Table of Contents  



EXECUTION









INDEMNITY AGREEMENT 



Dated March 24, 2004



among



BRASIL TELECOM S.A.



as Borrower



and



JAPAN BANK FOR
INTERNATIONAL COOPERATION



as Guarantor



SUMITOMO MITSUI BANKING
CORPORATION



as Collection Agent



in respect of the Loan
Agreement



among



BRASIL TELECOM S.A.



as Borrower,



THE FINANCIAL
INSTITUTIONS



named therein



as LENDERS



SUMITOMO MITSUI BANKING
CORPORATION



as Agent and as
Collection Agent




 





TABLE OF CONTENTS 


	CONTENTS 	PAGE 
	 
	Article I Interpretation	2 
	 
	Article II Reimbursement, Payment and Indemnity	3 
	 
	Article III Payments and Currency	7 
	 
	Article IV Representations and Warranties	8 
	 
	Article V Covenants	9 
	 
	Article VI Conditions Precedent	9 
	 
	Article VII Effectiveness	10 
	 
	Article VIII Taxes, Fees and Expenses	11 
	 
	Article IX Governing Law and Jurisdiction	12 
	 
	Article X Miscellaneous	14 








Annexes 


	Annex A	Form of the Guarantee Agreement
	 
	Annex B	Form of Consent of Borrower's Agents for Service of Process





 






THIS INDEMNITY AGREEMENT
is dated March 24, 2004 among:



(1) Brasil Telecom S.A.
(the “Borrower”); 



(2) Japan Bank for
International Cooperation (the “Guarantor”); and 



(3) Sumitomo Mitsui
Banking Corporation as collection agent (the “Collection Agent”). 



WHEREAS:



(A) At the request of the
Borrower, certain financial institutions defined herein as the “LENDERS” have agreed to
make available to the Borrower a loan in an aggregate amount of up to twenty seven
billion five hundred million Yen (¥27,500,000,000) under the terms and conditions of a
loan agreement entered into among the Borrower, the LENDERS, the Agent and the Collection
Agent defined therein dated the date hereof (the “Loan Agreement”) to provide the
Borrower with funds to finance the Project (as defined in the Loan Agreement);  



(B) At the request of the
Borrower, the Guarantor has agreed (subject to certain conditions) to guarantee the
repayment of the principal of, and interest on, the Loan pursuant to a guarantee
agreement dated the date hereof among each of the LENDERS, the Agent and the Guarantor in
the form set forth in Annex A (the “Guarantee Agreement”); 



(C) In consideration of
the Guarantor agreeing to provide the Guarantee Agreement, and for other good and
valuable consideration (the receipt of which is hereby acknowledged) the Borrower agrees
to reimburse the Guarantor any amount paid by the Guarantor under the Guarantee
Agreement, and to undertake certain other obligations towards the Guarantor, as
hereinafter provided;



(D) To facilitate
payments, apportionment and other matters in regard to this Agreement and the Loan
Agreement, the parties hereto together with the LENDERS and the Agent have entered into a
general agency agreement dated the date hereof (the “General Agency Agreement”); and 



(E) The purpose of this
Agreement is to support the Borrower in maintaining continuous access to international
capital markets, to contribute to the economy of the Borrower's Country by supporting the
financing of the Project and to further promote economic co-operation between Japan and
the Borrower's Country.



IT IS AGREED as follows:





Article I

Interpretation 



SECTION 1.1 (Definitions) 



(1) Unless otherwise
defined herein and except where the context otherwise requires, all terms and expressions
defined in the Loan Agreement (as in effect on the date of this Agreement or as
subsequently amended with the consent of the Guarantor) shall have the same respective
meanings when used in this Agreement and in Annexes hereto.



(2) In this Agreement and
in the Recitals and Annexes hereto, the following expressions shall, unless the context
otherwise requires, have the following meanings:



“After-Tax Basis”: 


	 	means
on a basis such that any payment required to be paid on such basis shall, if necessary,
be supplemented by a further      compensation so that the actual amount received after
all deductions and withholdings shall equal the amount that would have been      received
if no deduction or withholding were required; 






“Borrower's New York Process Agent”: 


	 	has the meaning set out in SECTION 9.4(a) of this Agreement;






“Borrower's Tokyo Process Agent”: 


	 	has the meaning set out in SECTION 9.4(a) of this Agreement;






“Guarantor Payment”: 


	 	means any amount paid or, as the context requires, to be paid by the Guarantor under the Guarantee Agreement;






“Indemnity Interest Rate”: 


	 	means a rate per annum determined on a daily basis for each Guarantor Payment and being equal to the Applicable Spread above
     LIBOR prevailing under the Loan Agreement for the last Interest Period preceding the relevant payment default for which such
     Guarantor Payment was made, plus the lower of (i) two percent (2.00%) per annum and (ii) the ceiling rate stipulated by the
     regulation of the Central Bank of Brazil, provided that, to the full extent permitted by applicable law, if such ceiling rate
     becomes less than one percent (1.00%) per annum, one percent (1.00%) per annum; and






“LIBOR”: 


	 	has the meaning set out in the definition of “Floating Rate” set forth in the Loan Agreement. 







