulate Itau
Customers to become AOLB/Itau Subscribers. The specific plans are intended to be
guidelines only, and, except where otherwise stated in the Strategic Interactive
Services and Marketing Agreement (e.g., the Minimum Marketing Commitments), are
not intended to be binding commitments of Itau or AOLB. Itau and AOLB agree that
the Minimum Marketing Commitment may be modified only if AOLB and Itau agree in
writing.
(b) The marketing program will be reviewed quarterly by the Marketing
Committee and factors such as packages, programs, offer frequency, target
groups, distribution and media may be altered, included or excluded as the
result of such reviews. For the avoidance of doubt, AOLB will not have approval
rights over the marketing plans of Itau, but AOLB and Itau will consult each
other to improve marketing programs.
(c) Marketing programs will take into account the fact that the Co-Branded
Service is not available in some areas, and Itau may decide not to target
marketing campaigns in those areas.
(d) AOLB will include a message in the CD-ROM package it distributes to
the public indicating that Itau Customers have been extended a service offering
and will provide a telephone number that the Itau Customers can call for more
information.
(e) As used in these Marketing Guidelines, the term "Launching Program"
means a marketing program that would commence upon the Launch of the Co-Branded
Service in each of the "Initial Cities" (and other cities in which the Co-
Branded Service becomes available before that Launch) and last for approximately
one month in each city, provided that not all marketing components of the Launch
Program will be used in each city.
(f) After the Launching Program ends, specific marketing programs may be
defined for launches in important cities.
(g) All communications made to Itau Customers related to the offer of Co-
Branded Service, billing, changes in service level, new services offered by
AOLB, etc. should be made by Itau or, if made by AOLB, approved by Itau to the
extent it relates to Itau's offer to Itau Customers. All communications made by
AOLB shall be at AOLB's expense. Within one month of the Effective Date Itau and
AOLB will agree upon an allocation of responsibility regarding communications
made by AOLB/Itau Subscribers.
2. MARKETING RESOURCES
(a) Minimum Marketing Commitments. Use, frequency and reach of each of
the following resources are identified in the attached Matrix Annex (for the
Launching Program and more sustained campaigns through the end of the fifth year
after Launch) After such fifth year the Marketing Committee will discuss the
level of Itau marketing.
. Direct Mail Program
-------------------
D-1
. Mailings promoting the Co-Branded Service and explaining the service
package offered by AOLB and Itau (but not including CD-ROMs with the
mailings).
. Mailings promoting the Co-Branded Service and explaining the
service package offered by AOLB and Itau (including CD-ROMs with
the mailings) to segments with a higher propensity to subscribe
to the Co-Branded Service.
. Checking account statement: Insert containing information about the
--------------------------
Co-Branded Service
. ATM screens: Messages on the screen including an option to request
------------
a CD-ROM.
. Itau Interactive Site (xxx.xxxx.xxx.xx): Explaining the Co-Branded
---------------------------------------
Service package, including demonstration screen shots, a CD-ROM
request screen, and a link to AOLB's content.
. Merchandising in bank branches
------------------------------
(b) Optional Resources: use, frequency and targets to be defined by Itau
at its own discretion with certain activities identified in the attached Matrix
Annex.
. Bankfone Service: to selected Itau customers, subject to the policies
----------------
of this service.
. message about the Co-Branded Service
. CD-ROM request option.
. Promotional Offer in the branches by tellers: to selected customers
--------------------------------------------
. CD-ROM distribution in the branches: conducted by branch managers.
-----------------------------------
. TV
--
. Radio
-----
. Magazines
---------
. Movie theaters
--------------
. Newspapers
----------
. Booklets
--------
. ATM slips: messages on the printed ATM slips.
---------
. Itau Service and Home Banking:
-----------------------------
. Promotion on the welcome screen.
. CD-ROM request option.
. Inbound Call Center: information about the Co-Branded Service
-------------------
. Outbound Call Center: information about the Co-Branded Service
--------------------
directed to selected Itau Customers.
. Kiosk: promotion of the Co-Branded Service in events and fairs in
-----
which Itau participates.
. Personal Computer in selected branches: to demonstrate Co-Branded
--------------------------------------
Service
(c) Pre-Launch market research: using methods such as focus groups to
better understand Itau Customers' perceptions of AOLB, the Co-Branded Service,
the packages offered by Itau, the value drivers and communications programs as
well as the kind of machines and equipment used by Itau Customers (such as types
of Personal Computers, whether they use CD-ROM or floppy disk drives, and
whether they have dedicated phone line) to better define the sales proposals.
AOLB will provide its research experience to assist Itau in improving the
effectiveness of the research.
D-2
3. ITAU INTERNAL MARKETING PROGRAM
(a) Branch Sales Force
. Financing computers for branch sales force at differentiated terms.
. Training course - inclusion of a session in Itau's training program.
. Training material - video, handbook.
. Incentive campaign to encourage use of the Co-Branded Service
(learning about the content and navigation) during the first
Anniversary Year.
. Implementation: As soon as possible after the Launch, AOLB will create
a special promocode for Itau employees to enable them to quickly
access the Co-Branded Service and speed up the training process. When
the Co-Branded Service is Launched, the Itau employees will be
migrated according to a program develop by the parties and implemented
by Itau.
(b) Internal Research. Periodic research with sales force employees
on issues such as their perception of the Itau Customers' reaction to and
evaluation of the Co-Branded Service, and their own reactions to and evaluations
of the Co-Branded Service, conducted in order to improve the sales process.
4. SALES CAMPAIGNS. Will vary depending on other product campaigns planned
by Itau, but may include:
(a) Goals and performance rewards for Itau employees.
(b) Differentiated media support.
(c) Sales kiosks (inside branches, where available).
5. GENERAL PROGRAMS. Programs such as computer financing at differentiated
terms may be available to selected Itau Customers who are not subject to credit
restrictions.
D-3
Matrix Annex
1- [*]:
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Resources* Launch Year 1 Year 2 to 5 (each
(month 1 / year 1) Months 2 - 12 year)
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*[*]
2-[*]:
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Resources* Launch Year 1 Year 2 to 5 (each
(month 1 / year 1) Months 2 - 12 year)
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[*] [*] [*] [*]
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[*] [*] [*] [*]
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[*] [*] [*] [*]
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[*] [*]
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[*] [*] [*] [*]
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[*] [*] [*] [*]
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*[*].
[*].
D-4
EXHIBIT E
TECHNICAL OPERATING GUIDELINES
------------------------------
1. Itau/AOLB CD Configuration
. Itau Customers will be provided a Customized Client.
. Once an Itau Customer registers for the Co-Branded Service, except as
provided below, such Itau Customer will be considered an AOLB/Itau
Subscriber during the Term until the subscriber cancels the Co-Branded
Service or is terminated, even if the AOLB/Itau Subscriber upgrades
his Customized Client with AOLB Client software distributed by third
parties.
. The Customized Client on the CD-ROM will be a customized version of
the AOLB Client. The packaging and installation will be Co-Branded by
AOLB and Itau.
. There will be one version of the CD-ROM (not considering variations in
packaging) containing the Customized Client, which version will be
updated from time to time to include the then-current release or
version of the Customized Client. Upon mutual agreement by AOLB and
Itau in writing, additional software may be bundled in the CD-ROM.
. AOLB will create a new release or version of the Customized Client
promptly after each new release or version of the AOLB Client.
2. Registration
. Once an Itau Customer has installed the Customized Client, he or she
will be prompted to register for the Co-Branded Service. The
registration process will be Co-Branded by AOLB and Itau, and shall
contain special Itau promotion code. It will be based on the AOLB
Service's registration process and will be modified and simplified, as
agreed between AOLB and Itau, as appropriate.
. The Itau Customer will:
. Select a payment method from among Itau payment options. However,
if registrant prefers another payment method they can select
"Other" at the bottom of the list of Itau payment options and be
presented with the list of standard AOLB Service payment options.
. Be told about the default price plan for such AOLB/Itau
Subscriber.
. Verification will be done on all registrants. A file will be sent to
Itau regularly, which will identify all registrants that register with
the Itau promotion code. Itau will process this information and
respond to AOLB with a list that flags registrants as either valid
Itau Customers or registrants who should be changed to a non-Itau
price plan. AOLB and Itau intend to improve the file transference
process into a real time validation.
E-1
. After completing registration, new AOLB/Itau Subscribers will continue
directly to their first session without disconnecting.
. If a registrant registers and is able to use the Co-Branded Service
but is subsequently not accepted by Itau for their free hours, then a
message will be sent to such registrant informing the registrant of
Itau's position and inviting the registrant to continue to use the
AOLB Service under one of the then-current price plans. Up to that
point, the price associated with usage of the Co-Branded Service will
be in accordance with the Finance Plan; after that point, Itau will
not be financially responsible for such registrant and such registrant
will have the opportunity to become a member of the AOLB Service. Such
Subscribers who opt to continue to use the AOLB Service will migrate
to the standard AOLB Service and subsequently not see the
customizations unique to the Co-Branded Service (including without
limitation the Co-Branded Welcome Screen, the Itau Window, the Custom
Toolbar Icon and the Special Edition Finance Channel) and will access
all standard features and screens of the AOLB Service without
restrictions (i.e., they will no longer be considered AOLB/Itau
Subscribers for the purposes of this Agreement).
. AOLB and Itau will discuss and agree upon measures to facilitate the
migration of members of the AOLB Service who are Itau Customers to
become AOLB/Itau Subscribers. Itau acknowledges that a primary means
to encourage such migration will be through its promotions on the AOLB
Service.
3. Price Changes
. AOLB/Itau Subscribers will be allowed to change their price plan.
. Any changes in price plans will take effect only at the beginning of
the AOLB/Itau Subscribers next billing cycle.
. AOLB/Itau Subscribers will receive Itau's special free hour offers and
will be advised about and marketed alternative price plans for
additional or unlimited hours on the Co-Branded Service. AOLB and Itau
have identified the following as a possible approach:
. Price plan options will be presented to the AOLB/Itau Subscribers
on the Itau ______ site where, based on Itau's rating of the
AOLB/Itau Subscribers, specific price plans will be presented.
. Upon making a selection, Itau will build a database of screen
names and price plan changes which it will send AOLB daily in a
structured data file for batch processing.
. As soon as a technical solution is developed and implemented,
this process of switching (i.e., upselling to) price plans will
be automated.
. After a special price plan is selected it will take effect only at the
beginning of the AOLB/Itau Subscriber's next billing cycle.
. Once a AOLB/Itau Subscriber is in a specific price plan, he may select
among other price plans available to him, by using the AutoRep service
within the Co-Branded Service or by using the Itau web site.
E-2
. Itau and AOLB will establish procedures to modify an AOLB/Itau
Subscriber's price plan.
4. Sign-on Initial Screen for AOLB/Itau Subscribers
. At the beginning of every session, the AOLB/Itau Subscriber will be
presented with a modified version of the AOLB Service:
. a co-branded Welcome Screen using existing AOLB technology (i.e.,
the Co-Branded Welcome Screen),
. a special Itau control panel represented as a narrow side window
(i.e., the Itau Window); and
. an Itau icon on the toolbar (i.e., the Custom Toolbar Icon)
. The final Technical Operating Plan will contain details on the
implementation of the above modifications and the timetable for
completion.
5. Customer Access
. Initially, certain Interactive Linked Sites and the Co-Branded Service
will connect through a secure, permanent virtual Internet circuit.
Each of AOLB and Itau will be responsible for paying their respective
costs related to such connection. At such time as AOLB launches
version 6 of the Customized Client, implements the AOLB node in Brazil
(as described below) and a circuit is established between that node
and such Linked Interactive Sites, there will be a direct connection
between Itau web site and the Co-Branded Service, without any use of
the open Internet for connectivity, providing additional level of
security to AOLB/Itau Subscribers when accessing Itau Financial
Services. AOLB will be responsible for the costs of the new Customized
Client and the implementation of the AOLB node, and Itau will be
responsible for the costs of the circuit between the node and Itau's
systems (i.e., the peering circuit).
. In accordance with and subject to the Marketing Plan, Itau will
provide links to special AOLB HTML content from the Itau home page.
Furthermore, Itau may create special HTML content for AOL Members
available only to AOL Members.
. Itau will have the right to publish content in the AOLB "Rainman"
format.
6. Itau Charges and Billing
. Subject to the Agreement, AOLB/Itau Subscribers will receive at least
one free hour toward metered price plans and/or discounted price
plans. These plans will be developed by Itau in consultation with AOLB
and implemented by AOLB; provided, however, that implementation will
be subject to technical and administrative limitations to be
determined by AOLB and Itau prior to completion of the plans by Itau.
With respect to the development of the necessary systems, Itau must
submit its structure for price plans to AOLB for technical and
implementation approval before they are communicated to AOLB/Itau
Subscribers or to Itau Customers.
. AOLB will inform Itau of the total number of free hours used (for
which Itau is responsible) by AOLB/Itau Subscribers. Charges will be
implemented as detailed in the
E-3
Finance Plan. AOLB/Itau Subscribers will automatically be charged for
time in excess of the free hours and will be notified of such
charge(s) during registration.
. AOLB will xxxx AOLB/Itau Subscribers per the selected price plan with
the subscriber payment method. If the payment processor is Itau, AOLB
will provide billing information that includes surcharges and the
standard monthly fee.
. A similar process will take place for other payment methods not
associated with Itau (e.g. AmEx).
. AOLB will be able to track and periodically report to Itau the number
of AOLB/Itau Subscribers and Verified Members, as well as mutually
agreed-to data concerning AOLB/Itau Subscribers.
. For AOLB/Itau Subscribers who have not been upsold to additional Co-
Branded Service hours through an AOLB price plan and use the Co-
Branded Service in excess of the free hours granted by Itau, AOLB will
investigate the development and implementation of an online process to
notify such AOLB/Itau Subscriber via a pop-up message that will inform
such AOLB/Itau Subscriber that the continued use of the Co-Branded
Service will result in hourly fees and give such AOLB/Itau Subscriber
the opportunity at that point to be upsold to a price plan that offers
more prepaid hours. AOLB and Itau will otherwise disclose to AOLB/Itau
Subscribers the charges for additional hours as appropriate and
subject to technological feasiblity, and AOLB will use commercially
reasonable efforts to develop such technology.
7. Customer Services
. AOLB/Itau Subscribers who require customer service will call a special
call center created for the Co-Branded Service (the telephone number
will be a local number for Sao Paulo and a toll-free number for the
rest of the country). Local numbers for other cities will be mutually
agreed upon by AOLB and Itau.
. The support available at this call center will be specialized support
for AOLB/Itau Subscribers. The ACD (Automatic Call Distributor) will
receive all incoming calls. A voice menu will prompt users to identify
the type of problem they have so that proper routing can be done.
. When the support required is for Itau's Financial Services, the call
will be transferred to Itau. When the support is related to aspects of
the Co-Branded Service other than Itau's Financial Services, the call
will be transferred to AOLB. All the transfers will be performed so as
to make the AOLB/Itau Subscribers unaware that they have been
transferred between companies.
. AOLB and Itau will review the possibility of Itau providing all
customer services to AOLB/Itau Subscribers for the Co-Branded Service.
If AOLB and Itau mutually agree, then AOLB would provide Itau with
training and, in such case, calls would be transferred to AOLB member
services only in special situations or in situations not covered in
the training program; provided that if Itau assumes such customer
services, it must assume the complete responsibility for customer
services. Itau will reimburse AOLB for any costs associated with such
transfer including, without limitation, training
E-4
costs and system development costs to allow Itau to access only
AOLB/Itau Subscriber information.
. The Parties will coordinate the exchange of information that is
relevant to their respective support activities.
. Before Launch, AOLB and Itau will review customer service standards to
confirm that they satisfy both AOLB and Itau.
8. Termination
. When an AOLB/Itau Subscriber decides to cancel the Co-Branded Service,
they will be required to call the AOLB/Itau Subscriber customer
service. Itau will be notified of the cancellation through not
receiving billing charges for that AOLB/Itau Subscriber.
. Through its customer retention programs, AOLB will try to retain
AOLB/Itau Subscribers who call to cancel. Periodically AOLB will send
to Itau statistical reports about the categories of reasons for
cancellation.
. Itau will notify AOLB if, it wishes to terminate an AOLB/Itau
Subscriber that has cancelled his account with Itau and is now an Itau
Customer. A message will be sent to such AOLB/Itau Subscriber
informing him of the change and inviting him to migrate to the AOLB
Service under one of the then-current price plans (or, at AOLB's
discretion, at a discount). Such AOLB/Itau Subscribers who opt to
migrate to the AOLB Service will subsequently not see the
customizations unique to the Co-Branded Service (including without
limitation the Co-Branded Welcome Screen, the Itau Window, the Custom
Toolbar Icon and the Special Edition Finance Channel) and will access
all standard features and screens of the AOLB Service without
restrictions (i.e., they will no longer be considered AOLB/Itau
Subscribers for the purposes of this Agreement).
9. Performance
9.1 General
. AOLB will provide to Itau agreed-upon community reports detailing the
online aggregated traffic patterns on the Co-Branded Service including
time spent in Itau Financial Services areas. Availability of any
specific report will be subject to AOLB's normal system capabilities.
. The phone numbers listed first in the Customized Client will be for
access to AOLB's fiber network, thus ensuring better performance of
the Co-Branded Service. Itau acknowledges that AOLB is undertaking a
project in process, although not a commitment for this Agreement, in
which it would introduce local caching and local peering within Brazil
to work with the release of AOLB's next major AOLB Client upgrade.
. AOLB's international backhaul network is designed for alternating
paths so, in the event of a network's outage, redundancy is planned
for either in fiber or satellite.
. Subject to and in accordance with the Agreement, Itau shall have the
right to independently audit the compliance of the Co-Branded Service
with the Technical Operating Plan in accordance with the auditing
provision of this Agreement.
E-5
9.2 Geographic Coverage
. In accordance with and consistent with the Marketing Plan, AOLB will
extend its current network to increase coverage. As part of the
Technical Committee meetings, the parties will review the Marketing
Plan's planned marketing efforts for the subsequent 90 days and
mutually agree upon additional capacity needed to meet the anticipated
growth in AOLB/Itau Subscribers and the timetable for obtaining the
additional capacity. AOLB will then expand its network in accordance
with the agreed-upon capacity requirements and schedule. Without
limiting the generality of the foregoing, AOLB and Itau have agreed
upon the following process:
. Itau will provide a list of Initial Cities and its anticipated demand
in each of them, as defined in the Marketing Plan.
. Based on Itau's list and the Marketing Plan, AOLB and Itau will
mutually agree upon the final network capacity and geographic
expansion as well as the timeframe for implementation. The Marketing
Plan will be adjusted as appropriate to be consistent with the
timeframe for the agreed-upon network expansion.
10. E-mail/AIM
. Within the Co-Branded Service, [screename]@xxx.xxx will be provided
for each AOLB/Itau Subscribers.
. A web-based interface to the Co-Branded Service's email will be made
available to all AOLB/Itau Subscribers at the same time that it is
made generally available for AOLB Service subscribers.
. AOLB will commit to develop a customized, Co-Branded instant messenger
(AIM) product for Itau to be used by users as a sticky application
that will make it easier to access Itau and AOLB interactive sites and
to acquire AOLB/Itau Subscribers. Final terms of the development of
AIM will be mutually agreed upon by AOLB and Itau.
11. Operational Coordination
. Subject to and in accordance with the Agreement, AOLB and Itau agree
to appoint a Technical Committee to meet periodically to review
reports, audit the performance of the Co-Branded Service and recommend
specific additional actions to improve the quality of the Co-Branded
Service.
E-6
Exhibit 10.13(f)
EXHIBIT F
FINANCE PLAN
------------
The final Finance Plan will be coordinated with the Technical Operating Plan to
the extent necessary to implement the technical and implementation requirements
of the below plan and final implementation of the final Finance Plan will take
into consideration any technical and implementation limitations..
1. BILLING PROCESS.
(a) General. The Co-Branded Service will have a unique co-branded
registration process, governed by the specific promo-codes tied to the
registration certificates for each Customized Client, in which price plans and
payment methods will be specific to AOLB/Itau Subscribers, all in accordance
with the Technical Operating Plan. The Itau payment options will be: (a) direct
debit from banking accounts and (b) collection documents (i.e., boletos
bancarios) provided by Itau to the AOLB/Itau Subscribers. Pursuant to the
Technical Operating Plan, registrants who prefer another payment method can
select "Other" and be presented with the list of AOLB Service's standard payment
options (excluding collection documents (i.e., boletos bancarios) provided by
banks other than Itau). Itau Customers who register for the Co-Branded Service
will receive free hours toward metered price plans and/or discounted price
plans. These plans will be developed by Itau, in consultation with AOLB, taking
into consideration technical and implementational aspects, and will be
implemented by AOLB.
(i) Free Hours Plans Charges to Itau: In accordance with this Exhibit F,
--------------------------------
AOLB will invoice and charge Itau for, and Itau shall pay the total amount in
Reais corresponding to the total number of free hours offered by Itau that are
used by AOLB/Itau Subscribers. Invoiced free hours will be the aggregated sum of
the minutes used by each AOLB/Itau Subscriber up to his free hour allotment.
This aggregated sum will be rounded up to a whole hour.
(ii) Itau Payment; Billing: AOLB will xxxx each AOLB/Itau Subscriber an
---------------------
amount based on the price plan selected by such AOLB/Itau Subscriber in
accordance with the selected payment method. If Itau is the selected payment
processor, then AOLB will provide billing information that includes applicable
subscription fees and surcharges. AOLB will send daily files to Itau that will
contain information regarding AOLB/Itau Subscribers as follows:
(A) Free Hours; Discounts: For all AOLB/Itau Subscribers, AOLB will
---------------------
provide the following information for each account that has ended its monthly
billing cycle:
(1) Hours to be paid by Itau regarding their free hours plan(s), the
amount to be paid in Reais for the free hours; and
(2) Amounts to be paid by Itau for discounted price plans offered by
Itau to Upsold Subscribers in accordance with this Finance Plan.
(B) Usage in Excess of Free Hours by Non-Upsold Subscribers: For those
-------------------------------------------------------
non- Upsold Subscribers who have used the Co-Branded Service in excess of the
Itau-provided free hours and who have selected Itau as their payment processor,
AOLB will provide the following information to Itau for each account that has
ended its monthly billing cycle:
(1) The extra hours in excess of the Itau provided free hours and the
applicable amount to be paid in Reais; and
F-1
(2) If applicable, surcharge and communications (including roaming)
fees and the applicable amount to be paid in Reais.
(C) Upsold Subscribers: For those Upsold Subscribers who have selected
------------------
Itau as their payment processor, AOLB will provide the following information for
each account that has ended its monthly billing cycle:
(1) If a price plan package (e.g., unlimited, 20 hours, or 10 hours)
is selected, then the applicable discounted package price (determined as set
forth below);
(2) If applicable, extra minutes/hours in excess of the hours that are
part of the package and the applicable amount to be paid in Reais; and
(3) If applicable, surcharge and communications (including roaming)
fees and the applicable amount value to be paid in Reais.
