Table of Contents  




EXECUTION  


























LOAN AGREEMENT 



dated as of March 24,
2004



between



Brasil Telecom S.A., as

                                                  Borrower



and

                          The financial institutions listed on Annex D hereto, as

                                                  LENDERS



and



Sumitomo Mitsui Banking
Corporation, as
                                          Agent and Collection Agent




 







TABLE OF CONTENTS 



	 	Page
	 
	Article I Definitions	2 
	 
	Article II Amount of Facility and Use of Loan	14 
	 
	Article III Disbursement	16 
	 
	Article IV Repayment and Prepayment of the Loan	16 
	 
	Article V Interest, Commitment Charge and Overdue Payment	17 
	 
	Article VI Payments and Currency	19 
	 
	Article VII Representations and Warranties	21 
	 
	Article VIII Particular Covenants	25 
	 
	Article IX Events of Default	32 
	 
	Article X Conditions Precedent	35 
	 
	Article XI Taxes, Fees and Expenses	36 
	 
	Article XII Yield Protection	38 
	 
	Article XIII The Agent	40 
	 
	Article XIV Governing Law and Jurisdiction	41 
	 
	Article XV Miscellaneous	42 




	Annexes	 
	Annex A	Form of Note
	Annex B	Project Description
	Annex C	Disbursement Procedures
	Annex D	Commitment Schedule
	Annex E	Amortization Schedule
	Annex F	Form of Legal Opinion of Independent Legal Counsel to the Borrower
	Annex G	Form of Consent of Borrower’s Agent for Service of Process
	Annex H	Form of Assignment and Assumption Agreement





 





LOAN AGREEMENT 





This AGREEMENT dated as
of March 24, 2004 BETWEEN  



(1) Brasil Telecom S.A.,
a corporation duly incorporated and existing under the laws of the Federative Republic of
Brazil having its principal executive offices at SIA/Sul, ASP, Lote “D”, Bloco “B”,
71.215-000 – Setor de Indústria, Brasília, DF, Brazil (the “Borrower”); 



(2) The financial
institutions listed on Annex D hereto, as lenders (each a “LENDER” and collectively, the “LENDERS”);  



(3) Sumitomo Mitsui
Banking Corporation, as agent for the LENDERS (in such capacity, the “Agent”); AND 



(4) Sumitomo Mitsui
Banking Corporation, as collection agent for the LENDERS and for Japan Bank for
International Cooperation (the “Guarantor”) (in such capacity, the “Collection Agent”).  




WITNESSETH:




(A) WHEREAS, the
Borrower has requested the LENDERS to make available to it an untied loan facility for
the financing of the Borrower’s 2003/2004 capital expenditures (as more fully
described in Annex B, the “Project”) under the terms and conditions set out in this
Agreement;  



(B)  WHEREAS, at the
request of the Borrower and to induce the LENDERS to enter into this Agreement and to
      make available to the Borrower the loan facility constituted by this Agreement, the
Guarantor has       agreed (subject to certain conditions) to guarantee the repayment of
ninety seven and one half of one       percent (97.5%) of the principal and the payment
of ninety seven and one half of one percent (97.5%)       of interest on the Loan, and
the Borrower has agreed to reimburse the Guarantor for any and all       amounts paid by
the Guarantor under the Guarantee Agreement and to make certain other payments, and
      to undertake certain obligations, to the Guarantor pursuant to the Indemnity
Agreement (as such terms       are defined below);



(C)  WHEREAS, to
facilitate payments and apportionment and other matters with respect to this Agreement
      and the Indemnity Agreement, the parties hereto together with the Guarantor have
entered into the       General Agency Agreement; and



(D)  WHEREAS, the purpose
of this transaction is to contribute to the economy of the Borrower’s Country       (as
defined below) by supporting the financing of the Project and to further promote economic
      co-operation between Japan and the Borrower’s Country.



NOW THEREFORE, the
parties hereto agree as follows:




Article I
Definitions 



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



“Affected LENDER”:

as defined in Section (1)(b) of Article XII; 



“Agent”:
 as defined
in the Recitals hereto, and its successors in such capacity; 



“Amortization Schedule”:

the schedule of the dates and amounts of repayments of the Loan set forth in Annex
E, as the same shall have been amended from time to time in accordance with Article
IV of this Agreement; 



“Applicable Spread”:

one point nine two percent (1.92%); 



“Assignee”:
 as
defined in Section (2)(c) of Article XV; 



“Borrower”:
 as
defined in the Recitals hereto; 



“Borrower’s Country”:

the Federative Republic of Brazil; 



“Business Day”:
 a
day, other than a Saturday or Sunday, on which banks and other financial institutions are
open for foreign exchange business in Tokyo, London and New York; 



“Calculation Date”:

with respect to any Interest Period or relevant due date, the day which is two (2)
LIBOR Business Days prior to the commencement of such Interest Period or such due
date; 



“Ceiling Amount”:

two hundred thousand US Dollars (US$200,000.00);  



“Collection Agent”:

as defined in the Recitals hereto; 



“Commitment”:
 (a)
with respect to each LENDER listed on the Commitment Schedule, the amount set forth
opposite such LENDER’s name on the Commitment Schedule, and (ii) with respect to
any Assignee which becomes a LENDER pursuant to Section (2)(c) of Article XV, the
amount of the transferor LENDER’s Commitment assigned to it pursuant such Section; 



“Commitment Schedule”:

the Commitment Schedule set forth in Annex D; 



“Confidential Information”:

only such information as is disclosed by the Borrower to the Agent in connection
with the Loan and related to the Borrower or the Project that is (i) disclosed in
writing or other tangible form and (ii) clearly identified as confidential,
proprietary or likewise at the time of its disclosure.   Notwithstanding the
preceding paragraph, Confidential Information does not include information: (a)
which is in, or will enter, the public domain other than through a violation of this
Agreement; (b) which is known to the Agent prior to its disclosure by the Borrower;
(c) which is obtained by the Agent from a third party which is not, to the Agent’s
knowledge, subject to any confidentiality obligation with respect thereto; and (d)
which is required to be disclosed in accordance with laws, or regulations or orders,
etc. of courts, the Ministry of Finance, the Board of Audit or other ministries or
administrative agencies, or any other public entities; 



”Consolidated Intangible
Assets”:
 the amount (to the extent reflected in determining the consolidated
shareholders' equity of the Borrower and its Consolidated Subsidiaries) of all
write-ups after December 31, 2002 in the book value of any asset owned by the
Borrower or a Consolidated Subsidiary, all investments in unconsolidated
Subsidiaries and all equity investments in Persons which are not Subsidiaries and
all unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, anticipated future benefit of tax
loss carry-forwards, copyrights, organization or developmental expense and other
intangible assets; 



“Consolidated Subsidiary”:

for any Person, each Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which shall be (or should have
been) consolidated with the financial statements of such Person in accordance with
GAAP; 



“Consolidated Tangible
Net Worth”:
 as at any date, the Total Consolidated Shareholders' Equity of the
Borrower and its Consolidated Subsidiaries determined as of such date, minus
Consolidated Intangible Assets; 



“Controlled”:
 the
possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise voting
or management power, by contract or otherwise. “Controlling” and “Controlled” have
meanings correlative thereto;  



“Credit Exposure”:

with respect to any LENDER at any time, (i) the amount of its Commitment (whether
used or unused) at such time or (ii) if the Commitments have been suspended or
terminated in their entirety or if the context so requires, its percentage share of
the aggregate outstanding principal amount of the Loan; 



“Debt Coverage Ratio”:

as of any date, (a) Total Consolidated Debt as at such date, to (b) EBITDA for the
period of four quarters ending on or most recently ended prior to such date; 



“Default”:
 any
condition or event which constitutes an Event of Default or which, with the lapse of
time, the giving of notice, the making of any determination or any combination of
any of the foregoing would, unless cured or waived, become an Event of Default; 



“Disbursement”:

each disbursement of the Facility made in accordance with Article III, or, as the
context may require, the principal amount of such disbursement from time to time
outstanding; 



“Disbursement Account”:

as defined in Annex C; 



“Disbursement Period”:

the period commencing on the date hereof and expiring on the earliest of (a) the
Expiry Date, (b) the date on which the Facility is fully disbursed hereunder, (c)
the date on which the Facility is canceled pursuant to the terms hereof and (d)
such other date as the parties may agree; 



“Disbursement Procedures”:

the procedures set forth in Annex C hereto; 



“Disbursement Request ”:

a request given by the Borrower to the Agent in the form of Form 1 of Annex C
hereto; 



“Dollar Equivalent Amount”:

with respect to each Disbursement, the US Dollar equivalent thereof calculated by
dividing the Yen amount of such Disbursement (determined in accordance with the
Disbursement Procedures) by the US Dollar/Yen exchange rate applicable to such
Disbursement as specified in the Notice of Disbursement relating thereto; 



“Dollar Facility Amount”:

as defined in Section (1)(b) of Article II; 



“EBITDA”:
 for any
period, for the Borrower and its Consolidated Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP), the sum of the following: (a)
operating profit plus (b) Financial Expenses plus (c) depreciation and
amortization, minus amortization of negative goodwill, as provided in section 1.7.7
of Comissão de Valores Mobiliá rios - CVM’ s Ofício-Circular CVM/SNC/SEP No. 01/2004,
dated January 19, 2004;  



“Eligible Expenditures”:

expenditures made or to be made in respect of the cost of goods and services
required for the Project and to be financed out of the proceeds of the Loan in
accordance with the provisions of this Agreement; 



“Encumbrance”:
 with
respect to any asset, any mortgage, pledge, lien, security interest, charge, or other
encumbrance of any kind, or any other type of preferential arrangement (including
title transfer and retention arrangements) that has substantially the same
practical effect as a security interest; 



“Equity Interest”:

for any period, for the Borrower and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), the sum of all
payments to shareholders of the Borrower or its Consolidated Subsidiaries which are
characterized as interest on capital (“Juros Sobre Capital Próprio”);  



“Event of Default”:

any of the events specified in Article IX; 



“Exchange Contract”:

with respect to any Disbursement, the exchange contract required by the applicable
rules and regulations of Banco Central do Brasil to effect the entry of funds from
outside the Borrower’s Country to inside the Borrower’s Country (and vice versa); 



“Expiry Date”:

March 24, 2006; 



“Facility”:
 the
loan facility described in Section (1)(a) of Article II; 



“Fee Letter”:
 as
defined in Section (6) of Article VI; 



“Final Disbursement Date”:

the last day of the Disbursement Period; 



“Financial Expenses”:

for any period, the sum of all interest and other financial expense of the
Borrower, as determined in accordance with GAAP and reported on the Borrower's
Quarterly Result Report "Informação Trimestral de Resultado (ITR)" or other similar
document, including, without limitation, the result (negative or positive, as the
case may be), of exchange variation and hedge operations, and excluding Equity
Interest;  



“Floating Rate”:

with respect to any Interest Period, the rate per annum (on the basis of a 360-day
year), shown on the Telerate Page 3750 (or such other page as may replace such page
on such screen for the purpose of displaying London interbank offered rates of
major banks for deposits in Yen) as the "British Bankers Association Interest
Settlement Rate" in Yen (LIBOR) for a period of six (6) months, provided that in
the case of any Disbursements made on a day other than a Payment Date, or in the
case that no rate appears on such page on the Calculation Date, the applicable rate
shall be the average (rounded upwards, if necessary, to the nearest 1/16th of 1%)
of the respective rates per annum at which deposits in Yen are offered to the
Reference Banks, as set out below, for a period equal to such Interest Period in
the London interbank market, in each case, as of approximately 11:00 a.m. (London
time) on such Calculation Date. In the event that such rate is not available at
such time for any reason, then the "Floating Rate" for such Interest Period shall
be determined by the Agent in a commercially reasonable manner after consulting
with the LENDERS and the Borrower; 



“GAAP”:
 means the
generally accepted accounting principles in effect in the Borrower’s Country consistently
applied; 



“General Agency Agreement”:

the General Agency Agreement dated as of March 24, 2004 among the Borrower, the
Guarantor, the LENDERS, the Agent and the Collection Agent in order to facilitate
payments, appointment and other matters in regard to this Agreement, the Guarantee
Agreement and the Indemnity Agreement; 



“Granting LENDER”:

as defined in Section (2)(b) of Article XV; 



“Governmental Agency”:

as defined in Section (15) of Article VII; 



“Guarantee Agreement”:

the Guarantee Agreement dated as of March 24, 2004 among the Guarantor, the LENDERS
and the Agent pursuant to which the Guarantor guarantees certain amounts due under
this Agreement to the LENDERS; 



“Guarantor”:
 as
defined in the Recitals hereto; 



“Hedging Agreements”:

any interest rate protection agreements, interest rate swaps, cap or collar
agreements, interest rate future option contracts, currency swap agreements,
currency future or option contracts and other similar agreements so long as such
agreements are entered into solely for the purpose of managing the Borrower's
Indebtedness or investments, hedging the Borrower's consolidated assets or liabilities or
in connection with the Borrower's and its Subsidiaries' line of business, and not
for the purposes of speculation; 



“Indebtedness”:

with respect to any Person, the following (whether outstanding on the date of this
Agreement or at any time thereafter), without duplication: (a) all indebtedness of
such Person for borrowed money; (b) all indebtedness for the deferred purchase
price of property or services excluding trade payables arising in the ordinary
course of business; (c) all reimbursement obligations of such Person under or in
respect of letters of credit or banker’s acceptances; (d) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (e) all
obligations of such Person under capital leases to the extent the same would be
treated as a liability in accordance with GAAP; and (f) all direct or indirect
guarantees, endorsements, avals and similar obligations of such Person in respect
of, and all obligations (contingent or otherwise) of such Person to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of, indebtedness
or obligations of any other Person specified in any of the preceding clauses, other
than endorsements for collection or deposit in the ordinary course of business and
provided that contingent liabilities other than direct and indirect guarantees
shall only constitute Indebtedness to the extent such liabilities would be included
as a liability in accordance with GAAP; 



“Interest Coverage Ratio”:

as of any date, (a) EBITDA for the period of four fiscal quarters ending on or most
recently ended prior to such date, to (b) Financial Expenses for the period of four
fiscal quarters ending on or most recently ended prior to such date; 



“Indemnity Agreement”:

the Indemnity Agreement dated as of March 24, 2004 among the Borrower, the
Guarantor and the Collection Agent pursuant to which the Borrower agrees to
reimburse the Guarantor in respect of payments made by the Guarantor to the LENDERS
pursuant to the Guarantee Agreement and to make certain other payments to the
Guarantor on the terms set forth therein; 



“Interest Period”:

the period commencing on the day on which the Loan is first disbursed under this
Agreement (in the case of the initial payment of interest) or (in the case of each
subsequent payment of interest) the immediately preceding Payment Date and ending
on the subsequent Payment Date; 



“Intervening Bank”:

the institution designated by the Borrower to close the Exchange Contract for a
particular Disbursement; 