SECTION 1.2
(Construction) 



(a)      Headings in this
Agreement (and their use in cross-references) are inserted for ease of reference only and
do not form a part of this Agreement and shall have no effect on the interpretation of
any of the provisions hereof.



(b)      The Annexes to
this Agreement shall form an integral part of this Agreement.



(c)      References to
this Agreement, the Loan Agreement, the General Agency Agreement and the Guarantee
Agreement in this Agreement shall be construed as a reference to this Agreement, the Loan
Agreement, the General Agency Agreement and the Guarantee Agreement as the same may be
amended, modified, supplemented or replaced pursuant to the terms thereof and hereof from
time to time.



(d)      Where the
context so requires, words importing the singular number shall include the plural and
vice versa.



(e)      Unless otherwise
specified, an Article, Section or Annex is a reference to an article or section of or an
annex to this Agreement.




Article II

Reimbursement, Payment and Indemnity 



SECTION 2.1 (Guarantee
Agreement) 



The Borrower hereby
requests the Guarantor, and the Guarantor hereby agrees, subject to the terms and
conditions of this Agreement, to guarantee certain payment obligations of the Borrower
pursuant to the terms of the Guarantee Agreement in the form set out in Annex A
(Guarantee Agreement).



SECTION 2.2
(Reimbursement for Guarantor Payments and Interest thereon) 



(a)      In the event
that the Guarantor makes any Guarantor Payment, in accordance with the terms and
conditions set out in the Guarantee Agreement, the Borrower agrees, subject to the terms
hereof, without prejudice to any right of the Guarantor under law, the Loan Agreement,
any other Transaction Document or any other agreement, instrument or document, to:



	(i)  	reimburse
the Guarantor for such Guarantor Payment within ten (10) Business Days after demand from
the Guarantor therefor; and 






	(ii)  	pay
to the Guarantor within ten (10) Business Days after demand from the Guarantor therefor
interest on such Guarantor Payment at the Indemnity Interest Rate in
respect of such Guarantor Payment during the period from and including the
date on which the Guarantor makes such Guarantor Payment to but excluding
the date on which the Guarantor is fully reimbursed for such Guarantor
Payment by the Borrower.  







(b)      The obligation
of the Borrower to pay interest on such Guarantor Payment shall not be conditional upon
any notification of the Indemnity Interest Rate to the Borrower by the Guarantor.



(c)      The interest
required to be paid by SECTION 2.2(a) shall be payable from time to time within ten (10)
Business Days after demand from the Guarantor therefor, shall accrue on a day to day
basis, shall be computed on the basis of a year of three hundred sixty (360) days and the
actual number of days elapsed, and shall accrue after as well as before judgment but
shall not be daily compounded.



SECTION 2.3 (Indemnity
for Costs) 



The Borrower agrees to
indemnify the Guarantor on demand in respect of all actions, proceedings, liabilities,
claims, losses, damages, costs and expenses suffered and incurred by the Guarantor in
relation to or arising out of the Guarantee Agreement or a breach of any of the
obligations or covenants of the Borrower or the incorrectness of any representation,
warranty or statement made or given by the Borrower under this Agreement, the General
Agency Agreement or the Loan Agreement or otherwise relating to the transactions
contemplated hereby or thereby, except in case of the Guarantor’s gross negligence or
willful misconduct.



SECTION 2.4 (Authority
to Comply with Demands) 



(a)      Subject to the
terms hereof, the Borrower irrevocably:



	(i)  	authorizes
the Guarantor to comply with any demands and make any payments which may be due from or
claimed upon or made by               the Guarantor pursuant to the Guarantee Agreement,
(it being understood that the Collection Agent (on behalf of the               Guarantor)
shall promptly notify the Borrower in writing of any such demand or Guarantor Payment (as
the case may be)               but failure by the Collection Agent to give such notice
shall in no way affect the Guarantor’s obligation to make               Guarantor
Payments under the Guarantee Agreement or the obligation of the Borrower to make payments
required to be made               by it to, or otherwise indemnify, the Guarantor
pursuant to this Agreement); and 






	(ii)  	agrees
that it shall not be incumbent on the Guarantor to enquire whether or not any such
demands or Guarantor Payments are               in fact due or whether or not any
statements in such demands are in fact correct or whether or not any dispute exists
              between the Borrower and the Agent and the LENDERS. 







