Business Cooperation Agreement

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act.


BUSINESS COOPERATION AGREEMENT


This private instrument is signed by and between


(a) MCDONALD'S COMERCIO DE ALIMENTOS LTDA., a company with registered
office in the City of Barueri, State of Sao Paulo, at Alameda Amazonas,
No. 253, registered with CNPJ/MF under No. 42,591,651/0001-43, herein
represented, pursuant to its Articles of Incorporation, by its
President, Mr. Marcel Fleischmann, a Brazilian citizen, legally
separated, economist, bearer of Identification Card RG No.
6,557,358-4/SSP-SP, registered with CPF/MF under No. 942,171,908-59,
domiciled in the City of Barueri, State of Sao Paulo, at Alameda
Amazonas, No. 253, hereinafter referred to as "MCDONALD'S"; and, on the
other side,


(b) AOL BRASIL LTDA., a company with registered office in the City of Santo
Andre, State of Sao Paulo, at Avenida Industrial, No. 600, Centro
Empresarial ABC Plaza, 2nd floor, registered with CNPJ/MF under No.
03,032,579/0001-62, herein represented by its President, Mr. Carlos
Eduardo Dan Trostli, a Brazilian citizen, married, business
administrator, bearer of Identification Card RG No. 6,459,765 SSP-SP
and registered with CPF/MF under No. 054,776,748-06, domiciled in Sao
Paulo, the Capital City of the State of Sao Paulo, at Avenida Marginal
do Rio Pinheiros, No. 5,200, Edificio Philadelphia, 2nd floor,
hereinafter referred to as "AOL".


The parties above have agreed by themselves and their successors, as follows:


I.- DEFINITIONS


1.1.- For the purposes hereof, the following definitions shall apply equally to the singular and plural forms of defined terms, as the context may require:


PARENTAL CONTROL: a tool incorporated into the AOL SERVICE and made available by AOL to MCDONALD'S, whereby MCDONALD'S may select and/or close off sites or any content MCDONALD'S may deem objectionable and/or inappropriate for access through the TERMINALS;


LAUNCHING DATE: a date as shall be designated by written notice from MCDONALD'S to AOL for the official launching of the PROJECT, which date shall mandatorily fall within sixty (60) days from the date of execution hereof;


ANNIVERSARY DATE(S) is/are the date(s) marking completion of each year of the effective period of the agreement, as of the LAUNCHING DATE;


SPACES: predefined and limited-space areas in the RESTAURANTS, especially designated for the PROJECT activities, as shall be timely advised by MCDONALD'S;


NET SURFER: general designation of a customer of MCDONALD'S who uses the TERMINALS;


INTERNET: the World Wide Web;


PARTNERS: legal entities not engaged in competing business (in regard to their respective activities under the PROJECT), which contribute funds, property and/or services, pay suppliers and share expenses, and which assume the risks


inherent in their respective participation in the PROJECT, all exclusively in accordance with the terms hereof;


EFFECTIVE PERIOD is the period between the execution hereof and a term of five (5) years as of the LAUNCHING DATE;


PERFORMANCE PERIOD is the period between the LAUNCHING DATE and the expiration of the EFFECTIVE PERIOD;


MCINTERNET PORTAL: the PROJECT portal for access to the INTERNET, maintained and operated by MCDONALD'S, or a MCDONALD'S designee, all at MCDONALD'S sole discretion and subject to the terms of this agreement;


PROJECT: a project for digital inclusion proposed by MCDONALD'S, which contemplates the installation of TERMINALS (as defined hereinbelow) through which MCDONALD'S will provide its customers with several products and services, educational and recreational content, access to the Internet, and others;


PROMOCODES: specific registration codes created by AOL, which will be furnished to MCDONALD'S and assigned to ACQUIRED ACCOUNTS (as defined hereinbelow), in connection with the PROJECT;


RESTAURANT: all points of sale in MCDONALD'S chain of fast-food restaurants, except for MCDONALD'S kiosks, regardless of whether such points of sale are operated by MCDONALD'S or any franchisee;


AOL SERVICE: any services and products provided, owned, operated, controlled, distributed or authorized by or through AOL;


SLA - "SERVICE LEVEL AGREEMENT": instrument attached hereto in the form of "ANNEX I", initialed by the parties and made an integral part of this agreement, which provide for and regulate the services concerning the PROJECT; and


TERMINALS: computer terminals, microcomputers, notebooks, tablets PCs, touch-screen terminals, hand-held PCs, and/or equivalent equipment installed in the RESTAURANTS for the exclusive and specific purposes of the PROJECT, with a minimum configuration as set forth in the SLA.


