<PAGE>
EXHIBIT 10.12
[*]=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.
Embratel Amendment Number VES-8-IDN-1-1999
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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 May 10, 2000 (the
"Amendment Date"), is entered into by and between AOL BRASIL LTDA., a Brazilian
corporation headquartered at Avenida Industrial 600, 2o. Andar, Santo Andre,
08090-500, Sao Paulo - SP, registered with the Ministerio de Fazenda under
number 03.032.579/0001-62, represented by its President, Manoel L. Amorim,
hereinafter called AOL, and EMPRESA BRASILEIRA DE TELECOMUNICACOES S.A. -
EMBRATEL, a Brazilian corporation headquartered at Av. Presidente Vargas, 1012,
CEP 20179-900, Rio de Janeiro - RJ, registered with the Ministerio de Fazenda
under number 33.530.486/0001-29, represented by its Services Director, Eduardo
Levy Cardoso Moreira, and its Regional Director, Luiz Claudio Andrade Cyriaco,
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:
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").
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 dedicated leased line
fiber-optic circuit with up to STM-1 bandwidth
capacity on the Americas II 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 ten (10) years starting on
the date AOL activates any capacity on the
Americas II Circuit. 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 to: (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 II Circuit is made available to AOL; or
(ii) initially activate DS-3 bandwidth capacity on
the Americas II Circuit upon the earlier of July
1, 2000 or the date the Americas II 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
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Embratel Amendment Number VES-8-IDN-1-1999
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EMBRATEL specifying the bandwidth to be activated.
(d) When the entire STM-1 has been activated, Embratel
will, at AOL's request, make its best efforts to
combine the three DS3s into a single OC3c
(concatenated) on the STM-1.
(e) Upon activation of Americas 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 (as defined in Section 1(f), if
applicable). Embratel shall move AOL's traffic to
Americas II Internet before any other customer.
(f) If EMBRATEL does not provide the Americas II
dedicated Circuit to AOL by July 1, 2000 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 July 1, 2000
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.
(g) 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 [*], including,
without limitation, the termination penalty of
Section 1(h), by providing EMBRATEL written notice
of such termination.
(h) 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 monthly
International Transit Fees multiplied by the
number of months remaining in the term of the
Agreement.
(i) International Transit Services shall be provided
by EMBRATEL in accordance with the performance
measures set forth in Schedule A hereto
("Performance Measures").
(j) 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 [*] (as defined below) [*], multiplied by
a fraction, the numerator of which equals the
number of hours of the outage, and the denominator
of which equals the number of hours in the month
in which the outage occurred (e.g., 720). 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;
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Embratel Amendment Number VES-8-IDN-1-1999
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(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 therefor;
2. [*]
Section 2.5 of the Agreement is hereby replaced in its entirety by the following
provisions:
2.5 [*]. EMBRATEL shall provide AOL [*] under this
Agreement [*]
3. INTERNATIONAL TRANSIT FEES
Section 2.1(d) of the Agreement 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) US$[*] per month for the first unit of DS-3
capacity activated if AOL activates an initial DS-
3 capacity on the Americas II Circuit as provided
in Section 1(c)(ii).
(b) US$[*] 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. This price is
available only if this second DS3 terminates at
the same location as the first DS3 above.
(c) US$[*] 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.
The International Transit Fees are for an international
circuit from AOL in Virginia - USA, terminating in one
of EMBRATEL's operations buildings in Sao Paulo -
Brazil. Any changes to the circuit termination outside
of EMBRATEL's facilities in the city of Sao Paulo may
require price adjustment.
In case AOL does not activate: (i) the second DS-3
capacity within [*] of the the date AOL first activates
capacity on the Americas II Circuit, then, at such
time, EMBRATEL shall charge AOL for the second DS-3,
according to Section 2.6(b), as if such capacity was
activated; (ii)
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Embratel Amendment Number VES-8-IDN-1-1999
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the entire STM-1 capacity within 36 (thirty-six) months
of the date AOL first activates capacity on the
Americas II Circuit, then, at such time, EMBRATEL shall
charge AOL for the entire STM-1 capacity, according to
Section 2.6 (c), as if such capacity was activated. As
of the date AOL activates any 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, which does
not include fees for International Transit Services. The new Base Price set
forth above shall become effective as of the date AOL activates bandwidth on the
Americas II 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.
--------------
(a) If AOL receives [*] with the capability to provide
telecommunications services in Brazil similar to
the International Transit Services to AOL [*]
EMBRATEL to AOL for International Transit
Services, then, no more often than once a year,
upon presentation of such [*], EMBRATEL shall
enter into good faith discussions with AOL in
order to adjust the International Transit Fees in
this Agreement to the market conditions, through
price and/or term adjustments.
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 the parties are unable to reach an agreement
regarding the International Transit Fees as
provided in Section 2.7(a), then AOL may,
terminate the provision of International Transit
Services without incurring any liability to
EMBRATEL, including, without limitation, the
termination penalty of Section 1(h), 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 invoice AOL International Transit
Fees for payment in Brazilian Reais, on a monthly
basis in arrears. The prices presented in Section
2.6 are in US Dollars and shall be converted to
Brazilian Reais every month, one day prior to the
release of the corresponding invoice, through the
PTAX800 closing exchange rate for selling of the
US Dollar, published by Banco Central do Brasil -
SISBACEN.