(b)      The Borrower
expressly acknowledges and agrees to the terms of the Guarantee Agreement.



SECTION 2.5 (Demand to
be Conclusive) 



(a)      The Borrower
agrees that, in the absence of any manifest and material error, any such demand or
payment shall, as between the Borrower and the Guarantor, be conclusive evidence that the
demand is properly made and/or payment properly due, and the Borrower further agrees that
the Guarantor may rely upon any notice received by it from the Agent in complying with
any such demand or making any such payment.



(b)      Subject to the
terms hereof, a certificate in writing signed by an officer of the Guarantor and
certifying the amount from time to time due from the Borrower under this Agreement shall,
in the absence of manifest error, be conclusive evidence of the matters so certified.



SECTION 2.6 (Obligations
not Discharged) 



The obligations of the
Borrower under this Agreement shall not be discharged except by performance and then only
to the extent of such performance. Such obligations shall not be impaired by:



(a)      any extension of
time, forbearance, concession or other indulgence given  to the Guarantor, the Agent, the
LENDERS or any other Person (including the Borrower);



(b)      any variation of
the Guarantee Agreement (except one which would materially increase the obligations of
the Borrower under this Agreement), the Loan Agreement, the General Agency Agreement or
any other related agreement or document;



(c)      the exercise (or
non-exercise) by the Guarantor of any discretion under the Guarantee Agreement or any
breach by the LENDERS or the Agent of any of their respective obligations under any of
the Loan Agreement, the Guarantee Agreement or the General Agency Agreement or any other
related agreement or document; or



(d)      any other
circumstances which would or might (but for this provision) constitute a discharge or
defense of the Borrower.



SECTION 2.7 (Extensions,
etc.) 



The Guarantor may at any
time, without thereby discharging, impairing or otherwise affecting any rights, powers
and remedies hereby created or conferred upon it by this Agreement, the Loan Agreement,
the General Agency Agreement or any other related agreement or by law:



(a)      offer or agree
to or enter into any agreement for the extension or variation of the Guarantee Agreement
(except one which would materially increase the obligations of the Borrower under this
Agreement), the Loan Agreement, the General Agency Agreement or any other related
agreement; or



(b)      offer to give,
or agree to give, any time or other indulgence to any other Person or entity from whom it
may seek reimbursement in respect of sums paid out by the Guarantor under the Guarantee
Agreement.



SECTION 2.8 (Rights
Additional) 



(a)      Any rights
conferred on the Guarantor by this Agreement shall be in addition to, and not in
substitution for or derogation of, any other right which the Guarantor may at any time
have to seek from the Borrower or any other Person, reimbursement of or indemnification
against payments made or liabilities incurred under the Guarantee Agreement.



(b)      The Guarantor
may exercise, upon subrogation and/or assignment pursuant to the Guarantee Agreement, the
rights of the LENDERS against the Borrower under the Loan Agreement and the General
Agency Agreement or any security held by or for the benefit of the LENDERS or any related
agreement, document or instrument; and (without prejudice to any right which the Borrower
may have against the LENDERS or the Agent) the Borrower may not assert against the
Guarantor any defense which it might have against the LENDERS or the Agent or any of them.



SECTION 2.9 (No Waiver
etc.)

 (a) No delay
    in exercising, or omission to exercise, any right, power or remedy accruing
    to the Guarantor under the Loan Agreement, the General Agency Agreement,
    the Guarantee Agreement, this Agreement or any other related agreement upon
    any default shall impair any such right, power or remedy or be construed
    to be a waiver thereof or any acquiescence in such default. 


(b)      No action of the
Guarantor in respect of any default, or any acquiescence by it in any default, shall
affect or impair any right, power or remedy of the Guarantor in respect of any other or
subsequent default.



(c)      No single or
partial exercise of any right shall preclude any other or further exercise thereof or the
exercise of any other right.



(d)      No waiver by the
Guarantor hereunder shall be effective unless it is in writing.



SECTION 2.10 (No
Obligation to Enforce) 



Before the Guarantor
takes steps to enforce any rights conferred on the Guarantor, or exercising any of the
rights, powers and remedies conferred upon the Guarantor by this Agreement, the Loan
Agreement, the General Agency Agreement or by law, the Guarantor shall not be obliged;



	(i)  	to
take any action (including, but without limitation, the filing of any petition or other
documents for a bankruptcy, winding-up, liquidation or re-organisation of
any other Person) or obtain judgment in any court against any other Person
(including Persons from whom the Guarantor may seek reimbursement in
respect of any Guarantor Payment); or  






	(ii)  	to
enforce or seek to enforce any other rights which the Guarantor may have against the
Borrower or any other Person. 