(b) When an AOLB/Itau Subscriber has changed service options (including
price plans in the case of Upsold Subscribers), with respect to their account
payment method, termination of the account, etc., such changes will be effective
beginning on the next billing cycle. For example, if the account anniversary is
on the 15th of each month and a change in service options is made on the 1st of
the month, this change will only be effective on the billing cycle that starts
on the 16th of the month. AOLB will inform Itau, on a monthly basis, of each
AOLB/Itau Subscriber that becomes an Upsold Subsriber.
(c) Invoicing.
(i) Invoice to Itau: AOLB agrees that Itau will not be charged during the
---------------
first month of any free trial period offered to Itau Customers ("Free Trial
Period"), which period is described below. Thereafter, AOLB shall invoice Itau
as follows:
(A) For each month during the Free Trial Period after the first month,
AOLB will invoice Itau the amount identified in Section 4(d) and 5(d) of this
Exhibit.
(B) After the end of the Free Trial Period, for each AOLB/Itau
Subscriber account, AOLB will electronically invoice Itau in advance on the
first day of the start of each respective AOLB/Itau Subscriber's billing cycle.
(C) The first invoice is calculated based on the minimum usage value
agreed by AOLB and Itau, as defined in Item 4(e).
(D) Thereafter, invoices for each AOLB/Itau Subscriber will be for
either the hourly usage of free plan hours or the minimum fee if there was no
usage (see Item 4(e) and 5(g)). The due date will be 10 days after the invoice
date.
(ii) Invoice to Subscribers through Itau: AOLB will make available to
-----------------------------------
AOLB/Itau Subscribers an online invoice on the first day of the paid plan,
beginning after the free trial period, based on the price plan chosen by the
AOLB/Itau Subscriber. If surcharges apply, they will be included on the next
xxxx. Late payments will be charged per AOLB's then-current policy.
(d) Collection and Payments.
(i) If Itau is the selected billing processor, it will collect payments
from each AOLB/Itau Subscriber in accordance with his or her respective billing
cycle.
(ii) For collection purposes, Itau will have to inform AOLB of the
termination of the account no later than 15 days after the account due date. If
an account is overdue after the 15th day and either: (i) Itau does not so inform
AOLB, or (ii) Itau informs AOLB but requests that AOLB not terminate
F-2
the account, then Itau will be responsible to pay the amount due, without any
penalties or interest rates related to the late payment, and the corresponding
AOLB/Itau Subscriber will be taken off the price plan package and revert to the
original Itau free hours offer, unless Itau agrees to cover any future
non-payment of the price plan package.
(iii) Itau will within 10 days of invoice date transfer to AOLB payments
associated with free plans and discounts payable by Itau.
2. PAYMENT RESPONSIBILITIES. AOLB and Itau will share payment responsibilities
as follows:
(a) Itau will guarantee to AOLB the payment a number of free hours
offered by Itau to AOLB/Itau Subscribers as determined in the Agreement that are
actually used by AOLB/Itau Subscriber. If the free hours are not used (i.e., if
inactive), then Itau will pay to AOLB the minimum price for inactive AOLB/Itau
Subscribers pursuant to Section 4(e) and 5(g). Itau will also guarantee AOLB the
payment of any amounts that are discounts to AOLB price plan packages offered to
AOLB/Itau Subscribers by Itau as provided herein.
(b) AOLB/Itau Subscribers who elect to be upsold to a paid plan such as
10 hours, 20 hours, unlimited, etc. (i.e., Upsold Subscribers) will pay the AOLB
list price minus the total amount to be covered by Itau. For example, if an
AOLB/Itau Subscriber decides to upgrade from a 5 hours free plan to a 10 hours
paid plan, then the cost of the package for the customer will be the standard
market price for the 10 hours plan less the cost to be covered by Itau. The
costs to be covered by Itau in the upgrade plans offered AOLB/Itau Subscribers
may range from a nominal discount to the cost of free hours paid by Itau before
the upgrade. In all cases, upgraded price plans for the Co-Branded Service will
be offered at a discount (either a discounted price or free hours paid by Itau)
to Itau Customers.
(c) In addition to paragraph (b) above, AOLB/Itau Subscribers will pay
for surcharges, including roaming fees, and for additional hours used over the
free hours paid by Itau or free hours in a selected price plans, as applicable.
3. COSTS STRUCTURE CHANGES AND NEW TECHNOLOGIES
(a) Whenever there are significant changes in costs that affect the
10-hour and best selling price plan packages due to cost variations or the use
of new technologies that change the cost structure of the Co-Branded Service or
due to exchange rate variations or inflationary pressures, AOLB and Itau agree
to set up a dedicated meeting to review in good faith the terms of the cost
components of this Agreement and make equitable adjustments.
(b) For future new technologies or distribution channels, AOLB and Itau
will agree on a methodology for determining a new cost structure that will be,
at a minimum, consistent with the principles explained in this Agreement.
4. CONDITIONS FOR FIRST AND SECOND YEAR OF THE AGREEMENT.
(a) Basic Prices. For the first and second Anniversary Years of the
Agreement, Itau and AOLB agree on the following price structure to define the
free hours and prices to be paid by Itau:
(i) For free hours offered by Itau up to 10 hours, Itau will pay AOLB
a price per hour as follows:
F-3
Market price of 10 hours plan
Price per hour = ------------------------------------
10 hours
(A) Subject to paragraph (B) below, considering that the current price
list for a 10 hours plan is R$14,95, the price per hour charged to Itau for the
first and second year will be R$1,495 for the Itau-provided free hours used by
AOLB/Itau Subscribers.
(B) Subject to paragraph (C) below, if there is a reduction in the
AOLB market price of the 10-hour plan, then this value will be recalculated. If
there is an increase in the AOLB market price of the 10-hour plan, then the
price per hour charged to Itau will not exceed R$1,495.
(C) Notwithstanding paragraph (B), in the event of significant changes
due to cost variations or the use of new technologies that change the cost
structure of the Co-Branded Service, the parties will make equitable adjustments
in accordance with Section 3(a) to the price per hour charged to Itau without
regard to the cap on charges.
(ii) For free hours offered by Itau in excess of 10 hours, Itau will pay
to AOLB the full market price corresponding to the market price for the plan
package independent of usage (e.g., if Itau offers 20 hours free, it will pay to
AOLB R$ 19,95 (i.e., the current market price for the 20-hour plan)), provided
that Itau will have the right to purchase price plan packages in excess of 10
hours at a bulk price if a bulk price is available.
(b) Price for additional hour usage above Free Hour Plan. The price for
the usage of additional hours above the free hour plan will be R$ 2.95 and will
be charged to AOLB/Itau Subscribers. This price can be changed, up or down, at
AOLB's discretion. This additional hour charge will be disclosed to AOLB/Itau
Subscribers in accordance with the Technical Operating Plan.
(c) Payment of Free Hours under the Paid Plan.
(i) When an AOLB/Itau Subscriber elects to be Upsold to a paid plan
package (i.e., Upsold Subscribers), the free hours charged to Itau will only
include the cost of ports, hosting and taxes, and at AOLB's sole discretion, the
costs of member services (call center) and general and administrative expenses
(G&A) will either be: (y) passed on to the AOLB/Itau Subscriber in the price of
the selected package or (z) absorbed by AOLB. With respect to a price plan
package offered to AOLB/Itau Subscribers who are not Upsold Subscribers, Itau
will decide how many free hours it will offer to AOLB/Itau Subscribers or how
much of a discount it will subsidize. With respect to Upsold Subscribers, upon
mutual agreement of AOLB and Itau, the Upsold Subscriber may be charged more in
order to reduce the cost burden to Itau or AOLB (to the extent that AOLB absorbs
the costs of member services and G&A). Further, AOLB and Itau will equitably
adjust the price of packages to Upsold Subscribers in the event of a reduction
or increase in the market price of a particular plan(s), as determined by AOLB
in its sole discretion. Notwithstanding anything contained herein, AOLB/Itau
Subscribers will always have a more advantageous price versus the market and
Itau will pay AOLB the following:
(A) If the AOLB/Itau Subscriber becomes an Upsold Subscriber of a
price plan package other than the unlimited price plan, then the package will be
discounted by the number of free hours that Itau is willing to pay ("Itau Free
Hours") as follows:
Market Price minus (Itau Free Hours as if fully used times Itau hourly cost
(excluding member services and G&A costs)) minus (in AOLB's discretion) the
member services and G&A costs corresponding to the Itau Free Hours.
For example, if Itau offers an AOLB/Itau Subscriber 5 free hours per month for
the upsold 10-hour price plan package (priced at R$14,95, where the upsold
AOLB/Itau Subscriber will receive 5 free hours and 5 paid hours for the total 10
hours provided under the plan) and the AOLB/Itau Subscriber elects to be so
upsold, then (based on the $R0.85 charge per hour to Itau for Upsold
Subscribers), the subscriber will pay AOLB R$14,95 - R$4,25 - R$0 (where AOLB
elects not to subsidize member services and G&A)=R$10,70 and Itau will pay AOLB
the actual number of free hours offered by Itau and used by the AOLB/Itau
Subscriber up to 5 hours (i.e., capped at R$4,25), and, in the alternative if
AOLB decides to absorb the member services and G&A costs, then the subscriber
would pay AOLB R$7,475 (R$10,70 less R$3,225) and Itau would pay the same as
above.
F-4
(B) If the AOLB/Itau Subscriber becomes an Upsold Subscriber of the
unlimited price plan package, then the package will be discounted by a direct
Itau subsidy determined by Itau at its sole discretion, and the price to the
AOLB/Itau Subscriber will be:
Market Price minus amount of subsidy paid by Itau.
-----
The cost to Itau will be the total amount it has offered to subsidize the Upsold
Subscriber's price plan package (without regard to actual usage). For example,
if Itau offers an AOLB/Itau Subsciber the unlimited price plan (priced at R$
24,95) at a R$5 subsidized discount, then the AOLB/Itau Subscriber will pay AOLB
R$ 19,95 and Itau will pay AOLB R$ 5 (without regard to actual usage).
(ii) AOLB and Itau agree that the price per hour charged to Itau for free
hours offered to AOLB/Itau Subscribers will be adjusted for Upsold Subscribers
to R$ 0,85 per hour (an amount equal to the actual equivalent value for the
price detailed at item 4(a) minus call-center costs and G&A costs).
Notwithstanding the foregoing, in the event of significant changes due to cost
variations or the use of new technologies that change the cost structure of the
Co- Branded Service, AOLB and Itau will in accordance with Section 3 make
equitable adjustments to the price per hour charged to Itau without regard to
the cap on charges.
(d) Free Trial Period.
(i) First Year. Subject to paragraph (iii), Itau and AOLB agree to a four
----------
(4) months free trial period offered to Itau Customers during the first
Anniversary Year, with Itau paying the following costs:
(A) First Month of Free Trial Period: No cost for Itau.
--------------------------------
(B) Second, Third and Fourth Months of Free Trial Period. Itau will
----------------------------------------------------
pay AOLB of the greater of: (1) R$0,11 (the inactive AOLB/Itau Subscriber fee)
and (2) the amount Itau pays for actual usage of free hours of non-Upsold
Subscribers capped at one (1) hour per month for each AOLB/Itau Subscriber,
determined in accordance with this Section 4.
(ii) Second Year. Subject to paragraph (iii), Itau and AOLB agree to a
------------
three (3) months free trial period offered to Itau Customers during the second
Anniversary Year with Itau paying the following costs:
(A) First month of Free Trial Period: No cost for Itau
--------------------------------
(B) Second and Third Months of Free Trial Period. Itau will pay AOLB
--------------------------------------------
the price of the greater of: (1) R$0,11 (the inactive AOLB/Itau Subscriber fee)
and (2) the amount Itau pays for actual usage of free hours of non-Upsold
Subscribers capped at one (1) hour per month for each AOLB/Itau Subscriber,
determined in accordance with this Section 4.
(iii) MFN on Free Trial Period. During the first and second Anniversary
-------------------------
Years pursuant to Section 2.1.5 of the Agreement, AOLB agrees that Itau
Customers that register for the Co-Branded Service shall receive the benefit of
any more favorable then-available free trial period offers from AOLB (e.g.,
first six months free to customers of a particular Financial Institution or
other Person) other than offers extended by AOLB (alone or in conjunction with
other Persons) to classes of consumers based on their social needs or charitable
purpose, such as schools, school children, handicapped consumers and
underprivileged consumers.
(e) Minimum Price per Inactive Subscriber. Each month for each AOLB/Itau
Subscriber (other than during any months of any free trial period), Itau shall
pay to AOLB a minimum charge of R$0,11
F-5
per inactive AOLB/Itau Subscriber. This value was determined based on an Itau
protection time agreed to be 15 minutes (1/4 hour). Itau acknowledges that in
the event the Itau protection time is insufficient to cover the network capacity
needs of the inactive AOLB/Itau Subscribers, the provision of network services
by AOLB may be adversely impacted and AOLB will be relieved of the performance
standards applicable to network services and will not be responsible for any
consequences of the resulting impact to Itau to the extent that it is so
impacted.
5. CONDITIONS FOR THE REMAINDER OF THE TERM AFTER SECOND
YEAR
(a) Basic Prices. AOLB and Itau agree to renegotiate in good faith the
cost allocations at end of the second Anniversary Year. AOLB and Itau desire to
agree upon a flat fee per hour. The principle for such negotiations shall be
based on the jointly-developed formula process with true-ups according to the
cost definitions detailed below. However, if AOLB and Itau cannot agree upon the
flat fee, the charge to Itau will be the lower of: (i) the costs consistent with
components paid during the first two Anniversary Years and based on the cost
definitions provided in paragraphs (b) through (g) below, and (ii) for free
hours offered by Itau up to 10 hours, the cost per hour, as calculated by taking
the market price that AOLB charges its general subscribers for a 10 hour plan
and dividing it by 10 as provided in paragraph (h) below, free hours offered by
Itau in excess of 10 hours, the market price in accordance with Section
4(b)(ii), and the other fees payable during the first two Anniversary Years
(e.g., fees associated with the free trial period and inactive AOLB/Itau
Subscribers).
(b) Price for additional hour usage above Free Hour Plan. Price for the
use of additional hours above the free hour plan will be R$2,95 and will be
charged to AOLB/Itau Subscribers. This price can be changed, up or down, in
AOLB's sole discretion.
(c) Payment of Free Hours Under the Paid Plan. When an AOLB/Itau
Subscriber decides to upgrade to a paid plan, Itau will be charged only for the
costs of ports, hosting costs plus taxes. Member service (call center) and
administrative cost will be covered by the AOLB/Itau Subscriber.
(d) Free Trial Period.
(i) After Second Year. Subject to paragraph (ii), after the second
-----------------
Anniversary Year, AOLB and Itau will agree upon the number of months for the
free trial period to be offered with the Co-Branded Service and the cost
sharing. Subject to paragraph (ii), in the event that AOLB and Itau do not agree
on the number of free months for the free trial period, the free trial period
will be the free trial period generally offered by AOLB in the marketplace and,
unless AOLB does not offer any free trial period, Itau will not be charged for
the first month of the free trial period, and will pay AOLB the greater of the
price of one (1) hour per month or the amount agreed for an inactive AOLB/Itau
Subscriber.
(ii) MFN on Free Trial Period. After the second Anniversary Year
-------------------------
pursuant to Section 2.1.5 of the Agreement, AOLB agrees that Itau Customers that
register for the Co-Branded Service shall receive the benefit of any more
favorable then-available free trial period offers from AOLB (e.g., first six
months free to customers of a particular Financial Institution or other Person)
other than offers extended by AOLB (alone or in conjunction with other Persons)
to classes of consumers based on their social needs or charitable purpose, such
as schools, school children, handicapped consumers and underprivileged
consumers.
(e) Cost Components. The following are the costs components associated
with the delivery of the AOLB/Itau co-branded services:
F-6
o network (R$/hours)
o member service (R$/Call)
o administrative expenses
o indirect taxes (ISS and Pis/Cofins)
In order to achieve an equitable share of such costs, in case of cost increasing
an decreasing, AOLB and Itau will periodically review the cost structure (see
item 5(f)).
(i) Cost Definition for Free Hours Plans - Active Subscriber. The
--------------------------------------------------------
following formula describes the general methodology to be applied for the
calculation of the total amount of costs for the active AOLB/Itau Subscriber
base:
Total Free Plan Costs = (Total Network Costs + member services (call
center) costs) times (1 + G&A costs) times (1 + Taxes)
(A) Total Network Costs: All costs related to the IP access network,
--------------------
with access ports and hosting as the main components. Calculation will be based
on cost per hour used by an AOLB/Itau Subscribers. This cost will be charged
monthly as follows:
Total Network Costs = Port Costs plus Hosting Costs (Costs related to the
IP access network)
Port Costs = Port Cost / hour times Total Actual Hours Used
Port Cost / hour = Monthly Port Cost(1) Peak Simultaneous Usage (%)(2)
-------------------- times --------------------------
Average Usage(h)(2) Used Capacity(%)(3)
(1) Monthly Port Cost - to be revised on a continuous basis with
carriers
(2) Peak Simultaneous Usage and Average Usage - to be measured in a
monthly basis and audited by Itau
(3) Used Capacity - to be revised during monthly capacity planning
meetings between AOLB and Itau
Total Actual Hours Used = Total number of access hours used by AOLB/Itau
Subscribers using the free plan
Hosting Costs = AOLB Hosting Cost Per Hour(4) times Total Actual Hours
Used
(4) Cost generated by maintaining AOLB active member and charged to AOLA
by America Online, Inc. The initial proxy to be considered will be the current
AOLB cost per hour (US$0,08/hour) and will be revised in the semester true-ups -
see item 5(f) below.
(B) Member Service Costs (Call-Center): All costs directly related to
----------------------------------
the call center for AOLB/Itau Subscribers, with toll-free numbers and human
resources costs as the main components. The cost will be charged monthly as
follows:
Total Call Center Costs = Cost Per Call(5) times Number of AOLB Itau
Free Plan Subs Calls
(5) Cost Per Call = Representative Costs(6) + Toll-free Costs(7)
+ Dep Costs(8)
--------------------------------------------------
Total number of calls received by AOLB Call-Center
(6) Representative Costs = Human Resources Costs (monthly bases)
(7) Toll-free Costs = Calls Itau Free Plan/Total Calls * ACT * Cost
per Minute)
(8) Depreciation Costs - to be reviewed and audit in the semester
true-ups
(9) ACT = Average Conversation Time - to be reviewed and audited in the
semester true-ups
(C) G&A (General and Administrative) Expenses: Applicable
-----------------------------------------
Administrative Expenses will be calculated as follows:
G&A Expenses Percentage = Total Administrative Expenses / (Total Administrative
Expenses + Total Network Cost + Total Member Service Cost)
F-7
AOLB believes that the G&A Expenses Percentage will decrease over time and
agrees to cap it at 10% for purposes of calculating Total Costs per Active
Subscriber
(D) Indirect Taxes: All indirect taxes applicable to the payment from
---------------
Itau to AOLB. These taxes are ISS,PIS, and Cofins.
(f) Semester True-ups. Both AOLB and Itau agree to disclose relevant
information regarding the costs that are being defined in this Finance Plan and
the Agreement and that are charged to Itau. In the event that AOLB and Itau do
not agree upon a flat fee as provided above, AOLB and Itau will "true up" the
costs as follows:
(i) The true-up meeting will take place every six (6) months and will be
held to review the costs and network overcapacity contemplated in Section
5(e)(i)(A) above.
(ii) Any amounts paid by Itau that exceeded the actual costs will be
fully reimbursed by AOLB to Itau.
(iii) Any amounts underestimated and unrecovered by AOLB (i.e., underpaid
by Itau) will be fully reimbursed by Itau to AOLB.
(g) Minimum Cost per Inactive Subscriber The costs associated with an
inactive AOLB/Itau Subscriber will be calculated as follows :
Cost for Inactive AOLB/Itau Subscriber = Protection Cost per hour(1)
times Itau Protection Time (hours)
(1) Protection Cost / hour = Monthly Port Cost times Peak Simultaneous
Usage (%)
-------------------------------------------------------------------
Average Usage(h)
Itau Protection Time - agreed to be 15 minutes - 1/4 hour. This number will
be revised in the true-up meetings and must be higher than zero minutes.
(h) Maximum Cost Per Hour / Free Plan. The cost per hour charged to Itau
for the free plans will not exceed the market price that AOLB charges its
subscribers for 10 hour plan divided by 10.
The following formula describes the methodology to determine the equivalent Itau
cost per hour to be compared to the price list cost per hour:
Itau Cost per Hour = Port Cost per hour (Section 5(e)(i)(A)) + Hosting
Cost per hour (Section 5(e)(i)(A)) + Call-center Cost per hour(1) times (1 +
G&A charge) times (1 + Taxes)
(1) Call-Center Cost / hour = Total Call-Center Costs (Section 5(e)(i)(B))
--------------------------------------------
Total Actual Hours Used (Section 5(e)(i)(B))
Price List Cost per hour = Price List Cost for Specific Plan
---------------------------------
Number of Hours for Specific Plan
F-8
Unless the parties agree to a flat hourly price, if in a given month, the Itau
cost per hour is higher than market price list cost per hour under the 10 hour
plan, then Itau will be charged for the market price cost per hour under the 10
hour plan provided that in such circumstance Itau will pay the market price of
offers in excess of ten hours.
F-9
EXHIBIT G-1
LAUNCH PERFORMANCE CRITERIA
---------------------------
AOLB and Itau hereby agree to the following criteria for the certification that
the Customized Client and the Co-Branded Service is ready for Launch:
(1) Quality Assurance. Subject to and in accordance with the audit provisions
-----------------
of the Agreement: (i) AOLB Quality Assurance will evaluate and certify that the
performance of the AOLB Service meets AOLB's quality standards and Itau will
have the right to audit the standards and the AOLB Service's compliance
therewith, and (ii) Itau shall have the right to independently audit the
compliance of the Co-Branded Service with the Launch Performance Criteria. .
(2) Launch Criteria
---------------
. Connectivity test
-----------------
Prior to the Launch of the Co-Branded Service in each Initial
City and each other city in which AOLB and Itau agree to Launch
the Co-Branded Service, AOLB shall conduct connectivity testing
with respect to such city for approximately six (6) days. The
target for Launch will be:
(a) [*]and
(b) [*]
All tests will be made using digital direct lines to simulate the customer
experience.
. Service customizations
-----------------------
Before the Launch Date, Itau will have the right to test and
confirm that each of the following functions of the Co-Branded
Service is working as specified in the Technical Operating Plan:
(a) Co-Branded Welcome Screen
(b) Itau Window
(c) Itau Keywords
(d) Custom Toolbar Icon
(e) Itau Pre-programmed Sign-on Pop-up
. Perform tests to confirm that Itau web pages appear
---------------------------------------------------
Before the Launch Date, Itau will have the right to test and confirm:
a) that the Co-Branded Welcome Screen appears upon accessing the Co-
Branded Service;
G1-1
b) that the pages of the Linked Interactive Sites appear during
navigation of the Co-Branded Service.
. Customer Registration Process
------------------------------
Before the Launch Date Itau will have the right to confirm that
the registration process as agreed between AOLB and Itau works as
specified in the Technical Operating Plan.