“JBIC Environmental
Guidelines”:
 the Guidelines for confirmation of Environmental and Social
Considerations issued by the Guarantor dated October 1999; 



“JBIC Procurement
Guidelines”:
 the “Guidelines for Procurement under Untied Loans by Japan Bank for
International Cooperation”, dated April 2002, as the same may be replaced, amended
or supplemented from time to time; 



“Law”:
 as defined
in Section (15) of Article VII; 



“LENDERS”:
 as
defined in the Recitals hereto; 



“Lending Office”:

the office of each LENDER set forth on Annex D hereto; 



“Leverage Ratio”:

as of any date, (a) Total Consolidated Debt as at such date to (b) Total
Consolidated Debt plus Total Consolidated Shareholders’ Equity as at such date; 



“LIBOR Business Day”:

a day on which dealings in deposits in Yen are carried on in the London interbank
Euro-currency market; 



“Loan”:
 the
aggregate principal amount of all Disbursements hereunder by the LENDERS to the Borrower
from time to time outstanding; 



“Majority LENDERS”:

at any time, LENDERS having at least fifty percent (50%) of the aggregate amount of
the Credit Exposures at such time; 



“Material Adverse Effect”:

a material adverse effect on the business, operations, properties, assets,
liabilities or financial or other condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or on the ability of the Borrower to perform its
obligations under this Agreement or any Transaction Document or with respect to the
Project; 



“New York Process Agent”:

as defined in Section (4) of Article XIV; 



“Notes”:
 promissory
notes of the Borrower, substantially in the form of Annex A hereto, evidencing the
Borrower’s obligation to repay the Loan, and “Note” means any one of such
promissory notes issued hereunder; 



“Official Lender”:
any Brazilian governmental financial institution, agency or development bank (or
any other bank or financial institution representing or acting as agent for any of
such institutions, agencies or banks), including, without limitation, Banco
Nacional de Desenvolvimento Econô mico e Social and the related system;  



“Other Guarantor Agreement”:

any agreement other than this Agreement involving the borrowing of money or the
extension of credit or any guarantee or indemnity between the Borrower on the one
part and either the Guarantor alone or the Guarantor acting together with one or
more banks or financial institutions on the other part; 



“Overdue Amount”:

as defined in Section (3)(a) of Article V; 



“Overdue Floating Rate”:

as defined in Section (3)(a) of Article V; 



“Overdue Interest”:

as defined in Section (3)(a) of Article V; 



“Overdue Interest
Calculation Date”:
 as defined in Section (3)(a) of Article V; 



“Overdue Period”:

as defined in Section (3)(a) of Article V; 



“Participant”:
 as
defined in Section (3)(b) of Article XV; 



“Payment Date”:

each of March 24 and September 24 in each year, provided that, if any Payment Date
would otherwise fall on a day which is not a Business Day, such Payment Date shall
be the immediately succeeding Business Day; 



“Permitted Encumbrance”:

(i) any Encumbrance in existence on and securing Indebtedness outstanding on the
date of this Agreement disclosed in writing to the Guarantor on or before the date
hereof; 

 (ii) any Encumbrance on any property acquired, constructed or
improved by the Borrower or any of its Subsidiaries after the date of this
Agreement, which is created, incurred or assumed contemporaneously with, or within
90 days after, that acquisition (or in the case of any such property constructed or
improved, after the completion or commencement of commercial operation of such
property, whichever is later) to secure or provide for the payment of any part of the
purchase price of such property or the costs of that construction or improvement
(including costs such as escalation, interest during construction and finance
costs); provided that in the case of any such construction or improvement the
Encumbrance shall not apply to any other property owned by the Borrower or any of
its Subsidiaries, other than any unimproved real property on which the property so
constructed, or the improvement, is located; 

 (iii) any Encumbrance on
any property which secures trade payables arising in the ordinary course of
business owing to an Official Lender; 

 (iv) any Encumbrance on any
property existing at the time of its acquisition and which is not created as a
result of or in connection with or in anticipation of that acquisition (unless such
Encumbrance was created to secure or provide for the payment of any part of the
purchase price of such property); 

 (v) any Encumbrance on any property
acquired from any Person which is merged with or into the Borrower which exists at
the time of such merger and is not created as a result of or in connection with or
in anticipation of any such transaction (unless such Encumbrance was created to secure or
provide for the payment of any part of the purchase price of such Person); 

 (vi) any Encumbrance
arising out of the refinancing, extension, renewal or refunding of any
Indebtedness, secured by any Encumbrance permitted by any of the foregoing clauses,
provided that such Indebtedness is not increased and is not secured by any
additional assets; 

 (vii) Encumbrances for taxes, assessments, government
charges or claims which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP shall have
been made therefore;

(viii) Encumbrances
incurred or deposited made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security;


 (ix) easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the business of the
Borrower or any of its Subsidiaries incurred in the ordinary course of business;


(x) Encumbrances created or deposits made to secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of alike nature incurred in the
ordinary course of business (exclusive of obligations for the payment of borrowed
money);

(xi) any Encumbrance on cash or cash equivalents securing Hedging
Agreements or other similar transactions;

(xii) Encumbrances
arising by operation of law and not otherwise included in (viii) above incurred in
the ordinary course of business for sums which are not yet delinquent or are being
contested in good faith by negotiations or by appropriate proceedings which suspend
the collection thereof; and 

 (xiii) any Encumbrance on any property of the
Borrower or any of its Subsidiaries that does not fall within paragraphs (i)
through (xii) above and that secures an aggregate amount of Indebtedness, which,
when aggregated with then outstanding Indebtedness, secured by all other Encumbrances on
any property of the Borrower and its Subsidiaries permitted under this paragraph
(xii) does not exceed five percent (5%) of the lower of Unconsolidated Tangible Net
Worth and Consolidated Tangible Net Worth at the time any such Indebtedness is
incurred or Encumbrance is entered into;  



“Person”:
 an
individual, corporation, partnership, joint venture, trust, unincorporated organization,
government, sovereign state or any agency, authority or political subdivision
thereof, any international organization, agency or authority (in each case whether
or not having separate legal personality) or any two or more of the foregoing; 



“Project”:
 as
defined in the Recitals and set forth in Annex B; 



“Project Documents”:

all agreements, licenses, concessions, notices and documents relating to the
Project; 



“Quarterly Dates”:

the last day of March, June, September and December in each year, the first of
which shall be the first such day after the date hereof; provided that if any such
day is not a Business Day, then such Quarterly Date shall be the next preceding
Business Day;  



“Receivables Financing
Transaction”:
 a loan, advance or other similar credit made to the Borrower and/or
its Subsidiaries and secured by a pledge on receivables arising in connection with
the provision of services by the Borrower and/or such Subsidiaries, whereby (i)
such receivables are paid to one or more accounts directly or indirectly controlled
by, or accessible by, the relevant lender(s) or an agent on their behalf and (ii)
if the Borrower and/or such Subsidiaries do not pay amounts due and owing in respect of
such loan, advance or similar credit, such lender(s) or agent are entitled to apply
funds in such accounts toward the payment of such amounts due and owing; 



“Reference Banks”:

four (4) major banks in the London interbank market (including such subsidiary or
affiliate of the Agent as the Agent may from time to time determine in its sole
discretion and any LENDER the amount of whose Commitment is greater than ¥ 5,500,000,000)
selected by the Agent; 



“Relevant Currency”:

the currency in which any tax, duty, penalty, fee, expense, charge, interest, loss,
cost or liability is denominated or, if the Agent shall so reasonably request, the
amount of the same in Yen at the then current rate of exchange as quoted by the
Agent, who shall give notice to the Borrower of such rate; 



“Repayment Date”:

each Payment Date occurring during the period commencing on September 24, 2006 and
ending on March 24, 2011; 



“Repayment Installment”:

the aggregate amount of principal repayable on any Repayment Date with respect to
all Disbursements; 



“Sale and Lease-Back
Transaction”:
 any arrangement with any Person providing for the leasing by the
Borrower or any Subsidiary of real or personal property which has been or is to be
sold or transferred by the Borrower or such Subsidiary to such Person, if the net
proceeds of such sale are at least equal to the fair value of such property as
determined by the Board of Directors of the Borrower, and so long as the Borrower or
the applicable Subsidiary applies such proceeds within one year of the consummation
of such sale or transfer to (i) the repayment of Indebtedness, (ii) the acquisition
of additional real or personal property, or (iii) a combination of the foregoing; 



“Subsidiary”:
 with
respect to any Person (the “parent”) at any date, any corporation, limited liability
company, partnership, association or other entity of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, otherwise Controlled by the
parent or one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. Unless otherwise specified, “Subsidiary” means a Subsidiary
of the Borrower;  



“Tax”:
 any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature (including,
without limitation, stamp tax and similar charge) which is at the date hereof or
hereafter imposed, levied, collected, withheld or assessed (i) in the Borrower’s
Country or by any taxing authority thereof or therein or (ii) by any taxing
authority (other than a taxing authority in Japan) purporting to exercise
jurisdiction over the Borrower or (iii) in any state or country (other than Japan) from
or through which the Borrower makes any payment hereunder or otherwise performs
this Agreement, excluding, in each case, net income and franchise taxes and similar
taxes and charges imposed on the Agent, the Guarantor or any LENDER; 



“Tokyo Process Agent”:

as defined in Section (4) of Article XIV; 



“Total Consolidated Debt”:

as at any date, the sum of the aggregate outstanding principal amount of all
Indebtedness of the Borrower and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP); 



“Total Consolidated
Shareholders' Equity”:
 as at any date, for the Borrower and its Consolidated
Subsidiaries (determined on a consolidated basis without duplication in accordance
with GAAP), the sum of the following: (a) capital stock plus (b) capital reserves
plus (c) revaluation reserves plus (d) profit reserves plus (e) retained
earnings/losses, all determined as of such date, as provided in Brazilian law
6,404/76, dated December 15, 1976, under the name of "Patrimô nio Líquido";  



“Transaction Documents”:

this Agreement, the Indemnity Agreement, the General Agency Agreement, the Fee
Letter and the Notes; 



“Unconsolidated
Intangible Assets”:
 the amount (to the extent reflected in determining the
unconsolidated shareholders' equity of the Borrower) of all write-ups after December
31, 2002 in the book value of any asset owned by the Borrower, all investments in
Subsidiaries and all equity investments in Persons which are not Subsidiaries and
all unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, anticipated future benefit of tax
loss carry-forwards, copyrights, organization or developmental expense and other
intangible assets; 



“Unconsolidated Tangible
Net Worth”:
 as at any date, the unconsolidated shareholders’ equity of the Borrower
determined as of such date, minus Unconsolidated Intangible Assets; 



“US Dollars” or “US$”:

the lawful currency of the United States of America from time to time; and  



“Yen” or “¥ ”:
 the
lawful currency of Japan from time to time.  



(2)   Article and Section
headings in this Agreement and the Table of Contents 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.



(3)   The Annexes to this
Agreement shall form an integral part hereof.



(4) Reference to “this
Agreement” in this Agreement means this Agreement as it may be amended from time to time. 



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



(6)   Unless otherwise
provided, any interest, fee, commission or other amount payable in respect of any period
shall accrue from (and including) the first day of that period up to (but excluding) the
last day of that period.



Article II 
Amount of
Facility and Use of Loan 



(1) (Facility) 



(a) The LENDERS hereby
agree to make available to the Borrower, on and subject to the terms and conditions
of this Agreement, a loan facility in Yen in an aggregate amount not exceeding twenty
seven billion five hundred million Yen (¥ 27,500,000,000) (the “Facility”). 



(b) Notwithstanding
paragraph (a) above, the LENDERS shall be under no obligation to make any
Disbursement if as a result thereof the maximum aggregate Dollar Equivalent Amount
of all Disbursements made hereunder would exceed two hundred million US Dollars
(US$200,000,000.00) (the “Dollar Facility Amount”).  



(c) If the whole or any
part of the Facility is canceled or reduced, then the whole or an equivalent
proportion (as the case may be) of the Dollar Facility Amount shall be canceled or
reduced and vice versa. 



(2) (Use of Loan) 



(a)   The entire proceeds
of the Loan shall be applied by the Borrower for the sole purpose of financing
      Eligible Expenditures.



(b)   The goods and
services to be financed out of the proceeds of the Loan shall be for non-military
      purposes.



(c)   No part of the Loan
shall be used to finance payments made for expenditures incurred prior to January
      1, 2003.



(3) (Nature of a LENDER’s
Rights and Obligations) The obligations of the LENDERS under this Agreement are several.
In no event shall any LENDER be responsible for any obligation of, or any action taken
or omitted by, any other LENDER under this Agreement (including, without limitation, the
obligation of any other LENDER to lend pursuant to this Article II). The rights of the
LENDERS under the Transaction Documents and the Guarantee Agreement are several. A
LENDER may, except as otherwise stated therein, separately enforce such rights. 



(4) (Notes) 



(a)   The Borrower’s
obligation to repay the Loan to each LENDER shall be evidenced by a single Note payable
to the order of such LENDER.



(b)   Each LENDER shall
record the date and amount of its share of each Disbursement made hereunder and the date
and amount of each payment of principal made by the Borrower with respect thereto, and
may, if such LENDER so elects in connection with any transfer or enforcement of its Note,
endorse on the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Disbursement then outstanding; provided
that a LENDER’s failure to make (or any error in making) any such recordation or
endorsement shall not affect the Borrower’s obligations hereunder or under the Notes.
Each LENDER is hereby irrevocably authorized by the Borrower so to endorse its Note and
to attach to it and make a part of its Note a continuation of any such schedule as and
when required.




Article III
Disbursement 



(1) (Disbursement
Procedures) Subject to the fulfillment or waiver of the conditions referred to in
Article X and the other terms and conditions of this Agreement, the LENDERS shall
disburse the Loan in accordance with the Disbursement Procedures. Each Disbursement
shall be made from the several LENDERS ratably in proportion to their respective
Commitments, as set forth in Annex D. 



(2) (Final Disbursement
Date) No Disbursement shall be made after the Final Disbursement Date unless otherwise
agreed in writing by the LENDERS and the Guarantor. 



(3) (Facility Amount;
Amount of Disbursement) Notwithstanding anything contained herein to the contrary, the
aggregate amount of all Disbursements made hereunder shall at no time exceed the amount
of the Facility. 



(4) (Completion of
Disbursement Request) The Disbursement Request shall not be deemed to be duly completed
unless the conditions precedent set forth in Article X have been satisfied or irrevocably
waived by the Agent and the Guarantor. 




Article IV
Repayment and
Prepayment of the Loan 



(1) (Repayment of Loan)
The Borrower shall repay the Loan to the LENDERS in ten (10) equal semi-annual repayment
installments, falling due and payable on each Repayment Date, as set out in the
Amortization Schedule. 