SECTION 2.11 (Payment) 



Without prejudice to its
other obligations in this Article II, the Borrower undertakes to pay to the Guarantor the
amount(s) in Yen required to satisfy in full any amount demanded under the Guarantee
Agreement on the due date for payment of such amount by the Guarantor under the Guarantee
Agreement (as notified to the Borrower pursuant to SECTION 2.4(a)(i) (Authority to Comply
with Demands)). 



SECTION 2.12
(Obligations in Loan Agreement and General Agency Agreement) 



Without limitation or
restriction upon any of the Borrower's obligations under this Agreement, the Borrower
hereby undertakes for the express benefit of the Guarantor to duly and punctually perform
all of its obligations under the Loan Agreement and the General Agency Agreement, and all
such obligations are incorporated herein by reference as fully and to the same extent as
if set forth in full herein.





Article III

Payments and Currency 



SECTION 3.1 (Method of
Payments and Application of Proceeds) 



All payments to be made
by the Borrower to the Guarantor hereunder shall be paid on a Business Day in Yen only in
immediately available funds to the account of the Collection Agent in accordance with
SECTION 3.1 of the General Agency Agreement and shall be applied in accordance with
SECTION 3.2 thereof.



SECTION 3.2 (Payments to
be free of Claims and Taxes) 



(a)      No payment to be
made by the Borrower hereunder shall be reduced by any set-off or counterclaim, or any
Tax.



(b)      If any payment
hereunder (including one required by this Article) is reduced by a Tax, the Borrower
shall make such payment on an After-Tax Basis.



(c)      If the Guarantor
becomes liable for a Tax on account of a payment (including one required by this SECTION
3.2) from which such Tax has not been deducted or reasonably incurs a cost in connection
with a Tax, the Borrower shall, as an indemnity, pay to the Guarantor on demand an amount
equal to that Tax or cost.



SECTION 3.3 (Payments in
Yen) 



The obligation of the
Borrower hereunder to make payments in Yen shall not be discharged or satisfied by any
amount, tender or recovery (whether pursuant to any judgment or otherwise) expressed,
paid or made in or converted into any currency other than Yen except where such amount,
tender or recovery shall result in the effective receipt by the Guarantor of the full
amount of Yen payable to the Guarantor hereunder and the primary obligation of the
Borrower to make payment in Yen shall be enforceable as an alternative or additional
cause of action, and shall not be affected by judgment being obtained for any sums due
under this Agreement.




Article IV

Representations and Warranties 



In order to induce the
Guarantor to enter into the Guarantee Agreement, the Borrower hereby, for the benefit of
the Guarantor, confirms the representations and warranties set forth in Article VII
(Representations and Warranties) of the Loan Agreement as if made as of the date hereof,
which representations and warranties shall apply, mutatis mutandis, to this Agreement as
if set out in full herein.  



The representations and
warranties of the Borrower made and given above are continuing representations and
warranties and shall survive each Disbursement and the execution of this Agreement, the
Loan Agreement and the Guarantee Agreement, and any performance or enforcement of any
provision hereof or thereof, and shall be deemed to be repeated by the Borrower on and as
of the date of each Disbursement, the date of each Payment Date and the date on which the
Guarantee Agreement is executed, with reference to the facts then existing.





Article V

Covenants 



The Borrower covenants
and agrees that as from the date of this Agreement and so long as any amount payable or
repayable by the Borrower under this Agreement, the General Agency Agreement or the Loan
Agreement has accrued and remains outstanding:



SECTION 5.1 (Loan
Agreement Covenants) 



The Borrower shall
observe and perform the covenants set forth in Article VIII (Particular Covenants) of the
Loan Agreement, which covenants shall apply, mutatis mutandis, to this Agreement as if
set out in full herein.  





Article VI

Conditions Precedent 



The effectiveness of this
Agreement shall be subject to the fulfillment to the satisfaction of the Guarantor or
waiver by the Guarantor on or prior to the date of the initial Disbursement of all of the
following conditions precedent:



(a)      The due
execution and effectiveness of the Loan Agreement and the General Agency Agreement in
form and substance satisfactory to the Guarantor;



(b)      The delivery to
the Guarantor of an executed copy of the Loan Agreement in form and substance
satisfactory to the Guarantor;



(c)      The fulfillment
of the conditions precedent set forth in Article X of the Loan Agreement to the
satisfaction of the Guarantor;



(d)      The receipt by
the Guarantor of all of the following documents, each in form and substance satisfactory
to it:



	(i)  	a
legal opinion of independent legal counsel to the Borrower, substantially in the form set
out in Annex F to the Loan Agreement;  






	(ii)  	documentary
evidence of the authority of each person who:  






