EXHIBIT 10.12
[*]=CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS WITH ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE
SECURITIES ACT OF 1933, AS AMENDED.
AOL Confidential
FOR INTERNAL AOL DISCUSSION ONLY
AMENDMENT TO MASTER AGREEMENT FOR VALUE ADDED SERVICES (BRAZIL)
BY AND BETWEEN
AOL BRASIL LTDA. AND EMPRESA BRASILEIRA DE TELECOMUNICAcoES S.A. - EMBRATEL
This Amendment (the "Amendment"), effective as of March __, 2000 (the
"Amendment Date"), is entered into by and between AOL BRASIL LTDA., a Brazilian
corporation headquartered at Xxxxxxx Xxxxxxxxxx 000, 0x. Andar, Xxxxx Xxxxx,
08090-500, Sao Paulo - SP, registered with the Ministerio de Fazenda under
number 03.032.579/0001-62, represented by its __,__, hereinafter called AOL, and
EMPRESA BRASILEIRA DE TELECOMUNICAcoES S.A. - EMBRATEL, a Brazilian corporation
headquartered at Xx. Xxxxxxxxxx Xxxxxx, 0000, CEP 20179-900, Rio de Janeiro -
RJ, registered with the Ministerio de Fazenda under number 33.530.486/0001-29,
represented by its __, __, hereinafter called EMBRATEL, and modifies, and is
incorporated into, the Master Agreement for Value Added Services (Brazil) dated
October 18, 1999 by and between AOL and EMBRATEL (the "Agreement"). This
Amendment modifies the sections of the Agreement as indicated below. Unless
modified herein, all other terms defined in the Agreement shall have the same
meaning when used in this Amendment. All terms and conditions of the Agreement
not otherwise specifically modified in this Amendment remain unchanged and in
full force and effect. In the case of conflict between the terms of this
Amendment and the remaining terms and conditions of the Agreement, the terms of
this Amendment shall control.
1. INTERNATIONAL TRANSIT SERVICES
Section 1 of the Agreement is hereby amended by adding the following provisions
at the end of Section 1("Scope of Services"):
The services under this Agreement include, the provision of fully-
redundant dedicated private line backhaul capacity to AOL between
Brazil and the United States ("International Transit Services"), which
are part of the network.
EMBRATEL shall provide International Transit Services to AOL as
follows:
(a) Within ten (10) days of the Amendment Date, EMBRATEL shall re-route AOL's
existing traffic over [*] of Internet bandwidth capacity on the [*]
submarine cable (the "Initial [*] Capacity").
(b) EMBRATEL shall provide AOL a [*] leased line fiber-optic circuit with up to
STM-1 bandwidth capacity on the Americas III submarine cable (the "Americas
II Circuit") between Brazil and the USA. EMBRATEL shall provide AOL the
capacity not later than July 1, 2000. EMBRATEL shall provide AOL the
Americas II Circuit for [*] years starting on the Effective Date of the
Agreement. EMBRATEL shall notify AOL in
writing of the date in which the Americas II Circuit will be made available
to AOL at least fifteen (15) days prior such date.
(c) AOL may choose: (i) activate the entire STM-1 bandwidth capacity on the
Americas II Circuit upon the earlier of July 1, 2000 or the date the
Americas III Circuit is made available to AOL; or (ii) initially activate
DS-3 bandwidth capacity on the Amercias II Circuit upon the earlier of July
1, 2000 or the date the Americas III Circuit is made available to AOL, and,
thereafter, activate additional units of DS-3 bandwidth capacity until the
entire STM-1 capacity on the Americas II Circuit is filled. Such
activation will be made by AOL by providing 30 days prior written notice to
EMBRATEL specifying the bandwidth to be activated.
(d) During the time the dedicated lease line fiber optic circuit is
provisioned, and upon activation of Amercias II capacity for EMBRATEL's
Internet backbone, EMBRATEL shall route all AOL traffic over the Americas
II Circuit (including traffic previously routed over the Initial [*]
Capacity and the Additional [*] Capacity, if applicable). Embratel shall
move AOL's traffic to Americas II Internet before any other customer.
(e) If EMBRATEL does not provide the [*] dedicated Circuit to AOL by [*] as
provided in Section 1(b), EMBRATEL shall provide AOL, in addition to the
Initial [*] Capacity, [*] of bandwidth capacity on the [*] submarine cable
(the "Additional [*] Capacity") as of [*] and re-route existing AOL traffic
not already routed through the Initial [*] Capacity over the Additional [*]
Capacity. In any event, EMBRATEL shall use its best commercial efforts to
provide AOL the Additional [*] Capacity as of April 30, 2000 and re-route
existing AOL traffic not already routed through the Initial [*] Capacity
over the Additional [*] Capacity.