    In the event that on the
day immediately following the Final Disbursement Date, the aggregate amount of
Disbursements made hereunder is less than the aggregate maximum principal amount of
Disbursements permitted under Article II, the amount equal to the undisbursed amount
shall be deducted pro rata from each of the installments of the Loan shown in the
Amortization Schedule (provided that the installments other than the last installment
shall be rounded up to the nearest one thousand Yen (¥ 1,000.-), the aggregate amount of
the resulting increases to such installments being deducted from the last installment),
unless such undisbursed balance is less than the last installment, in which case the
whole amount thereof shall be deducted from the last installment alone. 



    Promptly after the Final
Disbursement Date and at the time of any amendment to the Amortization Schedule, the
Agent shall draw up an amended Amortization Schedule which shall replace the original
Amortization Schedule and be binding upon the Borrower, and the Agent shall notify the
Borrower thereof and furnish the Borrower with a copy thereof without delay, whereupon
the Borrower shall be irrevocably and unconditionally obliged to repay the Loan in
accordance therewith.  Such Amortization Schedule shall be conclusive in the absence of
manifest error.



(2) (Prepayment
Circumstance) The Borrower shall not at any time prepay any outstanding amount of the
Loan other than in accordance with Section (3) of this Article IV or Section (2) of
Article XII or as otherwise agreed between each of the Guarantor, the Agent and the
Borrower and in the manner directed by the Guarantor and the Agent. 



(3) (Voluntary
Prepayment) On any Payment Date falling after the Final Disbursement Date, the Borrower
may, after issuance of any authorization of the Central Bank of the Borrower’s Country
necessary to make such prepayment and upon giving not less than thirty (30) calendar days’ prior
irrevocable notice in writing to the Agent and the Guarantor, prepay all or any part of
the Loan on a Payment Date in advance of the final Repayment Date together with all
accrued interest on the respective amounts so prepaid up to and including the day
immediately preceding the date of such prepayment and any other amounts then payable
under this Agreement in respect thereof, in the manner directed by the Agent and the
Guarantor. 



(4) (Prepayment – Miscellaneous)
Subject to the other provisions of this Agreement (including, without limitation Section
(2) of this Article IV), (i) any notice to prepay given by the Borrower under this
Agreement shall be irrevocable and shall constitute an irrevocable obligation to prepay
the amount set forth in such notice and (ii) all prepayments shall, subject to the
provisions of Article XI of this Agreement, be made without premium or penalty. Amounts
prepaid under this Agreement may not be re-borrowed. Any and all prepayments made under
this Agreement shall be applied to the Repayment Installments of the principal of the
Loan in the inverse order of their maturity and shall be in an amount equal to the
Repayment Installment or Repayment Installments against which such prepayment is to be
applied pursuant to this Section (4). 




Article V
Interest,
Commitment Charge and Overdue Payment 



(1) (Interest) Each
Disbursement shall bear interest on the outstanding principal amount therefor, for each
day during each Interest Period, at a rate per annum equal to the Floating Rate
applicable to such Interest Period plus the Applicable Spread. The Borrower shall pay
such interest to the LENDERS in arrears on each Payment Date for the period commencing on
and including the date of the first Disbursement (in the case of the initial payment of
interest on such Disbursement) or the immediately preceding Payment Date (in the case of
each subsequent payment of interest) up to but excluding such Payment Date. 



(2) (Commitment Charge) 



(a)   The Borrower shall
pay to the LENDERS ratably in proportion to their Credit Exposures, a commitment
      charge at the rate of two-fifths of one percent (0.4%) per annum on the daily
undrawn and uncancelled       portion of the Facility.



(b)   Such commitment
charge shall accrue from and including the date hereof to the Final Disbursement
      Date. Such commitment charge shall be payable in arrears on each Payment Date
during the period       commencing on the date hereof (in the case of the initial payment
of such commitment charge) or the       immediately preceding Payment Date (in the case
of each subsequent payment of such commitment charge)       up to and including such
first-mentioned Payment Date or the Final Disbursement Date, as the case may       be.



(3) (Default Interest) 



(a) In case the
Borrower fails to pay any principal or interest payable under this Agreement on the due
date therefor (hereinafter referred to as the “Overdue Amount”), the Borrower shall
pay to the LENDERS interest (“Overdue Interest”), to the fullest extent permitted
by applicable law, on such Overdue Amount for each day during the period from and
including the due date therefor to the date of actual receipt by the LENDERS
thereof (hereinafter referred to as the “Overdue Period”), at a rate per annum
equal to the sum of the Overdue Floating Rate (as defined below), the Applicable Spread
and one percent (1.00%). Such Overdue Interest shall accrue as well after as
before judgment and in accordance with Section (4) of this Article V. Interest at
the rate stipulated in Section (1) of this Article V shall not accrue on any
Overdue Amount during the Overdue Period.  



The “Overdue Floating Rate” means,
in this Section (3) of this Article V, the rate per annum (on the basis of a
360-day year), shown on the Telerate Page 3750 (or such other page as may replace such
page on such screen for the purpose of displaying London interbank offered rates of
major banks for deposits in Yen) as the “British Bankers Association Interest
Settlement Rate” in Yen (LIBOR) for a period of six (6) months, or if no rate
appears on such page on any Overdue Interest Calculation Date (as defined below) in
the Overdue Period, the average (rounded upwards, if necessary, to the nearest
1/16th of 1%) of the respective rates per annum at which deposits in Yen are
offered to the Reference Banks in the London interbank market, in each case, as of
approximately 11:00 a.m. (London time) on such Overdue Interest Calculation Date.
In the event that such rate is not available at such time for any reason, then the
applicable the “Overdue Floating Rate” shall be determined by the Agent in a
commercially reasonable manner after consulting with the LENDERS and the Borrower. 



The “Overdue Interest
Calculation Date” means two (2) LIBOR Business Days prior to: 



(i)    the Repayment Date
or Payment Date, as applicable, on which the Overdue Amount became due and
             payable;



(ii)   (a) the Repayment
Date or Payment Date, as applicable, next succeeding the previous Repayment
             Date or Payment Date, as the case may be, in the event that the Overdue
Amount continues to be              unpaid on such subsequent Repayment Date or Payment
Date, as the case may be, or (b) each              March 24 and September 24 which
succeeds the final Repayment Date hereunder, in the event that              the Overdue
Amount is or continues to be unpaid on such date; and



(iii)  in the event that
the Overdue Amount became due and payable on any day other than a Repayment
             Date or a Payment Date, then the Repayment Date or Payment Date immediately
preceding the date              the Overdue Amount became due and payable, or the March
24 or September 24 immediately              preceding the date the Overdue Amount became
due and payable, in the event that the Overdue              Amount is or continues to be
unpaid after the final Repayment Date.



(b)   Payment of interest
by the Borrower in accordance with paragraph (a) of this Section (3) shall not
      prejudice the right of the LENDERS to exercise any other of its rights or claims
hereunder, at law or       otherwise to remedy any such failure to pay any amount on the
due date for payment hereunder, and in       particular its rights under Article IX
hereof.



(4) (Basis of
Calculation) Interest, commitment charge and any other fees on the Loan shall accrue on
a day-to-day basis and be computed on the basis of a year of three hundred and sixty-
(360) days and the actual number of days elapsed (fractional sums of less than one Yen (¥ 1.-)
being disregarded). 




Article VI
Payments and
Currency 



(1) (Place and Time of
Payment) Unless otherwise stipulated to the contrary, any and all payments to be made by
the Borrower to the LENDERS, the Agent and/or the Collection Agent under any Transaction
Document shall be paid, subject to the terms of the General Agency Agreement, in Yen in
immediately available funds for value not later than 11:00 a.m. (Tokyo time) on the due
date for payment thereof to the account of the Collection Agent as is notified to the
Borrower by the Collection Agent. Any payment made on such due date but after that time
shall be deemed to have been made on the immediately following Business Day and
accordingly interest shall accrue upon any amount paid after that time in accordance with
Section (3) of Article V. 



(2) (Payment to be made
on a Business Day) If any payment to be made by the Borrower under this Agreement falls
due on any day which is not a Business Day, such payment shall be made on the immediately
succeeding Business Day. 



(3) (Payments to be
Free of Claims) Any repayment or payment or prepayment by the Borrower to the LENDERS
hereunder shall be made without set-off or counterclaim. 



(4) (Payments in
Relevant Currency) The obligation of the Borrower under this Agreement to make payment
in Yen or the Relevant Currency, as the case may be, 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 or the Relevant
Currency, as the case may be, except to the extent to which such amount, tender or
recovery so expressed, paid, made or converted shall result (when converted to the
currency in which the obligation is denominated in accordance with the relevant LENDER's
usual foreign exchange practices) in the effective receipt by the LENDERS of Yen or the
Relevant Currency, as the case may be, and the Borrower shall, as a primary obligation
enforceable as an alternative or additional cause of action for the purpose of recovery
in Yen or the Relevant Currency, as the case may be, indemnify the LENDERS against the
amount (if any) by which such effective receipt shall fall short of the full amount of
Yen or the Relevant Currency, as the case may be, payable under this Agreement, and such
indemnity shall not be affected by any judgment obtained for any other sum due under this
Agreement. 



(5) (Insufficient
Payment) If the amount of any payment made by the Borrower on the due date therefor
under this Agreement is less than the total amount due and payable in respect of such
payment, the Agent (on behalf of the LENDERS) shall apply the payment so made in or
towards the satisfaction of any or all of the amounts which are due or overdue for
payment on such day in the following order (or in such other order as the Agent may agree
with the Borrower from time to time to be appropriate in the circumstances):

 (a)
costs and expenses (and amounts under indemnities in respect of costs and expenses)
due under this Agreement (to the extent the Agent has been notified that such
amounts are due) pursuant to this Agreement;

 (b) commitment and agency fees
due but unpaid under this Agreement, if any;

 (c) interest on Overdue Amounts due but
unpaid under this Agreement, if any; 

(d) interest due but unpaid on the Loan;

 (e)
the principal amount of the Loan then due and payable;

 (f) any amount due and
payable by the Borrower in accordance with the terms of this Agreement and not
otherwise provided for in this Section (5) of Article VI, 

provided that:

 (g)
if any payment is insufficient to pay an amount referred to in any of paragraphs (a)
to (f) (inclusive) above in full, the Agent shall apply the payment received pro
rata in proportion to the amounts owing under the Loan in reduction of the amount
referred to in the relevant paragraph above and, with respect to amounts applied
to the Loan, in the chronological order in which such sums fell due; and

(h) if the Guarantor
makes any payment with respect to the Guaranteed Unpaid Amount (as defined in the
Guarantee Agreement) pursuant to the terms of the Guarantee Agreement, the
parties hereto agree for the express benefit of the Guarantor that, from the
date the Guarantor makes such payment until the date the Borrower reimburses
the Guarantor in full therefor and discharges in full any other outstanding
payment obligations or other obligations that it may owe the Guarantor under the
Indemnity Agreement, all payments made by the Borrower under this Agreement
shall be applied in accordance with the provisions of Section 3.2
(Application of Payments) of the General Agency Agreement.  



(6) (Arrangement Fee
and Agency Fee) The Borrower shall pay to Sumitomo Mitsui Banking Corporation the
arrangement fee and the agency fee specified in a fee letter dated after the date hereof
between the Borrower and Sumitomo Mitsui Banking Corporation (the “Fee Letter”), at the
times specified for payment therein, independently from any obligation under this
Agreement.  




Article
VII
Representations and Warranties 



The Borrower hereby
represents and warrants for the benefit of the LENDERS that:



(1) (Status of
Borrower) The Borrower is a corporation duly incorporated and validly existing under the
laws of the Borrower’s Country as a sociedade anô nima and has full power and authority to
carry on its business (including the Project) as now being conducted and is a legal
entity with separate legal personality capable of being sued in its own name.  



(2) (Authorization)
The Borrower has full power and authority to enter into each Transaction Document, to
borrow hereunder and to perform and observe the terms and conditions of this Agreement
and each other Transaction Document. The Borrower has taken and completed all action or
procedures necessary to approve the transactions contemplated in this Agreement and each
other Transaction Document and to authorize the Borrower to execute, deliver and perform
this Agreement and each such Transaction Document and to perform its obligations
hereunder or thereunder. 



(3) (Government
Consents and Actions) All authorizations, licenses, approvals or consents of, or
registrations, recordations or filings with, the Borrower’s Country, or of any agency,
department, or commission thereof or therein which is necessary for (a) the execution,
delivery or performance of this Agreement and each other Transaction Document or any
agreement or instrument required hereunder or thereunder, (b) the legality, validity,
enforceability and admissibility in evidence hereof or thereof, (c) the borrowings
hereunder or (d) the payment by the Borrower of all sums which it may be liable to pay
hereunder or thereunder in Yen or the Relevant Currency, as the case may be, have been
duly effected, completed and/or obtained and are in full force and effect, (A) including,
but not limited to, the electronic registration of the Loan with Banco Central do Brasil
by means of the SISBACEN system called Registration of Financial Transaction (“Registro
de Operação Financeira – ROF”) (“ROF”) and all related authorizations, registrations (or
amendments thereof) and communications from, with or in respect of ROF and/or any
department of Banco Central do Brasil which may be required prior to each Disbursement
hereunder by the applicable regulations of the Borrower’s Country, which has been made
and is in full force and effect, or shall be made or be in full force and effect prior to
such Disbursement, and (B) except for (i) the registration of each Disbursement and the
related schedule of payments with respect thereto with Banco Central do Brasil, which the
Borrower shall promptly effect after the entrance of such Disbursement into the Borrower’s
Country in accordance with Article VIII of this Agreement, (ii) the notarization of the
signature of the parties to each Transaction Document by a notary public licensed under
the laws of the place of signing; (iii) the consularization of each Transaction Document
in the appropriate Brazilian consulate in the event that such Transaction Document is not
executed in the Borrower’s Country; and (iv) the registration of each Transaction
Document, together with a sworn translation of each Transaction Document into the
Portuguese language, with the appropriate Registry of Deeds and Documents, which
registration can be made at any time prior to the enforcement thereof in the Borrower’s
Country.  



(4) (Binding Effect)
Each Transaction Document has been duly executed and delivered by the duly authorized
representative(s) of the Borrower. Each Transaction Document constitutes the legal,
valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law. 



(5) (No Contravention)
The execution, delivery and performance of this Agreement and each other Transaction
Document and all instruments and agreements required hereunder or thereunder do not
contravene, violate or constitute a default under (a) any provision of the articles of
incorporation, by-laws or other constituent documents or capital stock of the Borrower;
(b) any material provision of any material agreement or other material instrument to
which the Borrower is a party or by which the Borrower or any of its assets is or may be
bound; (c) any treaty, law or regulation applicable to the Borrower; or (d) any judgment,
injunction, order or decree binding upon the Borrower or any of its assets, nor would the
same result in the creation or imposition of any Encumbrance on any asset of the Borrower. 



(6) (No Default) No
event has occurred and is continuing or would result from the making of any Disbursement
hereunder which constitutes or would constitute a Default or a material default under any
material agreement, mortgage, indenture, note or other material instrument to which the
Borrower is a party or by which the Borrower or any of its assets is or may be bound. 