. Client Customizations
---------------------
a) Make sure the Custom Toolbar Icon appears in the Customized
Client.
b) Make sure Custom Toolbar Icon executes the appropriate link
when "clicked."
c) Make sure the titlebar of the Customized Client has the
proper title text.
G1-1
EXHIBIT G-2
CONNECTIVITY TEST
. Connectivity test
-----------------
Prior to the Launch of the Co-Branded Service in each Initial City and
each other city in which AOLB and Itau agree to Launch the Co-Branded
Service, AOLB shall conduct connectivity testing with respect to such
city for approximately six (6) days. The target for Launch will be:
(c) [*]; and
(d) [*].
All tests will be made using digital direct lines to simulate the customer
experience.
G2-1
EXHIBIT H
AOLB DESIGNATED ENTITIES
------------------------
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
H-1
EXHIBIT I
Earned Percentage Schedule
--------------------------
1. On the first Anniversary Date the following percentage shall be considered
earned:
(a) If there are 250,000 or less Verified Members: 2% multiplied by a
fraction the numerator of which is the actual number of Verified
Members and the denominator of which is 250,000.
(b) If there are more than 250,000 but less than or equal to 500,000
Verified Members, (i) 2%, plus (ii) 3% multiplied by a fraction the
numerator of which is the excess of the actual number of Verified
Members over 250,000, and the denominator of which is 250,000.
(c) If there are more than 500,000 Verified Members, (i) 5%, plus (ii) 2%
multiplied by a fraction (but not greater than 1) the numerator of
which is the excess of the actual number of Verified Members over
500,000, and the denominator of which is 500,000, plus (iii) a
"Special Additional Percentage" equal to 1% multiplied by a fraction
(but not greater than 1) the numerator of which is the excess of the
actual number of Verified Members over 500,000, and the denominator of
which is 500,000.
2. On the second Anniversary Date, the following additional percentage (but
not less than 0) shall be considered earned:
(a) If there are 250,000 or less Verified Members: no additional
percentages.
(b) If there are more than 250,000 but less than or equal to 500,000
Verified Members: (i) 3% multiplied by a fraction the numerator of
which is the actual number of such Verified Members in excess of
250,000, and the denominator of which is 250,000, less (ii) the excess
(if any) of the percentage earned pursuant to paragraph 1 over 2%.
(c) If there are more than 500,000 Verified Members, (i) 3%, plus (ii) a
"Special Additional Percentage" equal to 1% multiplied by a fraction
(but not greater than 1), the numerator of which is the excess of the
actual number of Verified Members over 500,000, and the denominator of
which is 500,000, less (iii) the excess (if any) of the percentage
earned pursuant to paragraph 1 over 2%.
For the following Sections of this Exhibit I, the "Second Year Anticipation
Percentage" means a percentage equal to 2% multiplied by a fraction (but not
greater than 1) the numerator of which is the excess of the actual number of
Verified Members over 500,000 on the second Anniversary Date, and the
denominator of which is 500,000.
3. On the third Anniversary Date, the following additional percentage shall be
considered earned: (a) the Second Year Anticipation Percentage multiplied by
0.40, plus (b) the Reference Percentage for the third Anniversary Date
multiplied by the Third Anniversary Percentage. As used herein, "Third
Anniversary Percentage" shall be 0.4, multiplied by the result of (i) 5% less
(ii) the Second Year Anticipation Percentage.
I-1
4. On the fourth Anniversary Date, the following additional percentage shall
be considered earned:
(a) (i) The Second Year Anticipation Percentage multiplied by 0.40, plus
(ii) the Reference Percentage for the fourth Anniversary Date
multiplied by the Fourth Anniversary Percentage, where the "Fourth
Anniversary Percentage" shall be 0.4, multiplied by the result of (i)
5% less (ii) the Second Year Anticipation Percentage.
(b) If there are more than 1,000,000 Verified Members, (i) a "Special
Additional Percentage" equal to 1% multiplied by a fraction (but not
greater than 1) the numerator of which is the excess of the actual
number of Verified Members over 1,000,000, and the denominator of
which is 1,000,000.
5. On the fifth Anniversary Date, the following additional percentage shall be
considered earned: (i) the Second Year Anticipation Percentage multiplied
by 0.2, plus (ii) the Reference Percentage for the fifth Anniversary Date
multiplied by the Fifth Anniversary Percentage. As used herein the "Fifth
Anniversary Percentage" shall be 0.2, multiplied by the result of (i) 5%
less (ii) the Second Year Anticipation Percentage.
I-2
EXHIBIT J
TEST CITIES
-----------
1. SAO PAULO
2. RIO DE JANEIRO
3. SALVADOR
4. BELO HORIZONTE
5. FORTALEZA
6. BRASILIA
7. CURITIBA
8. RECIFE
9. PORTO ALEGRE
10. CAMPINAS
J-1
EXHIBIT K
SPECIAL EDITION FINANCE CHANNEL SCREEN SHOT
-------------------------------------------
Graphic depicts a computer screen with general financial content and links
to other content in Spanish.
K-1
EXHIBIT L
TERMS OF SERVICE
----------------
AOL BRASIL SERVICE SUBSCRIPTION AGREEMENT
The Subscriber Agreement of AOL Brasil Ltda. ("AOL") is a legal document that
describes your rights and obligations as a subscriber to AOL Brasil services.
You may not become an AOL subscriber until you have accepted the terms of the
Subscriber Agreement. The Subscriber Agreement provides important information
about your AOL subscription. Therefore, you should take time to read and
understand this document. If you have any questions about the Subscriber
Agreement, or about your rights and responsibilities as an AOL subscriber,
please contact us using the keyword CDS, or by e-mail, clicking here. You should
also take time to look over the AOL Privacy Policy and the AOL Community
Guidelines, which reflect current AOL policies. The Internet and online
community are changing rapidly, and since AOL technology and business continues
to evolve, those policies may have to be updated or revised. Since the Privacy
Policy and Community Guidelines may change, you must regularly use the keyword
"CDS" to get the updated versions.
For the same reasons, it may be necessary for AOL to update or revise the
Subscriber Agreement. When you subscribe to AOL Brasil services, and accept the
Subscriber Agreement, you are agreeing that AOL may change the terms of this
Subscriber Agreement. If AOL makes substantial modifications or revisions to the
Subscriber Agreement, we will send you notification 30 (thirty) days in advance.
If you do not agree with the changes proposed by AOL, or any of the terms of
this Subscriber Agreement, your only option will be to cancel your AOL
subscription.
1. THE PRINCIPLES OF YOUR AOL SUBSCRIPTION
The Subscriber Agreement represents your entire Agreement with AOL, and governs
the use of AOL Internet service. Additional terms and conditions may exist if
you use related services, such as our international areas, other AOL services or
products such as AOL Instant Messenger service, or third-party software or
services. In order to access AOL service, you must accept the terms of this
Agreement and the AOL Community Guidelines. In order to be an AOL subscriber,
you must be above 18 (eighteen) years of age. If you not yet 18 (eighteen) years
old, you may still use AOL services only if the account was created and
registered by your parents or legal guardians. Since we offer free trial
periods, we reserve the right to limit free periods to one per each subscriber.
You also agree to provide AOL true and correct information during the AOL
registration process, as well as any changes in your account registration
information that may occur later. When you accept this Agreement and complete
the AOL registration process, you become the holder of a "main primary account,"
and AOL provides you with a non-exclusive limited license within the terms of
your subscription to use the Screen Name you select for your "main primary
account." Your Screen Name is your online identity, and also serves as your e-
mail address. You may not use a Screen Name that is already used by someone else
or use a vulgar Screen Name. The Screen Name may not be used in any way that
violates other parts of the Subscriber Agreement or the Community Guidelines.
AOL also permits you to create additional "sub-accounts" with Screen Names of
your choice, and also permits you to indicate several sub-account Screen Names
as "additional primary account(s)." The primary account Screen Names have access
to aspects of online account administration such as payment and parental
control, but must not be used by anyone under 18 (eighteen) year of age. As
holder of a main primary account, you are liable for all activity on your
account and on anyone the sub-accounts (including other indicated primary
accounts), and guarantee that all activity on your
L-1
account comply with the Community Guidelines. Violations or warnings credited to
any of these sub-accounts may result in the termination of your AOL
subscription. If any violations are made by your sub-accounts, or if they
receive warnings, you will be notified to all Screen Names of your primary
account. From time to time, you may also receive important notices about your
subscription that may not be provided to the sub-accounts. However, it is
important that you regularly check your primary account's mailbox(es). Since you
become liable for all use of your account, you must supervise any use of your
account or sub-accounts by other persons. This is especially important when
children use the service; children have greater online safety, and their online
experiences will be better under adult supervision. AOL furnishes you with
parental controls to help you administer the content and items that your
children may access online. AOL advises you to create a separate sub-account and
Screen Name for each child using your account, and to carefully select the
parental controls that are compatible with the maturity of each child. You may
use your primary account(s) to set up parental controls for your sub-accounts,
and may obtain additional detailed information with the keyword "Parental
Control [Controle dos Pais]." Your password is the key that permits access to
your account. It is very important that you do not reveal your password to other
users, and AOL will never know your password. You agree not to reveal your
password to any other users, and agree to indemnify AOL for any improper or
illegal use of your account. This includes the illegal or improper use made by
someone to whom you have given permission to use your account or any of your
sub-accounts. Your account carries risks if you let someone use it improperly.
If your subscription is canceled for having violated this Agreement or the
Community Guidelines, it will be necessary to obtain AOL's express consent
before you can use AOL service again.
2. RATES, PAYMENTS AND FREE TRIAL PERIOD
AOL permits you to choose between two payment methods: credit card and bank
transfer.
If you choose the credit card option, you must keep the following facts in mind:
the credit card holder must be the same as the account holder; the credit card
must not have expired; no blocked credit cards will be accepted; during the
subscription process, for your own security the credit card presented will be
checked to make sure it is valid. This check is made through a pre-authorization
procedure in the amount
L-2
of US$10.00. Note: this pre-authorization WILL NOT BE CHARGED to the client,
that is, the pre-authorization will be made without generating any costs or
payments to the client. This pre-authorization will automatically be deleted
from the system if AOL does not confirm a charge for the aforementioned amount.
The deadline for the automatic elimination of the pre-authorization is
stipulated by the administrator of your credit card. IMPORTANT: This pre-
authorization will check your credit card limit, but will not be charged on your
statement. If the method chosen is by bank transfer, you must keep the following
facts in mind: the user must not have any outstanding credit debt (SPC and
Serasa) [credit reporting bureaus], and the address must be valid (as well as
one of your telephones). Under both payment methods you must enter the following
identification information in the payment area to complete your file: CPF
[Cadastro de Pessoas Fisicas - Registry of Natural Persons, like Social
Security] and RG [Registro Geral - Identity No.] and Date of Birth in the event
you register as an individual, and only the CNPJ [Tax ID No.] in the event you
register your company information. In this case, you must enter the Company Name
instead of a personal name. If these pieces of information are not provided
within 3 (three) days, AOL reserves the right to suspend your account. AOL
reserves the right to change the rates or payment methods at any time, and AOL
will send out notification of any changes 30 (thirty) days in advance pursuant
to the same method described above for changes to the Subscriber Agreement.
Responses to various general payment questions may be found by selecting
"Accounts and Payment [Contas e Cobranca]" or the keyword "SUBSCRIBER SERVICES
[SERVICO AO ASSINANTE]" followed by the keyword "PAYMENT [COBRANCA]," or by
contacting a Subscriber Services representative. If you do not accept the
changes to our rates or payment methods, you may cancel your subscription at any
time, but AOL will not reimburse any part of the remaining monthly charge when
you cancel your subscription. If you joined AOL for a trial period, you must
understand that your free period starts when you log on to AOL for the first
time, and you must cancel your account before the end of the trial period to
avoid a subscription charge. As holder of the main primary account, you are
liable for all charges incurred, including applicable taxes and purchases made
by you or anyone else who you permit to use your account or sub-accounts,
including your children, other family members or friends. This means that unless
your account information, personal or credit card data have been obtained
illegally or fraudulently by someone else who is not authorized to use your
account, you will be liable for the use and purchases made through your account
or sub-accounts. AOL has an extensive network of access numbers for the entire
country, but it is still possible that the closest AOL access number may be a
long-distance call, or a toll call from where you place the call. You are liable
for any telephone expenditures made to establish contact with AOL. Since you are
liable for these charges, you must contact with your local operator if you want
to know whether the AOL access number constitutes a long distance or toll call.
If you have other questions about access numbers, check keyword "ACCESS
[ACCESSO]." It is important to note that you may incur long-distance charges,
toll charges or access fees even during your trial period. The local operator
will charge for them independent of whether access to AOL services has been
completed. There may be additional charges to access certain AOL premium content
services. AOL will inform you of any additional charges before you enter the
premium area. You are liable for any charges related to premium content incurred
by use of your account (including sub-accounts), and these charges even apply
during the free trial period. AOL Parental Control permits you to block access
by sub-accounts to premium or surcharged content. For more information, go to
keyword "PARENTAL CONTROL [CONTROLE DOS PAIS]." Some websites have separate
charges that are not included in the cost of your AOL subscription. AOL provides
access to a large number of providers who offer content, goods and/or services
on AOL or over the Internet. You are liable for any separate charges or
obligations contracted by you in negotiations with third parties, and they are
not part of your AOL subscription charges. According to our payment plan, we
will debit the monthly subscription amount to the credit card that you have
chosen, or through a bank transfer, but certain charges may accumulate on your
account before they are debited. In selecting
L-3
this payment option and providing AOL information about your bank account, you
will be authorizing AOL to debit your checking account for charges to the AOL
for use of the services. Every time you use AOL, you are reaffirming that AOL is
authorized to debit your account (credit card or Bank Transfer). You also agree
to authorize AOL either to charge online purchases to the credit card that you
provided AOL when you subscribed, or your bank account, if you choose this
option during registration. In the event of overdue payments for the monthly
subscription charge, AOL reserves the right to charge a penalty of 10% on the
amount to be charged, based on the IGP-DI or other index that may replace it,
incurring late interest charges of 1% per month. After 15 (fifteen) days of non-
payment, AOL reserves the right to block your account, and reactivate it only
upon payment. You are liable for any charges, including attorney's fees and
collection charges that AOL must incur in its efforts to collected remaining
balances. You also agree that any outstanding balances will be charged and paid
if you cancel your subscription, or if it is canceled. You must inform us about
any payment problems or discrepancies within a period of 90 (ninety) days after
they appear on your account statement for the first time.
3. ONLINE CONDUCT AND CONTENT
By content, we mean text, links, software, communication and publishing tools,
images, animation, video, sons, data and other information furnished online. The
major portion of AOL service content is provided under license by AOL Brasil for
our subscribers, associates or independent content providers. In general, AOL
does not pre-select the content made available on AOL services that was not
created by AOL. AOL does not endorse or assume any responsibility for any
content provided by third parties. AOL retains the right to remove content it
deems incompatible with its standards, or which does not correspond to current
AOL Community Guidelines. However, AOL is not liable for any error or delay in
removing such material. It should be remembered that AOL is not liable for
content available over the Internet, and we reserve the right to block access to
any area of the Internet containing legal or offensive content, or which may be
used for illegal or defamatory purposes against AOL or its subscribers. One of
the most exciting aspects of this medium is that individual subscribers can
create their own content and express their own opinions. AOL encourages
subscribers to participate and express their points of view, because this is
what changes their interactive experience. It is also important to remember that
there are rules and standards that you must accept as an AOL subscriber. These
rules and standards are described in the Community Guidelines. As an AOL
subscriber, you agree to abide by the AOL Community Guidelines, and recognize
that AOL has the right to strengthen them at its own expense. This means that if
you, or anyone else using your account, violates the AOL Community Guidelines,
AOL may take measures against your account. Such measures can go from mailed
notification referring to the violation, to cancellation of your subscription by
AOL, with previous notice. In addition to this, as an AOL subscriber, you may
have access to other AOL-brand services, such as AOL Instant Messenger service
and xx.xxx.xxx, as these are available both to AOL subscribers as to other
Internet users. When using these AOL-brand services, your conduct is subject to
this Subscriber Agreement. However, individuals who are not AOL subscribers, but
who use these services, are not subject to this Subscriber Agreement, and
therefore, you understand that these other users may not follow the same rules
and standards. Due to the nature of constant changes taking place on the
Internet and in online services, the AOL Community Guidelines may change at any
time. You can always find the most recent version of the AOL Community
Guidelines at keyword CDS. A large amount of unsolicited e-mail [sic]. Your AOL
subscription permits you to send email to AOL subscribers and Internet users,
and to receive e-mail from subscribers and users. This does not mean that you
may use AOL to sent out large amounts of unsolicited e-mail or undesirable e-
mail. Information about large amount of unsolicited e-mail may be found at the
keyword "E-MAIL CONTROL [CONTROLE DE E-
L-4
MAIL]." Your AOL subscription is the authorization to use e-mail services. AOL
does not permit you to send large amounts of unsolicited e-mail, or to pretend
that such e-mail was sent by someone else. You must not use the Subscriber
Directory or other area of AOL to obtain or collect information, including
Screen Names, about AOL subscribers. The use of such information for the purpose
of sending large amounts of unsolicited e-mail is strictly prohibited. Any
violation of these rules may result in the immediate cancellation of your AOL
account and subsequent legal action. If you receive an undesirable e-mail, and
wish to report it, use the Send button on the e-mail screen, and send the
message to TOS Spam. AOL also reserves the right to resort to any and all
technical and legal means to prevent large amounts of e-mail from entering, sent
through, and remaining on the AOL network. AOL exclusive property rights and AOL
licensees have copyright, registered xxxx and other intellectual property rights
to content found on AOL services. AOL also possesses copyright and registered
xxxx rights to AOL design and structure, or "look and feel," as well as to the
compilation of content placed at its disposition on its services. It is very
easy to copy this content in cyberspace; however, this does mean that that is
acceptable or legal. Any content that you upload or download by using the
service must be authorized. This means that you must have the legal right to
upload and download content. You must not copy, transmit, modify, distribute,
publicly display or perform, or create anything originating from content that
you have found on AOL without possessing the legal right to do so. If you make
unauthorized copies of any content found on AOL, your AOL account may be
cancelled, and you could be subject to legal action, in addition to the
cancellation of your subscription. In addition, other content providers may
initiate criminal or civil proceedings against you. Under these circumstances,
you agree not to hold AOL, its subsidiaries, associates, relating companies,
employees, managers, directors or agents liable for your acts. If you believe
that a particular creation of yours has been copied or is accessible on the
service in a way that constitutes a violation of copyright, you may notify us of
this fact, using keyword NOTIFY AOL [NOTIFICAR A AOL], and follow the
instructions described there. If appropriate, fill out a copyright violation
complaint form. It should be remembered that there are certain areas of AOL that
are publicly accessible to other subscribers, i.e. boards, chat rooms, forums,
subscriber web pages and the subscriber directory. When sending and placing
content in these areas, you are accepting that you are the owner of such
material or are authorized to distribute it. You must re-read the Guidelines
inserted in all public areas of the services to be certain that you understood
how this Agreement applies to that area. When placing content on AOL, you
concede to AOL the right to use, reproduce, exhibit, perform, adapt, modify,
distribute and promote the content of any form and in any place.
4. AOL SOFTWARE USAGE LICENSES
AOL grants you a non-exclusive and limited license to use our access software
and other software tools that we make available to you in assisting you to view
and publish content, communicate and perform other functions on or through the
services. You agree to use all such software according to the rules. You may not
sublicense or rent software, or charge others for the use of the software or for
access to our services, without receiving written permission from AOL. We
periodically provide automatic updates to improve your online experience, and we
use virus verification technology to assist in protecting our network and
subscribers. For your security, AOL reserves the right to disconnect (logoff)
accounts of users that are inactive for a specific period of time during their
access, and we prohibit the use of tools that disables AOL's means of
disconnecting accounts. If you have been disconnected, just become reconnected.
This limited license permits you to use AOL software to connect to AOL from
authorized locations pursuant to this Agreement. The license is subject to
restriction, such that you may not translate, do reverse manipulation,
disassemble, take apart or do other related activity with any software provided
by AOL without the express permission of AOL. You may not modify AOL software,
nor use it in
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any way expressly prohibited by this Agreement. You understand that the
introduction by AOL of various technologies may not work when running all
platforms, and that some media offered by AOL may vary, depending on you
computer and other hardware.
5. GUARANTY
The subscriber expressly agrees that the use of AOL Brasil services, AOL Brasil
software, and of the Internet is the sole responsibility of the subscriber. AOL
Brasil services, AOL Brasil software, AOL products, third-party virus
verification technology and the Internet are offered "as is" and "as available"
for your use, without any guaranties whatsoever, either explicit or implicit,
unless such guaranties are legally prevented from being excluded. AOL Brasil
provides AOL services under appropriate commercial terms, and does not guarantee
that subscribers may access or use the service at the time and local chosen, or
that AOL will have adequate capacity for all services in any geographic area.
The total liability of AOL and its legal action with regard to the use of any
software provided or used by AOL must be the replacement of any AOL software
that is damaged. Your only and exclusive action for any other dispute with AOL
is the cancellation of your account, as described hereinafter in section 7.
Under no circumstances will AOL be liable for damage resulting from use by the
subscriber of AOL, the Internet, or for any other claim related to your
subscription to AOL. AOL does not endorse or guarantee any product or service
offered through AOL service, and shall not be party nor in any manner liable for
monitoring any transaction between you and the company that is the provider of
products and services.
6. INDEMNITY
Upon request from AOL Brasil you herewith agree to defend, indemnify and hold
harmless AOL Brasil and its subsidiaries, affiliates, employees, contractors,
managers, directors, providers of telecommunications and suppliers of contents
in connection with any and all responsibility, claim or expense, including legal
fees, as may be incurred from the violation of this Subscription Agreement for
which you are responsible, or deriving from the use of AOL Brasil or Internet
services, or in connection with your transmission of any Content through AOL.
AOL Brasil reserves the right to assume the defense and exclusive control of any
complaints, claims, proceedings in or out of court, at its own expense, with the
exception of those for which indemnity has been claimed directly from the
subscriber, in which case the subscriber shall have no obligation whatsoever to
compensate AOL.
7. RESCISSION AND CANCELLATION
Both you and AOL Brasil may rescind or cancel your subscription at any time. You
understand and agree that cancellation of your account is your sole right and
solution with respect to any conflict with AOL Brasil. This includes, among
other situations, any conflict in connection with or deriving from: (1) any term
of this Agreement or demand or application of this Agreement on AOL's part; (2)
any AOL policy or practice, including the Guidelines for the AOL Community and
the AOL Privacy Policy, or the requirement or implementation of such policies;
(3) the contents available through AOL or Internet or any changes in the
contents provided by AOL; (4) your right to access and/or use AOL; or (5) the
amount or types of monthly fees, rates, surcharges or methods of collection, or
any changes in such monthly fees, rates, surcharges or methods of collection.
You may cancel your subscription by notifying AOL Brasil's Subscription
Department or sending your cancellation request by mail, addressed to: AOL
Brasil Ltda. Xx. Xxxxxxxxxx 000 - 0/xx/ xx., CEP 09080-500 Xxxxx Xxxxx, SP, or
by telephone (0xx11) 0000-0000, if you are located in the
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Greater Sao Paulo area, or (0xx11) 0800-787879 for other parts of Brazil.