	  	(aa) has
signed this Agreement, the General Agency Agreement and/or the Loan Agreement on behalf
of the Borrower; 






	  	(bb) has
signed the Guarantee Agreement, the General Agency Agreement and/or the Loan Agreement on
behalf of the LENDERS                   and/or the Agent; and 






	  	(cc) will
sign the statements, reports, certificates and other documents required by this
Agreement, the General Agency Agreement, the Loan Agreement and/or the
Guarantee Agreement and will otherwise act as a representative of the
Borrower, each LENDER or the Agent in relation to the implementation
and administration of this Agreement, the General Agency Agreement, the
Loan Agreement and/or the Guarantee Agreement;  






	  	(such
documentary evidence shall include, if applicable, certified copies of all corporate and
governmental actions and consents taken or obtained in order to authorize the
execution, delivery and performance by the Borrower of this Agreement, the
General Agency Agreement and the Loan Agreement, and by each LENDER and the Agent of the
Guarantee Agreement, the Loan Agreement and the General Agency Agreement and
the transactions contemplated hereby or thereby and the certified specimen
signature of and certificate of incumbency in respect of each person described in (aa),
(bb) and (cc) above);  






	(iii)  	the
written consent of the Borrower's Tokyo Process Agent and the Borrower's New York Process
Agent in the form set out in Annex B;  






	(iv)  	certified
copies of all the relevant authorizations relating to the power and authority of the
Borrower for the execution, delivery or performance of this Agreement and
the General Agency Agreement and each document provided for hereunder and
thereunder and documentary evidence that the registration of the Loan
Agreement with Banco Central do Brasil has been duly effected, certified by
an appropriate officer of the Borrower to be true and correct and in full force and
effect;  






	(v)  	such
other documents, evidence, materials and information (financial or otherwise) which the
Guarantor may reasonably request in relation to this Agreement, the General
Agency Agreement, the Loan Agreement or the Guarantee Agreement.  









Article VII

Effectiveness 



SECTION 7.1 (Validity) 



Regardless of the
validity or effectiveness of the Loan Agreement, this Agreement shall continue to be
effective so long as the Guarantor has any obligation (actual or contingent) under the
Guarantee Agreement or any obligation of the Borrower hereunder and/or under the General
Agency Agreement exists and continues.



SECTION 7.2
(Reinstatement) 



To the extent (i) the
Guarantor receives any payment by or on behalf of the Borrower, or (ii) the Agent or any
LENDER (or the Guarantor as subrogee thereof) receives any payment with respect to the
Loan from the Borrower or any other Person, and, in each case, such payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to the Borrower or any other Person, or its estate, trustee,
administrator or estate, receiver, custodian or any other party under any bankruptcy or
insolvency law then, with respect to clause (i) above, to the extent of such payment or
repayment, the obligation or part thereof which has been paid, reduced or satisfied by
the amount so repaid shall be reinstated by the amount so repaid and shall be included
within the liabilities of the Borrower to the Guarantor hereunder as of the date such
initial payment, reduction or satisfaction occurred, and, with respect to clause (ii)
above, the obligations of the Borrower hereunder to reimburse the Guarantor for any
amounts it might expend or incur in the event it becomes obligated to pay any LENDER
under the Loan Agreement for any such recaptured payment shall be automatically
reinstated in full.




Article VIII

Taxes, Fees and Expenses 



SECTION 8.1
(Indemnification for Taxes and Banking Charges) 



Subject to delivery of
reasonably detailed statements and copies of the taxes and charges set forth below, the
Borrower shall pay or cause to be paid and shall indemnify the Guarantor against the
actual cost to the Guarantor of:



(a)      all court taxes,
stamp or registration or filing duties or analogous fees, expenses or taxes and any
penalties or interest with respect thereto which may be imposed by any law in connection
with the execution, delivery, performance, admissibility in evidence or enforcement of
this Agreement, the General Agency Agreement or the Loan Agreement or any related
agreement, instrument or document or obtaining or enforcing any judgment or award given
in respect thereof;



(b)      all banking
charges or fees, if any, incurred in connection with all payments to be made by the
Borrower to the Guarantor under this Agreement or the General Agency Agreement; and



(c)      the costs and
expenses related to the obtaining and delivery of the opinions (if such opinions are not
paid for under the Loan Agreement), documents and evidence referred to in Article VI
(Conditions Precedent), but not to exceed the Ceiling Amount when aggregated with amounts
due pursuant to Sections (3)(c) and (4)(a) of Article XI (Taxes, Fees and Expenses) of
the Loan Agreement.