II.- PROJECT


2.1.- The object of this instrument is to establish the terms, covenants, conditions and responsibilities of the parties, and to regulate their participation in the implementation, maintenance and development of the PROJECT.


2.2.- The PROJECT will be implemented through the installation of TERMINALS in the RESTAURANTS. The number of TERMINALS per RESTAURANT, as well as the SPACES, will be timely designated by MCDONALD'S subject to the provisions of this agreement.


2.3.- Notwithstanding Subsection 2.2 above, during the EFFECTIVE PERIOD set forth hereunder MCDONALD'S will implement the PROJECT in at least six hundred (600) RESTAURANTS, and will install a minimum number of three thousand and six hundred (3,600) TERMINALS. The number of RESTAURANTS and the installation schedule effective as of the LAUNCHING DATE are set forth in


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ANNEX II (the "SCHEDULE"), initialed by the parties and made an integral part of this agreement.


2.3.1.- Within the first one hundred and twenty (120) days from the LAUNCHING DATE, TERMINALS will only be activated in RESTAURANTS in those cities where AOL already provides for local access, the list of which is attached hereto as ANNEX III, initialed by the parties and made an integral part of this agreement.


2.3.2.- After the expiration of the period referred to in Paragraph 2.3.1 above, MCDONALD'S will give AOL ninety (90) days' prior notice of the installation of TERMINALS with reference to each additional city.


2.3.3.- AOL hereby acknowledges and agrees that there may be technical, business, operational, financial, logistic or franchise impediments for the installation of RESTAURANTS pursuant to Subsection 2.3 above, and that, in such case, the only consequence arising therefrom will be the review contemplated by Subsections 6.1 and 6.2 hereinbelow.


2.4.- The parties agree that, throughout the EFFECTIVE PERIOD and pursuant to Subsection 5.1 "viii", AOL will have a right of first refusal, on the same terms and conditions as offered by any competitors, to participate in any other projects contemplating any activities as contemplated by the PROJECT in the territory of Brazil, which are carried out by other companies within the same economic group as MCDONALD'S in Brazil, whether using the "McDonald's" trademark or any other trademark containing the "MC" prefix.


2.4.1.- The right of first refusal provided above shall be exercised in writing within thirty (30) days as of the date on which AOL receives written notice to that effect from MCDONALD'S.


2.5.- The parties will cooperate in joint efforts to solicit new AOL subscribers in the manner set forth in this agreement, including, without limitation, by demonstrating the AOL SERVICE, having MCDONALD'S employees registering new AOL accounts near the TERMINALS, distributing AOL's CD-ROMs, all to be carried out within the SPACES.


2.6.- The parties agree that, to make the project feasible, a commitment to contribute a minimum amount equal to approximately Twenty Million United States Dollars (US$20,000,000.00), net of taxes, is required, and that MCDONALD'S shall have the right, at MCDONALD'S sole discretion and without incurring any penalty, liability, and/or charges and/or reimbursements, to terminate this instrument if (i) by the LAUNCHING DATE, or (ii) within not more than sixty (60) days from the date of execution hereof, whichever occurs first, no assurance is given that the contribution of the minimum amount referred to above will be made. Such amount shall be contributed by an ideal number of five (5) PARTNERS or by MCDONALD'S, at MCDONALD'S sole discretion.


2.6.1.- For the effects of Subsection 2.6 above, AOL must necessarily be furnished with a notice pursuant to Subsection 11.1 hereinbelow indicating whether MCDONALD'S intends to terminate this instrument or keep it in force by representing that an assurance of such minimum contribution has been given either by the PARTNERS or by MCDONALD'S. In the absence of such notice, this agreement will be deemed to remain in force.


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III.- NET SURFING


3.1.- NET SURFERS will browse from the TERMINALS, and the first page to be brought up will always be that of MCINTERNET PORTAL.