Cancellation shall be effective within 72 hours from the time of receipt of the
notice, and AOL will send you a confirmation thereof in writing. If you cancel
the account a few days before the due date and are inadvertently charged for the
following month's fee, please contact the Subscriptions Department to have this
amount reimbursed within up to three (3) business days. AOL Brasil reserves the
right to collect monthly fees, surcharges or user costs pertaining to the period
prior to cancellation of the subscription. In addition, you are responsible for
any collections or expenses incurred with other suppliers and providers of
contents before your account was cancelled.
In the event that your account is rescinded or cancelled, no reimbursement shall
be due, including any monthly fees; online time or other credits (e.g.: points
for games online) shall not be credited to you, nor can they be converted to
cash or another form of reimbursement. Active AOL subscribers may not allow that
former subscribers or other individuals whose subscriptions have been cancelled
use their accounts. Any accounts owing late or outstanding balances with the
Community Action department or other AOL departments must be closed before you
can subscribe again to AOL Brasil.
8. LAWS AND LEGAL NOTICES
The Subscription Agreement represents your entire agreement with AOL. You agree
that this Subscription Agreement does not claim to confer nor does it confer any
rights or obligations to any individual, with the exception of the parties to
this Agreement. You likewise understand and agree that the Guidelines for the
AOL Community and the AOL Privacy Policy, including the requirement on the part
of AOL Brasil to comply with these policies do not claim to confer, nor do they
confer any rights or obligations to any individual. If any portion of this
agreement is regarded to be invalid or inapplicable, such portion must be
reworded in a manner that is compatible and in agreement with the law to reflect
as clearly as possible the original intention of both parties, the remaining
portions remaining valid and in effect. This Agreement and the signature thereof
are governed by the Brazilian laws. You expressly agree that the competent
jurisdiction wherein any differences of opinion or controversies with AOL Brasil
in connection with your subscription or the use of AOL Brasil shall be settled
within the jurisdiction of the city of Sao Paulo to the exclusion of any other,
no matter how privileged.
GUIDELINES FOR THE AOL COMMUNITY
The foundation of AOL's experience is the concept of community - the human
network of relationships entwined by millions of AOL subscribers as they
exchange e-mails, participate in chat rooms, add information to message boards,
send messages through AOL.'s "Instant Messenger" Service, participate in live
events, and join a myriad of other online forums sponsored by AOL. The
continuous growth and success of this community rest on an agreement built on
three pillars: our commitment to you, the subscriber, your commitment to AOL,
the service provider, and the joint responsibility of all AOL subscribers to one
another.
The combination of these three elements constituting this unit is outlined in
what we call our Community Guidelines. These Community Guidelines spell out what
you can expect from AOL, as well as the type of behavior we expect from you.
Equally important, they inform you on the kind of behavior you should expect
from other subscribers, and what they, in turn, will expect from you.
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In the same way as in the off-line world, community protection is a shared task.
This is why we depend on subscribers such as you to help us make sure that the
public areas continue to be safe, criminal behavior is reported, graffiti is
removed and children's privacy and safety are protected.
This sense of propriety and community pride help us make sure that everyone can
enjoy a safe and pleasant experience.
We trust that you will set aside some time to examine the nine principles
outlined herein and share them with members of your family and any other person
who may be using your account. Together we can turn the AOL community into the
best place to learn, work, buy, explore, communicate and live. Thank you for
your cooperation.
1. We have zero tolerance with respect to illegal behavior.
2. We, our partners and our subscribers have adopted the highest standards of
conduct to create a safe and gratifying experience online for our children.
3. We prohibit the unauthorized use of the AOL Network, including the
distribution of large volume of unsolicited e-mails, and will take every legal
and technical means to prevent this type of abuse.
4. We encourage healthy debate and discussion. but we do not tolerate disruptive
behavior that prevents other people from enjoying the use of AOL.
5. In providing and using services, AOL, its associates and its subscribers are
subject to essential standards, however, the standards of the community with
respect to certain contents and conduct may vary from one area to the other,
depending on the context and the target public.
6. When visiting AOL's international areas, your conduct shall be governed by
accepted standards in that particular field.
7. We take seriously the protection of copyrights and trademarks, and expect you
to do likewise.
8. We expect our subscribers to be good "internauts", using common sense and due
respect.
9. In order to make sure that your experience online is the best possible, we
encourage you to take advantage of the resources and tools we make available to
you.
1. We have zero tolerance with respect to illegal behavior.
AOL will consider that you are violating the Community Guidelines if you (or
anyone else who is using your account) send, forward, promote or distribute any
illegal contents or use our service to conduct illegal activities. In such
cases, we close these accounts and cooperate with measures to enforce the law.
The laws that apply in the offline world (including municipal, state, federal
and international laws, as the case may be), must also be obeyed in the online
world. Ignorance of the law does not exonerate the need to obey them.
Remember that if you feel threatened, or if you believe that somebody may be in
danger, you must contact the authorities in your city immediately.
2. We, our associates and our subscribers have adopted the highest standards of
conduct to create a safe and gratifying experience online for our children.
Children are an integral part of our online community. The Internet is rapidly
becoming a central and valuable part of our children's lives; it is, therefore,
essential for children these days to go online and learn new communication
skills. AOL is committed to make sure that children's experiences online are as
enriching and safe as possible. We take special precautions to protect
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the safety and privacy of the children while they are online, as described in
our Privacy Policy. We and our associates have adopted the highest community
standards in areas specifically intended for children, including, among others,
our "For Children Only" channel. We offer Parents' Controls (click on Key Word:
PARENTS' CONTROL) to help parents to establish limits on what their children can
see and do online. AOL, as well as all of the Internet, is set up to attract a
broad spectrum of the public and, therefore, it may contain some material that
is inappropriate for children. The use of Parents' Controls is a measure that
parents can take in order to make sure that their children have safe and
gratifying online experiences.
AOL provides multiple passwords for each AOL account. We strongly recommend that
parents create separate passwords for each child using AOL. Remember that
passwords for primary accounts should only be used by adults.
- We depend on you, the parents, to help us emphasize to your children the
importance of proper online contents and conduct.
- Chat rooms, e-mail and messaging are quite popular with children, and we hope
that your child's participation in these areas reflects community standards.
Read over (together with your children) the community standards of your favorite
areas. We reserve the right to remove any content that does not reflect these
standards and will send you a warning, and, in certain cases, we may close your
AOL account if our standards are not observed.
- AOL offers safety tips at all sites targeting teenagers and children. We
encourage you to look over these tips with your children and try to keep track
of their online activities.
3. We prohibit the unauthorized use of the AOL Network, including the
distribution of a large volume of unsolicited e-mail, and will take all legal
and technical means to prevent this type of abuse.
You (or others who may use your AOL account) may not use AOL to:
- Send, forward or be involved in the distribution of large quantities of
unsolicited e-mail, soliciting advertising or any other type of unauthorized
soliciting. AOL may take any kind of legal or technical recourse to avoid that a
large volume of unsolicited e-mail enters, is used or remains on the AOL
network. The unauthorized use of the AOL network with respect to the
transmission of large quantities of unsolicited e-mail, including forwarding of
fraudulent e-mail, may result in civil and criminal penalties against the
sender, pursuant to applicable provisions of the law.
- Chain letters and pyramids are not permitted. Many of them are illegal. Even
those that are not illegal confuse people, tied up online resources, and,
because of that, they are not permitted.
- Advertising may be placed only in areas designated for the purpose. No
unauthorized advertising is permitted, including the transmission of large
quantities of e-mail. Permission is required from AOL and/or from the individual
to whom you wish to send the advertising.
- It is strictly prohibited to use AOL service, including the Subscribers'
Directory, the subscribers' Web pages, chat rooms, message boards or any other
AOL area to collect or seek information, including AOL subscribers' passwords
for purposes of sending a large amount of unsolicited e-mail.
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- [It is prohibited] to send, forward or be involved in the distribution of any
material containing a software virus or other computer codes, files or programs
with the intent to interrupt, destroy or restrict the operating capability of
any computer software or hardware or telecommunications equipment.
- [It is prohibited] to obtain code names or other information regarding the
accounts or other specific information pertaining to subscribers. Remember, AOL
employees will NEVER ask for your password. Do not give your password to
anybody, and do not enter this information after you have clicked on a hyperlink
or entered a Web address contained in an e-mail sent by someone unknown to you.
4. We encourage healthy debate and discussion, but we do not tolerate disruptive
behavior that prevents other people from enjoying the use of AOL.
It shall be considered as a violation of the Community Guidelines if you (or
another person who may be using your account) commit one of the following acts:
- Bother, threaten, inhibit or commit any other undesirable act against another
subscriber. If you disagree with somebody, simply state your disagreement and do
not make offensive personal remarks.
- Forward or become involved in the distribution of contents that are
pernicious, abusive, racial or ethnically offensive or objectionable from the
point of view of the other person. Different communities may define contents in
different ways based on the context of the area and the targeted public, but in
providing service there is no tolerance for prejudiced discourse.
- Make false or misleading statements regarding your connection with other
people or affiliation with organizations or pretend to be who you are not. This
includes impersonating Community Leaders, other AOL subscribers, AOL employees,
personalities or government employees.
- Request information from or about minors (under 18). Personal data include
full name, residential address, telephone number or other offline information.
- Commit any act to interrupt the conversation or participation of another
person in the Community. This includes pressing the return key repeatedly or
inserting large images to make the screen change too fast and interfering with
reading. This type of behavior is online vandalism and ruins other people's
experience.
5. In providing and using services, AOL, its associates and its subscribers are
subject to essential standards, however, the standards of the community with
respect to certain contents and conduct may vary from one area to another,
depending on the context and the target public.
- By content we mean the information, software, communications, images, sounds
and all the materials and information that you receive online. The contents are
originated by AOL, its associates and subscribers, and by subscribers like
yourself - who generate contents when they participate in public areas,
including chat rooms, messaging boards, subscribers' Web pages and Subscribers'
Directory.
- Usually, AOL and its associates do not pre-select the contents, but we expect
all contents, including yours, to reflect our Community Guidelines.
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- The contents may be withdrawn if it does not meet the community standards.
However, neither AOL nor its associates assume any responsibility if the
contents are not withdrawn.
- The following guidelines apply:
- The language must be adjusted to meet the standards and customs of the area.
Vulgar language addressed to another individual or group is not acceptable.
Prejudiced language is not acceptable.
- Images of partial nudity in serious, literary, scientific, political or
artistic contexts are acceptable in certain places (not everywhere). Total
frontal nudity is not acceptable.
- Healthy discussion on human sexuality is acceptable in areas designated for
the purpose. Sexual content in games is subject to special guidelines.
- In most instances, graphic images of humans or animals being mutilated or
murdered are not acceptable. Content or behavior promoting any device or
providing instructions to manufacture any device used to inflict wounds or kill
(for example, instructions to manufacture bombs) are unacceptable. Violence in
games is subject to special guidelines.
- Contents or behavior promoting the use of illegal drugs or instructions on the
use of illegal drugs are unacceptable.
- Outside of designated areas (e.g., Classifieds) AOL may not be used for
business purposes. In the areas designated for commercial use or promotions, we
do not allow certain types of advertising, such as lotteries, firearms,
ammunition for firearms, and other explosives, tobacco, alcohol, adult products
and services, illegal products and services and other products and services that
we may deem to be inappropriate on AOL.
These are the basic guidelines, but the community standards may vary depending
on the context and the public being targeted. Therefore, although a stronger
language might be more appropriate in a chat room where adult subjects are being
discussed, the same language may be inappropriate in a message board discussing
relations between parents and children. Individually, the communities may
formulate their own guidelines by removing inappropriate contents. Should the
problem persist, you can report it to AOL. It is your responsibility to analyze
the standards and guidelines of the communities that you frequent. In addition,
many areas and resources (for example, Subscriber's Directory, Native City) make
guidelines available to help you understand how Community Guidelines are applied
to a specific product.
Common sense is important, particularly when you are dealing with other people's
opinions. AOL does not endorse or oppose the opinions expressed by its
subscribers but in some cases it objects to the way in which these opinions are
expressed.
6. When visiting AOL's international areas, your conduct shall be governed by
accepted standards in that particular area.
- International online areas (including international areas carrying the AOL
trade name) may have slightly different rules of behavior and different content
acceptance standards. You must be guided by the site rules when you enter those
areas; as a general rule, "when in Rome, do as the
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Romans do." For instance, words that are inoffensive in Brazil may acquire a
totally different meaning in other countries.
AOL can send a notice to you and your subscription may be rescinded if you
violate the rules in the international area. Remember that Cyberspace law is in
the development stage, and therefore it is a good idea to examine the rules of
your favorite places regularly.
7. We take seriously the protection of copyrights and trademarks, and expect you
to do likewise.
It is very easy to copy things in Cyberspace, however, despite this facility, it
does not mean that it is acceptable or legal. The contents may be protected by
copyrights, registered trademarks and other intellectual property rights. This
applies to all forms of contents available through AOL and the rest of the
Internet, including texts, music, video clips, artwork, photographs, games,
software and other materials.
Take some time to determine your legal right to use the contents or trademark of
another person before you copy them or distribute them. It is illegal to make
unauthorized copies of other people's work protected by a copyright, and you
will be subject to civil action, criminal penalties and rescission of AOL
service. We take the matter of violation very seriously and we trust that you
will assume the responsibility of making sure that you have the legal right to
upload and distribute AOL material that was not created by you. You must devote
some time to examine any additional guidelines available in specific areas of
the AOL service pertaining to copyrights and registered trademarks.
Remember that some AOL areas are public and may be accessed by other
subscribers, including message boards, chat rooms, forums, subscribers Web pages
and Subscribers Directory. Other subscribers can access the material that you
made available and copy it, change it or distribute it. If you find that your
material was copied and can be accessed in a way that constitutes a violation of
your rights, you can notify us by filing a copyright violation form.
Also, do not forget that by placing material on AOL, you are giving AOL
permission to use, reproduce, exhibit, perform, adapt, modify, distribute,
arrange for the distribution and promotion of the contents in any form and
anywhere. We take the protection of copyrights and registered trademarks very
seriously and trust that you will do likewise.
AOL and its licensees own exclusive copyrights, registered trademarks and other
intellectual property rights over the contents of the AOL service. AOL also owns
copyrights and registered trademarks over the project and structure of AOL's
"look and feel" and the compilation of the contents we make available to you as
part of our service. It is very easy to make copies in Cyberspace, but this ease
does not make it acceptable or legal.
Any contents that you upload or download when using the service has to be
authorized; this means that you must have a legal right to upload or download
the contents. You should not copy, forward, modify, distribute, exhibit
publicly, perform or create any work deriving from the contents found on AOL,
unless you have a legal right to do so. Unauthorized copies of any contents
found on AOL may result in the closing of your account and you will be
additional subject to other legal action. In such case, you agree to hold AOL
harmless as well as its subsidiaries, affiliates, associated companies,
employees, management, directors and agents. Should you find that your work is
being copied and can be accessed through this service in a manner that
constitutes a violation of your intellectual rights, you may send us a notice to
that
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effect by filing a copyright violation form that may be accessed freely by other
members, including message boards, chat rooms, forums, subscribers' Web pages
and Subscribers' Directory. By posting or making available the contents thereof,
you are stating that you are the owner of this material or that you are
authorized to distribute it. By posting or making available the contents
thereof, you are stating that you are the owner of this material or that you are
authorized to distribute it. You should examine the guidelines made available in
all the service areas in order to make sure that you understand how this
agreement applies to that area. In making contents available on AOL, you are
granting AOL the right to use, reproduce, exhibit, perform, adapt, modiify,
distribute, arrange to be distributed or promote the contents in any manner,
anywhere.
8. We expect our subscribers to be good "Internauts", using common sense and due
respect.
- When you participate in other Internet products - including AOL services such
as xx.xxx.xxx and "Instant Messenger" AOL ("AIM"), you will be subject to their
standards, which may differ from AOL's Community Guidelines.
There are many valuable sites in the rest of the Internet, but their standards
and guidelines may vary considerably. AOL cannot assume responsibility for the
contents and conduct you may encounter. Let your common sense be your guide.
If the contents or behavior comes from a source other than the AOL community, we
will not be able to remove them and the legal resources we can muster are
limited.
Make sure that you understand the privacy policies of the Web site that you
visit and be cautious about revealing personal information.
Some Web sites contain material to which you may object or that may be
unsuitable for children. We feel that you should set up a separate password for
each person in your household that will be using AOL and that you should use the
Parents' Control feature in order to create online personalized experiences in
accordance with the level of maturity of each user.
9. In order to make sure that your experience online is the best possible, we
encourage you to take advantage of the resources and tools we make available to
you.
- AOL trusts each member of its community - like yourself - to help us uphold
the community standards. Our Community Leaders are there to help you and help us
maintain these standards. It is impossible to monitor the volume of contents
made available to AOL subscribers every day, nor would we even attempt to do
that.
- At times we and our associates monitor public areas such as the chat rooms,
message boards, the Subscribers' Directory and our subscribers' Web pages. AOL
reserves the right to treat private chat rooms whose Directory names or chat
room names have been published, are generally known or if they are available to
the public.
"We do not monitor private communications such as private chat rooms, "Instant
Messenger" or e-mail, but the Community Guidelines also apply to them. If they
are reported by someone who believes that the contents made accessible by you or
that your conduct violates the Community Guidelines, we will launch an
investigation and take whatever measures are necessary.
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If you find any material or notice any objectionable conduct, you have several
options. These options are based on the standards of a specific community or on
AOL's Community Guidelines.
1) Block communications from the subscriber in question. AOL lets you control
your online experience and block the text of chats, the text of message boards,
"Instant Messenger" messages and e-mails from the subscriber you consider
inappropriate.
. Chats: "Ignore" a specific subscriber so that you no longer display what he
or she types.
. Message boards: You can use the Message board filter to block all messages
from a specific subscriber to stop displaying what he or she sends you.
. Instant messages: With the Buddies List resource to determine who can and
can't communicate with you through AOL "Instant Messenger" messages and AOL's
"Instant Messenger", add your Screen Name to the Buddies List or locate you
online.
. E-mails: You can use the e-mail controls to establish the AOL subscribers,
Internet domains and addresses that can and can't send you e-mails.
2) Notify the Community you're a member of. If you think that the content or
behavior of a subscriber violates the standards of the community you're a member
of, file a complaint with the Community Leader who hosted the message board or
the chat room where you were.
3) Notify AOL. If you think that a subscriber's content or behavior are not
within community standards and violate the Community Guidelines, you can file a
complaint with AOL in any of the following ways:
a) Use the Keyword: "NOTIFY AOL." If the violation occurred in an area used
for children, you can use the Keyword: "NOTIFY AOL."
b) Click on "NOTIFY AOL" when available in areas such as chat rooms or "Instant
Messenger" messages. In this way you can report the problem easily and
conveniently in one single location.
AOL's Community Action Team (CAT) will analyze your problem. CAT is a highly-
trained team responsible for enforcing AOL's Community Guidelines. This time
can issue written warnings and, in case of serious violations, close accounts.
If you or anybody who uses your account (or any Screen Name) is responsible for
a violation of AOL's Community Guidelines, the main account holder will receive
a violation notification. In case of a serious violation or if you have
committed a violation before, we will close your account.
. AOL offers many other resources to guarantee you safe and satisfying online
experiences. These include:
Parental Control (Keyword: PARENTAL CONTROL). AOL's Parental Control allows
you to control what children can display and do online, including access to
online games and their online communications with others. Parental Control is
easy to use and flexible. It can be adjusted at any time - so that your child's
online experiences are in line with his maturity level and needs.
Junk E-mails: (Keyword: E-MAIL CONTROL). Junk e-mails are a problem that all
Internet users experience. They are unpleasant, unwanted and, frequently,
fraudulent and offensive. We admit that AOL users are confused with the number
of junk e-mails they find in their mailboxes.
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This area contains information on what AOL is doing to combat junk e-mails, what
you can do to help and how you should use AOL's customized junk e-mail blocking
tools.
E-mail Control: (Keyword: E-MAIL CONTROL). E-mail Control lets you combat
junk e-mails or unwanted e-mails. E-mail controls let you:
* Block or allow all e-mails * Block or allow all e-mails from specific AOL
subscribers, or Internet Addresses * Block domains (the sources of e-mails) *
Block e-mails with images or files attached to the e-mail.
Marketing Preferences (Keyword: MARKETING PREFERENCES). AOL occasional makes
its e-mail list available to companies whose products or services you might be
interested in. Marketing Preferences allow you to tell us if you don't want
your name or address included on the direct mailing lists we make available to
other organizations. You can also tell us you don't want to receive our offers
for AOL subscribers.
For more information on security online, see the following items:
Password Protection (Keyword: PASSWORD). Your password is the key to opening
your AOL account. It's very important that you not tell other users your
password. AOL employees will never ask you what your password is. This area
contains important information for you to protect against "password fraud." It
also gives information for e-mail security and a list of the most recent frauds,
so don't forget to visit this area regularly.
Neighborhood Watch (Keyword: SECURITY ONLINE). Neighborhood Watch is an online
areas with information on security online, including how to locate and avoid
computer viruses, what to do about junk e-mails, how to guarantee the security
of your account and how to guarantee online safety for your children.
Subscriber Service (Keyword: HELP). This area offers answers to a wide variety
of questions about AOL Service.
AOL'S PRIVACY POLICY
We consider the privacy of our subscribers to be one of our most important
values. We want you to know how we protect subscriber information and what your
choices are regarding the use of that information. We believe that AOL's
Privacy Policy will provide you security whenever you use the AOL Brazil service
or XX.XXX.XXX - 24 hours per day, seven days per week, 365 days per year.
We have organized our Privacy Policy into three parts:
(1) We outline our Eight Privacy Principles and our basic commitment to protect
your privacy.
(2) We explain how to implement each principle. Just click on a principle to
read the policy.
(3) We present useful Information on how to protect your privacy in cyberspace.
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AOL'S PRIVACY COMMITMENT: THE EIGHT PRIVACY PRINCIPLES
Our commitment is to protect your personal privacy. Our Eight Privacy
Principles summarize and clarify that commitment: how we protect your privacy,
how we treat personal information and what choices you can make. We understand
that for you to make the most of the benefits of this interactive medium, we
must do everything we can to ensure that your privacy is maintained.
(1) We don't read your private online communications.
(2) We don't use any information about where you visit on AOL or the Web, and we
don't make that information available to third parties.
(3) We don't disclose your telephone number, credit card number or Screen Names,
unless you authorize us to do so. And you also have the opportunity to correct
your personal contact and billing information at any time.
(4) We may use information about the kinds of products you buy from AOL to make
other marketing offers to you, unless you tell us not to. We don't disclose
this purchase information to others.
(5) We let you choose how AOL uses your personal information.
(6) We take special measures to protect the safety and privacy of children.
(7) We use secure technology, privacy protection controls and restrictions on
employee access in order to guarantee the confidentiality of your personal
information.
(8) We'll keep you informed, clearly and prominently, on what we do with your
personal information, and we will advise you if we change our Privacy Policy.
