Document:

Amendment No. 2, dated September 21, 2006, to the Financing Agreement

 Exhibit 10.18 
  

			
	 	  	ADDENDUM NO. 2 TO THE LOAN AGREEMENT BY EXTENSION OF CREDIT No.
04.2.559.3.1, OF AUGUST 13, 2004 MADE BY BANCO NACIONAL DE DESENVOLVIMENTO ECONÔMICO E SOCIAL - BNDES AND BRASIL TELECOM S.A., WITH THIRD PARTY INTERVENTION, AS FOLLOWS:

 BANCO NACIONAL DE DESENVOLVIMENTO ECONÔMICO E SOCIAL - BNDES, herewith referred to simply as
BNDES, a federal public company, headquartered in Brasilia, Federal District, and with services in this city, at Avenida República do Chile No. 100, CNPJ No. 33.657.248/0001-89, by its undersigned representatives; 

and 
 BRASIL TELECOM S.A., hereinafter referred to
as BENEFICIARY, a corporation headquartered in Brasilia, DF, at SIA/SUL -ASP - Lote D - Bloco B S/No., CNPJ No. 76.535.764/0001-43, by its undersigned representatives; and appearing as INTERVENING PARTY: 
 BRASIL TELECOM PARTICIPAÇÕES S.A., a corporation, headquartered in Brasilia, DF, at SIA/SUL - ASP - Lote D - Bloco B S/No., CNPJ
No. 02.570.688/0001-70, by its undersigned representatives. 
 have mutually agreed to amend the Loan Agreement by Extension of Credit
No. 04.2.559.3.1, hereinafter referred to simply as CONTRACT, made by BNDES and BENEFICIARY, through a private instrument of August 13, 2004, registered in 1 Ofício de Registro de Títulos e Documentos
(Deeds and Documents Register), of the Judicial District of the Federal District, Brasilia, on August 19, 2004, under No. 623802, having as Addendum No. 1 a private instrument of July 25, 2005, filed in the Deeds and Documents
Register of the Judicial District of the Federal District, Brasilia, under No. 00655700, of which this instrument becomes an integral part, for all legal effects and purposes, by the following clauses: 
 CLAUSE 1 
 AMENDMENT 

BNDES and BENEFICIARY agree to amend items II and III of Clause 11 and §1 of Clause 14 of the CONTRACT, which comes into effect with the
following wording: 
 “CLAUSE 11 
 GUARANTEES OF OPERATION 
 To ensure the payment of any obligations resulting from this CONTRACT, as principal payer of the
debt, interest, commissions, conventional penalty, fines and expenses, the BENEFICIARY grants to BNDES: 
 (...) 
 II - Restriction as guarantee, in favor of BNDES, irrevocably and irreversibly, of the RESTRICTED REVENUES, pursuant to the terms of the Contract of
Assignment and Restriction of Revenues and Other Covenants, which revenue is detached from the funds originating from payments by the users of telecommunications services provided by the BENEFICIARY, so as to ensure compliance with the
financial obligations resulting from the CONTRACT, as provided for in the Contract of Assignment and Restriction of Revenues and Other Covenants, executed on this date. 
 (...) 

 III - Assignment in favor of BNDES, irrevocably and irreversibly, of the indemnity due to BENEFICIARY, in
the event of termination of the concession contract of commuted fixed telephony services, executed by BENEFICIARY and ANATEL, in a sufficient amount to settle the obligations resulting from the CONTRACT, in compliance with the
proportion of eventual outstanding balances existing as a result of other financings executed between BNDES and BENEFICIARY, which also provide the stipulation of an identical guarantee hereto, as well as the provisions in items VI and
VIII of Clause 13.” 
 “CLAUSE 14 
 The intervening party BRASIL TELECOM PARTICIPAÇÕES S.A., identified in the preamble of this CONTRACT, undertakes to: (...) 
 §1 
 Noncompliance by the INTERVENING PARTY of any of the financial indices contemplated in
item I of this Clause, shall lead to the freezing of the funds corresponding to 1 (one) times the value of the HIGHEST INSTALLMENT due as a result of the CONTRACT, calculated quarterly. Said freezing will be performed as provisioned in
the Contract of Assignment and Restriction of Revenues and Other Covenants contemplated in Clause 11. For purposes of this CONTRACT, HIGHEST INSTALLMENT due will be thus considered including the principal of the debt, interest, commissions,
conventional penalty and other charges contractually contemplated.” 
 CLAUSE 2 
 RATIFICATION The CONTRACTING PARTIES and the INTERVENING PARTY hereby ratify all the Clauses and Conditions of the CONTRACT, where they do
not contradict with what is established in this Addendum, the other guarantees covenanted in said CONTRACT being maintained, the present not leading to novation. 
 CLAUSE 3 
 REGISTRATION 
 The BENEFICIARY undertakes to effect the registration of this Addendum on the margin of the registrations mentioned in the preamble of this instrument, and shall present to BNDES evidence of such
registrations within 30 (thirty) days, counted from this date. 
 The 4 (four) pages of this instrument are initialed by Teresa Pinho Carim, BNDES
lawyer, by authorization of the legal representatives who execute it. 
 IN WITNESS WHEREOF, the parties sign this instrument in 4 (four) counterparts of
equal content and for a single purpose, in the presence of the undersigned witnesses. 
  