SECTION 8.2 (Expenses) 



(a)      The Borrower
shall pay to the Guarantor on demand all expenses, but not exceeding the Ceiling Amount
when aggregated with amounts due pursuant to Sections (3)(c) and (4)(a) of Article XI
(Taxes, Fees and Expenses) of the Loan Agreement) reasonably incurred by the Guarantor in
respect of the transactions contemplated hereby and by the General Agency Agreement and
the Loan Agreement, including, but not limited to, legal fees and expenses of counsel and
translation, communication, travel, accommodation and all other out-of-pocket and other
expenses, in connection with the negotiation, preparation, execution, delivery and
implementation of this Agreement, the Guarantee Agreement, the Loan Agreement, the
General Agency Agreement and any related agreements, documents and instruments and any
amendment hereof or thereof.



(b)      The Borrower
shall also reimburse the Guarantor, on demand, for all reasonable expenses, including but
not limited to legal fees, incurred by the Guarantor in contemplation of, or in
connection with (i) the administration or enforcement of, or the preservation or
perfection of any of its rights under, this Agreement, the Loan Agreement and the General
Agency Agreement and the Guarantee Agreement, (ii) the consideration of its rights and
liabilities following the occurrence of an Event of Default or (iii) the consideration of
any demand served on the Guarantor under the Guarantee Agreement.



(c)      The expenses
contemplated in this SECTION 8.2 shall be paid by the Borrower to the Guarantor within
thirty (30) calendar days after the day on which the Guarantor makes a request to the
Borrower for payment of such expenses.



(d)      The Borrower’s
obligations under this SECTION 8.2 shall be subject to delivery of reasonably detailed
statements and copies of the expenses set forth above.





Article IX

Governing Law and Jurisdiction 



SECTION 9.1 (Governing
Law) 



This Agreement shall be
governed by and construed in accordance with the laws of Japan.



SECTION 9.2 (Good Faith
Consultation) 



Each of the parties
hereto undertakes to use its respective best efforts to resolve any dispute arising out
of or in connection with this Agreement through consultation in good faith and mutual
understanding, provided that such consultation shall neither prejudice the exercise of
any rights or remedies in respect of any such dispute nor prevent a party taking
necessary steps to prevent the expiry of any time limitation for the bringing of any
process, suit, action or proceedings. 



SECTION 9.3 (Submission
to Jurisdiction) 



(a)      The Borrower
irrevocably agrees that the Tokyo District Court and the New York State and/or Federal
Courts sitting in New York City shall have jurisdiction to hear and determine any suit,
action or proceedings, and to settle any disputes, which may arise out of or in
connection with this Agreement, the General Agency Agreement or the Loan Agreement and,
for such purposes, irrevocably submits to the jurisdiction of such courts.



(b)      The Borrower
irrevocably waives any objection which it might now or hereafter have to such courts
being nominated as the forum to hear and determine any suit, action or proceedings, and
to settle any disputes, which may arise out of or in connection with this Agreement, the
General Agency Agreement or the Loan Agreement and agrees not to claim that any such
court is not a convenient or appropriate forum.



(c)      The submission
to the jurisdiction of such courts shall not (and shall not be construed so as to) limit
the right of the Guarantor, to take proceedings against the Borrower in any other court
of competent jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions, preclude the taking of proceedings in any other jurisdiction, whether
concurrently or not.



(d)      The Borrower
hereby consents generally in respect of any legal action or proceedings arising out of or
in connection with this Agreement, the General Agency Agreement or the Loan Agreement to
the giving of any relief or the issue of any process in connection with such action or
proceeding including, without limitation, the making, enforcement or execution against
any property whatsoever (irrespective of its use or intended use) of any order or
judgment which may be made or given in such action or proceedings, except in the case of
enforcement proceedings in the Borrower’s Country relating to the assets of the Borrower
which, under applicable law of the Borrower’s Country, are deemed to provide an essential
public service.



SECTION 9.4 (Process
Agents) 



(a)      The Borrower
agrees that, without limiting any other means available to the Guarantor, the process by
which any suit, action or proceeding is begun shall include service of such process (or
any other document) on the Borrower by delivery:



	(i)  	in
Japan, to Abe & Matsutome Law Office (the “Borrower's Tokyo Process Agent”) for the time
being presently located at Shuwa Kioicho Park Bldg., Suite 703, 3-6
Kioicho, Chiyoda-ku, Tokyo 102-0094, Japan; or  






	(ii)  	in
New York, to CT Corporation System (the “Borrower's New York Process Agent”) for the time
being presently located at 111 Eighth Avenue, New York, NY 10011 USA.  







(b)      If, for any
reason, any of the Borrower's Tokyo Process Agent or the Borrower's New York Process
Agent shall cease, or shall not be capable, so to act, the Borrower shall promptly and
irrevocably designate and appoint another agent acceptable to the Guarantor.  Failure by
the Borrower to designate or appoint another agent acceptable to the Agent within fifteen
(15) days shall entitle the Agent and the Guarantor to appoint a person as agent of the
Borrower by notice to the Borrower.