(f) If EMBRATEL does not provide AOL the leased line over Americas II Circuit
by [*], AOL may (i) terminate the provision of the Americas II Circuit [*],
or (ii) terminate the provision of all International Transit Services [*],
by providing EMBRATEL written notice of such termination.
(g) AOL may terminate the provision of International Transit Services at any
time upon the delivery of a 30-day notice and the payment of an early
termination fee consisting of [*] of the amount corresponding to the months
until the expiration date multiplied by the amount of the Service Provision
Xxxx -CPS in force in the termination month. .
(h) International Transit Services shall be provided by EMBRATEL in accordance
with the performance measures set forth in Schedule A hereto ("Performance
Measures").
(i) If EMBRATEL fails to meet Performance Measures and such failure results in
an outage of International Transit Services, EMBRATEL shall credit AOL, in
the invoice for the month immediately following the month in which the
outage occurs, an amount equal to (i) (a) [*]. EMBRATEL shall not be
required to make such credit if the outage results from:
(1) non-routine operations undertaken by a Party, provided the Parties
have agreed in writing in advance of such operations to excuse
outages resulting from such operations;
(2) an Act of God;
(3) a force majeure event; or
(4) reasonable scheduled maintenance performed by EMBRATEL, provided
EMBRATEL has provided AOL at least fifteen (15) days prior written
notice of such outage and the reasons therefore;
2. [*]
Section 2.5 of the Agreement is hereby replaced in its entirety by the following
provisions:
2.5 [*]
3. INTERNATIONAL TRANSIT FEES
Section 2.1(d) is hereby amended by deleting clauses (c) ("routing through
Internet international circuits") and (d) ("recurring backhaul circuit
charges"). A new Section 2.6 is hereby incorporated to the Agreement consisting
of the following provisions:
2.6 International Transit Fees. Fees for International Transit
--------------------------
Services ("International Transit Fees") are, as of the date AOL
activates bandwidth in the Americas II Circuit, the following, subject
to item 2.1 (f) of the Agreement:
(a) [*] per month for the first unit of DS-3 capacity activated if
AOL activates an initial DS-3 capacity on the Americas II
Circuit as provided in Section 1(c)(ii).
(b) [*] per month for the second unit of DS-3 capacity activated
if AOL activates an initial DS-3 capacity on the Americas II
Circuit as provided in Section 1(c)(ii) and subsequently
activates a second unit of DS-3 capacity .
(c) [*] per month if AOL activates the entire STM-1 capacity on
the Americas II Circuit either (i) as provided in Section
1(c)(i),
or (ii) if AOL initially activates DS-3 capacity on the
Americas II Circuit pursuant to Section 1(b)(ii) and
subsequently activates the second and third units of DS-3
capacity (e.g., all three units of DS-3 capacity are
activated).
The prices presented above do not include any taxes. Such prices are
[*] and shall be [*] every month, on the release date of the
corresponding invoice.
The prices are for an international circuit from AOL Headquarters in
Virginia - USA, terminating in one of EMBRATEL operations building in
Sao Paulo - Brazil. Any changes on the circuit termination outside of
Embratel facilities in Sao Paulo may require price adjustment.
In case AOL does not activate the entire STM-1 capacity within [*] of
this Amendment Date, then EMBRATEL shall charge AOL for the entire
STM-1, according to 2.6 (c), as if such capacity was activated. As of
the date of AOL activates bandwidth in the Americas II Circuit, the
Base Price shall not include fees for International Transit Services.
4. MODEM FEES
Section 2.1(a) is hereby amended by replacing the Base Price of [*] per [*]
Modem per month with a new Base Price of [*] per [*] Modem per month. The new
Base Price set forth above shall become effective as of the date AOL activates
bandwidth on the [*] circuit or as of the date AOL terminates the provision of
International Transit Services.
5. MARKET PRICING
A new Section 2.7 is hereby incorporated to the Agreement consisting of the
following provisions:
2.7 Market Pricing.
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(a) If industry pricing for similar services purchased in
similar quantities provided by other modem service
providers are materially lower than the fees set forth in
2.1(a), the parties shall renegotiate the fees for modem
services to bring them in line with industry pricing.