					
		 		  	Rio de Janeiro, September 21, 2006
			
	By BNDES:	 		  	
			
	 /s/ Eduardo Rath Fingeri
	 		  	 /s/ Wagner Bittencourt

	Eduardo Rath Fingeri	 		  	Wagner Bittencourt
	Officer	 		  	Officer
	
	BANCO NACIONAL DE DESENVOLVIMENTO ECONÔMICO E SOCIAL - BNDES
			
	By BENEFICIARY:	 		  	
			
	 /s/ Samuel Saldanha Teixeira
	 		  	 /s/ Edinelson Faria de Oliveira

	Samuel Saldanha Teixeira	 		  	Edinelson Faria de Oliveira
	Assistance Officer of Financial Operations	 		  	Capitalization and Administration of Funds Manager

  

 2 

					
	BRASIL TELECOM S.A.
			
	By INTERVENING PARTY:	  		 	
			
	 /s/ Samuel Saldanha Teixeira
	  		 	 /s/ Edinelson Faria de Oliveira

	Samuel Saldanha Teixeira	  		 	Edinelson Faria de Oliveira
	Assistance Officer of Financial Operations	  		 	Capitalization and Administration of Funds Manager
	
	BRASIL TELECOM PARTICIPAÇÕES S.A.
			
	WITNESSES:	  		 	
			
	 /s/ [Signature]
	  		 	  

	Name:	  		 	Name:
	ID: 17.874-D-Crea MG	  		 	ID:
	CPF:	  		 	CPF:

 This page is an integral part of Addendum No. 2 of the Loan Agreement by Extension of Credit
No. 04.2.559.3.1 of 08/13/2004. 
  

 3Amendment No. 3, dated December 20, 2006, to the Financing Agreement No. 04.2.55

 Exhibit 10.19 
  

			
	 	 	ADDENDUM NO. 3 TO LOAN AGREEMENT BY EXTENSION OF CREDIT No.
04.2.559.3.1, OF AUGUST 13, 2004, MADE BY BANCO NACIONAL DE DESENVOLVIMENTO ECONÔMICO E SOCIAL - BNDES AND BRASIL TELECOM S.A, WITH THIRD PARTY INTERVENTION, AS FOLLOWS:

 BANCO NACIONAL DE DESENVOLVIMENTO ECONÔMICO E SOCIAL - BNDES, hereby referred to simply as BNDES, a
federal publicly held company, headquartered in Brasilia, Federal District, and with services in this City, at Avenida República do Chile No. 100, corporate taxpayer register CNPJ No. 33.657.248/0001-89, by its undersigned
representatives; 
 and 
 BRASIL TELECOM
S.A., hereinafter referred to as BENEFICIARY, a corporation headquartered in Brasilia, DF, at SIA/SUL - ASP - Lote D - Bloco B S/No., CNPJ No. 76.535.764/0001-43, by its undersigned representatives, and appearing as INTERVENING
PARTY: 
 BRASIL TELECOM PARTICIPAÇÕES S.A., a corporation, headquartered in Brasilia, DF, at SIA/SUL - ASP - Lote D - Bloco B
S/No., CNPJ No. 02.570.688/0001-70. 
 have mutually agreed to amend the Loan Agreement by Extension of Credit No. 04.2.559.3.1, hereinafter
referred to simply as CONTRACT, executed by BNDES and BENEFICIARY through a private instrument of August 13, 2004, registered in the 1 Ofício de Registro de Títulos e Documentos (Deeds and Documents Register)
of the Judicial District of the Federal District, Brasilia, on August 19, 2004, under No. 623802, having as Addendum No. 1, a private instrument dated July 25, 2005, filed in the Register of Deeds and Documents of the Federal
District, Brasilia, under No. 00655700 and, as Addendum No. 2, a private instrument dated September 21, 2006, filed in the Register of Deeds and Documents of the Federal District, Brasilia, under No. 00696809, of which this
instrument becomes an integral part, for all legal effects and purposes, by the following clauses: 
 CLAUSE 1 
 AMENDMENT 
 In view of the Contract signed by BNDES and
BENEFICIARY, the following modifications are established: 
 I - Include items IX and X, as well as §§ 1, 2, 3 and 4 in Clause 13 - ‘Special
Obligations of the Beneficiary’ - of the CONTRACT, according to the wording below: 
 II - Delete item I, as well as §§ 1, 2 and 3 of
Clause 14 of the CONTRACT, which deal with the obligations of compliance with the financial indices by the Intervening Party; and 
 III - Include the
point “f” and change the wording of the First Paragraph of the Clause 21 ‘netting” of the CONTRACT, as included below. 
 “CLAUSE 13 
 SPECIAL OBLIGATIONS OF BENEFICIARY 
 BENEFICIARY undertakes to: 
 (...) 

 IX - maintain, during the effective period of this Contract, and up to its final maturity, the three following financial
indices, according to the values stipulated below, calculated biannually in the months of June and December, based on the consolidated financial statements of BENEFICIARY, audited by external auditors registered with the Comissão de
Valores Mobiliários: 
 a) Consolidated EBITDA/Consolidated Financial Expenses: equal to or greater than 1.95; 
 b) Consolidated Debt/EBITDA: equal to or less than 3.75; 
 c)
Consolidated Debt (Consolidated Debt + PL): equal to or greater than 0.65; 
 X - in the event of declaration of the early maturity of the debentures
issued on 06/01/2006, recorded at the CVM under No. CVM/SER/DEB/2006/020, notify BNDES of the occurrence of such event in the period of up to 24 hours, counted from receipt of the notification by the Fiduciary Agent. 
 §1: 
 Noncompliance, by BENEFICIARY, with any of the
financial indices contemplated in item IX, will lead to freezing of funds corresponding to 3 (three) times the value of the HIGHEST INSTALLMENT, due as a result of the CONTRACT, considering, conventional penalty and other charges
contractually contemplated, which funds will be released when compliance with the financial indices is restored. 
 §2: 
 BENEFICIARY may submit to the approval of BNDES in substitution of the freezing of revenues, contemplated in §1, the reinforcement of guarantees through posting as
collateral, pre-existing financial investments, held by it, in an amount sufficient to cover the order for freezing, which collateral will be released when compliance with the covenanted financial indices is restored, determined as established in
item IX. BENEFICIARY will be responsible for compliance with all the formalities necessary for the constitution of this guarantee, which shall be provided for in its own instrument. 
 §3: 
 If it is evidenced that BENEFICIARY has not complied with any of the financial indices contemplated
in item IX for 2 (two) periods of consecutive calculation, BNDES may choose, within 45 (forty-five) days after BENEFICIARY’s official disclosure to the market of its results, between: 1) the maintenance of the retained amount; 2) to declare the
early maturity of this Contract, with the required repayment of the debt and immediate suspension of any disbursement. 
 §4: 