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(1) We don't read your private online communications.
AOL honors the confidentiality of its members' private communications in chat
rooms, e-mail (including downloads), and "Instant Message" conversations, as
well as any information you have included in your profile, such as a stock
portfolio. AOL does not read or disclose private communications except to
comply with the requirements of a judicial writ or judicial order, to protect
the company's rights and property or during emergencies when we believe physical
safety is at risk. But of course, what you send to public areas such as chat
rooms and message boards is available not only to AOL, but to all members.
(2) We don't use any information about where you visit on AOL or the Web, and
we don't make that information available to third parties.
Our system automatically gathers information about the areas you visit on our
service.
We don't use any of this navigational data about where you -- as an individual
member -- visit on the service with the exception of research to understand and
improve AOL's programming. We don't share that information with other
companies.
We do, however, use navigational information to understand how our members as a
group use the service so that we can always improve it. We may also share this
statistical information with our partners or other companies, but in doing so,
we don't disclose individual names or personal navigational information.
We don't monitor where you go on the World Wide Web.
The Web sites you visit may have their own Privacy Policies or they might not
follow any policy. We recommend that you review the privacy policies of Web
sites before providing them any type of personal information.
(3) We don't disclose your telephone number, credit card number or Screen Names,
unless you authorize us to do so. And you also have the opportunity to correct
your personal contact and billing information at any time.
When you subscribe to AOL, we ask you for your name, address, telephone number,
and billing information -- including the credit card, checking account, or debit
card used to pay for your monthly account -- and the various Screen Names you
want to use on your account. Here is how we protect that information:
* AOL will not disclose your telephone number or Screen Names (e-mail
addresses), unless this is needed to deliver a product or service you ordered.
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* AOL will not disclose your credit or debit card number or checking account
information unless you authorize it, during an online purchase, for example.
* We will not disclose information that would link your Screen Names with your
real name.
We make lists of members' names and addresses available to pre-selected
companies who have specific direct mail product and service offers that might be
of interest to you. We also sometimes combine these lists with publicly
available information or segment them based on other information, such as when a
member signed up for AOL or a subscriber's computer system type. These lists
are never based on a user's online activities.
You may choose to remove your name and address from the direct mailing lists we
provide to other companies. For more information about your choices, please see
Principle 5. We also collect and use other information for internal purposes.
For example, we keep records in your account history of your complaints about
other subscribers, your contact with AOL Member Services and any reported
violations of our Service Conditions that you or someone on your account may
have committed. AOL automatically takes information from your computer about
the type of system you're using and your modem speed, error messages you have
received, or whether you use Macintosh or Windows software -- to help us adjust
our service and to help us diagnose problems you may have had with your system.
Finally, we sometimes use information about your geographical location to
provide localized services. For example, we may use your Zip Code or the time
zone you are in to make sure the weather information or TV listings you see are
accurate for you.
We have two exceptions to these policies: We will release specific information
about your account only to comply with judicial writs or court orders, or in
emergencies when we believe that your physical security or that of others is at
risk.
We provide you with the opportunity to update or correct your contact and
billing information in our files. Just as you want to make sure that
information AOL has about you is correct, we also want to have the most up-to-
date information about you. Therefore, whenever you believe that your contact
or billing information needs updating, you can go to Keyword: BILLING and make
the necessary changes.
(4) We may use information about the kinds of products you buy from AOL to make
other marketing offers to you, unless you tell us not to. We don't disclose
this purchase information to others.
YOUR AOL PURCHASES
AOL offers its members the opportunity to buy AOL store merchandise, such as
computer hardware and software, as well as AOL brand products. Like other
retailers we record information about those purchases. When you buy something
from us online, our system automatically gathers information on the purchase
made through our telemarketing service.
We use this information in two ways:
1) We review what kinds of products and services appeal most to our subscribers
as a group. That statistical information helps us improve our offerings just
like other companies change their catalog based on the products that sell best.
L-18
2) We use information such as the number of purchases made by subscribers and
the categories of goods and services they buy to make offers that we believe
will interest them. In addition, we use other information such as when
subscribers joined AOL, how often they use the service or the type of computer
system they use. We also use publicly available information on subscribers to
decide which marketing offers we should make and which advertising they see.
You can choose not to receive marketing offers from AOL or from AOL companies.
For more information about your choices, please see Principle 5.
We don't disclose any information about what you, as an individual, purchase
from AOL, except to complete your transactions, or to comply with valid legal
process a judicial writ or court order. We share with other companies only
statistics about what AOL products or services our members -- as a group -- buy.
ONLINE PURCHASES VIA AOL
For other online purchases, be sure that you are aware of the privacy and
security policies of the selling company, and contact them directly if you have
any doubts. They may have privacy conditions different from the policy followed
by AOL, and can use your personal information for other purposes not permitted
under our privacy policy.
AOL can sometimes facilitate your purchases at those online stores, but that
personal information is not used for any other purpose.
(5) We let you choose how AOL uses your personal information.
You can define the use AOL can make of your personal information to send special
offers to you.
And you can also instruct us to remove your name and address from the direct
mailing lists we provide to pre-selected companies, as well as other AOL
companies..To activate any of these marketing preferences, go to Keyword:
MARKETING PREFERENCES or Keyword: CHOICE or click on the MY AOL button on the
software toolbar at the top of your screen.
* You can choose not to receive offers from AOL by mail.
* You can choose not to receive offers from AOL by telephone.
* You can choose not to receive offers from AOL by e-mail.
* You can choose not to receive offers from AOL through online "pop-up screens."
* You may choose to have your name removed from all direct mailing lists that we
provide to other companies, including other AOL companies.
(6) We take special measures to protect the safety and privacy of children.
Children and young people need special safeguards and privacy protection. We
know they often do not understand all the points in our privacy policy or be
able to make complex decisions about the choices available to adult subscribers.
Therefore we have a special privacy policy to protect children and teenagers
using areas on our service specifically for them, including our Kids Only
L-19
Channel. And we ask all parents to teach their children about protecting their
personal information while they are online.
In areas on the service designated for children 12 and under, AOL and its
partners require prior parental authorization (by sending a letter or fax, for
example) before collecting or using names, addresses, telephone numbers or other
information that identifies a child offline. In addition, prior to children's
using Screen Names, we require parental consent (Master Screen Name) at the time
the subaccount is created. We do this so that parents are aware of and consent
to how their children use their Screen Names; for example, using the Screen Name
to request an online newsletter, to post a message on a bulletin board or to
participate in a chat room.
In areas designed for teens 13 through 16, AOL and its partners cannot collect
names, addresses, telephone numbers or other identifiable information without
disclosing how that information will be used and notifying teens that they must
obtain permission from their parents before providing any information.
* Another way parents can control their children's experience online is AOL's
Parental Controls (Keyword: PARENTAL CONTROLS). This simple, flexible tool
allows parents to customize the content and functionality to their child's
maturity level. Since one primary account may have several Screen Names, we
recommend that all parents use their master account to create separate Screen
Names for each child. This allows parents to customize AOL to their child's
maturity level and content needs: Children (up to 12 years of age); Teens
(between 13 and 15); or Young Adults (between 16 and 17).
Unsolicited e-mail is a problem for everyone, but it is particularly a problem
for children. This includes e-mails that could contain content you might not
want your children to see, or e-mails that might ask for information you
wouldn't want your children to provide.
To reduce the unsolicited e-mails you your children receive, you can use E-Mail
Controls (Keyword: E-MAIL CONTROL) to block all e-mail from the Internet or to
select the e-mail addresses from which you wish to allow your children to
receive messages. Remember that Screen Names and information voluntarily given
by children and teens in public chat rooms, e-mail exchanges, message boards,
the Member Directory, and other online communications are publicly available and
may be used by other parties to generate unsolicited e-mail.
You can learn more about how to ensure an enjoyable online experience for you
and your family at Keyword: SECURITY. To obtain more information to help you
maximize your children's online experience, please read: Important Notice to
Parents.
(7) We use security technology, privacy protection controls and restrictions on
employee access in order to guarantee the confidentiality of your personal
information.
We use state-of-the-art technology to keep your personal information --
including your billing and account information -- as secure as possible. We also
have created privacy protection control systems designed to ensure that your
data remain completely confidential.
All AOL employees must follow AOL's privacy policy. Only authorized AOL
employees are permitted to have access to your personal information, and such
access is limited on need-to-know basis. For example, if you call our Member
Services department with a concern or complaint, the official can only access
only the personal information that he or she needs to solve
L-20
your problem. In addition, any company with which AOL contracts to be our agent
in conducting our business must adhere to the Privacy Policy to guarantee that
your information remains safe.
All AOL employees must sign a commitment stating that they understand and are in
agreement with the privacy policy. Employees who violate our privacy policies
are subject to disciplinary action, including dismissal.
We encourage our content, electronic commerce and advertising partners to
publish their privacy policies clearly and to have privacy control mechanisms to
protect your personal information. Be sure to read these privacy policies and
contact these partners directly if you have any questions.
(8) We'll keep you informed, clearly and prominently, on what we do with your
personal information, and we will advise you if we change our Privacy Policy.
Part of AOL's commitment to protecting your privacy is explaining to you how we
can use your personal information. This privacy policy serves that purpose, and
it is accessible through several means within our service. When you register
for our service, you receive our Privacy Policy and should familiarize yourself
with this and all other AOL policies at that time. In addition, this policy is
easily located in our Service Conditions area (Keyword: CDS), and by using
Keyword: PRIVACY, you can view AOL's privacy policy.
Whenever we change our policy, we will advise you on those changes 30 (thirty)
days in advance, through prominent means, including notification on our initial
screen. If the changes were substantial, we will notify each of our members
individually through pop-up screens or e-mails. Since pop-ups last only for a
short time, you should sign on to your account regularly for this and other
important information.
If you'd like to comment on or have questions about our privacy policy, or if
you have a concern or policy violation to report, please go to Keyword: PRIVACY.
L-21
EXHIBIT M
CO-BRANDED WELCOME SCREEN
-------------------------
Co-Branded Welcome Screen Exhibit has the following language:
"Co-Branded Welcome Screen," "Itau Programmable," and "AOLB Programmable
Area." The graphic depicts a computer screen with the AOL and Itau logos and
other general content including icons for weather forecasts and shopping links.
M-1
EXHIBIT N
ESCROW AGREEMENT
----------------
EXHIBIT N
ESCROW AGREEMENT
This Escrow Agreement (this "Escrow Agreement") is made as of __________ ___,
2000 by and among The Bank of New York, a New York banking corporation as escrow
agent (the "Escrow Agent"), America Online Latin America, Inc. ("AOLA"), a
Delaware corporation, AOL Brasil Ltda. ("AOLB"), a Brazilian limited liability
quota company, and Banco Itau, S.A. ("Itau"), a Brazilian banking institution,
in connection with, among other documents, a Strategic Interactive Services and
Marketing Agreement, dated as of the date hereof, among AOLA, AOLB and Itau (the
"Marketing Agreement"). Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Marketing Agreement.
WHEREAS, as more fully described in the Marketing Agreement, Itau has
undertaken certain marketing commitments with respect to AOLA's and AOLB's
Brazilian internet online service, including, without limitation, the
requirement to make certain Reference Payments to AOLA if such service fails to
achieve certain levels of Verified Members and Verified Revenues as of certain
dates.
WHEREAS, as more fully described in the Marketing Agreement, Itau has also
undertaken to pay to AOLA liquidated damages in an amount up to $[76% of IPO
price] (the "Termination Fee") in the event that Itau commits a Material Itau
Breach under the Marketing Agreement.
WHEREAS, to secure payment by Itau of any Reference Payments under the
Marketing Agreement (including, without limitation, Acceleration Payments), Itau
is delivering to the Escrow Agent the following five (5) promissory notes
(copies of which are attached hereto as Exhibit A), each made payable to AOLA
---------
and dated as of the date hereof (collectively, the "Reference Payment Notes
(Brazil)"):
Promissory note in the maximum principal amount of $[first year maximum]
(the "First Anniversary Reference Payment Note (Brazil)")
Promissory note in the maximum principal amount of $[second year maximum]
(the "Second Anniversary Reference Payment Note (Brazil)")
Promissory note in the maximum principal amount of $[third year maximum]
(the "Third Anniversary Reference Payment Note (Brazil)")
Promissory note in the maximum principal amount of $[fourth year maximum]
(the "Fourth Anniversary Reference Payment Note (Brazil)")
Promissory note in the maximum principal amount of $[fifth year maximum]
(the "Fifth Anniversary Reference Payment Note (Brazil)")
WHEREAS, to further secure payment by Itau of any Reference Payments under the
Marketing Agreement (including, without limitation, Acceleration Payments), Itau
is delivering to the Escrow Agent the following five (5) promissory notes
(copies of which are attached hereto as
Exhibit B) each dated as of the date hereof, made by Banco Itau S.A., Grand
---------
Cayman Branch, a branch of Itau doing business in the Cayman Islands, in favor
of AOLA (collectively, the "Reference Payment Notes (Caymans)"):
Promissory note in the maximum principal amount of $[first year maximum]
(the "First Anniversary Reference Payment Note (Caymans)")
Promissory note in the maximum principal amount of $[second year maximum]
(the "Second Anniversary Reference Payment Note (Caymans)")
Promissory note in the maximum principal amount of $[third year maximum]
(the "Third Anniversary Reference Payment Note (Caymans)")
Promissory note in the maximum principal amount of $[fourth year maximum]
(the "Fourth Anniversary Reference Payment Note (Caymans)")
Promissory note in the maximum principal amount of $[fifth year maximum]
(the "Fifth Anniversary Reference Payment Note (Caymans)")
WHEREAS, to secure payment by Itau of any Termination Fee under the Marketing
Agreement, Itau is delivering to the Escrow Agent the following five (5)
promissory notes (copies of which are attached hereto as Exhibit C), each made
---------
payable to AOLA and dated as of the date hereof (collectively, the "Termination
Fee Notes (Brazil)"):
Promissory note in the maximum principal amount of $[first year maximum]
(the "First Anniversary Termination Fee Note (Brazil)")
Promissory note in the maximum principal amount of $[second year maximum]
(the "Second Anniversary Termination Fee Note (Brazil)")
Promissory note in the maximum principal amount of $[third year maximum]
(the "Third Anniversary Termination Fee Note (Brazil)")
Promissory note in the maximum principal amount of $[fourth year maximum]
(the "Fourth Anniversary Termination Fee Note (Brazil)")
Promissory note in the maximum principal amount of $[fifth year maximum]
(the "Fifth Anniversary Termination Fee Note (Brazil)")
WHEREAS, to further secure payment by Itau of any Termination Fee under the
Marketing Agreement, Itau is delivering to the Escrow Agent the following five
(5) promissory notes (copies of which are attached hereto as Exhibit D) each
---------
dated as of the date hereof, made by Banco Itau S.A., Grand Cayman Branch, a
branch of Itau doing business in the Cayman Islands, in favor of AOLA
(collectively, the "Termination Fee Notes (Caymans)"):
2
Promissory note in the maximum principal amount of $[first year maximum]
(the "First Anniversary Termination Fee Note (Caymans)")
Promissory note in the maximum principal amount of $[second year maximum]
(the "Second Anniversary Termination Fee Note (Caymans)")
Promissory note in the maximum principal amount of $[third year maximum]
(the "Third Anniversary Termination Fee Note (Caymans)")
Promissory note in the maximum principal amount of $[fourth year maximum]
(the "Fourth Anniversary Termination Fee Note (Caymans)")
Promissory note in the maximum principal amount of $[fifth year maximum]
(the "Fifth Anniversary Termination Fee Note (Caymans)")
NOW, THEREFORE, in consideration of the foregoing and the mutual promises of
the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Definitions.
-----------
(a) "Anniversary Date" shall mean each calendar anniversary date of the
Launch Date, provided, however, if with respect to a particular Anniversary
-------- -------
Date, AOLA, AOLB and Itau deliver a certificate to the Escrow Agent in the form
of Exhibit E attached hereto (an "Anniversary Date Certificate"), such
---------
Anniversary Date shall be the date set forth in such certificate; provided,
--------
further, however, if the Escrow Agent shall receive a decision of an arbitrator
------- -------
appointed under Sections 1.5 or 2.2 of the Marketing Agreement or of a court of
competent jurisdiction, which decision determines an Anniversary Date under the
Marketing Agreement, the Anniversary Date shall be the date set by such arbitral
or judicial decision. If an Anniversary Date is extended beyond the date that
would be the calendar anniversary date of the Launch Date, then all subsequent
Anniversary Dates, unless extended in accordance with the provisions of this
Section 1(a), shall be the calendar anniversary date of such extended
Anniversary Date.
(b) "Business Day" shall mean any day other than Saturday, Sunday or a
day on which banks in New York, N.Y. or Sao Paulo, Brazil, are required or
permitted to close.
(c) "Launch Date" shall mean April 23, 2001; provided, however, if AOLA,
-------- -------
AOLB and Itau deliver a certificate to the Escrow Agent in the form of Exhibit F
---------
attached hereto (a "Launch Date Certificate"), the Launch Date shall be the date
set forth in such certificate; provided, further, however, if the Escrow Agent
-------- ------- -------
shall receive a decision of an arbitrator appointed under the Marketing
Agreement or of a court of competent jurisdiction, which decision determines
3
the Launch Date under the Marketing Agreement, the Launch Date shall be the date
set by such arbitral or judicial decision.
2. Establishment of Escrow.
-----------------------
(a) Appointment of Escrow Agent. AOLA, AOLB and Itau hereby appoint the
---------------------------
Escrow Agent as escrow agent to serve in such capacity in accordance with the
provisions of this Escrow Agreement. The Escrow Agent hereby accepts such
appointment.
(b) Receipt of Marketing Agreement. The Escrow Agent hereby acknowledges
------------------------------
receipt of a copy of the Marketing Agreement. Except for reference thereto for
definitions of certain terms not defined herein, the Escrow Agent is not charged
with any duties or responsibilities with respect to, and shall not otherwise
refer to, the Marketing Agreement. In the event of a conflict between the
provisions of this Escrow Agreement and the provisions of the Marketing
Agreement relating to the subject matter of this Escrow Agreement, the
provisions of this Escrow Agreement shall govern such conflict.
(c) Delivery of Notes. Itau has herewith delivered to the Escrow Agent
-----------------
and the Escrow Agent hereby acknowledges receipt of the original Reference
Payment Notes (Brazil), the Reference Payment Notes (Caymans), the Termination
Fee Notes (Brazil), and the Termination Fee Notes (Caymans) (collectively, the
"Notes").
3. Custody of Notes. Unless otherwise directed in writing by AOLA, AOLB and
----------------
Itau, the Notes shall be held by the Escrow Agent in a vault or similar secure
location. The Notes held by the Escrow Agent pursuant to the provisions hereof
shall be for the exclusive benefit of AOLA, AOLB and their successors and
assigns, and no other person or entity shall have any right, title or interest
therein other than Itau`s right to receive delivery of such documents as
provided herein.
4. Release of Reference Payment Notes From Escrow Upon Receipt of Audit
--------------------------------------------------------------------
Certificate.
-----------
(a) Within three (3) Business Days of receipt of a completed and signed
certificate in the form of Exhibit G attached hereto (an "Audit Certificate
---------
(Reference Payments)"), stating that (i) a Reference Payment has been computed
by the Auditor in accordance with the Marketing Agreement as of a particular
Anniversary Date, or (ii) the Auditor has concluded that Itau has failed to
provide the Auditor with information sufficient to enable the Auditor to compute
a Reference Payment as of a particular Anniversary Date, the Escrow Agent shall
send written notification in the form of Exhibit H attached hereto (a "Notice of
---------
Entitlement to Release of Notes") by facsimile to AOLA, AOLB and Itau setting
the forth the date that the Escrow Agent received the Audit Certificate
(Reference Payments) and attaching a copy of the Audit Certificate (Reference
Payments) received by the Escrow Agent, and
4
(1) (A) if such Audit Certificate (Reference Payments) states that (i) a
Reference Payment greater than $0 has been computed as of the first Anniversary
Date, or (ii) that Itau has failed to provide the Auditor with information
sufficient to enable the Auditor to compute a Reference Payment as of the first
Anniversary Date, then, within three (3) Business Days of delivery of such
Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver to
AOLA and AOLB, at their election, either the First Anniversary Reference Payment
Note (Brazil) or the First Anniversary Reference Payment Note (Caymans) by hand
delivery or by reputable overnight mail service; or
(B) if such Audit Certificate (Reference Payments) states that the
Reference Payment is less than or equal to $0 as of the first Anniversary Date,
then, within three (3) Business Days of delivery of such Notice of Entitlement
to Release of Notes, the Escrow Agent shall deliver to Itau the First
Anniversary Reference Payment Note (Brazil) and the First Anniversary Reference
Payment Note (Caymans) by hand delivery or by reputable overnight mail service;
or
(2) (A) if such Audit Certificate (Reference Payments) states that (i) a
Reference Payment greater than $0 has been computed as of the second Anniversary
Date, or (ii) that Itau has failed to provide the Auditor with information
sufficient to enable the Auditor to compute a Reference Payment as of the second
Anniversary Date, then, within three (3) Business Days of delivery of such
Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver to
AOLA and AOLB, at their election, either the Second Anniversary Reference
Payment Note (Brazil) or the Second Anniversary Reference Payment Note (Caymans)
by hand delivery or by reputable overnight mail service; or
(B) if such Audit Certificate (Reference Payments) states that the
Reference Payment is less than or equal to $0 as of the second Anniversary Date,
then, within three (3) Business Days of delivery of such Notice of Entitlement
to Release of Notes, the Escrow Agent shall deliver to Itau the Second
Anniversary Reference Payment Note (Brazil) and the Second Anniversary Reference
Payment Note (Caymans) by hand delivery or by reputable overnight mail service;
or
(3) (A) if such Audit Certificate (Reference Payments) states that (i) a
Reference Payment greater than $0 has been computed as of the third Anniversary
Date, or (ii) that Itau has failed to provide the Auditor with information
sufficient to enable the Auditor to compute a Reference Payment as of the third
Anniversary Date, then, within three (3) Business Days of delivery of such
Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver to
AOLA and AOLB, at their election, either the Third Anniversary Reference Payment
Note (Brazil) or the Third Anniversary Reference Payment Note (Caymans) by hand
delivery or by reputable overnight mail service; or
(B) if such Audit Certificate (Reference Payments) states that the
Reference Payment is less than or equal to $0 as of the third Anniversary Date,
then, within three (3) Business Days of delivery of such Notice of Entitlement
to Release of Notes, the Escrow Agent
5
shall deliver to Itau the Third Anniversary Reference Payment Note (Brazil) and
the Third Anniversary Reference Payment Note (Caymans) by hand delivery or by
reputable overnight mail service; or
(4) (A) if such Audit Certificate (Reference Payments) states that (i) a
Reference Payment greater than $0 has been computed as of the fourth Anniversary
Date, or (ii) that Itau has failed to provide the Auditor with information
sufficient to enable the Auditor to compute a Reference Payment as of the fourth
Anniversary Date, then, within three (3) Business Days of delivery of such
Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver to
AOLA and AOLB, at their election, either the Fourth Anniversary Reference
Payment Note (Brazil) or the Fourth Anniversary Reference Payment Note (Caymans)
by hand delivery or by reputable overnight mail service; or
(B) if such Audit Certificate (Reference Payments) states that the
Reference Payment is less than or equal to $0 as of the fourth Anniversary Date,
then, within three (3) Business Days of delivery of such Notice of Entitlement
to Release of Notes, the Escrow Agent shall deliver to Itau the Fourth
Anniversary Reference Payment Note (Brazil) and the Fourth Anniversary Reference
Payment Note (Caymans) by hand delivery or by reputable overnight mail service;
or
(5) (A) if such Audit Certificate (Reference Payments) states that (i) a
Reference Payment greater than $0 has been computed as of the fifth Anniversary
Date, or (ii) that Itau has failed to provide the Auditor with information
sufficient to enable the Auditor to compute a Reference Payment as of the fifth
Anniversary Date, then, within three (3) Business Days of delivery of such
Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver to
AOLA and AOLB, at their election, either the Fifth Anniversary Reference Payment
Note (Brazil) or the Fifth Anniversary Reference Payment Note (Caymans) by hand
delivery or by reputable overnight mail service; or
(B) if such Audit Certificate (Reference Payments) states that the
Reference Payment is less than or equal to $0 as of the fifth Anniversary Date,
then, within three (3) Business Days of delivery of such Notice of Entitlement
to Release of Notes, the Escrow Agent shall deliver to Itau the Fifth
Anniversary Reference Payment Note (Brazil) and the Fifth Anniversary Reference
Payment Note (Caymans) by hand delivery or by reputable overnight mail service.