3.2.- MCDONALD'S will establish, at MCDONALD'S sole discretion, the minimum charges made by the RESTAURANTS to NET SURFERS for using the TERMINALS, and shall give AOL prior notice of any change thereof.


3.3.- It is hereby agreed between the parties that any employee of MCDONALD'S may, on MCDONALD'S behalf and at MCDONALD'S sole discretion, cut off a NET SURFER connection where such NET SURFER is accessing sites and/or content that MCDONALD'S deems objectionable or inappropriate.


3.4.- The parties agree that any educational content in the MCINTERNET PORTAL, as well as any content inserted by the other PARTNERS, will be freely accessible through the INTERNET.


3.5.- As regards content of all other sites in the MCINTERNET PORTAL, the parties agree that such content may be accessible in part through the INTERNET, for the exclusive purpose of fostering the PROJECT and AOL. The parties will mutually agrees on the levels of content accessibility through the INTERNET, it being hereby agreed that, in the event contemplated by this Subsection, exclusive access to most of the MCINTERNET PORTAL's content will always be provided to NET SURFERS who are AOL subscribers.


3.6.- During the EFFECTIVE PERIOD hereof, AOL will offer the NET SURFERS a special unlimited plan (the "Special Unlimited Plan") and a special limited-hours plan (the "Special Limited Plan").


3.6.1.- The fee for the Special Unlimited Plan will be Thirty-Two Reals (R$32,00), which already includes an initial discount of Two Reals and Ninety-Five Centavos (R$2.95) on the standard unlimited plan offered on the market by AOL, it being hereby agreed that AOL may review its fee, at its sole discretion, provided that AOL maintains such discount at a rate of eight and forty-five hundredths of one percent (8.45%) on the standard unlimited plan.


3.6.2.- The fee for the Special Limited Plan will be Ten Reals and Ninety-Nine Centavos (R$10,95), and such plan may be used for access to the INTERNET only from 6:00 AM to 8:00 PM. All other conditions under the Unlimited Plan will be applicable to the Special Limited Plan. AOL may review the fee for such plan, at AOL's sole discretion, provided that such review is never made in greater proportion than the review of the Special Unlimited Plan. However, in the event AOL has launched into the market a plan equal to the Special Limited Plan, AOL shall maintain the discount at a rate of eight and forty-five hundredths of one percent (8.45%) on the standard special limited plan. For the effects of this Paragraph, the Special Limited Plan offered to customers of AOL/Itau will not be taken into account.


3.6.2.1.- The Special Limited Plan will be further reviewed or terminated by AOL, at its sole discretion, in the event FSTS (Fixed Switched Telephony Service)operators shall establish flat tariff plans for telephone connections to the INTERNET, pursuant to the Public Consultation 417/2002 of the Brazilian Telecommunications Agency (AGENCIA NACIONAL DE TELECOMUNICACOES - ANATEL).


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3.6.3.- The trial period for the Special Unlimited Plan and the Special Limited Plan will be a period of one (1) month from the registration of the NET SURFER with the AOL SERVICE. AOL may only shorten the length of such trial period if AOL shortens likewise AOL's standard offers on the market. Such trial period may be extended, at AOL's discretion, for a period not to exceed two (2) months.


3.6.4.- For the effects of the preceding Paragraph, it is hereby agreed that MCDONALD'S accepts, and will ensure, that the Special Unlimited Plan is the default plan to be offered for the AOL SERVICE by the McHosts and McHostesses (as these are defined hereinbelow) near the TERMINALS. Other plans, including the Special Limited Plan, will only be offered after the Special Unlimited Plan has been offered and rejected by the NET SURFER, or for purposes of securing adherence to the AOL customer service.