(c)      The Borrower
undertakes to maintain at all times the foregoing at its own cost to act on its behalf in
such manner in each of Tokyo and New York throughout the period that the Borrower has any
actual or contingent obligations outstanding under this Agreement, the General Agency
Agreement or the Loan Agreement and further undertakes to take, from time to time and so
long as any amount payable hereunder remains outstanding, any and all action (including
the execution and filing of any and all documents and instruments) that may be necessary
to effect and to continue the foregoing appointments and designation in full force and
effect.



SECTION 9.5 (Waiver of
Immunity) 



To the extent that the
Borrower may in any jurisdiction claim for itself or its assets immunity from process,
suit, execution, attachment (whether in aid of execution, before judgment or otherwise)
or other legal process and to the extent that in any such jurisdiction there may be
attributed to itself or its assets such immunity (whether or not claimed), the Borrower
hereby irrevocably consents generally to the giving of relief by way of process of
enforcement (including the arrest, detention or sale of any state property) and, for the
avoidance of doubt, the Borrower further irrevocably agrees not to claim and hereby
irrevocably waives such immunity to the fullest extent permitted by the laws of such
jurisdiction and, for the avoidance of doubt, in relation to any proceedings that may be
taken in the United States, the foregoing waiver of immunity shall have effect under, and
be construed in accordance with the Foreign Sovereign Immunity Act of the United States
of America 1976.





Article X

Miscellaneous 



SECTION 10.1 (No Release) 



No claim or dispute
arising out of or in connection with the Loan Agreement or the General Agency Agreement
or any other agreements, documents or instruments to which the Borrower is a party shall
have any effect upon the Borrower's obligations under this Agreement or the General
Agency Agreement nor in any way be deemed to release the Borrower therefrom, such
obligations being absolute, irrevocable and unconditional.



SECTION 10.2 (Remedies
Cumulative) 



The rights and remedies
herein provided are cumulative and not exclusive of any other rights or remedies provided
by Law.



SECTION 10.3 (Partial
Illegality) 



If at any time any
provision hereof becomes illegal, invalid or unenforceable in any respect under the Laws
of any jurisdiction, the legality, validity and enforceability of any other provisions
hereof (or the legality of such provision in any other jurisdiction) shall in no way be
affected or impaired thereby.



SECTION 10.4 (Change of
Evidence of Authority) 



(a) In the event of
any change in the matters referred to in the documentary evidence provided for in Article
VI(d)(ii) (Conditions Precedent) hereof, the Borrower shall promptly notify the Guarantor
in writing of such change and, at the same time, furnish to the Guarantor relevant
documentary evidence in respect of such change as well as certified specimen signatures
of and certificates of incumbency in respect of any person(s) who are referred to in such
documentary evidence as changed, if such change involves replacement of or addition to
the person(s) referred to in that Article. 



(b)      The Guarantor
may rely upon and refer to the documentary evidence, certified specimen signatures and
certificates of incumbency previously received by the Guarantor until such time as the
Guarantor receives notice from the Borrower of such change as well as the relevant
documentary evidence as aforesaid.



SECTION 10.5
(Communications) 



(a)      Unless otherwise
specified herein, all notices, requests, demands and other communications to or upon the
parties hereto shall be given or made by personal delivery, by internationally recognised
courier service, or by telex, telegram or facsimile (in the case of facsimile, to be
promptly confirmed by the delivery of the original copy thereof by internationally
recognised courier service) addressed as follows:



If to the Guarantor:



Japan Bank for
International Cooperation 
International Finance Department III 
4-1, Ohtemachi 1-chome,

Chiyoda-ku, Tokyo 100-8144, Japan
 Attention: Director General 
Facsimile: +81 3 5218-3965



If to the Borrower:



Brasil Telecom S.A.

SIA/Sul, ASP, Lote “D”, Bloco “B”
71.215-000 – Setor de Industria, Brasilia, DF Brazil

Attention: Diretor Financeiro 
Facsimile: +5561-415-1593



with a copy to:
 Brasil
Telecom S.A. 
SIA/Sul, ASP, Lote “D”, Bloco “B”
71.215-000 – Setor de Industria, Brasilia,
DF, Brazil
 Attention: General Counsel
 Facsimile: +5561-415-1870 



or in each case to such
other address as any party hereto may designate by written notice to each of the other
parties hereto.