(7) (Litigation) There
are no legal, administrative or other actions, claims or other proceedings current,
pending or, to the Borrower’s knowledge, threatened against the Borrower or the Project
which if decided adversely would materially and adversely affect the financial condition,
business or operations of the Borrower and its Consolidated Subsidiaries or the Project
or would materially and adversely affect the Borrower’s ability to perform its
obligations under this Agreement or any other Transaction Document or which question the
legality, validity or binding effect of any provision of this Agreement or any other
Transaction Document or the authority of the Borrower to execute any of the Transaction
Documents. 



(8) (Taxes) Under the
laws of the Borrower’s Country, there is no Tax payable (whether by withholding or
otherwise) on or by virtue of the execution and delivery of this Agreement, or any other
Transaction Document or any document or instrument to be executed and delivered hereunder
or thereunder, the performance, enforcement or admissibility in evidence hereof or
thereof, or on any payment required to be made hereunder or thereunder, except for a
withholding tax with respect to payments of interest under this Agreement. 



(9) (Pari Passu) The
obligations and liabilities of the Borrower under this Agreement and each other
Transaction Document are unconditional and general obligations of the Borrower and rank
at least pari passu with all other present or future unsecured and unsubordinated
Indebtedness (both actual and contingent) of the Borrower.  



(10) (Proceedings to
Enforce Agreement) In any proceedings in the Borrower’s Country to enforce any
Transaction Document, the choice of New York law or Japanese law (as the case may be) as
the governing law thereof will be recognized and such law will be applied, the
irrevocable submissions of the Borrower to the non-exclusive jurisdiction of the Tokyo
District Court, the courts of the State of New York and the courts of the United States
of America in New York and the appointment by the Borrower of the Tokyo Process Agent and
the New York Process Agent are legal, valid, binding and enforceable and any judgment
obtained in Japan or New York will be recognized and enforceable against the Borrower and
its assets in the Borrower’s Country after having been duly ratified by the Federal
Supreme Court of the Borrower’s Country; such ratification by the Supreme Court of the
Borrower’s Country will occur if the court decision in such jurisdiction (i) complies
with all formalities required for the enforcement thereof under the laws of such
jurisdiction; (ii) was issued by a competent court in such jurisdiction after valid
service of process upon the parties to the action (such service to have been made under
the authority of a court or the clerk of a court), or after sufficient evidence of the
parties’ absence has been given in accordance with the applicable law of such
jurisdiction; (iii) is not subject to appeal; (iv) is not against public policy, national
sovereignty or good morals of the Borrower’s Country and does not contain any other
provision of a similar nature; (v) is duly authenticated by the competent consulate of
the Borrower’s Country in such jurisdiction and is accompanied by a translation thereof
into Portuguese made by a sworn translator; and (vi) in the case of proceedings in the
Borrower’s Country to enforce a payment obligation under this Agreement, it is also
required that any judgment obtained in Japan or New York be for the payment of a
determined amount. 



    Each Transaction Document
is in proper legal form under the laws of the Borrower’s Country and is capable of
enforcement in the courts of the Borrower’s Country.



    There is no requirement
to file, register or otherwise record any Transaction Document or any instrument or
agreement required hereunder or thereunder in any public office or elsewhere in the
Borrower’s Country to ensure the validity, legality, effectiveness, enforceability or
admissibility in evidence hereof or thereof, except for the approvals, registrations and
other actions referred to in Section (3) of this Article VII.



    Each Note shall
constitute a valid título executivo, enforceable against the Borrower in accordance with
applicable law. 



(11) (Commercial
Activity) The Borrower is subject to civil and commercial law with respect to its
obligations under this Agreement and each Transaction Document. The execution and
delivery of this Agreement and each Transaction Document constitute, and the Borrower’s
performance of and compliance with its obligations under this Agreement and each
Transaction Document will constitute, private and commercial acts rather than public or
governmental acts. 



(12) (Immunity) The
waiver of immunity by the Borrower in Section (5) of Article XIV is legal, valid, binding
and enforceable and neither the Borrower nor any of its assets has any right of immunity
from suit, execution, attachment prior to judgment, attachment in aid of execution or any
other legal process with respect to its obligations under any Transaction Document in any
jurisdiction, including, without limitation, the Borrower’s Country. 



(13) (Information) All
written information which has been given by the Borrower or the representatives or agents
thereof to the Guarantor, the Agent or the LENDERS or the representatives, agents or
legal counsel thereof in connection with any Transaction Document was when given true and
accurate in all material respects. The Borrower has disclosed to the LENDERS in writing
any and all facts which materially and adversely affect the business, operations or
financial condition of the Borrower or the ability of the Borrower to perform its
obligations under any Transaction Document. 



(14) (Financial
Statements) 



(a)   The audited
consolidated financial statements of the Borrower and its Consolidated Subsidiaries as of
      the end of and for the years ending December 31, 2002 and (ii) each of the Borrower’s
fiscal years       thereafter, reported on by KPMG or other independent public
accountants of recognized international       standing, copies of which have been
furnished to each of the Guarantor, the Agent and the LENDERS on       or before the date
on which this representation is made or deemed to be made, to the extent then
      existing, are complete and correct in all material respects and fairly present the
consolidated       financial position of the Borrower and its Consolidated Subsidiaries
as of such dates and their       consolidated results of operations and cash flows and
changes in shareholders’ equity for the fiscal       years then ended.



(b)   The financial
statements described in paragraph (a) of this Section (14) and the related schedules
      and notes thereto have been prepared in accordance with GAAP throughout the periods
involved.



(c)   Since December 31,
2002 there has been no material adverse change in the business, financial position
      or results of operations of the Borrower and its Consolidated Subsidiaries.



(15) (Compliance with
Laws) The Borrower is in compliance with all applicable Laws and directions of any
Governmental Agency having jurisdiction over its business and all covenants and other
obligations contained in any agreements to which it is a party except where the failure
to so comply in respect of any of the foregoing does not have a Material Adverse Effect.
For the purposes of this Section (15) and of Section (7) of Article VIII, the term “Law” means
any convention, treaty, law, ordinance, decree, rule, directive, regulation, judicial or
arbitral decision, or voluntary restraint, policy or guideline not having the force of
law but compulsory in character, or any of the provisions of the foregoing (as amended,
supplemented or replaced from time to time) binding on or affecting the Borrower, and the
term “Governmental Agency” means any ministry, department, authority, corporation, or
other juridical entity of the Borrower’s Country or any political subdivision thereof or
therein, whether autonomous or not but charged with legislative, regulatory,
administrative or judicial powers of functions, including any entity owned or controlled
by such government or such political subdivision.  



(16) (Project) The
Project description and details contained in Annex B are true and accurate in all
respects.  



(17) (Qualification to
do Business) It is not necessary under the laws of the Borrower's Country that any LENDER
or the Agent be licensed or qualified to do business in the Borrower's Country solely as
a result of its execution, delivery or performance of the Transaction Documents, except
that each LENDER will be required, pursuant to Normative Instruction No. 200, of
September 13, 2002, issued by the Federal Revenue Service (Secretaria da Receita Federal)
of the Ministry of Finance (Ministé rio da Fazenda), as amended, to obtain a federal
taxpayer's identification number (número de inscrição no cadastro de pessoas jurídicas)
in the Borrower’s Country.  



The representations and
warranties of the Borrower made and given above shall be continuing representations and
warranties, shall survive the execution of this Agreement and shall be deemed to be
repeated by the Borrower on the date of each Disbursement and on each Payment Date by
reference to the facts then existing.




Article VIII
Particular
Covenants 



The Borrower covenants
and agrees that, as from the date of this Agreement and so long as any amount payable or
repayable to the LENDERS hereunder has accrued and remains outstanding:



(1) (Consultation and
Visit) The Borrower shall from time to time at the request of the Agent or the
Guarantor, consult with the Agent or the Guarantor, as the case may be, as to the
implementation and administration of the Transaction Documents and the Project. The
Borrower shall afford all reasonable opportunity for representatives of the Agent or the
Guarantor, during normal business hours and upon reasonable advance notice, to visit any
part of its premises (and/or territory as the case may be), and to inspect the books,
accounts and records of the Borrower for purposes related to the Transaction Documents. 



(2) (Information) 



(a)   The Borrower shall
furnish the Agent and the Guarantor with copies of the annual reports of the
      Borrower promptly after they are prepared, and in any event not later than one
hundred and eighty       (180) days after the close of each of the Borrower’s financial
years.



(b)   The Borrower shall
include the Agent and the Guarantor in its mailing list and by so doing shall
      disclose to the Agent and the Guarantor all public information disclosed by the
Borrower to its       shareholders.



(c)   The Borrower shall
furnish the Agent and the Guarantor upon request with all information as shall be
      furnished by the Borrower to any party to any other loan or financing agreement
related to the       Project and with such other information (financial or other) as the
Agent or the Guarantor may       reasonably request.



(d)   The Borrower shall
furnish the Agent and the Guarantor with such other information (financial or
      otherwise) as the Agent or the Guarantor may reasonably request from time to time
in relation to the       implementation and administration of the Project or of this
Agreement.



(3) (Notifications) 



(a)   The Borrower shall
promptly inform the Agent and the Guarantor of the imposition of, or change in,       any
laws, decrees or regulations and any change in the favorable treatment (if any) provided
by the       government of the Borrower’s Country that has or could have a Material
Adverse Effect.



(b)   The Borrower shall
promptly inform the Agent and the Guarantor of any amendment to the constitutive
      documents of the Borrower that has or could have a Material Adverse Effect, any
substantial change in       the business activities of the Borrower or in the Project,
any proposed or actual change, to the       Borrower’s knowledge, in the shareholders of
the Borrower beneficially owning five percent (5%) or       more of the outstanding
common shares of the Borrower, or the occurrence of any other matter which       has or
could have a Material Adverse Effect.



(c)   The Borrower shall
promptly inform the Agent and the Guarantor of the occurrence of any event or
      circumstance which interferes with the implementation, completion or operation of
the Project.



(d)   The Borrower shall
notify the Agent and the Guarantor as soon as it becomes aware of the occurrence       of
any Event of Default or of any event or circumstance which, upon the lapse of time, the
giving of       notice, the making of a determination or any combination of any of the
foregoing, would become an       Event of Default, or any event which interferes with the
performance by the Borrower of its       obligations under the Transaction Documents.



(e)   The Borrower shall
promptly inform the Agent and the Guarantor of any change in the information
      described in Section (13) of Article VII hereof which could have a Material Adverse
Effect.



(4) (Financial
Statements) The Borrower shall furnish or cause the Agent and the Guarantor to be
furnished with the following reports and information: 



(a)   as soon as
available, but in any event not later than one hundred and eighty (180) days after the
      close of each of the Borrower’s fiscal year, the audited consolidated financial
statement of the       Borrower and its Consolidated Subsidiaries as of the end of and
for such year, setting forth in each       case in comparative form, in the manner
regularly published by the Borrower, the figures for the       previous fiscal year, all
reported on by KPMG or other independent public accountants of recognized
      international standing (without a “going concern” or like qualification or
exception and without any       qualification or exception as to the scope of such audit)
to the effect that such consolidated       financial statements present fairly in all
material respects the financial condition, results of       operations and cash flows and
changes in shareholders’ equity of the Borrower and its Consolidated       Subsidiaries
in accordance with GAAP;



(b)   as soon as
available, but in any event within sixty (60) days after the end of each of the first
      three fiscal quarters of the Borrower, the consolidated financial statements of the
Borrower and its       Consolidated Subsidiaries as of the end of and for such fiscal
quarter and the then elapsed portion       of the fiscal year, setting forth in each case
in comparative form, in the manner regularly published       by the Borrower, the figures
for (or, in the case of the balance sheet, as of the end of) the       corresponding
period or periods of the previous fiscal year, all certified by the chief financial
      officer of the Borrower as presenting fairly in all material respects the financial
condition,       results of operations and cash flows and changes in shareholders’ equity
of the Borrower and its       Consolidated Subsidiaries in accordance with GAAP, subject
to normal year-end audit adjustments;



(c)   concurrently with
any delivery of financial statements under clause (a) or (b) of this Section (4), a
      certificate of the chief financial officer of the Borrower (i) certifying as to
whether a Default has       occurred and, if a Default has occurred, specifying the
details thereof and any action taken or       proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations       demonstrating compliance with
Section (18) of this Article VIII and (iii) stating whether any change       in GAAP or
in the application thereof has occurred since the date of the audited financial
statements       referred to in this Section (4) and if any such change has occurred,
specifying the effect of such       change on the financial statements accompanying such
certificate.



(5) (Records and
Accounts) 



(a)   The Borrower shall
maintain records and accounts adequate to reflect in accordance with consistently
      maintained sound accounting practices the expenditures financed out of the proceeds
of the Loan.



(b)   The Borrower shall
furnish to the Agent and the Guarantor such other information concerning the
      records and accounts and the audit thereof as the Agent or the Guarantor may from
time to time       reasonably request.



(c)   For all
expenditures with respect to which Disbursements were made on the basis of statements of
      expenditures, the Borrower shall:



(i)    maintain, in
accordance with paragraph (a) above, records and account reflecting such
             expenditures;



(ii)   retain, until at
least two (2) years after the Final Disbursement Date, all records
             (contracts, orders, invoices, bills, receipts and other documents)
evidencing such              expenditures; and



(iii)  enable
representatives of the Agent or the Guarantor to examine such records.



(6) (Maintenance of
Property) The Borrower shall keep all material property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted. 



(7) (Compliance with
Laws) The Borrower shall comply with all applicable Laws and directions of any
Governmental Agency having jurisdiction over its business and all covenants and other
obligations contained in any agreements to which it is a party except where the failure
to so comply in respect of any of the foregoing would not have a Material Adverse Effect. 



(8) (No Encumbrance)
The Borrower shall not, without the prior written consent of the Majority LENDERS and
the Guarantor, create, assume or have outstanding any Encumbrance upon all or any part of
the present or future assets or revenues of the Borrower to secure any present or future
Indebtedness of any Person, whether actual or contingent, except for the Permitted
Encumbrances. 



(9) (Pari Passu) The
obligations and liabilities of the Borrower under this Agreement and each other
Transaction Document shall constitute unconditional and general obligations of the
Borrower and shall rank at least pari passu with all other existing or future unsecured
and unsubordinated Indebtedness of the Borrower.  



(10) (Protection of
Environment) The Borrower shall pay due attention to the protection and conservation of
the environment and ecology, including, but not limited to, giving due consideration to
such issues as noise pollution, air pollution, water pollution, industrial waste
treatment and ecological changes to the environment in accordance with JBIC Environmental
Guidelines. 