IV.- RIGHTS AND OBLIGATIONS OF AOL


4.1.- In addition to other duties and obligations provided hereunder, AOL shall:


(i) Contribute the amounts determined by the parties as necessary for investment in the PROJECT, pursuant to Section VI hereinbelow;


(ii) Furnish MCDONALD'S with accounts for access to the AOL SERVICE, duly cleared as required for access to the INTERNET, at no additional cost to MCDONALD'S. There shall be one account for each TERMINAL included in the originally estimated three thousand and six hundred (3,600) accounts. In the event that more than three thousand and six hundred (3,600) TERMINALS are installed, AOL will furnish such additional accounts at no cost to MCDONALD'S;


(iii) At AOL's expense, make available as many CD-ROMs for installation of the AOL Navigator as necessary to be distributed exclusively to customers who register new accounts in the RESTAURANTS, it being hereby established that a minimum annual number of two hundred thousands (200,000) CD-ROMs will be needed. Such CD-ROMs shall be requested in advance by MCDONALD'S by the tenth (10th) day of each month, and will be delivered, already packaged, by the twenty-fifth (25th) day of the same month, to one sole distribution facility designated by MCDONALD'S;


(iv) Accept express responsibility for any content hosted by AOL's servers. For purposes of navigation through content located elsewhere in the World Wide Web, AOL will always make available to MCDONALD'S all security tools used by AOL, with a view to enabling MCDONALD'S to block any content MCDONALD'S deems objectionable or inappropriate and, in such case, AOL will not be liable for any such content. Likewise, AOL will have no liability where NET SURFERS have access to such content through other means. MCDONALD'S acknowledges that the tool currently available to block inappropriate sites is the PARENTAL CONTROL, and that control will depend on the options made by MCDONALD'S, at MCDONALD'S sole discretion, for use of such tool. Therefore, making use of the PARENTAL CONTROL to block any content that MCDONALD'S deems objectionable or inappropriate remains the sole responsibility of MCDONALD'S;


(v) Accept liability for all employment and social security obligations relating to AOL's employees engaged in the implementation of the PROJECT, and hereby undertakes to defend and hold MCDONALD'S harmless from and against any action, claim or proceeding by any of AOL's employees, and to indemnify


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MCDONALD'S from any direct or consequential damages MCDONALD'S may incur, which arise from or relate to any such actions, claims or proceedings. In such events, MCDONALD'S may file for AOL to be substituted in the action, whereupon AOL shall immediately move for substitution of AOL as defendant in the place of MCDONALD'S;


(vi) Accept liability for all obligations arising from any consumer-related claims, actions or proceedings with regard to the AOL SERVICE, hereby undertaking to immediately advise MCDONALD'S thereof, and to hold MCDONALD'S harmless from and against any liability with respect to any action, claim or proceeding that may be initiated, and to indemnify MCDONALD'S from any direct or consequential damages MCDONALD'S may incur, which arise from or relate to any such actions, claims or proceedings. In such events, MCDONALD'S may file for AOL to be substituted in the action, whereupon AOL shall immediately move for substitution of AOL as defendant in the place of MCDONALD'S. For the effects of this Subsection, the parties agree that AOL will be liable for the AOL SERVICE in the manner set forth in this agreement;


(vii) Associate the "McDonald's" trademark with any initiatives AOL may take in marketing the PROJECT, subject to prior written authorization from MCDONALD'S;


(viii) Ensure exclusivity to MCDONALD'S in the implementation of the PROJECT, expressly undertaking hereby not to enter into any other agreements the scope of which may encompass any of the activities under the PROJECT provided for hereunder, with any entities doing business primarily as bars, restaurants, fast-food facilities, pizzerie, ice cream parlors, or cafes; and


(ix) Assure NET SURFERS free navigation through the INTERNET.


4.2.- In addition to other rights provided for under this agreement, AOL shall be entitled:


(i) To be given the same exposure as the other PARTNERS, and will be assured the display of the "AOL" logotype with the same dimensions as those of the other PARTNERS in all TERMINALS, on the uniforms of MCDONALD'S employees' engaged in the PROJECT, in the SPACES, in the MCINTERNET PORTAL ("AOL Icon for Internet Access"), and in the respective screen savers;


(ii) To participate in and provide the content of the training to be given by MCDONALD'S to MCDONALD'S employees who will be engaged solely in the PROJECT ("McHosts" and "McHostesses"), at no additional cost to AOL and in a manner to be mutually agreed upon between the parties, with a view to qualify such employees for demonstrating and selling the AOL SERVICE. AOL may request the replacement of any McHosts and McHostesses, provided there actually are objective and justifiable reasons therefor;