(b)      Notices,
requests, demands or other communications given or made by personal delivery, courier or
telegram shall be deemed to have been duly given or made on the date of receipt by the
recipient, those given or made by telex or facsimile shall be deemed to have been duly
given or made, in the case of telex, when the answerback code of the recipient thereof is
duly received by the sender or, in the case of facsimile, when such facsimile in a
legible readable form is duly received by the intended recipient; provided, further, that
those given or made by telex, telegram or facsimile which are transmitted after normal
working hours or on a day which is not an ordinary working day in the place where the
recipient is located (which term “ordinary working day” shall exclude Saturday and
Sunday) shall be treated as having been received by such recipient on the first such
ordinary working day immediately thereafter.




SECTION 10.6 (Use of
English Language) 



All notices, documents,
information and materials to be furnished under this Agreement shall be in the English
language.



SECTION 10.7
(Abbreviation) 



This Agreement may be
referred to as “Indemnity Agreement for Brasil Telecom Guarantee” in communications
between the Guarantor and the Borrower as well as in relevant documents. 



SECTION 10.8
(Counterparts) 



This Agreement may be
executed in any number of counterparts all of which when taken together shall constitute
one and the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.



SECTION 10.9 (Loan
Defaults) 



The Borrower hereby
acknowledges for the express benefit of the Guarantor that the breach of its obligations
hereunder or under the General Agency Agreement or any material misrepresentation
hereunder may give rise to an Event of Default under the Loan Agreement subject to the
terms thereof, whereupon the Guarantor may cause the acceleration of the Loan and
exercise all rights and remedies available to it by Law, hereunder or as subrogee of the
LENDERS under the Loan Agreement.



SECTION 10.10
(Amendments) 



No provision of this
Agreement may be amended or modified except by an instrument in writing signed by the
Guarantor and the Borrower.



SECTION 10.11 (No
Assignment)  



This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Guarantor and their
respective successors and assigns, provided that the Borrower may not assign or transfer
any or all of its rights or obligations hereunder to any Person in any manner whatsoever
without the prior written consent of the Guarantor. 




 





IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.





THE BORROWER: 
Brasil
Telecom S.A.




By:
________________________


	Name:	Carla Cico
	Title:	Chief Executive Officer








By:
________________________

	Name:	Paulo Pedrão Rio Branco
	Title:	Financial Executive Officer








THE GUARANTOR:
 Japan Bank
for International Cooperation





By:
________________________

	Name:	Katsunori Kudo
	Title:	Resident Executive Director for the Americas








THE COLLECTION AGENT:

Sumitomo Mitsui Banking Corporation





By:
________________________

	Name:	Shuntaro Higashi
	Title:	Managing Director and Head of the Americas Division
















Witnesses for the
purposes of Article 585,
 II of the Brazilian Code of Civil Procedure




By:
________________________
 Name:
 Identification No.: 
Tax ID No.:




By:
________________________
 Name:
 Identification No.: 
Tax ID No.:




 






Annex A 



Form of Guarantee
Agreement
 [Attached] 




 






Annex B 



Form of Consent of
Borrower's Agents for Service of Process 
(the Borrower's __________1
Process Agent) 




Date: ______________



	To:  	Japan
Bank for International Cooperation        International Finance Dept. III        4-1,
Ohtemachi 1-chome,        Chiyoda-ku, Tokyo 100-8144, Japan 







Attn: Director General

Re: Brasil Telecom S.A. (the “Borrower”) 



Gentlemen:



Reference is made to the
Indemnity Agreement dated March 24, 2004 (the “Agreement”) between Brasil Telecom S.A. as
borrower, Japan Bank for International Cooperation, as guarantor and Sumitomo Mitsui
Banking Corporation, as collection agent. 



Pursuant to the
Agreement, the Borrower has irrevocably and unconditionally appointed the undersigned at
the undersigned's office presently located at [ ] as its agent to accept service of legal
process in connection with legal actions, suits or proceedings commenced in [ ]2 and any
appellate court therefrom in connection with the Agreement.



The undersigned hereby
(a) informs you that it has received a copy of the Agreement and accepts such appointment
by the Borrower as is set forth in the Agreement and (b) agrees with you that (i) it will
not terminate such agency relationship prior to the termination of the Agreement, (ii) it
will maintain an office in __________ 1 until the termination of the Agreement and will
give you prompt notice of any change of address, (iii) it will perform its duties in
accordance with the Agreement, and (iv) it will promptly forward to the Borrower at its
address as specified in the Agreement any summons, complaint or other legal process which
it receives in connection with its appointment as such agent of the Borrower.



This acceptance and
agreement shall be binding upon the undersigned and all successors of the undersigned
including all persons hereafter acting in the capacity of the undersigned or otherwise in
charge of the office of the undersigned.







	1	Insert
either Tokyo or New York. 




	2	Insert
either the Tokyo District Court or the New York State and/or Federal Courts sitting in
New York         City. 







Very truly yours,



___________________

(Authorized Signature)