(11) (Disposal of
Assets) The Borrower shall not, without the prior written consent of the Majority
LENDERS and the Guarantor, sell or otherwise dispose of, whether by a single transaction
or a series of related transactions, assets or properties (other than sales or disposals
in the ordinary course of business and for full consideration) the aggregate of which
exceeds twenty percent (20%) of the lower of Unconsolidated Tangible Net Worth and
Consolidated Tangible Net Worth, as calculated on the date of the transaction in
question, provided that the Borrower may upon thirty (30) days’ prior written notice to
the Agent and the Guarantor, enter into Sale and Lease-Back Transactions with respect to
its assets and properties. 



(12) (No Merger) The
Borrower shall not consent to, enter into or become a party to, any merger, amalgamation
or similar transaction with any other Person without the prior written consent of the
Majority LENDERS and the Guarantor provided that the Borrower may enter into or become a
party to, any merger, amalgamation or similar transaction with another Person if (i) the
survivor of such merger, amalgamation or similar transaction explicitly assumes in
writing all of the Borrower’s obligations under each Transaction Document and in
connection with the Project, (ii) such merger, amalgamation or similar transaction will
not substantially change the nature of the Borrower's business, (iii) such merger,
amalgamation or similar transaction does not and would not have a Material Adverse Effect
and (iv) immediately after giving effect to such merger, amalgamation or similar
transaction, no Default shall have occurred and be continuing under this Agreement. 



(13) (Procurement
Process) The Borrower shall ensure that the funds made available to the Borrower by the
LENDERS are used to procure goods and services necessary for the implementation of the
Project in accordance with JBIC Procurement Guidelines. 



(14) (Registration of
Agreement) 



(a)   Upon each
Disbursement by the LENDERS hereunder, the Borrower shall provide its Intervening Bank
with       the requisite documents for the purpose of closing the Exchange Contract
relating thereto, in       accordance with the applicable rules and regulations of Banco
Central do Brasil and shall take each       and all other necessary measures relating to
the ROF registration and/or the requirements of Banco       Central do Brasil in respect
of such Disbursement (including the registration with Banco Central do       Brasil of
the schedule of payments with respect thereto), so as to permit payment of the principal
      and interest on the Loan and any and all other amounts due under this Agreement in
the Relevant       Currency in accordance with the terms of this Agreement.  So long as
the Loan is outstanding       hereunder, the Borrower shall ensure that the ROF
registration thereof is in full force and effect.



(b)   The Borrower shall
execute each Exchange Contract with its Intervening Bank no later than four (4)
      days (or if a shorter period is required under the applicable rules and regulations
of the Borrower’s       Country, such shorter period) after the making of the
Disbursement relating thereto by the LENDERS.



(c)   The Borrower shall
promptly and timely obtain, and deliver to the Agent, from time to time at its own
      expense all such other governmental licenses, authorizations, consents, permits and
approvals as may       be required for the Borrower to comply with, and make scheduled
and unscheduled payments (including,       but not limited to, indemnification payments
or payments resulting from an acceleration of the       obligations of the Borrower) in
Yen in respect of, all of its obligations under, and to preserve the       rights and
remedies of the LENDERS under, this Agreement and any other Transaction Document.



(15) (Questions) The
Borrower shall promptly answer in writing, in reasonable detail, all reasonable questions
in respect of the financial condition and business activities of the Borrower which the
Agent or the Guarantor may submit to the Borrower in writing, and the Borrower shall at
the request of the Agent or the Guarantor meet with representatives or agents of the
Agent and the Guarantor to answer, in reasonable detail, all questions in respect of the
financial condition and business activities of the Borrower which the Agent and the
Guarantor may submit to the Borrower at least one week in advance of that meeting. The
Agent and the Guarantor may submit questions and request meetings once a year or more
frequently at the Agent and the Guarantor’s reasonable discretion. 



(16) (Further Assurance)
The Borrower agrees that, promptly following any request from the Agent and the
Guarantor, it shall take such further action, to the fullest extent permitted by
applicable law and regulations, as in the Agent and the Guarantor’s reasonable opinion is
necessary to ensure the enforceability of the Transaction Documents, the ability and
right of each party hereto to comply with its obligations hereunder and thereunder
(including the making of all requisite payments in Yen) and the preservation of the
rights and remedies of the LENDERS and the Guarantor hereunder and thereunder. 



(17) (Additional or
Substitutional Guarantee) Upon the occurrence of a Default under Section (18) of this
Article VIII, the Borrower shall, upon request by the Agent and the Guarantor, provide
the Agent, for the benefit of the LENDERS, and the Guarantor with such additional
security for the Loan as the Agent and the Guarantor requires, including without
limitation an absolute irrevocable and unconditional guarantee from a first-class bank
acceptable to the Agent and the Guarantor, or from a parent company of the Borrower if
acceptable to the Agent and the Guarantor, such guarantee to be by the first-class bank
or parent company as primary obligor and not as surety for the due and punctual payment
of the principal of, and interest on the Loan and any other amounts payable in accordance
with the terms and conditions of the Transaction Documents in addition to or as a
substitute for any guarantee or security provided with respect to the obligations
hereunder and thereunder; in such case, the said guarantee or other additional security
as requested by the Agent and the Guarantor shall, within 30 days of the Agent and the
Guarantor's first written demand therefor, be submitted to the Agent and the Guarantor
and shall be in form and substance satisfactory to the Agent and the Guarantor in all
respects. Such additional or substitutional guarantee shall remain in full force and
effect until the Default (the “Triggering Default”) giving rise to the Borrower's
obligation to deliver such guarantee hereunder has been cured. The acceptance by the
Agent and the Guarantor of such additional or substitutional guarantee shall constitute a
waiver by the LENDERS of the Triggering Default, provided that such waiver shall not
affect the rights, powers or privileges of any LENDER hereunder or under applicable law
(including, without limitation, the right to exercise any remedy with respect to a
Default or an Event of Default other than the Triggering Default, including a Default
under Section (18) of this Article VIII arising after the date of the Triggering
Default), all of which shall be expressly reserved, and provided, further, that such
waiver shall immediately terminate without notice or any action on the part of any LENDER
when such guarantee ceases to be in full force and effect.  



(18) (Financial
Covenants) 



(a) (Interest Coverage
Ratio) The Borrower will not permit the Interest Coverage Ratio on any Quarterly
Date for the four fiscal quarters ended on or immediately prior to such Quarterly
Date to be less than 2.25:1. 



(b) (Debt Coverage
Ratio) The Borrower will not permit the Debt Coverage Ratio on any Quarterly Date for
the four fiscal quarters ended on or immediately prior to such Quarterly Date to
exceed 3.50:1. 



(c) (Leverage Ratio)
The Borrower will not permit the Leverage Ratio on any Quarterly Date to be greater
than 0.60:1. 



(19) (Project
Implementation) 



(a)   The Borrower shall
implement, complete and operate the Project with due diligence and efficiency
      without any unnecessary delay, and in conformity with sound administrative,
engineering and financial       practices, and the Borrower shall not, without the prior
written consent of the Agent and the       Guarantor, make any substantial alteration to
the scope or nature of the Project.



(b)   The Borrower shall
duly perform its obligations under the Project Documents to which it is a party,
      and take all appropriate steps to enforce its rights and remedies and to ensure
that each other party       thereto complies with its material obligations under the
Project Documents to which such other party       is a party.



(c)   The Borrower shall
do all that is necessary to maintain in full force and effect, and shall comply
      with the terms of, all authorizations, approvals, consents, licenses and
permissions required or       desirable to enable it lawfully to enter into and perform
its obligations in respect of the Project.



(20) (Completion Report)
The Borrower shall furnish the Agent and the Guarantor, as soon as available upon
the completion of the Project, with a certified report of the total expenditures paid by
the Borrower for the construction of the Project and the sources of funds therefor,
in such detail as the Agent and the Guarantor may reasonably request. 




Article IX
Events of
Default 



(1) (Events of Default)
Each of the events set out in this Article IX shall be an Event of Default. 



(a)   the Borrower fails
to pay when due any amount of principal, interest or any other amount payable to
      the LENDERS or the Agent under this Agreement or any other Transaction Document, in
the manner       required hereunder or thereunder, provided that no Event of Default
shall occur if such failure to       pay is caused by a technical or administrative error
and payment is made within five (5) days; or



(b)   the Borrower is in
breach of or in default under any term, condition or provision of this Agreement       or
any other Transaction Document, provided that no Event of Default shall occur if such
breach or       default is capable of remedy and is remedied within ten (10) days of the
Agent notifying the Borrower       of such breach or default; or



(c)   any of the events
described in (a) or (b) above, or any other event which constitutes a default,
      occurs in respect of any Other Guarantor Agreement, provided that if an event
described in (b) above       or any other event which constitutes a default other than a
payment default occurs in respect of any       Other Guarantor Agreement, no Event of
Default shall occur if (i) such breach or default is capable       of remedy and is
remedied within fifteen (15) days of the Agent notifying the Borrower of such breach
      or (ii) the Indebtedness outstanding under such Other Guarantor Agreement is repaid
within such       fifteen (15) day period; or



(d)   any representation
or warranty made or given by the Borrower herein or in any other Transaction
      Document or any Disbursement Request or in any other statement otherwise made in
any certificate,       opinion or other document furnished in connection with this
Agreement or any other Transaction       Document proves to have been incorrect or untrue
in any material respect when made or given or deemed       made or given; or



(e)   (i) any other
Indebtedness of the Borrower, in an aggregate amount at least equal to US$30,000,000
      (or its equivalent in other currencies), is not paid at the maturity thereof for
any reason, or (ii)       any such Indebtedness becomes due and payable or repayable
prior to the stated maturity thereof       otherwise than at the option of the Borrower,
or (iii) any guarantee, indemnity or other contingent       liability , in an aggregate
amount at least equal to US$30,000,000 (or its equivalent in other       currencies),
given or owing by the Borrower in respect of Indebtedness is not honored when due or
      called; or



(f)   any distress,
attachment, execution, seizure before judgment or other process having a similar effect
      is levied, enforced or sued on or against any part of the property, assets or
revenues of the       Borrower and such process is not contested in good faith by the
Borrower or is not discharged or       stayed within one hundred and twenty (120) days
thereof; or



(g)   any foreclosure
proceeding or other process having a similar effect (other than exercise by creditors
      of rights in respect of amounts paid to accounts directly or indirectly controlled
by such creditors       in connection with Receivables Financing Transactions) is taken
by an encumbrancer to enforce any       Encumbrance created or assumed by the Borrower in
respect of any part of its property, assets or       revenues (including the taking of
possession or the appointment of a receiver, manager or other       similar Person), in
each case in respect of Indebtedness of the Borrower in an aggregate amount at
      least equal to US$30,000,000; or



(h)   the Borrower is
unable to pay, or admits to its creditors generally inability to pay, or takes any
      step inconsistent with an ability to pay, its debts as they fall due or a general
moratorium is       agreed to or declared in respect of the payment or performance of the
obligations of the Borrower; or



(i)   the Borrower
ceases, or threatens to cease, to carry on its business or the whole or a substantial
      part of the business, properties or assets of the Borrower is disposed of by the
Borrower or is       seized or appropriated (including pursuant to any condemnation,
seizure, compulsory purchase or       expropriation by any governmental authority or
agency); or



(j)   the Borrower
applies for the appointment of any liquidator, receiver, trustee, administrator or
      similar officer for it or any part of its assets; or such liquidator, receiver,
trustee,       administrator or similar officer is appointed without the application or
consent of, the Borrower; or       the Borrower institutes any bankruptcy, arrangement,
readjustment or rescheduling of debt,       dissolution, liquidation or similar executory
or judicial proceedings relating to it under the laws       of any jurisdiction; or any
such proceeding is instituted against the Borrower and such involuntary       proceeding
is not discharged or stayed within sixty (60) days thereof; or



(k)   (i) the validity of
this Agreement or any other Transaction Document is contested by the Borrower or
      (ii) the validity of this Agreement or any other Transaction Document is contested
by the Borrower’s       Country by virtue of enactment or adoption of any law, rule or
regulation, the issuance of a legally       binding decree or a final judgment or
decision of any competent court; or



(l)   there is any change
in any treaty to which the Borrower’s Country is a party or any law, rule or
      regulation of the Borrower’s Country or any order of any competent authority or
final decision of any       court of competent jurisdiction which renders any material
provision of this Agreement or any other       Transaction Document unlawful, invalid or
unenforceable or which will delay for more than sixty (60)       days the performance or
observance by the Borrower of any of its obligations hereunder or thereunder;       or



(m)   any license,
consent, approval or authorization of, or filing or registration with, any governmental
      authority or agency necessary for the validity or enforceability of this Agreement,
any other       Transaction Document or the Guarantee Agreement or the making or
performance by the Borrower of its       obligations under this Agreement, any other
Transaction Document or the Guarantee Agreement, or any       agreement or instrument
required hereunder or thereunder, or for the admissibility in evidence of       this
Agreement, any other Transaction Document or the Guarantee Agreement shall be revoked,
not be       issued or timely renewed, or cease to remain in full force and effect; or



(n)   the Borrower’s
Country shall cease to be a member of the International Monetary Fund.



(2) (Consequences of
Events of Default) Upon the occurrence of any of the foregoing Events of Default, then,
in each and every case, the Agent (on behalf of the LENDERS) shall (subject to the terms
of Section 2.4 (Obligations) of the General Agency Agreement and Section 4.08
(Acceleration/Prepayment and Legal Action) of the Guarantee Agreement) at any time
thereafter by written notice to the Borrower:- (i) immediately suspend any
Disbursement; and/or (ii) immediately cancel the undrawn portion of the Facility;
and/or (iii) demand that all or part of the Loan be payable on demand, whereupon the
Loan, together with all accrued interest, breakage costs, commitment
charges, fees and other amounts due under this Agreement or in respect of
the Loan shall become forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower. 



(3) (Guarantee) If the
Loan is accelerated pursuant to Section (2) of this Article IX and if such acceleration
is made pursuant to Section 4.08 (Acceleration/prepayment and legal action) of the
Guarantee Agreement, the Borrower shall in addition pay the Agent for the account of the
LENDERS a sum equal to the total amount of the Guarantee Fee (as defined in the Guarantee
Agreement) which would have accrued had no such acceleration occurred, together with the
cost to the LENDERS of funding such amount. 