(iii) Allocate AOL's own supervisors to the RESTAURANTS, in order to cooperate and assist MCDONALD'S employees engaged in the PROJECT in their activities. It is hereby agreed that (a) circulation of such personnel will be mandatorily limited to the SPACES, (b) the terms and conditions for the presence of such supervisors in the RESTAURANTS will be established by mutual agreement, and (c) all technical and operational aspects of the activities carried out within the RESTAURANTS must necessarily be observed; and


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(iv) Allocate AOL's own promoters to the RESTAURANTS, in order to cooperate and assist MCDONALD'S employees engaged in the PROJECT, where necessary to achieve the targets set forth under Subsection 6.2 hereinbelow. It is hereby agreed that (a) circulation of such AOL's personnel will be mandatorily limited to the SPACES, (b) the terms and conditions for the presence of such promoters in the RESTAURANTS will be established by mutual agreement, and (c) all technical and operational aspects of the activities carried out within the RESTAURANTS must necessarily be observed.


V.- RIGHTS AND OBLIGATIONS OF MCDONALD'S


5.1.- In addition to other duties and obligations provided hereunder, MCDONALD'S shall:


(i) Accept overall responsibility for the coordination, implementation and management of the PROJECT, including, without limitation, solicit other PARTNERS in a number not to exceed five (5), contract and maintain all the required infrastructure (whether its own or outsourced infrastructure), hire and train personnel, produce promotional material etc., subject to all rights and obligations hereunder;


(ii) Install and maintain a minimum of three thousand and six hundred (3,600) TERMINALS, at an average value of One Thousand Nine Hundred and Ninety Reals (R$1,990.00), in a minimum of six hundred (600) RESTAURANTS, which will result in an average of six (6) TERMINALS per RESTAURANT. Notwithstanding the obligation to install and maintain three thousand and six hundred (3,600) TERMINALS during the PERFORMANCE PERIOD, such number may be reduced, provided that equipment at a market value equal to at least Seven Million, One Hundred and Sixty-Four Thousand Reals (R$7,164,000.00) have been installed, and provided that an average minimum number of four (4) TERMINALS are installed and maintained per RESTAURANT. For the purposes of this Paragraph, MCDONALD'S will furnish AOL, upon request, with a statement of the total number of TERMINALS installed, as well as of the total value assigned thereto;


(iii) Perform maintenance within scheduled periods, which shall not exceed an average of thirty (30) days in each year with respect to each TERMINAL;


(iv) Hire, and/or make available from among MCDONALD'S own employees, and give training to at least two (2) persons per RESTAURANT, who shall be engaged exclusively in the PROJECT as McHosts and McHostesses, and who will circulate among the RESTAURANTS's patrons as monitors, demonstrating how the PROJECT works and clarifying doubts, among other activities, during at least two (2) periods of four (4) hours each, seven (7) days a week;


(v) Have the AOL SERVICE demonstrated to patrons by the McHosts and McHostesses, in the manner agreed between the parties. The McHosts and McHostesses will talk to patrons within the SPACES to demonstrate the AOL SERVICE and register new AOL accounts, and MCDONALD'S shall always maintain at least one (1) TERMINAL enabled for such registrations in each RESTAURANT in which the PROJECT is implemented;


(vi) Associate the "AOL" trademark with any initiatives MCDONALD'S may take in marketing the PROJECT, subject to prior written authorization from AOL;


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(vii) Analyze the possibility of implementing a program for registering PROJECT users by means of an access card, which may eventually become a fidelity card and, thus, make it possible for AOL to send direct mail and promotional materials to and carry out other marketing activities designed for registered users, subject to McDonald's Corporation privacy rules and policies applicable to such data. It is hereby understood, however, that currently such internal policies expressly prohibit such practice;


(viii) Ensure exclusivity to AOL in the implementation of the PROJECT, in the categories of INTERNET access provider and e-mail provider, whether among the PARTNERS or in the MCINTERNET PORTAL, further expressly undertaking not to enter into any other agreements the scope of which may encompass any of the activities under the PROJECT provided hereunder, with any business engaged primarily in providing access to the INTERNET and/or e-mail services, in addition to any INTERNET portals offering their own or third parties' e-mail services. The parties agree that MCDONALD'S will not make any offer of free e-mail services in connection with the PROJECT;


(ix) Make promotional material directly available in each of the SPACES, under terms and conditions to be mutually agreed upon between the parties;