(b) Whenever any of the Reference Payment Notes (Brazil) or the Reference
Payment Notes (Caymans) are released from escrow to AOLA and AOLB in accordance
with the provisions of Section 4(a) above,
(1) the Note selected by AOLA and AOLB to be released from escrow
shall be referred to as the "Released Reference Payment Note," and the Note that
is not selected by AOLA and AOLB to be released from escrow shall be referred to
as the "Retained Reference Payment Note;" and
6
(2) except as provided in Section 11 hereof, the Retained Reference
Payment Note shall not be released from escrow and shall remain in the custody
of the Escrow Agent.
5. Release of Reference Payment Notes On Account of Acceleration Payment.
----------------------------------------------------------------------
(a) Within three (3) Business Days of receipt by the Escrow Agent of an
arbitrator's decision or award finding that Itau is obligated under the
Marketing Agreement to pay an Acceleration Payment on account of the occurrence
of a Material Payment Breach, the Escrow Agent shall send a Notice of
Entitlement to Release of Notes by facsimile to AOLA, AOLB and Itau setting
forth the date that the Escrow Agent received such decision or award and
attaching a copy of such decision or award received by the Escrow Agent, and
(1) if such decision or award states that the Material Payment Breach
first occurred as a result of Itau's failure to pay a Reference Payment owing as
of the First Anniversary Date, then, within three (3) Business Days of the
delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their written instruction, either (i) the
First, Second, Third, Fourth and Fifth Reference Payment Notes (Brazil), or (ii)
the First, Second, Third, Fourth and Fifth Reference Payment Notes (Caymans), by
hand delivery or by reputable overnight mail service;
(2) if such decision or award states that the Material Payment Breach
first occurred as a result of Itau's failure to pay a Reference Payment owing as
of the Second Anniversary Date, then, within three (3) Business Days of the
delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their written instruction, either (i) the
Second, Third, Fourth and Fifth Reference Payment Notes (Brazil), or (ii) the
Second, Third, Fourth and Fifth Reference Payment Notes (Caymans), by hand
delivery or by reputable overnight mail service;
(3) if such decision or award states that the Material Payment Breach
first occurred as a result of Itau's failure to pay a Reference Payment owing as
of the Third Anniversary Date, then, within three (3) Business Days of the
delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their written instruction, either (i) the
Third, Fourth and Fifth Reference Payment Notes (Brazil), or (ii) the Third,
Fourth and Fifth Reference Payment Notes (Caymans), by hand delivery or by
reputable overnight mail service;
(4) if such decision or award states that the Material Payment Breach
first occurred as a result of Itau's failure to pay a Reference Payment owing as
of the Fourth Anniversary Date, then, within three (3) Business Days of the
delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their written instruction, either (i) the
Fourth and Fifth Reference Payment Notes (Brazil), or (ii) the
7
Fourth and Fifth Reference Payment Notes (Caymans), by hand delivery or by
reputable overnight mail service;
(5) if such decision or award states that the Material Payment Breach
first occurred as a result of Itau's failure to pay a Reference Payment owing as
of the Fifth Anniversary Date, then, within three (3) Business Days of the
delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their written instruction, either (i) the
Fifth Reference Payment Notes (Brazil), or (ii) the Fifth Reference Payment
Notes (Caymans), by hand delivery or by reputable overnight mail service;
(b) Whenever either the series of Reference Payment Notes (Brazil) or the
series of Reference Payment Notes (Caymans) are released from escrow to AOLA and
AOLB in accordance with the provisions of Section 5(a) above,
(1) the series of Notes selected by AOLA and AOLB to be released from
escrow shall be referred to as the "Released Acceleration Payment Notes," and
the series of Notes that is not selected by AOLA and AOLB to be released from
escrow shall be referred to as the "Retained Acceleration Payment Notes;" and
(2) except as provided in Section 11 hereof, the Retained Acceleration
Payment Notes shall not be released from escrow and shall remain in the custody
of the Escrow Agent; and
6. Release of Reference Payment Notes From Escrow Upon Lapse of Time.
-----------------------------------------------------------------
(a) If, on the second Anniversary Date, all of the following conditions
are satisfied, the First Anniversary Reference Payment Note (Brazil) and the
First Anniversary Reference Payment Note (Caymans) shall be released from escrow
and shall be delivered to Itau within three (3) Business Days of the second
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the First Anniversary Reference Payment Note
(Brazil) nor the First Anniversary Reference Payment Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 4 hereof,
(ii) the Escrow Agent has not received an Audit Certificate
(Reference Payments) that computes a Reference Payment as
of the first Anniversary Date that is greater than $0, and
(iii) the Escrow Agent has not received a certificate in the form
of Exhibit I attached hereto (a "Claim Certificate")
---------
stating that AOLA and AOLB have made a claim that relates
to the First
8
Anniversary Reference Payment Note (Brazil) or the First
Anniversary Reference Payment Note (Caymans).
(b) If, on the third Anniversary Date, all of the following conditions
are satisfied, the Second Anniversary Reference Payment Note (Brazil) and the
Second Anniversary Reference Payment Note (Caymans) shall be released from
escrow and shall be delivered to Itau within three (3) Business Days of the
third Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Second Anniversary Reference Payment Note
(Brazil) nor the Second Anniversary Reference Payment Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 4 hereof,
(ii) the Escrow Agent has not received an Audit Certificate
(Reference Payments) that computes a Reference Payment as
of the second Anniversary Date that is greater than $0, and
(iii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Second Anniversary Reference Payment Note (Brazil)
or the Second Anniversary Reference Payment Note (Caymans).
(c) If, on the fourth Anniversary Date, all of the following conditions
are satisfied, the Third Anniversary Reference Payment Note (Brazil) and the
Third Anniversary Reference Payment Note (Caymans) shall be released from escrow
and shall be delivered to Itau within three (3) Business Days of the fourth
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Third Anniversary Reference Payment Note
(Brazil) nor the Third Anniversary Reference Payment Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 4 hereof,
(ii) the Escrow Agent has not received an Audit Certificate
(Reference Payments) that computes a Reference Payment as
of the third Anniversary Date that is greater than $0, and
(iii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Third Anniversary Reference Payment Note (Brazil) or
the Third Anniversary Reference Payment Note (Caymans).
9
(d) If, on the fifth Anniversary Date, all of the following conditions
are satisfied, the Fourth Anniversary Reference Payment Note (Brazil) and the
Fourth Anniversary Reference Payment Note (Caymans) shall be released from
escrow and shall be delivered to Itau within three (3) Business Days of the
fifth Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Fourth Anniversary Reference Payment Note
(Brazil) nor the Fourth Anniversary Reference Payment Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 4 hereof,
(ii) the Escrow Agent has not received an Audit Certificate
(Reference Payments) that computes a Reference Payment as
of the fourth Anniversary Date that is greater than $0, and
(iii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Fourth Anniversary Reference Payment Note (Brazil)
or the Fourth First Anniversary Reference Payment Note
(Caymans).
(e) If, on the sixth Anniversary Date, all of the following conditions
are satisfied, the Fifth Anniversary Reference Payment Note (Brazil) and the
Fifth Anniversary Reference Payment Note (Caymans) shall be released from escrow
and shall be delivered to Itau within three (3) Business Days of the sixth
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Fifth Anniversary Reference Payment Note
(Brazil) nor the Fifth Anniversary Reference Payment Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 4 hereof,
(ii) the Escrow Agent has not received an Audit Certificate
(Reference Payments) that computes a Reference Payment as
of the fifth Anniversary Date that is greater than $0, and
(iii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Fifth Anniversary Reference Payment Note (Brazil) or
the Fifth Anniversary Reference Payment Note (Caymans).
7. Release of Reference Payment Notes From Escrow Upon Release of Termination
--------------------------------------------------------------------------
Fee Notes. If at any time, any of the Termination Fee Notes are released from
---------
escrow and delivered to AOLA, AOLB or Itau pursuant to the terms of this Escrow
Agreement, then within three (3)
10
Business Days thereafter, all of the Reference Payment Notes (Brazil) and the
Reference Payment Notes (Caymans) shall be released from escrow and shall be
delivered to Itau by hand delivery or by reputable overnight mail service.
8. Release of Termination Fee Notes From Escrow On Account of Arbitration
----------------------------------------------------------------------
Award.
------
(a) Within three (3) Business Days of receipt by the Escrow Agent of an
arbitrator's decision or award finding that Itau is obligated under the
Marketing Agreement to pay any Termination Fee, the Escrow Agent shall send a
Notice of Entitlement to Release of Notes by facsimile to AOLA, AOLB and Itau
setting forth the date that the Escrow Agent received such decision or award and
attaching a copy of such decision or award received by the Escrow Agent, and
(1) if such decision or award states that it is rendered in whole or
in part on account of conduct by Itau occurring between the Launch Date and the
first Anniversary Date, then, within three (3) Business Days of the delivery of
such Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver
to AOLA and AOLB, at their written instruction, either the First Anniversary
Termination Fee Note (Brazil) or the First Anniversary Termination Fee Note
(Caymans) by hand delivery or by reputable overnight mail service;
(2) if such decision or award states that it is rendered in whole or
in part on account of conduct by Itau occurring between the first Anniversary
Date and the second Anniversary Date, then, within three (3) Business Days of
the delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their election, either the Second Anniversary
Termination Fee Note (Brazil) or the Second Anniversary Termination Fee Note
(Caymans) by hand delivery or by reputable overnight mail service;
(3) if such decision or award states that it is rendered in whole or
in part on account of conduct by Itau occurring between the second Anniversary
Date and the third Anniversary Date, then, within three (3) Business Days of the
delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their election, either the Third Anniversary
Termination Fee Note (Brazil) or the Third Anniversary Termination Fee Note
(Caymans) by hand delivery or by reputable overnight mail service;
(4) if such decision or award states that it is rendered in whole or
in part on account of conduct by Itau occurring between the third Anniversary
Date and the fourth Anniversary Date, then, within three (3) Business Days of
the delivery of such Notice of Entitlement to Release of Notes, the Escrow Agent
shall deliver to AOLA and AOLB, at their election, either the Fourth Anniversary
Termination Fee Note (Brazil) or the Fourth Anniversary Termination Fee Note
(Caymans) by hand delivery or by reputable overnight mail service; or
(5) if such decision or award states that it is rendered in whole or
in part on account of conduct by Itau occurring between the fourth Anniversary
Date and the fifth
11
Anniversary Date, then, within three (3) Business Days of the delivery of such
Notice of Entitlement to Release of Notes, the Escrow Agent shall deliver to
AOLA and AOLB, at their election, either the Fifth Anniversary Termination Fee
Note (Brazil) or the Fifth Anniversary Termination Fee Note (Caymans) by hand
delivery or by reputable overnight mail service.
(b) Whenever any of the Termination Fee Notes are released from escrow to
AOLA and AOLB in accordance with the provisions of Section 8(a) above,
(1) the Note selected by AOLA and AOLB to be released from escrow
shall be referred to as the "Released Termination Fee Note," and the Note that
is not selected by AOLA and AOLB to be released from escrow shall be referred to
as the "Retained Termination Fee Note;"
(2) except as provided in Section 11 hereof, the Retained Termination
Fee Note shall not be released from escrow and shall remain in the custody of
the Escrow Agent; and
(3) all Termination Fee Notes other than the Released Termination Fee
Note and the Retained Termination Fee Note shall be released from escrow and,
within three (3) Business Days thereof, shall be delivered by the Escrow Agent
to Itau by hand delivery or by reputable overnight mail service.
(c) Within three (3) Business Days of receipt by the Escrow Agent of an
arbitrator's decision finding that Itau is not obligated under the Marketing
Agreement to pay any Termination Fee, (i) the Escrow Agent shall send written
notification by facsimile to AOLA, AOLB and Itau of the date that the Escrow
Agent received such decision, including a copy of such decision received by the
Escrow Agent, and (ii) all of the Termination Fee Notes (Brazil) and the
Termination Fee Notes (Caymans) shall be released from escrow and shall be
delivered by the Escrow Agent to Itau by hand delivery or by a reputable
overnight mail service.
9. Release of Termination Fee Notes From Escrow Upon Lapse Of Time.
---------------------------------------------------------------
(a) If, on the second Anniversary Date, all of the following conditions
are satisfied, the First Anniversary Termination Fee Note (Brazil) and the First
Anniversary Termination Fee Note (Caymans) shall be released from escrow and
shall be delivered to Itau within three (3) Business Days of the second
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the First Anniversary Termination Fee Note (Brazil)
nor the First Anniversary Termination Fee Note (Caymans)
have been released from escrow to AOLA and AOLB pursuant to
Section 8 hereof, and
12
(ii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the First Anniversary Termination Fee Note (Brazil) or
the First Anniversary Termination Fee Note (Caymans).
(b) If, on the third Anniversary Date, all of the following conditions
are satisfied, the Second Anniversary Termination Fee Note (Brazil) and the
Second Anniversary Termination Fee Note (Caymans) shall be released from escrow
and shall be delivered to Itau within three (3) Business Days of the third
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Second Anniversary Termination Fee Note
(Brazil) nor the Second Anniversary Termination Fee Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 8 hereof, and
(ii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Second Anniversary Termination Fee Note (Brazil) or
the Second Anniversary Termination Fee Note (Caymans).
(c) If, on the fourth Anniversary Date, all of the following conditions
are satisfied, the Third Anniversary Termination Fee Note (Brazil) and the Third
Anniversary Termination Fee Note (Caymans) shall be released from escrow and
shall be delivered to Itau within three (3) Business Days of the fourth
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Third Anniversary Termination Fee Note (Brazil)
nor the Third Anniversary Termination Fee Note (Caymans)
have been released from escrow to AOLA and AOLB pursuant to
Section 8 hereof, and
(ii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Third Anniversary Termination Fee Note (Brazil) or
the Third Anniversary Termination Fee Note (Caymans).
(d) If, on the fifth Anniversary Date, all of the following conditions
are satisfied, the Fourth Anniversary Termination Fee Note (Brazil) and the
Fourth Anniversary Termination Fee Note (Caymans) shall be released from escrow
and shall be delivered to Itau within three (3) Business Days of the fifth
Anniversary Date by hand delivery or by reputable overnight mail service:
13
(i) neither the Fourth Anniversary Termination Fee Note
(Brazil) nor the Fourth Anniversary Termination Fee Note
(Caymans) have been released from escrow to AOLA and AOLB
pursuant to Section 8 hereof, and
(ii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Fourth Anniversary Termination Fee Note (Brazil) or
the Fourth First Anniversary Termination Fee Note
(Caymans).
(e) If, on the sixth Anniversary Date, all of the following conditions
are satisfied, the Fifth Anniversary Termination Fee Note (Brazil) and the Fifth
Anniversary Termination Fee Note (Caymans) shall be released from escrow and
shall be delivered to Itau within three (3) Business Days of the sixth
Anniversary Date by hand delivery or by reputable overnight mail service:
(i) neither the Fifth Anniversary Termination Fee Note (Brazil)
nor the Fifth Anniversary Termination Fee Note (Caymans)
have been released from escrow to AOLA and AOLB pursuant to
Section 8 hereof, and
(ii) the Escrow Agent has not received a Claim Certificate
stating that AOLA and AOLB have made a claim that relates
to the Fifth Anniversary Termination Fee Note (Brazil) or
the Fifth Anniversary Termination Fee Note (Caymans).
10. Release of Notes Upon Non-Compliance With Caymans Financial Test.
----------------------------------------------------------------
(a) Within three (3) Business Days of the receipt by the Escrow Agent of
a certificate by an auditor in the form of Exhibit J attached hereto (an "Audit
---------
Certificate (Caymans Financial Test)"), stating that Itau does not comply with
the Caymans Financial Test, (i) there shall be released from escrow, and the
Escrow Agent shall deliver to AOLA and AOLB by hand delivery or by reputable
overnight mail service, at the written election of AOLA and AOLB, either the
Termination Fee Note (Brazil) or the Termination Fee Note (Caymans) listed in
such Audit Certificate (Caymans Financial Test), and (ii) if, pursuant to clause
(i) above, AOLA and AOLB elect to have released from escrow a Termination Fee
Note (Brazil), then there shall be released from escrow, and the Escrow Agent
shall deliver to AOLA and AOLB by hand delivery or by reputable overnight mail
service, the Reference Payment Notes (Brazil) listed in such Audit Certificate
(Caymans Financial Test), or if, pursuant to clause (i) above, AOLA and AOLB
elect to have released from escrow a Termination Fee Note (Caymans), then there
shall be released from escrow, and the Escrow Agent shall deliver to AOLA and
AOLB by hand delivery or by reputable overnight mail service, the Reference
Payment Notes (Caymans) listed in such Audit Certificate (Caymans Financial
Test).
14
(b) The Notes to be released from escrow in accordance with Section 10(a)
above shall be referred to as the "Released CFT Notes," and the Notes that are
not released from escrow shall be referred to as the "Retained CFT Notes."
(c) Except as provided in Section 11 hereof, the Retained CFT Notes shall
not be released from escrow and shall remain in the custody of the Escrow Agent.
11. Exchange of Released Note(s) for Retained Note(s).
-------------------------------------------------
(a) At any time that AOLA and AOLB have possession of a Released
Reference Payment Note, a Released Termination Fee Note, the Released
Acceleration Payment Notes or the Released CFT Notes (each such Note or Notes
being hereinafter referred to as the "Released Note" or the "Released Notes"),
AOLA and AOLB may exchange such Released Reference Payment Note for the Retained
Reference Payment Note, may exchange such Released Termination Fee Note for the
Retained Termination Fee Note, may exchange all of such Released Acceleration
Payment Notes for all of the Retained Acceleration Payment Notes, and may
exchange all of such Released CFT Notes for the Retained CFT Notes (each such
Note or Notes for which the Released Note or Notes may be exchanged being
hereinafter referred to as the "Retained Note" or the "Retained Notes"). Upon
such exchange, (i) the Retained Note or Notes shall be released from escrow and
the Escrow Agent shall deliver the Retained Note or Notes to AOLA and AOLB by
hand delivery or by reputable overnight mail service, and (ii) the Escrow Agent
shall take custody of the Released Note or Notes, and shall hold such Released
Note or Notes in accordance with the provisions of Section 3 hereof. Immediately
after such exchange, for purposes of this Escrow Agreement, the Retained Note or
Notes delivered to AOLA and AOLB in accordance with the immediately preceding
sentence shall be deemed to be the Released Note or Notes, and the Released Note
or Notes over which the Escrow Agent has taken custody pursuant to the
immediately preceding sentence shall be deemed to be the Retained Note or Notes.
AOLA and AOLB may conduct unlimited exchanges of Released Notes for Retained
Notes in accordance with the terms of this Section.
(b) Pursuant to the terms of the Marketing Agreement, under certain
circumstances after a Released Note or Notes have been released from escrow and
delivered to AOLA and AOLB pursuant to the terms of this Escrow Agreement, Itau
is entitled to substitute a Substituted Reference Payment Note for a Released
Reference Payment Note, a Substituted Termination Fee Note for a Released
Termination Fee Note, a Substituted Acceleration Payment Note for all of the
Released Acceleration Payment Notes, and a Substituted CFT Note for all of the
Released CFT Notes. The parties hereto agree that, if Itau shall make any such
substitutions (all of which substitutions shall be made directly among AOLA,
AOLB and Itau without the involvement of the Escrow Agent), for all purposes
under this Escrow Agreement, any such substituted note or notes shall be deemed
to be the corresponding Released Note or Notes for which such substitution was
made, notwithstanding the fact that such substituted note or notes may state a
different principal amount than the Released Note or Notes or that more than one
note may be substituted for a single note. AOLA, AOLB and Itau shall notify the
Escrow Agent in writing if any such
15
substitutions are made, and shall identify the substituted note and the Released
Note or Notes for which such substitution was made.
12. Release of All Notes on Termination Date. All Notes in the custody of
----------------------------------------
the Escrow Agent as of the Termination Date shall be released from escrow and
shall be delivered to Itau within three (3) Business Days thereof by hand
delivery or by reputable overnight mail service.
13. Release of Notes By Consent. At any time, AOLA, AOLB and Itau may, by
---------------------------
mutual agreement, direct the Escrow Agent to release one of more of the Notes by
delivering to the Escrow Agent a certificate in the form of Exhibit K attached
---------
hereto (a "Note Release Certificate"). Upon receipt by the Escrow Agent of a
Note Release Certificate, the Notes listed in such Note Release Certificate
shall be released from escrow and, within three (3) Business Days of such
receipt, the Escrow Agent shall deliver the Notes listed in such Note Release
Certificate to the party listed in such Note Release Certificate by hand
delivery or by reputable overnight mail service
14. Deposit/Release of Reference Payment Notes On Account of Failure to
-------------------------------------------------------------------
Pay Post-Breach Reference Payment.
---------------------------------
(a) Upon receipt by the Escrow Agent of a certificate in the form of
Exhibit L attached hereto (a "Certificate of Deposit of Post-Breach Reference
---------
Payment Note"), together with the original promissory note described in such
Certificate (the "Post-Breach Reference Payment Note"), the Escrow Agent shall
hold such Post-Breach Reference Payment Note in escrow in the same manner and
under the same terms and conditions as the Notes, and such Post-Breach Reference
Payment Note shall constitute a "Note" for all purposes under this Escrow
Agreement.
(1) The Post-Breach Reference Payment Note shall be released to AOLA
or AOLB upon receipt by the Escrow Agent of a Certificate of Release of
Reference Payment Note in the form of Exhibit M attached hereto, whereupon
---------
within three (3) Business Days thereafter, the Escrow Agent shall deliver the
Post-Breach Reference Payment Note to AOLA and AOLB by hand delivery or by
reputable overnight mail service.