Article X
Conditions
Precedent 



(1) (Conditions to
First Disbursement) This Agreement shall come into effect on the date hereof, provided,
however, that the LENDERS shall be under no obligation hereunder and no Disbursement by
the LENDERS hereunder shall be made unless and until the Agent (with the consent of the
Guarantor) has notified the Borrower in writing that the Agent has received all of the
following documents, each in form and substance satisfactory to it: 



(i)    a legal opinion of
independent legal counsel to the Borrower of recognized standing in the
             Borrower’s Country, reasonably acceptable to the LENDERS and the Guarantor,
in the form set              out in Annex F (with such modifications as may be reasonably
acceptable to the LENDERS and the              Guarantor), dated the date hereof;



(ii)   a duly executed
Note from the account of each LENDER dated as of the date hereof;



(iii)  a copy of the
by-laws of the Borrower (being the constitutional documents of the Borrower)
             certified as true, complete and up-to-date by a duly authorized officer of
the Borrower;



(iv)   certified copies
of resolutions of the board of directors of the Borrower authorizing the
             execution, delivery and performance by the Borrower of this Agreement and
each other              Transaction Document and the borrowing hereunder;



(v)    documentary
evidence of the authority of each Person who (aa) has signed this Agreement and
             each other Transaction Document on behalf of the Borrower and (bb) will sign
the statements,              reports, certificates and other documents required by this
Agreement and each other              Transaction Document and will otherwise act as a
representative of the Borrower in relation to              the implementation,
administration or performance of this Agreement and each other Transaction
             Document (such documentary evidence to include certified copies of all
corporate consents              obtained in order to authorize the execution, delivery
and performance by the Borrower of this              Agreement and each other Transaction
Document and the transactions contemplated hereby and              thereby and the
authenticated specimen signatures of and certificates of incumbency in respect
             of each Person described in (aa) and (bb) above);



(vi)   the written
consent of the Tokyo Process Agent and the New York Process Agent in the form set
             forth in Annex G or in a form reasonably acceptable to the Agent and the
Guarantor;



(vii)  documentary
evidence that the registration of this Agreement with Banco Central do Brasil has
             been duly effected;



(viii) a copy of the
Guarantee Agreement, the Indemnity Agreement, the General Agency Agreement and
             the Fee Letter duly executed by each party thereto, duly notarized and, to
the extent such              document is executed outside the Borrower’s Country, duly
consularized by the Brazilian              consulate located in the place of execution;
and



(ix)   such other
documents, evidence, materials and information (financial or other) which the Agent
             may reasonably request in relation to this Agreement, any other Transaction
Document and/or              the Project.



(2) (Conditions to Each
Disbursement) Moreover, notwithstanding anything contained herein to the contrary, the
obligation of the LENDERS to make each and every Disbursement hereunder shall at all
times be subject to the condition that as of the date of such Disbursement: 



(i)    no Default has
occurred and is continuing or would result from the making of such
             Disbursement;



(ii)   all the
representations and warranties made or given by the Borrower herein or in any other
             Transaction Document remain true and accurate in all material respects;



(iii)  the registration
of the Loan and of such Disbursement with Banco Central do Brasil by means of
             ROF and all related authorizations, registrations (or amendments thereof)
and communications              from, with or in respect of ROF and/or any department of
Banco Central do Brasil which may be              required by the applicable regulations
of the Borrower’s Country are in full force and effect;              and



(iv)   the Agent has
received consent from the Guarantor to the Disbursement being made by the
             LENDERS in the form set out in Annex 5 (Form of Consent to Disbursement) to
the Guarantee              Agreement not less than three (3) Business Days in advance of
the scheduled date for the              Disbursement.




Article XI
Taxes, Fees
and Expenses 



(1) (Tax Gross-up) If
the Borrower is required to make a payment to any Person under the Agreement subject to
the deduction or withholding of Tax, the sum payable by the Borrower in respect of which
such deduction or withholding is required to be made shall be increased to the extent
necessary to ensure that, after the making of the required deduction or withholding, such
Person receives and retains (free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have received and so retained had
no such deduction or withholding been made or required to be made. 



(2) (Tax Indemnity) If
any Person (or any agent on its behalf) is required to make any payment on account of Tax
or otherwise on or in relation to any sum received or receivable under this Agreement by
such Person (or agent on its behalf) or any liability in respect of any such payment is
asserted, imposed, levied or assessed against such Person (or agent on its behalf), the
Borrower shall, upon demand of the Agent, promptly indemnify such Person against such
payment or liability, together with any interest, penalties and expenses payable or
incurred in connection therewith. 



(3) (Indemnification
for Taxes, Fees and Expenses) 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 LENDERS against: 



(a)   all court taxes,
stamp or registration or filing duties or other fees, expenses or taxes and any
      penalty or interest with respect thereto which may be imposed by any law or
governmental authorities       in connection with the execution, delivery, performance,
registration or enforcement (including,       without limitation, the admissibility in
evidence) of this Agreement or any Transaction Document or       the obtaining or
enforcing of any judgment or award given in respect thereof;



(b)   all banking charges
or fees, if any, duly evidenced to the extent reasonably practicable, incurred in
      connection with the payment, repayment or prepayment of principal, interest,
commitment charges or       any other amount due to the LENDERS under this Agreement;



(c)   the costs and
expenses related to the obtaining and delivery of the opinions, documents and evidence
      referred to in Article X, but not to exceed the Ceiling Amount when aggregated with
amounts due       pursuant to Section (4)(a) of this Article XI; and



(d)   all losses, costs,
expenses and liabilities duly evidenced to the extent reasonably practicable,       which
the LENDERS may sustain or incur as a direct consequence of all or any of:



(i)  any accelerated
payment consequent upon the exercise of rights under Article IX;



(ii) any default in
punctual payment by the Borrower of any moneys due under this Agreement;



(iii)the occurrence or
continuance of any other Event of Default; and



(iv) prepayment and/or
repayment of the Loan or any part thereof on any date other than a Payment
           Date or any other date on which such amount falls due in accordance with the
provisions hereof            or of the Amortization Schedule.



(4) (Expenses) 



(a)   The Borrower shall,
whether or not any Disbursement is made, pay to the Agent on demand all expenses
      reasonably incurred by the Agent but not exceeding the Ceiling Amount, when
aggregated with amounts       due pursuant to Section (3)(c) of this Article XI in
connection with the negotiation, preparation,       execution, delivery, administration
and implementation of this Agreement and any other Transaction       Document including,
but not limited to, translation, communication, travel, accommodation and all       other
out-of-pocket expenses reasonably incurred.



(b)   The Borrower shall
reimburse the Agent on demand for all expenses reasonably incurred, including but
      not limited to reasonable legal fees and expenses of counsel, incurred by the Agent
in contemplation       of, or in connection with any amendment of this Agreement or any
other Transaction Document which is       implemented at the request of or as a result of
a material change in the circumstances of the       Borrower.



(c)   The Borrower shall
reimburse the LENDERS on demand for all expenses reasonably incurred in connection
      with the enforcement of, or the preservation or perfection of any of the rights of
the LENDERS       hereunder or thereunder.



(d)   The Borrower’s
obligations under this Section (4) shall be subject to delivery of reasonably detailed
      statements and copies of the expenses set forth above.



(5) (Relevant Currency)
All amounts payable by the Borrower under this Article XI shall be payable and paid in
the Relevant Currency. 




Article XII
Yield
Protection 



(1) (Inability to
Determine Interest Rates) If on or before the first day of any Interest Period, (a) the
Agent is advised by the Reference Banks that deposits in Yen (in the applicable amounts)
are not being offered to the Reference Banks in the London interbank market for such
Interest Period or (b) a LENDER (an “Affected LENDER”) advises the Agent that the
Floating Rate as determined by the Agent will not adequately and fairly reflect the cost
to such Affected LENDER of funding its ratable share of Disbursements during such
Interest Period, the Agent shall promptly give notice thereof to the Borrower and the
Borrower’s right to request the making of, and the Affected LENDER’s obligations to make,
Disbursements shall be suspended until such time as the circumstances giving rise to such
suspension no longer exist. Upon the giving of such notice, the Agent and the Guarantor
shall negotiate with the Borrower with a view to agreeing upon a reasonable alternative
basis for calculating the interest payable on and/or for making, maintaining and/or
funding of such Disbursements. Any alternative basis so agreed within 30 days of the
notification by the Agent of the event in question shall take effect in accordance with
the terms so agreed. If an alternative basis is not so agreed within such 30-day period,
such Disbursements shall, during such Interest Period, bear interest at the rate per
annum equal to the sum of the Applicable Spread and the direct cost of such Affected
LENDER (expressed as a rate per annum) of funding or maintaining outstanding its ratable
share of such Disbursements during such Interest Period (as determined in good faith by
the Agent), which determination shall be conclusive and binding on the Borrower for all
purposes in the absence of manifest error); provided that, upon the request of the
Borrower, the Agent shall describe in writing to the Borrower, in reasonable detail, the
calculation of such direct cost.  



(2) (Illegality) If,
on or after the date hereof, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by any
LENDER with any request or directive (whether or not having the force of law) of such
authority, central bank or comparable agency, shall make it unlawful or impossible for
any LENDER to make, maintain or fund its Credit Exposure and such LENDER shall so notify
the Agent, the Agent shall forthwith give notice thereof to the other LENDERS and the
Borrower, whereupon until such LENDER notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of such
LENDER to fund its Credit Exposure shall be suspended. At the request of such LENDER,
the Borrower shall, on the next Payment Date for interest on the Loan (or upon such
earlier date as such LENDER may advise the Borrower is the latest date on which such
LENDER may make, maintain or fund its Credit Exposure or the affected portion thereof
under applicable law) repay such LENDER’s ratable share of the Loan or the affected
portion thereof (including all interest accrued thereon and fees and expenses payable in
connection therewith) of such LENDER if such LENDER shall notify the Borrower that such
LENDER may not lawfully continue to fund and maintain its Credit Exposure or the affected
portion thereof. 



(3) (Increased Cost and
Reduced Return) (a) If on or after the date hereof, the adoption of any applicable law,
rule or regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any LENDER with any request or directive (whether having the
force of law) of any such authority, central bank or comparable agency, shall impose,
modify or deem applicable any reserve, special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit extended
by, any LENDER or shall impose on any LENDER or on the London interbank market any other
condition affecting funding of its Credit Exposure and the result of any of the foregoing
is to increase the cost to such LENDER of funding or maintaining the funding of its
Credit Exposure, or to reduce the amount of any sum received or receivable by such LENDER
under this Agreement or under its Note with respect thereto, by an amount deemed by such
LENDER to be material, then, within 15 days after demand by such LENDER (with a copy to
the Agent), the Borrower shall, at its option, (i) pay, upon delivery of documentary
evidence of such increase, to such LENDER such additional amount or amounts as will
compensate such LENDER for such increased cost or reduction; or (ii) repay such LENDER’s
ratable share of the Loan or the affected portion thereof (including all interest accrued
thereon and fees and expenses payable in connection therewith). 



(b)  If any LENDER shall
have determined that, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such law, rule or regulation,
or any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or comparable agency,
has the effect of reducing the rate of return on capital of such LENDER (or its parent)
as a consequence of such LENDER’s obligations hereunder to a level below that which such
LENDER (or its parent) could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such LENDER to be material, then from time to time, within 15 days after
demand by such LENDER (with a copy to the Agent), the Borrower shall, at its option, (i)
pay, upon delivery of documentary evidence of such increase, such LENDER such additional
amount or amounts as will compensate such LENDER (or its parent) for such reduction; or
(ii) repay such LENDER’s ratable share of the Loan or the affected portion thereof
(including all interest accrued thereon and fees and expenses payable in connection
therewith).



(c)  Each LENDER will
promptly notify the Borrower and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such LENDER to compensation pursuant
to this Section (3).  A certificate of any LENDER claiming compensation under this
Section (3) and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error.  In determining such amount, such
LENDER may use any reasonable averaging and attribution methods.




Article XIII
The Agent 



Under and subject to the
terms of the General Agency Agreement, each LENDER shall appoint the Agent to act as its
agent in relation to the implementation of the transactions contemplated by this
Agreement and the General Agency Agreement.  In addition, the Collection Agent shall be
appointed to act as a collection agent for and on behalf of the LENDERS and the Guarantor
pursuant to the General Agency Agreement.




Article XIV
Governing
Law and Jurisdiction 



(1) (Governing Law)
This Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the choice of law rules thereof, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws. 



(2) (Good Faith
Consultation) The parties hereto undertake to use their 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 not prejudice the
exercise of any right or remedy of either party hereto by any such party in respect of
any such dispute nor prevent a party from taking necessary steps to prevent the expiry of
any time limit for bringing any process, suit action or proceeding. 



(3) (Submission to
Jurisdiction) 



(a)   The Borrower hereby
irrevocably agrees that each of the Tokyo District Court, the courts of the State
      of New York and the courts of the United States of America in New York shall have
jurisdiction to       hear and determine any suit, action or proceedings, and to settle
any dispute, which may arise out of       or in connection with this Agreement and, for
such purpose, irrevocably submits to the jurisdiction       of such courts.



(b)   The Borrower
irrevocably waives any objection which it might at any time have to the courts referred
      to in paragraph (a) of this Section (3) 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 and agrees not to claim that any
such court is not a convenient or appropriate forum.



(c)   The submission to
the jurisdiction of the courts referred to in paragraph (a) of this Section (3)
      shall not (and shall not be construed so as to) limit the right of the LENDERS 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 to the giving of any relief or the issue of any process
in       connection with such action or proceedings 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.



(4) (Process Agent)
The Borrower agrees that without limiting any other means available to the LENDERS, the
process by which any suit, action or proceedings is begun, or any other document
regarding the initiation of suit, action or proceedings, may be validly served on the
Borrower by being delivered to (a) Abe & Matsutome Law Office at Shuwa Kioicho Park
Bldg., Suite 703, 3-6 Kioicho, Chiyoda-ku, Tokyo 102-0094, Japan (the “Tokyo Process Agent” and
(b) CT Corporation System at 111 Eighth Avenue, New York, NY 10011 USA (the “New York
Process Agent”).  



    If for any reason the
Tokyo Process Agent or the 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 LENDERS. Failure by the Borrower to designate and appoint another agent
acceptable to the LENDERS within fifteen (15) days shall entitle the LENDERS to appoint
any Person acceptable to them as agent of the Borrower by notice to the Borrower.



(5) (Waiver of
Immunity) To the extent that the Borrower may now or hereafter 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 the Borrower 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 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, in particular, in relation to any proceedings that may be taken in
New York the foregoing waiver of immunity shall have effect under and be construed in
accordance with the United States Foreign Sovereign Immunities Act of 1976. 




Article XV
Miscellaneous 



(1) (Amendments and
Waivers) Any provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Agent with the
consent of the Majority LENDERS; provided that no such amendment or waiver shall, unless
signed by each LENDER, (i) reduce the principal of or rate of interest on the Loan or any
fees hereunder, (ii) postpone the date fixed for any payment of principal of or interest
on the Loan or any fees hereunder or for any suspension or termination of any Commitment,
(iii) change the aggregate unpaid principal amount of the Notes or (iv) change the number
of LENDERS which shall be required for the LENDERS or any of them to take any action
under this Section (1) or any other provision of the Transaction Documents; and provided
further that no such amendment of waiver shall, unless signed by each affected LENDER,
(v) increase the Commitment of such LENDER or subject such LENDER to any additional
obligation, or (vi) change the Commitment of such LENDER. 



(2) (Successors and
Assigns) (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, except that
the Borrower may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all LENDERS. 