For purposes of the financial indices set forth in item IX, the following definitions and criteria shall be adopted: 
 a) Consolidated EBITDA: means the sum of the last 4 (four) quarters (i) of the result before deduction of taxes, charges, contributions, participations;
(ii) of the depreciation and amortizations occurred in the period; (iii) of the Consolidated Financial Expenses deducted from the financial revenues; and (iv) of the non-operating income; 
 b) Consolidated Financial Expenses: sum of the last 4 (four) quarters, of the costs of issued of the debt, interest paid to natural persons or corporations (including
financial institutions and suppliers), real estate values, financial expenses that do not impact the cash, commissions, discounts and other charges for bank loans or letters of credit, expenses and revenues with hedge operations against foreign
exchange variation, expenses with surety, bails, pledges or guarantees provided to other obligations, excluding interest on net current assets or any other form of remuneration to the shareholders, accounted for as financial expense; 
 c) Consolidated Debt: sum of consolidated remunerated debts of the BENEFICIARY with natural persons and/or corporations, including third party loans and financing,
issuances of fixed income securities, convertible or not, in the local and/or international capital markets. Surety, bail, pledges or guarantees provided by BENEFICIARY, as well as the sale or assignment of future receivables, will be considered as
debt, provided that they are accounted for as obligations in the Financial Statements of BENEFICIARY; 
  

 2 

 d) PL: Shareholder’s Equity, including “Minority Participations”; 
 “CLAUSE 21 
 EARLY MATURITY 

 BNDES may declare the early maturity of this Contract, with the required repayment of the debt and immediate suspension of any disbursement
if, in addition to the events contemplated in Articles 39 and 40 of the “PROVISIONS APPLICABLE TO BNDES CONTRACT”, contemplated in Clause 13, item I, the following are evidenced by BNDES: 
 (...) 
 f) Declaration of early maturity of the debentures issued by
BENEFICIARY ON 06/01/2006, registered at the CVM under No. CVM/SER/DEB/2006/020. This event will be constituted upon receipt, by the BENEFICIARY, of notification from the Fiduciary Agent informing it of such declaration. 
 (...) 
 §1: 
 BNDES may, moreover, elect to declare early maturity as a result of noncompliance with the financial indices established in item IX of Clause 13, pursuant to § 3 of
the same clause.” 
 CLAUSE 2 
 RATIFICATION 
 The Contracting Parties and the INTERVENING PARTY hereby ratify all the Clauses and Conditions of the CONTRACT,
where they do not conflict with the provisions in this Addendum, maintaining the other conventional guarantees in said CONTRACT, the present instrument not leading to novation. 
 CLAUSE 3 
 REGISTRATION 
 The BENEFICIARY undertakes to effect the registration of this Addendum on the margin of the registrations mentioned in the preamble hereof, and shall present to
BNDES evidence of such registrations within 30 (thirty) days, counted from this date. 
 The 5 (five) pages of this instrument are initialed by Antonio
Carlos do Amaral Prewodowski, lawyer of BNDES, by authorization of the legal representatives who sign it. 
 IN WITNESS WHEREOF, they sign this
instrument in 4 (four) counterparts of equal content and form, for a single purpose, in the presence of the undersigned witnesses. 
  

					
		 		 	Rio de Janeiro, December 20, 2006
			
	By BNDES:	 		 	
			
	 /s/ João Carlos do Couto R. Cavalcanti
	 		 	 /s/ Claudia P. Trindade Prates

	João Carlos do Couto R. Cavalcanti	 		 	Claudia P. Trindade Prates
	BNDES Superintendent	 		 	Head of Department
		 		 	DEGAP/AIE
	
	

  

 3 

 BANCO NACIONAL DE DESENVOLVIMENTO ECONÔMICO E SOCIAL - BNDES 
  

					
	By BENEFICIARY:	 		 	
			
	 /s/ Edinelson Faria de Oliveira
	 		 	
	Edinelson Faria de Oliveira	 		 	
	Funding and Administration Manager	 		 	
	Brasil Telecom S/A	 		 	
	
	BRASIL TELECOM S.A.
			
	By INTERVENING PARTY:	 		 	
			
	 /s/ Edinelson Faria de Oliveira
	 		 	
	Edinelson Faria de Oliveira	 		 	
	Funding and Administration Manager	 		 	
	
	BRASIL TELECOM PARTICIPAÇÕES S.A.
			
	WITNESSES:	 		 	
			
	 /s/ Antonio Bahia Nery
	 		 	 /s/ Paulo Renato Martins Santos

	Name: Antonio Bahia Nery	 		 	Name: Paulo Renato Martins Santos
	ID: illegible	 		 	ID: 2962999
	CPF: illegible	 		 	CPF: 527917187-53

 This page is an integral part of Addendum No. 3 to the Loan Agreement by Extension of Credit
No. 04.2.559.3.1 of 08/03/2004 
  

 4

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