(2) In the event that Itau exercises its exchange rights pursuant to
Section 11 hereof, AOLA, AOLB and Itau shall designate the Reference Payment
Note for which the Post-Breach Reference Payment Note has been substituted, it
being understood that, pursuant to the terms of the Marketing Agreement, such
Reference Payment Note has been split into two substituted notes, one being the
Post-Breach Reference Payment Note held in escrow by the Escrow Agent and the
other being a note that has been delivered to AOLA and AOLB (the "Pre-Breach
Reference Payment Note"). For purposes of Section 11 hereof, unless and until
the Post-Breach Reference Payment Note is released to AOLA and AOLB, the Pre-
Breach Reference Payment Note shall be deemed to be the Released Reference
Payment Note. On and after the date, if any, that the Post-Breach Reference
Payment Note is released to AOLB and AOLB, both the Pre-Breach Reference Payment
Note and the Post-Breach Reference Payment Note, collectively, shall be deemed
to be the Released Reference Payment Note.
16
(b) Upon receipt by the Escrow Agent of a Certificate of Release of
Reference Payment Note stating that a Reference Payment Note should be released
to AOLA and AOLB on account of the fact that Itau has failed to pay a Post-
Breach Reference Payment, such Reference Payment Note shall be released from
escrow and delivered to AOLA and AOLB within three (3) Business Days thereafter
by hand delivery or by reputable overnight mail service.
15. Continuation of Escrow. Except as expressly permitted by the terms of
----------------------
this Escrow Agreement, or as otherwise ordered by an arbitrator or court of
competent jurisdiction, none of the Notes shall be released from the escrow
created by this Escrow Agreement.
16. Applicable Law; Arbitration.
---------------------------
(a) This Agreement shall be governed by and construed and interpreted in
accordance with the law of the State of New York, without reference to the
conflict of laws provisions thereof except for N.Y.G.O.L. (S)(S) 5-1401 and
5-1402.
(b) Any dispute, controversy or claim among AOLA, AOLB and Itau arising
out of or relating to this Agreement, or the breach, termination or validity
thereof ("Dispute") shall be decided by arbitration administered by the American
Arbitration Association ("AAA") in accordance with the International Arbitration
Rules of the AAA ("Rules"). For the purpose of any arbitration held pursuant to
this Section 16, AOLA and AOLB shall act as one party and Itau shall act as one
party for the purpose of the appointment of arbitrators and for the general
conduct of the arbitration. The arbitration shall be conducted in New York in
the English language and the award shall be rendered in New York. Any judicial
proceeding by a party seeking to set aside, vacate or modify an arbitral award
issued hereunder shall be filed in the United States District Court for the
Southern District of New York or the New York State Courts located in New York,
New York and shall be subject to the Federal Arbitration Act, 9 U.S.C. (S)(S) 1
et seq. The parties hereto consent to the exclusive -- --- jurisdiction of the
aforesaid courts for any judicial consideration of an arbitration award
hereunder.
(c) Each arbitration shall be commenced by, and on the date of, the
serving of a statement of claim by the claimant on the respondent
("Commencement"). The claimant shall simultaneously file such statement of claim
with the AAA. The arbitral award shall be final and binding and the prevailing
party may enter such award in any court having jurisdiction. The panel shall
order all expenses and costs of an arbitration, including reasonable counsel and
consultant fees, to be paid by the non-prevailing party. In a proceeding in
which both parties prevail on different issues in dispute, the panel shall
provide in its award for an apportionment of such expenses and costs reasonably
reflecting the relative significance of the issues decided. Any disputes as to
the reasonableness of counsel fees or other expenses or costs of the prevailing
party shall be decided by the same panel. The arbitral award shall incorporate
the amount of costs and fees to be paid by the non-prevailing party. By agreeing
to arbitration, the parties do not intend to deprive any court of its
jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment, or
other order in aid of arbitration proceedings. However, the parties agree that
any such relief in aid
17
of arbitration shall be sought exclusively in the United States District Court
for the Southern District of New York or the New York State Courts located in
New York, New York. Without prejudice to such provisional remedies as may be
available under the jurisdiction of a court, the arbitral tribunal shall have
full authority to grant provisional remedies or to order any party or parties to
request that a court modify or vacate any temporary or preliminary relief issued
by that court, and to award damages for the failure of any party to comply with
the arbitral tribunal's orders to that effect. The parties shall use
commercially reasonable efforts to facilitate the expeditious resolution of any
Disputes.
(d) With respect to any arbitration commenced pursuant to this Section
16, the following specific schedule and content of proceedings shall be adhered
to by the parties, unless otherwise mutually agreed:
(1) Within thirty (30) days after the execution of this Agreement, the
parties, in consultation with the Escrow Agent, shall pre-select a single
arbitrator to hear any such Dispute and at least two additional back-up
arbitrators who will, in the order ranked by the parties, serve if the first
chosen arbitrator is unable to serve on the schedule required hereunder. If the
parties are unable to agree on the arbitrators within said thirty (30) days,
either or both parties shall immediately request the AAA to make such selection
after furnishing the parties a list of no less than ten (10) qualified
arbitrators. Within ten (10) days after receipt of such list, each party shall
return said list to the AAA in which it shall have stricken three (3) of the
arbitrator candidates and ranked the remaining arbitrator candidates remaining
on the list 1 through 7, 1 being the party's first choice. The AAA shall select
one arbitrator and two back-up arbitrators in order of their combined ranking by
the parties. Upon selection, the arbitrators shall be provided a copy of this
Escrow Agreement and other information either party considers useful to the
arbitrator for purposes of being prepared to consider such Dispute. As provided
in this Section, the place of arbitration shall be New York and the award shall
be rendered in New York; however, the arbitrator shall have discretion to hold
evidentiary hearings in Brazil or elsewhere where appropriate to expedite the
proceeding.
(2) Immediately upon commencement, the party initiating the
arbitration shall contact the first ranking pre-selected arbitrator and request
their service on the schedule set forth herein. In the event that person is not
able to commit to this schedule, the back-up arbitrators shall be similarly
contacted in their order of ranking. The first arbitrator in the ranking to
commit to the schedule shall be the selected arbitrator. Within five (5) days
after notification by either party to the other party and the selected
arbitrator of such a Dispute, the arbitrator shall meet with the parties and
determine the information to be provided by the parties and the schedule upon
which the arbitration shall proceed; provided, however, that such proceedings
-------- -------
shall, unless the parties agree otherwise, be concluded and a final award
rendered no more than thirty (30) days after the receipt by the parties and the
selected arbitrator of the notice of the Dispute. An award rendered hereunder
shall be valid and binding notwithstanding the failure of the arbitrator to
render the award within the schedule set forth herein or as mutually amended by
the parties. The parties specifically agree not to move to set aside or refuse
enforcement of such award on the basis that it was not timely rendered and
irrevocably waive any right to do so.
18
(e) Unless mutually agreed by the parties, there shall be no joinder or
consolidation of a Dispute hereunder with any other Dispute.
(f) In the case of all arbitration proceedings hereunder, the award of
the single arbitrator or tribunal shall be final and fully effective as between
the parties when the award is issued to the parties without regard to the filing
by any party of judicial proceedings seeking to set aside, vacate or modify the
award. In the event that judicial proceedings are filed as to any award and a
final judicial determination is made setting aside, vacating or modifying the
award, the parties shall take all appropriate actions to comply with such
determination, including the revocation or unwinding of any actions taken or
restoration of any payments made pursuant to the arbitral award with interest
thereon at the prevailing rate.
(g) The parties shall continue to perform their obligations hereunder
during the pendency of any arbitral proceeding.
17. Limitation of Disputes. AOLA, AOLB and Itau hereby agree that any claim,
----------------------
counterclaim, defense, setoff, offset, dispute or controversy arising among the
parties under the Marketing Agreement shall not constitute a claim,
counterclaim, defense, setoff, offset, dispute or controversy under this Escrow
Agreement, nor shall it impair, delay or affect the operation or interpretation
of the terms of this Escrow Agreement. The rights and obligations of the
parties hereto are separate and independent from the rights and obligations of
the parties under the Marketing Agreement.
18. Escrow Agent.
------------
(a) The duties, responsibilities and obligations of the Escrow Agent
shall be limited to those expressly set forth herein and no duties,
responsibilities or obligations shall be inferred or implied. The Escrow Agent
may conclusively rely and shall be protected in acting or refraining from acting
upon any written notice, request, waiver, consent, receipt or other paper or
document from any duly authorized officer or agent of AOLA, AOLB or Itau, not
only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth of any information therein contained that
the Escrow Agent in good faith believes to be genuine and as to which the Escrow
Agent shall have no actual notice of invalidity, lack of authority or other
deficiency; provided, that this Section 18(a) shall in no way authorize the
Escrow Agent to deviate from or fail to comply with the express terms of this
Escrow Agreement.
(b) The Escrow Agent shall not be liable for any error of judgment, or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection therewith, except for any liability arising from its (i) failure to
comply with the terms of this Escrow Agreement or (ii) own gross negligence,
willful misconduct or bad faith. In the event of any dispute between or
conflicting claims by or among AOLA, AOLB, Itau and/or any other person or
entity with respect to any of the
19
Notes, the Escrow Agent shall not be or become liable in any way to AOLA, AOLB
and Itau for complying with the terms of this Escrow Agreement.
(c) The Escrow Agent shall be entitled to consult with competent and
responsible counsel of its choice with respect to the interpretation of the
provisions hereof, and any other legal matters relating hereto, and shall be
fully protected in taking any action or omitting to take any action in good
faith in accordance with the advice of such counsel.
(d) AOLA, AOLB and Itau jointly and severally agree to reimburse,
indemnify and hold the Escrow Agent harmless from any and all claims,
liabilities, damages, costs, payments and expenses of the Escrow Agent in
connection with its performance of its duties hereunder, including without
limitation, fees and expenses of counsel (who may be selected by the Escrow
Agent) for court actions, any transfer taxes or other taxes relating to the
Notes incurred in connection herewith, or for anything done or omitted by it in
the performance of this Escrow Agreement, except as a result of the Escrow
Agent's (i) failure to comply with the terms of this Escrow Agreement or (ii)
own gross negligence, willful misconduct or bad faith.
(e) All expenses of the Escrow Agent for its services hereunder
(including fees and expenses of legal counsel) shall be paid one half by AOLA
and AOLB and one half by Itau.
(f) None of the provisions contained in this Escrow Agreement shall cause
the Escrow Agent to advance its own funds in the performance of their duties
herein described.
(g) The Escrow Agent shall not by reason of serving as Escrow Agent
hereunder be prohibited from providing other services to any party hereto.
(h) Upon the release from escrow of any Notes and the delivery of such
Notes as provided in this Escrow Agreement, the Escrow Agent shall have no
further duties with respect to such Notes.
(i) Upon the occurrence of the Termination Date and the fulfillment of
all duties of the Escrow Agent hereunder, the Escrow Agent shall cease to be the
Escrow Agent hereunder and shall have no further duties or obligations under
this Escrow Agreement.
(j) The Escrow Agent shall not be responsible in any respect for the
form, execution, validity, value or genuineness of documents or instruments
deposited hereunder, or for any description therein, or for the identity,
authority or rights of persons executing or delivering or purporting to execute
or deliver any such document or instrument.
(k) The Escrow Agent does not have any interest in the Notes deposited
hereunder but is serving as escrow holder only and having only possession
thereof.
(l) If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process
20
which in any way affects the Notes in escrow (including, but not limited to,
orders of attachment or garnishment or other forms of levies or injunctions or
stays relating to the transfer of the Notes), the Escrow Agent shall immediately
deliver a copy of such process by hand delivery or by reputable overnight mail
service to AOLA, AOLB and Itau. The Escrow Agent is authorized to comply with
such process in any manner as it or its legal counsel of its own choosing deems
appropriate; and if the Escrow Agent complies with any such judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
19. Successor Escrow Agent. The Escrow Agent, or any successor, may resign
----------------------
at any time upon giving written notice to AOLA, AOLB and Itau thirty (30) days
before such resignation shall take effect. In addition, AOLA, AOLB and Itau may
terminate the Escrow Agent's appointment as escrow agent upon giving written
notice (jointly signed by AOLA, AOLB and Itau) to the Escrow Agent thirty (30)
days before such termination shall take effect. If the Escrow Agent shall
resign, be terminated or be unable to serve, then it shall be succeeded by a
successor escrow agent jointly named by AOLA, AOLB and Itau in such thirty (30)
day period, or if no such appointment is made by that time, then appointed by a
court of competent jurisdiction upon petition by the Escrow Agent, AOLA, AOLB or
Itau (in which action the other parties shall be afforded a reasonable
opportunity to participate) to appoint a successor escrow agent. The Escrow
Agent so removed shall deliver the Notes or any documents held in escrow
hereunder to its successor and shall thereupon be discharged, and the successor
shall thereupon succeed to all of the rights, powers and duties and shall assume
all of the obligations of the Escrow Agent originally named in this Escrow
Agreement. Upon such delivery of the Notes and any other documents, the Escrow
Agent shall have no further duties, responsibilities or obligations under this
Escrow Agreement. The successor Escrow Agent shall be a United States bank or
trust company with assets of at least $50,000,000 and with a place of business
in New York, New York.
20. Termination. Unless extended in writing by the parties hereto, the
-----------
escrow provided for in this Escrow Agreement shall expire on the earlier of:
(a) the date set forth in a certificate signed by AOLA, AOLB and Itau in
the form attached hereto as Exhibit N (a "Termination Date Certificate");
---------
(b) the date determined by an arbitrator appointed pursuant to the
Marketing Agreement as being the date upon which this Escrow Agreement
terminates, or;
(c) the date which is the later of (i) the date that all of the Notes
have been released from the escrow created by this Escrow Agreement, and (ii)
thirty (30) days after the date upon which all Disputes under this Escrow
Agreement are determined by a final decision or award of an arbitrator in
accordance with Section 16 hereof (the "Termination Date").
21
21. Notices; Addresses for Delivery of Notes. Whenever any Note is required
----------------------------------------
to be delivered pursuant to the terms of this Escrow Agreement, such Note shall
be delivered to the party at its address listed below, including any changes to
such address as permitted by the terms of this Section. For purposes of
determining the date upon which a Note is delivered to a party within the
meaning of this Escrow Agreement, delivery shall be deemed to have been made, in
the case of hand delivery, on the date such Note is received by such party and,
in the case of overnight mail, on the day such Note is given to such overnight
mail service, postage pre-paid; provided, however, notices to the Escrow Agent
shall be deemed to be given when actually received by the Escrow Agent at its
address listed below. All other notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been given
when received, if personally delivered or sent by facsimile transmission, on the
following day if sent by overnight mail, or five (5) days after deposited in the
U.S. mail for delivery by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to AOLA and AOLB to:
AOL Latin America, Inc
000 X. Xxxxxxx Xxxxxx, Xxxxx 000.
Xxxx Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: President
with a copy, which shall not constitute notice, to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
If to Itau:
Banco Itau, X.X.
Xxx Xxx Xxxxx, 000
Xxx Xxxxx - XX - Xxxxxx
Attention: President and CEO
Fax: 00-00-000-0000
22
With a copy, which shall not constitute notice, to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, L.L.P.
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
If to the Escrow Agent to:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Attention: Insurance and Escrow Group
Addresses may be changed by written notice given pursuant to this Section 21.
Any notice given hereunder may be given on behalf of any party by such party's
counsel or other authorized representative. The Escrow Agent is authorized to
comply with and rely upon any notices, instructions or other communications
believed by it to have been sent or given by AOLA, AOLB or Itau or by a person
or persons authorized by them.
22. Further Documents. Each party hereto agrees to execute such other and
-----------------
further documents as may be necessary to carry out the intent of this Escrow
Agreement, if reasonably requested by any other party hereto.
23. Waivers. The failure in any one or more instances of a party hereto to
-------
insist upon performance of any of the terms, covenants or conditions of this
Escrow Agreement, to exercise any right or privilege conferred in this Escrow
Agreement or the waiver by said party of any breach of any of the terms,
covenants or conditions of this Escrow Agreement, shall not be construed as a
subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect as
if no such forbearance of waiver had occurred. No waiver shall be effective
unless it is in writing and signed by an authorized representative of the
waiving party.
24. Counterparts. This Escrow Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all such
counterparts shall constitute but one instrument.
25. Force Majeure. No party hereto shall be responsible for delays or
-------------
failures in performance under this Escrow Agreement resulting from acts beyond
such party's control. Such acts shall include but not be limited to acts of
God, strikes, lockouts, riots, acts or war, epidemics,
23
governmental regulations superimposed after the fact, fire, communication line
failures, power failures, earthquakes or other disasters.
26. Severability. The invalidity of any provision of this Escrow Agreement
------------
or portion of a provision shall not affect the validity of any other provision
of this Escrow Agreement or the remaining portion of the applicable provision.
27. Preservation of Remedies. Except as provided in Section 16 hereof, no
------------------------
right or remedy herein conferred upon or reserved to any party hereto is
intended to be exclusive of any other right or remedy, and every right or remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right or remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy. Without limiting the foregoing, nothing herein
shall limit AOLA's or AOLB's recourse to Itau for any amounts due under the
Marketing Agreement, and neither AOLA nor AOLB shall be obligated to exercise
its rights under this Escrow Agreement prior to taking other actions available
to it under the Marketing Agreement or at law or in equity or otherwise with
respect to any amounts due under the Marketing Agreement. AOLA and AOLB shall
have the right and discretion to proceed with any and all remedies available to
them under this Escrow Agreement, the Marketing Agreement or otherwise, in such
order, or simultaneously, as they shall determine in their sole discretion.
28. Applicable Law. This Escrow Agreement shall be governed by the law of
--------------
the State of New York without giving effect to the conflict of law principles
thereof.
29. Binding Effect. This Escrow Agreement shall inure to the benefit of and
--------------
be binding upon, and enforceable by, the parties hereto and their successors and
permitted assigns.
30. Assignability. This Escrow Agreement shall not be transferable or
-------------
assignable by any party hereto without the prior written consent of the other
parties. Any attempted transfer or assignment other than as permitted above
shall be null and void.
31. Amendments. This Escrow Agreement shall not be modified, amended or
----------
supplemented, except pursuant to an instrument in writing executed and delivered
on behalf of each of the parties hereto. Should AOLA, AOLB and Itau attempt to
change this Escrow Agreement in a manner that would increase the duties or
responsibilities of the Escrow Agent, the Escrow Agent may resign as Escrow
Agent in accordance with the terms of Section 18 of this Escrow Agreement.
32. Headings. The headings and captions contained in this Escrow Agreement
--------
are for convenience of reference only and shall not affect the meaning or
interpretation of this Escrow Agreement.
33. Entire Agreement. This Escrow Agreement sets forth the entire agreement
----------------
and understanding with respect to the escrow transactions described herein and
supersedes all prior
24
agreements, arrangements and undertakings, whether oral or written, relating to
the subject matter hereof.
34. Confidentiality. No printed or other material in any language, including
---------------
prospectuses, notices, reports, and promotional material which mentions "The
Bank of New York" by name shall be publicly issued by any other parties hereto,
or on such party's behalf, without the prior written consent of the Escrow
Agent, unless such issuance is required by law.
35. Due Authorization. Each of AOLA, AOLB and Itau hereby represents and
-----------------
warrants (a) that this Escrow Agreement has been duly authorized, executed and
delivered on its behalf and constitutes its legal, valid and binding obligation,
and (b) that the execution, delivery and performance of this Escrow Agreement by
AOLA, AOLB and Itau do not and will not violate any applicable law or
regulation.
36. Survival of Sections. The provisions of Sections 16, 18 and 29 shall
--------------------
survive the termination of this Escrow Agreement or the resignation or removal
of the Escrow Agent.
37. No Third Party Beneficiary. This Escrow Agreement is for the exclusive
--------------------------
benefit of the parties hereto and their respective successors hereunder, and
shall not be deemed to give, either express or implied, any legal or equitable
right, remedy, or claim to any other entity or person whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed or caused this Escrow
Agreement to be executed as an instrument under seal by their duly authorized
representatives, as of the date first above written.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
BANCO ITAU, S.A.
25
By: _________________________________
Name:
Title:
The Bank of New York, as Escrow Agent
By: __________________________________
Name:
Title:
26
EXHIBIT A
REFERENCE PAYMENT NOTES (BRAZIL)
NOTA PROMISSORIA
Pagarei a America Online Latin America, Inc., uma sociedade devidamente
organizada e existente em conformidade com as xxxx de ___________, com sede em
________________________(endereco completo), por esta nota promissoria, a
quantia em Reais equivalente a US$______________________ (___________), pelo
cambio do dia do pagamento, a taxa de venda do dolar norte-americano, divulgada
pelo Banco Central do Brasil (PTAX 800-opcao 5), acrescida, xx xxxx, xx xxxxx de
9% a.a. ou pro rata die.
Esta nota promissoria tem vencimento a vista, podendo ser apresentada, para
pagamento, no prazo de 10 (dez) anos, a contar da data de sua emissao.
Esta nota promissoria e nao endossavel, exceto para a AOL Brasil Ltda.
Praca de pagamento: Sao Paulo (SP), Brasil
Local de emissao: Sao Paulo (SP), Brasil
Data de emissao: __ de ________de 2000.
Emitente:
Banco Itau S.A.
CNPJ no.__________________ __________________________________
Endereco: Nome:
Cargo:
__________________________________
Nome:
Cargo
Bom para Aval:
Itaucorp ___(razao social completa)
CNPJ no.__________________ __________________________________
Endereco: Nome:
Cargo:
__________________________________
Nome:
Cargo:
EXHIBIT B
REFERENCE PAYMENT NOTES (CAYMANS)
PROMISSORY NOTE
US $________________ _________, 20__
FOR VALUE RECEIVED, the undersigned, BANCO ITAU, S.A., GRAND CAYMAN BRANCH, a
bank organized under the laws of Brazil and registered as a foreign company in
the Cayman Islands (hereinafter called the "Maker"), promises to pay to the
order of AMERICA ONLINE LATIN AMERICA, INC., a company organized under the laws
of the State of Delaware of the United States of America (hereinafter called the
"Holder"), the principal sum of ____________________________ ($____________)
U.S. DOLLARS.
Principal shall be payable on demand by the Holder at the offices of Xxxxxx and
Calder, PO Box 309, Xxxxxx House, Xxxxxx Town, Grand Cayman, Cayman Islands or
at such other place as the Holder may designate in writing.
Notwithstanding any provisions to the contrary herein contained, during the
period of any Default (as defined below) under the terms of this Note, the
interest rate on the entire indebtedness then outstanding shall be at the rate
of 9% per annum. Interest shall be computed daily from the date of Default and
continuing until such Default is cured. The total charges for interest and in
the nature of interest shall not exceed the maximum amount allowed by law, and
any excess portion of such charges that may have been paid shall be deemed to
have been prepayments of principal.
The Maker shall be in default of this Note (a "Default") if: (i) the principal
is not received by the Holder on the due date of payment; (ii) the Maker shall
not be in compliance with any of the terms of this Note. Upon any Default
hereunder, the Maker agrees to pay all costs of collection, including all costs
and a reasonable attorneys' fee, in case the principal of this Note or interest
thereon is not paid on the respective due dates whether suit be brought or not.