(b) Any LENDER (a “Granting
LENDER”) may at any time grant to one or more banks or other institutions (each a “Participant”)
participating interests in its Commitment or its ratable share of the Loan. The Granting
LENDER shall remain responsible for the performance of its obligations hereunder, and the
Borrower and the Agent shall continue to deal solely and directly with such LENDER in
connection with such LENDER’s rights and obligations under this Agreement. Any agreement
or instrument pursuant to which the Granting LENDER sells such a participation shall
provide that such LENDER shall retain the sole right to enforce the Transaction Documents
and to approve any amendment, modification or waiver of any provision of the Transaction
Documents; provided that such agreement or instrument may provide that such LENDER will
not, without the consent of the Participant, agree to any amendment, modification or
waiver described in the proviso to Section (1) of Article XV that affects such
Participant. The Borrower agrees that each Participant shall, to the extent provided in
its participation agreement, be entitled to the benefits of Article XII with respect to
its participating interest. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this subsection.  



(c) Any LENDER may at
any time assign to one or more banks or other institutions (each an “Assignee”) all, or a
proportionate part of all, of its rights and obligations under this Agreement and its
Note, and such Assignee shall assume such rights and obligations, pursuant to an
assignment and assumption agreement substantially in the form of Annex G hereto signed by
such Assignee and such transferor LENDER, with (and subject to) the subscribed consent of
the Borrower (which shall not be unreasonably withheld) and the Agent, provided that if
an Assignee is an affiliate of such transferor LENDER or was a LENDER immediately before
such assignment, no such consent shall be required. When such instrument has been signed
and delivered by the parties thereto and such Assignee has paid to such transferor LENDER
the purchase price agreed between them, such Assignee shall be a LENDER party to this
Agreement and shall have all the rights and obligations of a LENDER with a commitment as
set forth in such instrument of assumption, and the transferor LENDER shall be released
from its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment pursuant
to this subsection, the transferor LENDER, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the Assignee. In
connection with any such assignment, the transferor LENDER shall pay to the Agent an
administrative fee for processing such assignment in the amount of ¥ 300,000. 



(d)  No assignee,
Participant or other transferee of any LENDER’s right shall be entitled to receive any
greater payment under Article XI or Section (2) or (3) of Article XII than such LENDER
would have been entitled to receive with respect to the rights transferred, unless such
transfer is made with the Borrower’s prior written consent.



(3) (Counterparts;
Integration; Effectiveness) This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior agreements
and understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when the Agent has received from each of the parties
hereto a counterpart hereto signed by such party or facsimile or other written
confirmation satisfactory to the Agent confirming that such party has signed a
counterpart hereof. 



(4) (WAIVER OF JURY
TRIAL) EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  



(5) (No Release) No
claim or dispute arising out of and/or in connection with any other contract or
agreement, shall have any effect upon the Borrower’s obligations under this Agreement nor
in any way be deemed to release the Borrower therefrom, such obligations being absolute
and unconditional. 



(6) (No Waiver,
Remedies Cumulative) No failure or delay on the part of the Agent or any other LENDER in
exercising any right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof, or the
exercise of any other right. No waiver by the Agent or any other LENDER hereunder shall
be effective unless it is in writing. The rights and remedies provided herein are
cumulative and not exclusive of any other right or remedy provided by law. 



(7) (Partial
Illegality) If at any time any provision hereof becomes illegal, invalid or
unenforceable in any respect under the laws of any jurisdiction, neither the legality,
validity nor enforceability of any other provision hereof nor the legality, validity or
enforceability of such provision under the laws of any other jurisdiction shall in any
way be affected or impaired thereby. 



(8) (Change of Evidence
of Authority) In the event of any change in the matters referred to in the documentary
evidence provided for in Section (1)(v) of Article X, the Borrower shall promptly notify
the Agent in writing of such change and, at the same time, furnish to the Agent relevant
documentary evidence in respect of such change as well as authenticated specimen
signatures of and certificates of incumbency in respect of the 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 such Section (1)(v) of Article X. 



The LENDERS and the Agent
may rely upon and refer to the documentary evidence, authenticated specimen signatures
and certificates of incumbency previously received by the Agent until such time as the
Agent receives notice from the Borrower of such change as well as the relevant revised
documentary evidence.



(9) (Communications)
All notices, requests, demands and other communications to or upon the parties to this
Agreement shall be given or made by registered air mail or by internationally recognized
courier services or facsimile (promptly confirmed by registered air mail or by
internationally recognized courier services, although receipt of the confirmation shall
not be necessary for effective receipt of the relevant facsimile communication) at the
addresses specified below or at such other address as any party thereto may designate by
written notice to each of the other parties thereto: 



	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
	 
	If to the Agent:	Sumitomo Mitsui Banking Corporation
Structured Finance Department
1-2 Yurakucho 1-chome
Chiyoda-ku, Tokyo 100-0006 Japan
Attention: General Manager
Facsimile: +81-3-3580-8432/3501-8539
	 
	If to the Guarantor	Japan Bank for International Cooperation
International Finance Dept. III
4-1, Ohtemachi 1-chome,
Chiyoda-ku, Tokyo 100-8144, Japan
Attention: Director General
Facsimile: +81-3-5218-3965
	 
	If to any LENDER:	The address/facsimile number set forth on the signature page hereto





Notices, requests,
demands or other communications given or made as aforesaid (i) by registered air mail or
by internationally recognized courier service shall be deemed to have been duly given or
made when the internationally recognized courier service is duly received by the
recipient and (ii) by facsimile shall be deemed to have been duly given or made when
transmitted to the facsimile number referred to in this Section and confirmation of
receipt is received.



(10) (Use of English
Language) Except as otherwise agreed by the LENDERS, all documents, information and
materials to be furnished under this Agreement shall be in the English language. 



(11) (Abbreviation) This
Agreement shall be referred to as “Loan to BRT under JBIC Guarantee” in communications
between the Borrower, the Agent and the Guarantor, as the case may be, as well as in
relevant documents.  



(12) (Confidentiality)
The Agent and each LENDER agrees not to disclose any Confidential Information to anyone
other than Persons employed or retained by such Person who are or are expected to become
engaged in evaluating, approving, structuring or administering the transactions
contemplated hereby; provided that nothing herein shall prevent the Agent or any LENDER
from disclosing Confidential Information (i) to the Agent or any other LENDER and each of
the officers, directors, employees, agents, attorneys and accountants of such Persons, in
each case provided that such recipient has been made aware of the restrictions set forth
in this Section prior to disclosure, (ii) upon the order of any court or administrative
agency, (iii) upon demand by any regulatory agency or authority having jurisdiction over
the Agent or any LENDER, (iv) to the extent reasonably required in connection with any
litigation to which the Agent or any LENDER may be a party, (v) to the extent reasonably
required in connection with the exercise of any remedy hereunder and (vi) to such
Person's legal counsel and independent auditors.  




 





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.




Brasil Telecom S.A., as
Borrower





By:
________________________

	Name:	Carla Cico
	Title:	Chief Executive Officer







By:
________________________

	Name:	Paulo Pedrão Rio Branco
	Title:	Financial Executive Officer








Sumitomo Mitsui Banking
Corporation,
 as LENDER, as Agent and as Collection Agent




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.:





 






ABN AMRO Bank, N.V.,
Tokyo Branch, as LENDER





By:
________________________

	Name:	Yasuo Fujii
	Title:	Managing Director
	 	Cross Border Structured Finance








By:
________________________


	Name:	Hirofumi Sakioka
	Title:	Director
	 	Cross Border Structured Finance







	Address:	5-1, Atago 2-chome
	 	Minato-ku, Tokyo 105-6231, Japan





 





BNP PARIBAS, Tokyo
Branch, 
as LENDER





By
________________________

	Name:	Hiroaki Inoue
	Title:	General Manager








By
________________________

	Name:	Eiji Kamiyabu
	Title:	Head of Energy, Commodities,
	 	Export & Project Finance Japan





	Address:	7-2, Otemachi 1-chome
	 	Chiyoda-ku, Tokyo 100-0004, Japan





 





Mizuho Corporate Bank,
Ltd.,
as LENDER




By
________________________


	Name:	Tsukasa Takasawa
	Title:	Senior Vice President
	 	Americas Financial Products Division
	 
	 
	Address:	3-3, Marunouchi 1-chome
	 	Chiyoda-ku, Tokyo 100-8210, Japan





 





Socié té  Gé né rale, Tokyo
Branch,
as LENDER





By
________________________

	Name:	Atsushi Yamashita
	Title:	Director
	 	Head of Export & Project Finance Department





	Address:	12-32, Akasaka 1-chome
	 	Minato-ku, Tokyo 100-0004, Japan





 






Annex A 



Form of Note 



[Date]



For value received,
Brasil Telecom, S.A., a sociedade anô nima organized under the laws of Brazil (the “Borrower”),
promises to pay to the order of _____________________ (the “LENDER”), for the account of
its Lending Office, the unpaid principal amount of its ratable share of each Disbursement
made by the LENDER to the Borrower pursuant to the Loan Agreement referred to below on
March 24, 2011. The Borrower promises to pay interest on the unpaid principal amount of
each such Disbursement on the dates and at the rate or rates provided for in the Loan
Agreement. All such payments of principal and interest shall be made in lawful money of
Japan in immediately available funds at the offices of the Agent (as defined below)
specified in the Loan Agreement. 



All Disbursements made by
the LENDER and all repayments of principal thereof shall be recorded by the LENDER and,
prior to any transfer hereof, endorsed by the LENDER on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof, provided that the
failure of the LENDER to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Loan Agreement.



This note is one of the
Notes referred to in the Loan Agreement dated as of March 24, 2004 between the Borrower
and the financial institutions listed on the signature pages thereof and Sumitomo Mitsui
Banking Corporation, as agent (the “Agent”) and collection agent (as the same may be
amended from time to time, the “Loan Agreement”).  Terms defined in the Loan Agreement
are used herein with the same meanings. Reference is made to the Loan Agreement for
provisions for the prepayment hereof and the acceleration of the maturity hereof.


	 	Brasil Telecom S.A.
	 
	 	By:______________________
	 	         Name:
	 	         Title:





 






Note (cont’d)



DISBURSEMENTS AND
PAYMENTS OF PRINCIPAL






	Date	Amount of
Disbursement	Amount of
Principal Repaid	Notation
Made By























































































 





Annex B 



Project Description 





1. Objectives and
Purposes: 



Mainly for the purpose of
meeting the yearly targets established by Agê ncia Nacional de Telecomnicações (“ANATEL”),
more specifically, (i) expanding the telecommunication network and (ii) improving the
telecommunication quality in relation to the Borrower’s fixed line business including the
data network, the Borrower will execute the capital expenditures as set forth in 2 below
during 2003 and 2004. 



2. Uses and Sources of
Funds: Capital Expenditure Program of 2003 - 2004 



(Unit: US$ million
equivalent) 


	Uses 	Sources 
	Switching	182 	This Loan Agreement	200   
	Transmission	44 	Other funds sources 
(including own cash generation)	915 
	Intelligent Network	16 	 
	Data Network	220 	 	 
	Corporate Customers	41 	 	 
	Information Technology	210 	 	 
	Others	402 	 	 
	Total	1,115  	Total	1,115  





 






Annex C 




Disbursement Procedures 




Unless otherwise agreed
in writing by the parties to this Agreement, Disbursement under this Agreement shall be
made in accordance with the following procedures:



1. Disbursement
Account 



Subsequent to the
execution of this Agreement, the Borrower shall designate a non-resident account (the “Disbursement
Account”) opened, in the name of the Borrower, at the Agent in Tokyo for the purpose of
receiving the Loan proceeds.



2. Disbursement 



The initial Disbursement
and any subsequent Disbursement(s) shall be made as follows:



(a) The Borrower
shall, no later than fifteen (15) Business Days prior to the proposed date of each
Disbursement, submit to the Agent a duly completed and signed Request for Disbursement in
the form of Form 1 attached hereto (the “Disbursement Request”). The date of
Disbursement may not be later than the Final Disbursement Date. The amount of each
Disbursement requested shall be not less than fifty million US Dollars
(US$50,000,000.00), not more than two hundred million US Dollars (US$200,000,000.00) and
an integral multiple of fifty million US Dollars (US$50,000,000.00) (save for the final
Disbursement which may be an amount equal to the undisbursed portion of the Facility).  



(b)      Each
Disbursement Request shall be accompanied by (a) a duly completed certificate of the
Borrower substantially in the form of Form 2 attached hereto (Certificate as to Use of
Proceeds) evidencing the use of the proceeds of such Disbursement and (b) any other
supporting documents satisfactory to the Agent and the Guarantor.



(c)      Upon receipt by
the Agent of the Disbursement Request with its duly completed attachments, the Agent
shall notify each of the LENDERS of the Yen amount of its share of the corresponding
Disbursement and each LENDER shall disburse such amount by payment into the Disbursement
Account on the date falling fifteen (15) Business Days after the date on which such
Disbursement Request is submitted to the Agent, unless otherwise agreed by the Agent and
the Guarantor. The Agent shall notify the Borrower of its approval by facsimile or in any
appropriate manner, of the date and amount of the Disbursement in advance.



(d)      For purposes of
calculating the Yen equivalent of the amount of Disbursement specified in the related
Disbursement Request, the opening telegraphic transfer selling (TTS) rate of exchange for
US Dollars into Yen quoted by the Agent on the day on which the Agent receives the
Disbursement Request shall be applied.



(e)      The payment by
the LENDERS into the Disbursement Account pursuant to paragraph (c) of this Section 2
shall constitute a Disbursement of the Loan and shall, as from the date of such payment,
constitute a valid and binding obligation of the Borrower in respect of repayment of the
corresponding amount of the Loan and the payment of interest and any other amounts
payable hereunder in relation thereto.



(f)      The Borrower
shall send the Agent a duly completed payment instruction in the form of Form 3 attached
hereto (Payment Instruction) not less than three (3) Business Days prior to the proposed
date of Disbursement, instructing the Agent to transfer all amounts disbursed by the
LENDERS into the Disbursement Account to an account designated by the Borrower.



(g)      No more than one
(1) Disbursement may be made hereunder in any one (1) calendar month period.



 





Form 1



Request for Disbursement 



Date:____________


	To:	Sumitomo Mitsui Banking Corporation
	 	1-2 Yurakucho 1-chome,
	 	Chiyoda-ku, Tokyo 100-0006, Japan
	 
	 	Facsimile Number: +81-3-3580-8432/3501-8539





Attn:    General Manager,
Structured Finance Department



Re: Loan to BRT under
JBIC Guarantee 



Dear Sirs



In accordance with
paragraph 2(a) of Annex C (Disbursement Procedures) to the Loan Agreement dated as of
March 24, 2004 between Brasil Telecom S.A, the financial institutions listed on the
signature pages thereto as lenders and Sumitomo Mitsui Banking Corporation, as agent and
collection agent (the “Loan Agreement”), we hereby request the LENDERS to disburse the
amount specified below.  Capitalized terms used herein are used as defined in the Loan
Agreement.