(x) Accept liability for all employment and social security obligations relating to MCDONALD'S employees, subcontractors and third parties engaged in the implementation of the PROJECT, including, without limitation, all McHosts and McHostesses, hereby undertaking to defend and hold AOL harmless from and against any action, claim or proceeding by any of MCDONALD'S employees, subcontractors or any third parties related to MCDONALD'S, as well as to indemnify AOL from any direct or consequential damages AOL may incur, which arise from or relate to any such actions, claims or proceedings. In such events, AOL may file for MCDONALD'S to be substituted in the action, whereupon MCDONALD'S shall immediately move for substitution of MCDONALD'S as defendant in the place of AOL;


(xi) Accept liability for all obligations arising from any consumer-related claims, actions, claims or proceedings with regard to MCDONALD'S services and products, hereby undertaking to immediately advise AOL thereof, and to hold AOL harmless from and against any liability with respect to any action, claim or proceeding that may be initiated, and to indemnify AOL from any direct or consequential damages AOL may incur, which arise from or relate to any such actions, claims or proceedings. In such events, AOL may file for MCDONALD'S to be substituted in the action, whereupon MCDONALD'S shall immediately move for substitution of MCDONALD'S as defendant in the place of AOL. For the effects of this Subsection, the parties agree that MCDONALD'S will be liable to AOL for the PROJECT, including, without limitation, for MCDONALD'S services and products, as set forth in this agreement;


(xii) Purchase media time and space for the promotion of the PROJECT, in an amount to be determined at MCDONALD'S sole discretion;


(xiii) Ensure the sole and exclusive use of the "AOL Navigator" to browse around the INTERNET through the TERMINALS, use of any other programs for browsing the Internet being forbidden;


(xiv) Provide appropriate conditions for MCDONALD'S patrons to attain a satisfactory INTERNET access experience, at no additional cost to AOL. To that


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effect, MCDONALD'S will install any and all equipment and other materials required to implement and develop the PROJECT, with the minimum configurations and according to all other specifications set forth under the SLA, which will establish all MCDONALD'S obligations in regard to connectivity;


(xv) Accept responsibility for all the infrastructure needed for the PROJECT, including, without limitation, hardware, connections, access network provided with a broad-band connection, software and others, with the minimum configurations and according to all other specifications set forth under the SLA; and


(xvi) Use MCDONALD'S best efforts to make a partnership feasible between AOL and McDonald's Corporation for the implementation of the PROJECT in other countries.


VI.- CONTRIBUTIONS


6.1.- AOL's initial contribution for a minimum of six hundred (600) RESTAURANTS will be Six Million and Four Hundred Thousand Reals (R$6,400,000.00), equal to an amount of Ten Thousand, Six Hundred Sixty-Six Reals and Sixty-Six Centavos (R$10,666.66) per RESTAURANT. Such contribution corresponds to a portion of the estimated total initial contribution to the PROJECT. The balance thereof will be contributed by the other PARTNERS or, if the case may be, by MCDONALD'S, at MCDONALD'S sole discretion, and will be also used to purchase all the infrastructure required for the PROJECT, including, without limitation, hardware, software, furniture, promotional material, infrastructure for connections pursuant to the SLA etc.


6.1.1.- The sum set forth in Subsection 6.1 above is applicable to the EFFECTIVE PERIOD and will contributed in eight (8) monthly and consecutive installments in an amount of Eight Hundred Thousand Reals (R$800,000.00) each, the first of which being payable twenty (20) days as of the LAUNCHING DATE, and the remaining on the same day of each subsequent month.


6.1.2.- It is expressly agreed between the parties that the amount of Six Million and Four Hundred Thousand Reals (R$6,400,000.00), as established in 6.1 above, related to the initial investments, will be borne by AOL under the following terms:


(i) Three Million and Two Hundred Thousand Reals [R$ 3.200.000,00] in favour of MCDONALD'S for the exclusivity to AOL in the implementation of the PROJECT, in the categories of INTERNET access provider and e-mail provider; (section 5.1);


(ii) One Million and Six Hundred Thousand Reals [R$ 1.600.000,00] directly in favor of third parties service and product providers , including, without limitation, providers of hardware, software, furniture, promotional mate ...