This Note may be assigned by the Holder only to AOL Brasil Ltda, a Brazilian
limited liability quota company, but may not otherwise be assigned, transferred
or endorsed.
Any failure of the Holder to exercise any right hereunder shall not be construed
as a waiver of the right to exercise the same or any other right at any time and
from time to time thereafter.
The sums due under this Note shall not be subject to set-off, deduction, or
claims in the nature thereof which any the Maker may have against the holder
hereof; the Maker hereby waives any such claim of set-off, deduction, or any
claim in the nature thereof.
Each provision of this Note is intended to be severable and the invalidity or
illegality of any portion of this Note shall not affect the validity or legality
of the remainder hereof.
This Note shall be governed by, and interpreted in accordance with, the laws of
the Cayman Islands. The Maker agrees that the Courts of the Cayman Islands shall
have exclusive jurisdiction to hear any dispute (including claims for set off
and counterclaims) which may arise in connection with the validity, effect,
interpretation or performance of this Note or otherwise arising in connection
with this Note. The Maker agrees not to challenge the jurisdiction of the Courts
of the Cayman Islands whether on forum non conveniens grounds or otherwise.
This Note constitutes the entire agreement between the Maker and the Holder
relating to the subject matter of this Note. The Maker acknowledges and confirms
that in entering into this Note it is not relying upon any statement or
representation made by or on behalf of the Holder, whether or not in writing, at
any time prior to execution of this Note which is not expressly set out herein.
The Maker expressly agrees that it will not have any right of action in relation
to any statement or representation, whether oral or written, made on behalf of
any of the Holder in the course of any negotiations which preceded the execution
of this Note, unless such statements or representations were made fraudulently.
The Maker appoints the firm listed below as agent for service of process and any
other documents in proceedings in any legal proceedings in the Cayman Islands in
connection with this Note. Any writ, judgment or other notice or legal process
shall be sufficiently served on the relevant firm if delivered to that firm at
its address for the time being. The Maker undertakes not to revoke the authority
of that firm to act as agent for such service unless it first appoints a
substitute agent for service of process reasonably acceptable to the Holder:
Scotiabank (Cayman Islands) Ltd.
Scotia Centre
0, Xxxxxxxx Xxxxxx
Xxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxxx
BANCO ITAU, S.A., GRAND CAYMAN BRANCH
By: Its:
2
EXHIBIT C
TERMINATION FEE NOTES (BRAZIL)
NOTA PROMISSORIA
Pagarei a America Online Latin America, Inc., uma sociedade devidamente
organizada e existente em conformidade com as xxxx de ___________, com sede em
________________________(endereco completo), por esta nota promissoria, a
quantia em Reais equivalente a US$______________________ (___________), pelo
cambio do dia do pagamento, a taxa de venda do dolar norte-americano, divulgada
pelo Banco Central do Brasil (PTAX 800-opcao 5), acrescida, xx xxxx, xx xxxxx de
9% a.a. ou pro rata die.
Esta nota promissoria tem vencimento a vista, podendo ser apresentada, para
pagamento, no prazo de 10 (dez) anos, a contar da data de sua emissao.
Esta nota promissoria e nao endossavel, exceto para a AOL Brasil Ltda.
Praca de pagamento: Sao Paulo (SP), Brasil
Local de emissao: Sao Paulo (SP), Brasil
Data de emissao: __ de ________de 2000.
Emitente:
Banco Itau S.A.
CNPJ no.__________________ __________________________________
Endereco: Nome:
Cargo:
__________________________________
Nome:
Cargo
Bom para Aval:
Itaucorp ___(razao social completa)
CNPJ no.__________________ __________________________________
Endereco: Nome:
Cargo:
__________________________________
Nome:
Cargo:
EXHIBIT D
TERMINATION FEE NOTES (CAYMANS)
PROMISSORY NOTE
US $________________ _________, 20__
FOR VALUE RECEIVED, the undersigned, BANCO ITAU, S.A., GRAND CAYMAN BRANCH, a
bank organized under the laws of Brazil and registered as a foreign company in
the Cayman Islands (hereinafter called the "Maker"), promises to pay to the
order of AMERICA ONLINE LATIN AMERICA, INC., a company organized under the laws
of the State of Delaware of the United States of America (hereinafter called the
"Holder"), the principal sum of ____________________________ ($____________)
U.S. DOLLARS.
Principal shall be payable on demand by the Holder at the offices of Xxxxxx and
Calder, PO Box 309, Xxxxxx House, Xxxxxx Town, Grand Cayman, Cayman Islands or
at such other place as the Holder may designate in writing.
Notwithstanding any provisions to the contrary herein contained, during the
period of any Default (as defined below) under the terms of this Note, the
interest rate on the entire indebtedness then outstanding shall be at the rate
of 9% per annum. Interest shall be computed daily from the date of Default and
continuing until such Default is cured. The total charges for interest and in
the nature of interest shall not exceed the maximum amount allowed by law, and
any excess portion of such charges that may have been paid shall be deemed to
have been prepayments of principal.
The Maker shall be in default of this Note (a "Default") if: (i) the principal
is not received by the Holder on the due date of payment; (ii) the Maker shall
not be in compliance with any of the terms of this Note. Upon any Default
hereunder, the Maker agrees to pay all costs of collection, including all costs
and a reasonable attorneys' fee, in case the principal of this Note or interest
thereon is not paid on the respective due dates whether suit be brought or not.
This Note may be assigned by the Holder only to AOL Brasil Ltda, a Brazilian
limited liability quota company, but may not otherwise be assigned, transferred
or endorsed.
Any failure of the Holder to exercise any right hereunder shall not be construed
as a waiver of the right to exercise the same or any other right at any time and
from time to time thereafter.
The sums due under this Note shall not be subject to set-off, deduction, or
claims in the nature thereof which any the Maker may have against the holder
hereof; the Maker hereby waives any such claim of set-off, deduction, or any
claim in the nature thereof.
Each provision of this Note is intended to be severable and the invalidity or
illegality of any portion of this Note shall not affect the validity or legality
of the remainder hereof.
This Note shall be governed by, and interpreted in accordance with, the laws of
the Cayman Islands. The Maker agrees that the Courts of the Cayman Islands shall
have exclusive jurisdiction to hear any dispute (including claims for set off
and counterclaims) which may arise in connection with the validity, effect,
interpretation or performance of this Note or otherwise arising in connection
with this Note. The Maker agrees not to challenge the jurisdiction of the Courts
of the Cayman Islands whether on forum non conveniens grounds or otherwise.
This Note constitutes the entire agreement between the Maker and the Holder
relating to the subject matter of this Note. The Maker acknowledges and confirms
that in entering into this Note it is not relying upon any statement or
representation made by or on behalf of the Holder, whether or not in writing, at
any time prior to execution of this Note which is not expressly set out herein.
The Maker expressly agrees that it will not have any right of action in relation
to any statement or representation, whether oral or written, made on behalf of
any of the Holder in the course of any negotiations which preceded the execution
of this Note, unless such statements or representations were made fraudulently.
The Maker appoints the firm listed below as agent for service of process and any
other documents in proceedings in any legal proceedings in the Cayman Islands in
connection with this Note. Any writ, judgment or other notice or legal process
shall be sufficiently served on the relevant firm if delivered to that firm at
its address for the time being. The Maker undertakes not to revoke the authority
of that firm to act as agent for such service unless it first appoints a
substitute agent for service of process reasonably acceptable to the Holder:
Scotiabank (Cayman Islands) Ltd.
Scotia Centre
0, Xxxxxxxx Xxxxxx
Xxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxxx
BANCO ITAU, S.A., GRAND CAYMAN BRANCH
By: Its:
2
EXHIBIT E
ANNIVERSARY DATE CERTIFICATE
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned are "AOLA," "AOLB" and "Itau" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Anniversary Date Certificate is submitted to the Escrow Agent in
connection with the Escrow Agreement.
3. For purposes of the Escrow Agreement, the
[first][second][third][fourth][fifth][sixth] "Anniversary Date" shall be deemed
to be _____________________, 20___.
IN WITNESS WHEREOF, the undersigned has executed this Anniversary Date
Certificate as of the ____ day of _______, 20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
BANCO ITAU, S.A.
By: _________________________________
Name:
Title:
2
EXHIBIT F
LAUNCH DATE CERTIFICATE
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned are "AOLA," "AOLB" and "Itau" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Launch Date Certificate is submitted to the Escrow Agent in
connection with the Escrow Agreement.
3. For purposes of the Escrow Agreement, the "Launch Date" shall be deemed
to be _____________________, 20___.
IN WITNESS WHEREOF, the undersigned has executed this Launch Date
Certificate as of the ____ day of _______, 20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
BANCO ITAU, S.A.
By: _________________________________
Name:
Title:
2
EXHIBIT G
AUDIT CERTIFICATE (REFERENCE PAYMENTS)
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned is the duly appointed Auditor pursuant to that certain
Strategic Interactive Services and Marketing Agreement, dated as of _______
____, 2000 (the "Marketing Agreement"), among AOLA, AOLB and Itau. Capitalized
terms not defined herein shall have the meanings given to such terms in the
Marketing Agreement.
2. This Audit Certificate (Reference Payments) is submitted to the Escrow
Agent in connection with the Escrow Agreement.
3. In accordance with the terms of the Marketing Agreement, the Auditor has
completed an Audit and has concluded that the Reference Payment as of the
[first][second][third][fourth][fifth] Anniversary Date is
$____________________________ (USD).
OR
3. In accordance with the terms of the Marketing Agreement, the Auditor has
concluded that Itau has failed to provide the Auditor with information
sufficient to enable the Auditor to compute a Reference Payment as of the
[first][second][third][fourth][fifth] Anniversary Date. Therefore, the Reference
Payment with respect to such Anniversary Date is $_________________ (USD).
IN WITNESS WHEREOF, the undersigned has executed this Audit Certificate
(Reference Payments) as of the ____ day of _______, 20___.
[THE AUDITOR]
By: __________________________
Name:
Title:
EXHIBIT H
NOTICE OF ENTITLEMENT TO RELEASE OF NOTES
The undersigned, as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the undersigned, hereby gives
notice to AOLA, AOLB and Itau as follows (capitalized terms not defined herein
shall have the meanings given to such terms in the Escrow Agreement):
1. This Notice of Entitlement to Release of Notes is provided to AOLA, AOLB
and Itau by the Escrow Agent in connection with the Escrow Agreement.
2. On [DATE], the Escrow Agent received an Audit Certificate (Reference
Payments) with respect to Reference Payments owing by Itau as of the
[first][second][third][fourth][fifth] Anniversary Date, a copy of which is
attached hereto as Exhibit A.
---------
OR
2. On [DATE], the Escrow Agent received an [arbitration award][court
decision] with respect to a [Termination Fee][Acceleration Payment] owing by
Itau, a copy of which is attached hereto as Exhibit A. ---------
IN WITNESS WHEREOF, the undersigned has executed this Notice of Entitlement
to Release of Notes as of the ____ day of _______, 20___.
The Bank of New York,
As Escrow Agent
By: __________________________
Name:
Title:
EXHIBIT I
CLAIM CERTIFICATE
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned are "AOLA," and "AOLB" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Claim Certificate is submitted to the Escrow Agent in connection
with the Escrow Agreement.
3. The undersigned hereby certify to the Escrow Agent that AOLA and AOLB
have made a claim against Itau under the Marketing Agreement, which claim has
not been finally resolved, and such claim relates to the Notes listed below.
[First Anniversary Reference Payment Note (Brazil)]
[Second Anniversary Reference Payment Note (Brazil)]
[Third Anniversary Reference Payment Note (Brazil)]
[Fourth Anniversary Reference Payment Note (Brazil)]
[Fifth Anniversary Reference Payment Note (Brazil)]
[First Anniversary Reference Payment Note (Caymans)]
[Second Anniversary Reference Payment Note (Caymans)]
[Third Anniversary Reference Payment Note (Caymans)]
[Fourth Anniversary Reference Payment Note (Caymans)]
[Fifth Anniversary Reference Payment Note (Caymans)]
[First Anniversary Termination Fee Note (Brazil)]
[Second Anniversary Termination Fee Note (Brazil)]
[Third Anniversary Termination Fee Note (Brazil)]
[Fourth Anniversary Termination Fee Note (Brazil)]
[Fifth Anniversary Termination Fee Note (Brazil)]
[First Anniversary Termination Fee Note (Caymans)]
[Second Anniversary Termination Fee Note (Caymans)]
[Third Anniversary Termination Fee Note (Caymans)]
[Fourth Anniversary Termination Fee Note (Caymans)]
[Fifth Anniversary Termination Fee Note (Caymans)]
IN WITNESS WHEREOF, the undersigned has executed this Claim Certificate
as of the ____ day of _______, 20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
2
EXHIBIT J
AUDIT CERTIFICATE (CAYMANS FINANCIAL TEST)
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned is the duly appointed Auditor pursuant to that certain
Strategic Interactive Services and Marketing Agreement, dated as of _______
____, 2000 (the "Marketing Agreement"), among AOLA, AOLB and Itau. Capitalized
terms not defined herein shall have the meanings given to such terms in the
Marketing Agreement.
2. This Audit Certificate (Caymans Financial Test) is submitted to the
Escrow Agent in connection with the Escrow Agreement.
3. In accordance with the terms of the Marketing Agreement, the Auditor has
determined that Itau does not comply with the Caymans Financial Test (as such
term is defined in the Escrow Agreement).
4. The maximum amount of all Reference Payments, Acceleration Payments and
Termination Fees that could become due and payable from Itau to AOLA or AOLB
pursuant to the terms of the Marketing Agreement on and after the date of this
Audit Certificate (Caymans Financial Test) is $______________________.
5. The largest stated principal balance of any of the Termination Fee Notes
remaining in escrow is $____________________. The Termination Fee Note (Brazil)
and Termination Fee Note (Caymans) having such stated principal balance are set
forth below:
[First Anniversary Termination Fee Note (Brazil) and First Anniversary
Termination Fee Note (Caymans)]
[Second Anniversary Termination Fee Note (Brazil) and Second Anniversary
Termination Fee Note (Caymans)]
[Third Anniversary Termination Fee Note (Brazil) and Third Anniversary
Termination Fee Note (Caymans)]
]
[Fourth Anniversary Termination Fee Note (Brazil) and Fourth Anniversary
Termination Fee Note (Caymans)]
[Fifth Anniversary Termination Fee Note (Brazil) and Fifth Anniversary
Termination Fee Note (Caymans)]
For purposes of Section 10 of the Escrow Agreement, the foregoing Termination
Fee Notes are the Termination Fee Note (Brazil) and the Termination Fee Note
(Caymans) listed in this Audit Certificate (Caymans Financial Test).
6. The amount by which the maximum of all Reference Payments, Acceleration
Payments and Termination Fees that could become due and payable from Itau to
AOLA or AOLB pursuant to the terms of the Marketing Agreement on and after the
date of this Audit Certificate (Caymans Financial Test) exceeds the stated
principal amount of either the Termination Fee Note (Brazil) or the Termination
Fee Note (Caymans) listed above is $__________________. The Reference Payment
Notes remaining in escrow which, in the aggregate, have a principal balance
exceeding such difference by the smallest amount are set forth below (for
purposes of this sentence, the stated principal balances of a Reference Payment
Note (Brazil) and a Reference Payment Note (Caymans) corresponding to the same
Anniversary Date are counted only once):
[First Anniversary Reference Payment Note (Brazil) and First Anniversary
Reference Payment Note (Caymans)]
[Second Anniversary Reference Payment Note (Brazil) and Second Anniversary
Reference Payment Note (Caymans)]
[Third Anniversary Reference Payment Note (Brazil) and Third Anniversary
Reference Payment Note (Caymans)]
[Fourth Anniversary Reference Payment Note (Brazil) and Fourth Anniversary
Reference Payment Note (Caymans)]
[Fifth Anniversary Reference Payment Note (Brazil) and Fifth Anniversary
Reference Payment Note (Caymans)]
For purposes of Section 10 of the Escrow Agreement, the foregoing Reference
Payment Notes are the Reference Payment Note (Brazil) and the Reference Payment
Note (Caymans) listed in this Audit Certificate (Caymans Financial Test).
IN WITNESS WHEREOF, the undersigned has executed this Audit Certificate
(Caymans Financial Test) as of the ____ day of _______, 20___.
[THE AUDITOR]
By: __________________________
Name:
Title:
2
EXHIBIT K
NOTE RELEASE CERTIFICATE
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned are "AOLA," "AOLB" and "Itau" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Note Release Certificate is submitted to the Escrow Agent in
connection with the Escrow Agreement.
3. The undersigned hereby direct the Escrow Agent that the following Notes
(as such term is defined in the Escrow Agreement) shall be delivered to [AOLA
and AOLB] [Itau] at its address as set forth in the Escrow Agreement and that
such Notes shall be released from the escrow created by the Escrow Agreement:
[First Anniversary Reference Payment Note (Brazil)]
[Second Anniversary Reference Payment Note (Brazil)]
[Third Anniversary Reference Payment Note (Brazil)]
[Fourth Anniversary Reference Payment Note (Brazil)]
[Fifth Anniversary Reference Payment Note (Brazil)]
[First Anniversary Reference Payment Note (Caymans)]
[Second Anniversary Reference Payment Note (Caymans)]
[Third Anniversary Reference Payment Note (Caymans)]
[Fourth Anniversary Reference Payment Note (Caymans)]
[Fifth Anniversary Reference Payment Note (Caymans)]
[First Anniversary Termination Fee Note (Brazil)]
[Second Anniversary Termination Fee Note (Brazil)]
[Third Anniversary Termination Fee Note (Brazil)]
[Fourth Anniversary Termination Fee Note (Brazil)]
[Fifth Anniversary Termination Fee Note (Brazil)]
[First Anniversary Termination Fee Note (Caymans)]
[Second Anniversary Termination Fee Note (Caymans)]
[Third Anniversary Termination Fee Note (Caymans)]
[Fourth Anniversary Termination Fee Note (Caymans)]
[Fifth Anniversary Termination Fee Note (Caymans)]
IN WITNESS WHEREOF, the undersigned has executed this Note Release
Certificate as of the ____ day of _______, 20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
BANCO ITAU, S.A.
By: _________________________________
Name:
Title:
2
EXHIBIT L
CERTIFICATE OF DEPOSIT OF POST-BREACH REFERENCE PAYMENT NOTE
The undersigned hereby certifies to _______________________________ (the
"Escrow Agent"), in its capacity as the Escrow Agent pursuant to that certain
Escrow Agreement, dated as of ______________ ___, 2000 (the "Escrow Agreement"),
among America Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL
Brasil Ltda. ("AOLB"), a Brazilian limited liability quota company, Banco Itau,
S.A. ("Itau"), a Brazilian ________________, and the Escrow Agent, as follows:
1. The undersigned are "AOLA," "AOLB" and "Itau" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Certificate of Deposit of Post-Breach Reference Payment Note is
submitted to the Escrow Agent in connection with the Escrow Agreement.
3. Attached hereto is the original of the following described promissory note:
[DESCRIBE POST-BREACH REFERENCE PAYMENT NOTE TO BE HELD IN ESCROW]
4. The attached promissory note is a "Post-Breach Reference Payment Note"
as such term is defined in the Escrow Agreement. The undersigned hereby deliver
the Post-Breach Reference Payment Note to the Escrow Agent and direct the Escrow
Agent to hold the Post-Breach Reference Payment Note in escrow pursuant to the
Escrow Agreement in the same manner and under the same terms and conditions as
the Notes. The Post-Breach Reference Payment Note shall constitute a "Note" for
all purposes under the Escrow Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Deposit of Post-Breach Reference Payment Note as of the ____ day of _______,
20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
BANCO ITAU, S.A.
By: _________________________________
Name:
Title:
2
EXHIBIT M
CERTIFICATE OF RELEASE OF REFERENCE PAYMENT NOTE
The undersigned hereby certifies to _______________________________ (the
"Escrow Agent"), in its capacity as the Escrow Agent pursuant to that certain
Escrow Agreement, dated as of ______________ ___, 2000 (the "Escrow Agreement"),
among America Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL
Brasil Ltda. ("AOLB"), a Brazilian limited liability quota company, Banco Itau,
S.A. ("Itau"), a Brazilian ________________, and the Escrow Agent, as follows:
1. The undersigned are "AOLA" and "AOLB" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Certificate of Release of Post-Breach Reference Payment Note is
submitted to the Escrow Agent in connection with the Escrow Agreement.
3. The undersigned hereby certify to the Escrow Agent that an arbitrator
has determined that a Material AOLB Breach has not occurred, or if such breach
has occurred, that Itau has elected to continue the Marketing Agreement.
Pursuant to Section 8.3 of the Marketing Agreement, AOLA and AOLB are entitled
to release from escrow, and to receive, the Post-Breach Reference Payment Note
described as follows:
[DESCRIPTION OF POST-BREACH REFERENCE PAYMENT NOTE]
OR
3. The undersigned hereby certify to the Escrow Agent that Itau has failed
to pay a Post-Breach Reference Payment that is currently due and owing, and
that, pursuant to Section 8.3(c), the undersigned are entitled to release from
escrow, and to receive, the Reference Payment Note described as follows:
[DESCRIPTION OF REFERENCE PAYMENT NOTE]
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Release of Reference Payment Note as of the ____ day of _______, 20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
2
EXHIBIT N
TERMINATION DATE CERTIFICATE
The undersigned hereby certifies to The Bank of New York (the "Escrow
Agent"), in its capacity as the Escrow Agent pursuant to that certain Escrow
Agreement, dated as of _______ ___, 2000 (the "Escrow Agreement"), among America
Online Latin America, Inc. ("AOLA"), a Delaware corporation, AOL Brasil Ltda.
("AOLB"), a Brazilian limited liability quota company, Banco Itau, S.A.
("Itau"), a Brazilian banking institution, and the Escrow Agent, as follows:
1. The undersigned are "AOLA," "AOLB" and "Itau" as defined in the Escrow
Agreement, and are also parties to that certain Strategic Interactive Services
and Marketing Agreement, dated as of _______ ____, 2000 (the "Marketing
Agreement"), among AOLA, AOLB and Itau. Capitalized terms not defined herein
shall have the meanings given to such terms in the Marketing Agreement.
2. This Termination Date Certificate is submitted to the Escrow Agent in
connection with the Escrow Agreement.
3. For purposes of the Escrow Agreement, the "Termination Date" shall be
deemed to be _____________________, 20___.
IN WITNESS WHEREOF, the undersigned has executed this Termination Date
Certificate as of the ____ day of _______, 20___.
AMERICA ONLINE LATIN AMERICA, INC.
By: ________________________________
Name:
Title:
AOL BRASIL LTDA.
By: ________________________________
Name:
Title:
BANCO ITAU, S.A.
By: _________________________________
Name:
Title:
2
EXHIBIT O
LIST OF JURISDICTIONS
---------------------
1. Ireland
2. Austria
3. The Netherlands
4. Luxemburg
5. Portugal (Ilha da Madeira)
6. Cayman Islands
7. Bahamas