(b) If AOL receives [*] that provides telecommunications
services in Brasil with a similar capability to deliver
similar International Transit Services to AOL [*] EMBRATEL
to AOL for International Transit Services, then, upon
presentation of such [*], EMBRATEL shall enter into good
faith discussions with AOL in order to [*] on this
Agreement [*].
6. MARKET PRICING REMEDIES
A new Section 2.8 is hereby incorporated to the Agreement consisting of the
following provisions:
2.8 Market Pricing Remedies.
-----------------------
(a) If EMBRATEL does not reduce its fees for Modems as
provided in Section 2.7(a), then AOL may, by providing
written notice to EMBRATEL, (i) be released from its
commitment to order [*] Modems from EMBRATEL pursuant to
Section 1.1 of the Agreement, and/or (ii) decommission
Modems as specified by AOL without incurring any liability
to EMBRATEL.
(b) If the parties are unable to reach an agreement regarding
market price conditions as provided in Section 2.7(a), then
AOL may, [*] the provision of International Transit
Services [*] to EMBRATEL, including the termination penalty
of Section 1(g), by providing written notice to EMBRATEL of
such termination.
7. PAYMENT TERMS
Section 2.4 of the Agreement is hereby amended by adding the following
provisions at the beginning of such section:
EMBRATEL will [*] AOL International Transit Fees on a [*] basis [*].
8. TERM
Section 8.1 of the Agreement is hereby amended by deleting the first sentence of
such section ("The term of this relationship shall be three (3) years from the
Effective Date") and replacing it with the following provisions:
The term of the Agreement shall be [*] years from the
Americas II Circuit activation date, provided that the
provision of Modems and services related thereto (other
than International Transit Services) shall terminate three
(3) years after the Effective Date of the Agreement.
9. FORCE MAJEURE
Section 14.3(d) of the Agreement is hereby replaced in its entirety by the
following provisions:
(d) If any of the circumstances described in this Section
prevent, hinder or delay performance of a material portion
of the Services necessary for the performance of AOL's
critical functions, taken as a whole, for more than [*]
hours, then AOL may: (iii) [*] the provision of
International Transit Services if International Transit
Services are materially affected by such force majeure
circumstances.
10. LANGUAGE AND COUNTERPARTS
This Amendment is executed in English, and AOL shall, within thirty (30)
days as of the Amendment Date, provide EMBRATEL a translation of this Amendment
into Portuguese to be executed by both Parties. The Parties shall agree upon
the final version of the Portuguese
translation as soon as practicable. In case of any discrepancies between the
English version and the Portuguese version of this Amendment, the Portuguese
version shall prevail. This Amendment may be executed in several counterparts ,
each of which shall be deemed an original, but all of which, when taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as
of the Amendment Date.
Sao Paulo, March __, 0000
XXX XXXXXX LTDA. EMPRESA BRASILEIRA DE TELECOMUNICAOES - embratel
By: By:
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Name: Name:
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Title: Title:
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WITNESSES:
By: By:
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Name: Name:
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RG: RG:
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AOL Confidential
FOR INTERNAL AOL DISCUSSION ONLY
SCHEDULE A
PERFORMANCE MEASURES
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o International Transit Services shall be provided on a net availability of [*]
(measured over the preceding 90 day period).
o The undersea portion of the International Transit Services meets the
performance criteria of ITU-T G.826 and has line monitoring and protection
switching.
o The inland portion of the International Transit Services has the ability to
carry commercial traffic between the system interface at the Fortaleza cable
station to the inland point of interface meeting performance criteria of ITU-
T G.826 and has protection switching capability. The interface to the system
shall be an optical interface as specified in ITU Recommendation G.957 and be
1+1 (or equivalent) protected.
o The connection between the Fortaleza cable station and Sao Paulo will be
delivered through EMBRATEL's [*].
o Day to day operation of the International Transit Services will be under the
control of the Embratel Network Operations Center (the "Embratel NOC"). The
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Embratel NOC will be manned 24 hours per day, 7 days per week, and will
provide comprehensive end to end monitoring of the system between AOL -
Virginia, Fortaleza Cable Station, and Sao Paulo.
o The Embratel NOC will act as the Restoration Control Office (RCO) and
coordinate all system restoration activity. Internal restoration, using the
Drop and Continue Add/Drop Multiplexers (ADMs) and Synchronous Digital
Hierarchy (SDH) loop technology, will be automatic, with an interruption of
less than [*].