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Embratel Amendment Number VES-8-IDN-1-1999
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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 ten (10) years
from the date AOL activates any capacity on the
Americas II Circuit, 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 amended by adding the following
provisions to the end of the first sentence of such section:
(iii) terminate 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.
11. CERTAIN CONDITIONS
Section 10.5 of the Agreement is hereby replaced in its entirety by the
following provisions: EMBRATEL shall designate 5% of invoiced amounts less
taxes due to the domestic portion (Dedicated and Shared Modems) of this
Agreement to joint marketing.
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Embratel Amendment Number VES-8-IDN-1-1999
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12. DEPLOYMENT PLAN
Exhibit C of the Agreement is hereby amended by replacing the "Deployment
Plan" table by the following provisions:
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AOL Designated City Total
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Americana 30
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Anapolis 60
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Aracaju 60
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Aracatuba 30
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Araraquara 90
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Barueri 90
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Bauru 90
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Belem 120
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Belo Horizonte 600
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Blumenau 60
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Boa Vista 30
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Brasilia 420
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Campinas 480
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Campo Grande 120
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Campos 60
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Cascavel 60
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Catanduva 30
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Caxias do Sul 90
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Chapeco 30
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Criciuma 30
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Cuiaba 90
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Curitiba 600
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Florianopolis 180
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Fortaleza 240
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Goiania 180
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Governador Valadares 30
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Joao Pessoa 90
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Joinville 120
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Juiz de Fora 90
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Jundiai 120
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Londrina 150
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Macapa 30
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Maceio 90
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Manaus 180
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Marilia 60
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Maringa 90
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Natal 90
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Osasco 240
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Palmas 30
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Pelotas 60
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Piracicaba 90
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Ponta Grossa 60
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Porto Alegre 540
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Porto Velho 30
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Presidente Prudente 90
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Recife 180
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Ribeirao Preto 240
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Rio Branco 30
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Embratel Amendment Number VES-8-IDN-1-1999
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Rio de Janeiro 960
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Salvador 360
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Santa Maria 60
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Santo Andre 240
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Santos 240
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Sao Bernardo do Campo 240
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Sao Carlos 30
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Sao Jose do Rio Preto 120
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Sao Jose dos Campos 240
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Sao Luis 90
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Sao Paulo 1.560
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Sorocaba 50
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Teresina 60
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Uberaba 30
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Uberlandia 210
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Varginha 30
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Vitoria 60
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TOTAL 11.280
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as
of the Amendment Date.
Sao Paulo, May 10, 2000
AOL BRASIL LTDA. EMPRESA BRASILEIRA DE
TELECOMUNICAcoES S.A.- embratel
By: /s/ Luiz Claudio A. Cyriaco By: /s/ Manoel L. Amorim
------------------------------------- ------------------------------------
Name: Luiz Claudio A. Cyriaco Name: Manoel L. Amorim
Regional Director President
By: /s/ Edson Pinheiro Alves
-------------------------------------
Name: Edson Pinheiro Alves
Sales Supervisor
WITNESSES:
By: /s/ Luciana Barreto By: ________________________________
------------------------------------
Luciana C. Zanata Mello Barreto
RG 20.612.932
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Embratel Amendment Number VES-8-IDN-1-1999
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SCHEDULE A
PERFORMANCE MEASURES
. International Transit Services shall be provided on a net availability of
99.9% (measured over the preceding 12 month period).
. The undersea portion of the International Transit Services meets the
performance criteria of ITU-T G.826 and has line monitoring and collapse
ring. Support for protection switching will made available to AOL as soon
as it becomes available to any other customers.
. 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 collapse ring capability. Support for protection
switching will made available to AOL as soon as it becomes available to any
other customers. The interface to the system shall be an electrical
interface as specified in ITU Recommendation G.957 and be 1+1 (or
equivalent) protected.
. The connection between the Fortaleza cable station and Sao Paulo will be
delivered through EMBRATEL's fiber-optic fully redundant.
. Day to day operation of the International Transit Services will be under
the control of the Embratel Network Operations Center (the "Embratel NOC").
The 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.
. 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 50 mSecs.
. In the case that restoration over the same cable system (Americas II)
cannot be performed, a fall back contingency will be in place. The Embratel
NOC will move AOL's traffic to another cable (e.g., Global Crossing,
Atlantica-1, Americas III) as soon as possible, and in any event within 2
hours. If, and only if, capacity on another cable is not in available, the
Embratel NOC will move AOL's traffic over a satellite circuit as soon as
possible, and in any event within 2 hours.
. In the event the international transit circuit fails, then AOL will stop
announcing its Border Gateway Patrols ("BGPs") routes to Embratel via the
local in-country connection. In such case Embratel will fall back to
usingBGP routes received from from the AOL complex in the USA through
EmbrateL'S international Internet circuits. At that time, Embratel will
start sending AOL's dial up traffic to AOL in the USA through Embratel's
international Internet circuits.
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