	(1)	Total amount requested for Disbursement
	 
	 	_______________ US Dollars (US$_______________)
	 
	(2)	Date of Disbursement:





Please disburse the
above-mentioned amount on the date requested for Disbursement by paying such amount into
the Disbursement Account.



We confirm that (a) each
of the representations and warranties set out in Article VII of the Loan Agreement is
true and correct in all material respects on the date hereof and will be true and correct
in all material respects on the date that the Disbursement requested in this Disbursement
Request will be made; and (b) no Default has occurred and is continuing or would result
from the making of the Disbursement requested in this Disbursement Request.



The payment by the
LENDERS of the above-mentioned amount into the Disbursement Account shall be a
Disbursement under the Loan Agreement and shall constitute a valid and binding obligation
of the Borrower under the Loan Agreement.




Yours faithfully,



Brasil Telecom S.A.



(authorized signature)




 






Form 2



Certificate as to Use
of Proceeds 




Date:         


	To:	Sumitomo Mitsui Banking Corporation
	 	1-2 Yurakucho 1-chome,
	 	Chiyoda-ku, Tokyo 100-0006, Japan
	 
	 
	Attn:	General Manager, Structured Finance Department
	 
	To:	Japan Bank for International Cooperation
	 	4-1, Ohtemachi 1-chome,
	 	Chiyoda-ku, Tokyo 100-8144, Japan
	 
	 
	Attn:	Director General, International Finance Department III





Re: Loan to BRT under
JBIC Guarantee 



Dear Sirs



Reference is made to the
Loan Agreement dated as of March 24, 2004 between Brasil Telecom S.A, the financial
institutions listed on the signature pages thereto as lenders and Sumitomo Mitsui Banking
Corporation, as agent and collection agent (the “Loan Agreement”).  Capitalized terms
used herein are used as defined in the Loan Agreement.



We hereby certify that
the proceeds of the Disbursement to be made by the LENDERS on __________, 200_ have been
applied as set out in the attached table.



In case the Guarantor or
the Agent requires more details or necessary documents concerning the above, we are ready
to furnish them without delay.



Yours faithfully,



Brasil Telecom S.A.



(authorized signatory)




 





(Attachment to Form 2) 

	Name and nationality of contractor
or supplier to which payment has
been made out of the proceeds of
the Disbursement	Invoice No.
(pls. specify)	Amount of Payment
(in Reais)	Date of Payment
(pls. specify)	Exchange rate
as of the date
of payment
(between Reais and
US Dollars)	US Dollar
equivalent
(pls. specify)	Remarks
	Name
 	Nationality
 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(in total)	 	 	 


















Form 3 




Form of Payment
Instruction 




	 	Date: 
	  	Serial No.: 






	To:	Sumitomo Mitsui Banking Corporation
	 	1-2 Yurakucho 1-chome,
	 	Chiyoda-ku, Tokyo 100-0006, Japan
	 
	 	Facsimile Number: +81-3-3580-8432/3501-8539
	 
	Attn:	General Manager, Structured Finance Department




Re: Loan to BRT
under JBIC Guarantee 




Dear Sirs 



In accordance with
paragraph 2(f) of Annex C (Disbursement Procedure) of the Loan Agreement dated as of
March 24, 2004 between Brasil Telecom S.A, the financial institutions listed on the
signature pages thereto as lenders and Sumitomo Mitsui Banking Corporation, as agent and
collection agent (the “Loan Agreement”), we hereby request you to execute the following
transfer from the Disbursement Account in the account specified below: 




	Transfer Date:	___________________________________
	Transfer Amount:	___________________________________
	Account Bank/Branch:	___________________________________
	Account Number:	___________________________________
	Account Name:	___________________________________
	Reference:	___________________________________




Yours faithfully, 



Brasil Telecom S.A. 






Name:

Title 














Annex D  





Commitment Schedule 





(Amounts in ¥ ) 




	
	
	

	 	 	 
	Name	Address of Lending Office	Commitment
	 
	
	
	

	Sumitomo Mitsui Banking Corporation	1-2 Yurakucho 1-chome Chiyoda-ku,	JPY5,500,000,000.-
	 	Tokyo 100-0006 Japan
	 
	
	
	

	ABN AMRO Bank, N.V., Tokyo Branch	5-1, Atago 2-chome	JPY5,500,000,000.-
	 	Minato-ku,
	 	Tokyo 105-6231, Japan
	 
	
	
	

	BNP PARIBAS, Tokyo Branch	7-2, Otemachi 1-chome	JPY5,500,000,000.-
	 	Chiyoda-ku,
	 	Tokyo 100-0004, Japan
	 
	
	
	

	Mizuho Corporate Bank, Ltd.	3-3, Marunouchi 1-chome	JPY5,500,000,000.-
	 	Chiyoda-ku,
	 	Tokyo 100-8210, Japan
	 
	
	
	

	Socié té  Gé né rale, Tokyo Branch	12-32, Akasaka 1-chome	JPY5,500,000,000.-
	 	Minato-ku,
	 	Tokyo 100-0004, Japan
	 
	
	
	

	 
	TOTAL	 	JPY27,500,000,000.
	 
	
	
	














Annex E  





Amortization Schedule  





	

	No.	Due Date	Amount in Yen
	

	1 	September 24, 2006
	2 	March 24, 2007
	3 	September 24, 2007
	4 	March 24, 2008
	5 	September 24, 2008
	6 	March 24, 2009
	7 	September 24, 2009
	8 	March 24, 2010
	9 	September 24, 2010
	10 	March 24, 2011
	

	 	Total: 	
	


















Annex F  






Form of Legal
Opinion of
                                                Independent Legal Counsel to
the Borrower 




	 	Date: 







	To:	Sumitomo Mitsui Banking Corporation,
	 	as Agent for the LENDERS referred to below
	 
	to:	Japan Bank for International Cooperation,
	 	as Guarantor
	 
	 	Re: Loan to BRT under JBIC Guarantee




Dear Sirs: 



    We have acted as
independent legal counsel to Brasil Telecom S.A. (the “Borrower”) and have advised the
Borrower in connection with a loan agreement dated as of March 24, 2004 between the
Borrower, the financial institutions listed on the signature page thereto as lenders and
Sumitomo Mitsui Banking Corporation, as agent and collection agent (the “Agreement”).  



    All terms and expressions
defined in the Agreement shall bear the same meaning in this opinion. 



    This opinion is given to
you pursuant to Section (1)(i) of Article X of the Agreement and at the request of the
Borrower. 



    After examining all
relevant documents, including an executed copy of the Transaction Documents, and making
all enquiries which we consider necessary or desirable for the opinion hereafter
expressed and having regard to the laws and regulations of the Federative Republic of
Brazil (the “Borrower’s Country”) which we consider relevant, we are of the opinion that:  



(1) The Borrower is a
corporation duly incorporated and validly existing under the laws of the Borrower’s
Country as a sociedade anô nima and has full power and authority to carry on its business
(including the Project) as now being conducted and is a legal entity with separate legal
personality capable of being sued in its own name.  



(2)   The Borrower has
full power and authority to enter into each Transaction Document, to borrow under the
Agreement and to perform and observe the terms and conditions of each Transaction
Document.  The Borrower has taken and completed all action or procedures necessary to
approve the transactions contemplated in each Transaction Document and to authorize the
Borrower to execute, deliver and perform each such Transaction Document and to perform
its obligations thereunder. 



(3) All authorizations,
licenses, approvals or consents of, or registrations, recordations or filings with, the
Borrower’s Country, or of any agency, department, or commission thereof or therein which
is necessary for (a) the execution, delivery or performance of each Transaction Document
or any agreement or instrument required thereunder, (b) the legality, validity,
enforceability and admissibility in evidence thereof, (c) the borrowings under the
Agreement or (d) the payment by the Borrower of all sums which it may be liable to pay
under the Transaction Documents in Yen or the Relevant Currency, as the case may be, have
been duly effected, completed and/or obtained and are in full force and effect, (A)
including, but not limited to, the electronic registration of the Loan with Banco Central
do Brasil by means of the SISBACEN system called Registration of Financial Transaction (“Registro
de Operação Financeira – ROF”) (“ROF”) and all related authorizations, registrations (or
amendments thereof) and communications from, with or in respect of ROF and/or any
department of Banco Central do Brasil which may be required prior to each Disbursement
hereunder by the applicable regulations of the Borrower’s Country, which has been made
and is in full force and effect, or shall be made or be in full force and effect prior to
such Disbursement, and (B) except for (i) the registration of each Disbursement and the
related schedule of payments with respect thereto with Banco Central do Brasil, which the
Borrower shall promptly effect after the entrance of such Disbursement into the Borrower’s
Country in accordance with Article VIII of the Agreement, (ii) the notarization of the
signature of the parties to each Transaction Document by a notary public licensed under
the laws of the place of signing; (iii) the consularization of each Transaction Document
in the appropriate Brazilian consulate in the event that such Transaction Document is not
executed in the Borrower’s Country; and (iv) the registration of each Transaction
Document, together with a sworn translation of each Transaction Document into the
Portuguese language, with the appropriate Registry of Deeds and Documents, which
registration can be made at any time prior to the enforcement thereof in the Borrower’s
Country.  





(4)   Each Transaction
Document has been duly executed and delivered by the duly authorized representative(s) of
the Borrower.  Each Transaction Document constitutes the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law. 



(5)   The execution,
delivery and performance of each Transaction Document and all instruments and agreements
required thereunder do not contravene, violate or constitute a default under (a) any
provision of the articles of incorporation, by-laws or other constituent documents or
capital stock of the Borrower; (b) any material provision of any material agreement or
other material instrument to which the Borrower is a party or by which the Borrower or
any of its assets is or may be bound; (c) any treaty, law or regulation applicable to the
Borrower; or (d) any judgment, injunction, order or decree binding upon the Borrower or
any of its assets, nor would the same result in the creation or imposition of any
Encumbrance on any asset of the Borrower. 






(6)   No event has
occurred and is continuing or would result from the making of any Disbursement hereunder
which constitutes or would constitute a Default or a material default under any material
agreement, mortgage, indenture, note or other material instrument to which the Borrower
is a party or by which the Borrower or any of its assets is or may be bound. 



(7)   There are no legal,
administrative or other actions, claims or other proceedings current, pending or, to the
Borrower’s knowledge, threatened against the Borrower or the Project which if decided
adversely would materially and adversely affect the financial condition, business or
operations of the Borrower and its Consolidated Subsidiaries or the Project or would
materially and adversely affect the Borrower’s ability to perform its obligations under
any Transaction Document or which question the legality, validity or binding effect of
any provision of any Transaction Document or the authority of the Borrower to execute any
of the Transaction Documents. 



(8)   Under the laws of
the Borrower’s Country, there is no Tax payable (whether by withholding or otherwise) on
or by virtue of the execution and delivery of any Transaction Document or any document or
instrument to be executed and delivered thereunder, the performance, enforcement or
admissibility in evidence thereof, or on any payment required to be made thereunder,
except for a withholding tax with respect to payments of interest under the Agreement. 



(9) The obligations and
liabilities of the Borrower under each Transaction Document are unconditional and general
obligations of the Borrower and rank at least pari passu with all other present or future
unsecured and unsubordinated Indebtedness (both actual and contingent) of the Borrower.  



(10)  In any proceedings
in the Borrower’s Country to enforce any Transaction Document, the choice of New York law
or Japanese law (as the case may be) as the governing law thereof will be recognized and
such law will be applied, the irrevocable submissions of the Borrower to the
non-exclusive jurisdiction of the Tokyo District Court, the courts of the State of New
York and the courts of the United States of America in New York and the appointment by
the Borrower of the Tokyo Process Agent and the New York Process Agent are legal, valid,
binding and enforceable and any judgment obtained in Japan or New York will be recognized
and enforceable against the Borrower and its assets in the Borrower’s Country after
having been duly ratified by the Federal Supreme Court of the Borrower’s Country; such
ratification by the Supreme Court of the Borrower’s Country will occur if the court
decision in such jurisdiction (i) complies with all formalities required for the
enforcement thereof under the laws of such jurisdiction; (ii) was issued by a competent
court in such jurisdiction after valid service of process upon the parties to the action
(such service to have been made under the authority of a court or the clerk of a court),
or after sufficient evidence of the parties’ absence has been given in accordance with
the applicable law of such jurisdiction; (iii) is not subject to appeal; (iv) is not
against public policy, national sovereignty or good morals of the Borrower’s Country and
does not contain any other provision of a similar nature; (v) is duly authenticated by
the competent consulate of the Borrower’s Country in such jurisdiction and is accompanied
by a translation thereof into Portuguese made by a sworn translator; and (vi) in the case
of proceedings in the Borrower’s Country to enforce a payment obligation under the
Agreement, it is also required that any judgment obtained in Japan or New York be for the
payment of a determined amount. 



    Each Transaction Document
is in proper legal form under the laws of the Borrower’s Country and is capable of
enforcement in the courts of the Borrower’s Country. 



    There is no requirement
to file, register or otherwise record any Transaction Document or any instrument or
agreement required thereunder in any public office or elsewhere in the Borrower’s Country
to ensure the validity, legality, effectiveness, enforceability or admissibility in
evidence hereof or thereof, except for the approvals, registrations and other actions
referred to in Section (3) of Article VII of the Agreement. 



    Each Note shall
constitute a valid título executivo, enforceable against the Borrower in accordance with
applicable law.  



(11)  The Borrower is
subject to civil and commercial law with respect to its obligations under each
Transaction Document.  The execution and delivery of each Transaction Document
constitute, and the Borrower’s performance of and compliance with its obligations under
each Transaction Document will constitute, private and commercial acts rather than public
or governmental acts. 



(12)  The waiver of
immunity by the Borrower in Section (5) of Article XIV of the Agreement is legal, valid,
binding and enforceable and neither the Borrower nor any of its assets has any right of
immunity from suit, execution, attachment prior to judgment, attachment in aid of
execution or any other legal process with respect to its obligations under any
Transaction Document in any jurisdiction, including, without limitation, the Borrower’s
Country. 



(13)  The Project
description and details contained in Annex B are true and accurate in all respects. 



(14) It is not necessary
under the laws of the Borrower's Country that any LENDER or the Agent be licensed or
qualified to do business in the Borrower's Country solely as a result of its execution,
delivery or performance of the Transaction Documents, except that each LENDER will be
required, pursuant to Normative Instruction No. 200, of September 13, 2002, issued by the
Federal Revenue Service (Secretaria da Receita Federal) of the Ministry of Finance (Ministé rio
da Fazenda), as amended, to obtain a federal taxpayer's identification number (número de
inscrição no cadastro de pessoas jurídicas) in the Borrower’s Country.  




Yours faithfully, 












Annex G  






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





	 	Date: 







	To:	Sumitomo Mitsui Banking Corporation,
	 	as agent for the LENDERS referred to below
	 
	 	Re: Loan to BRT under JBIC Guarantee




Dear Sirs: 



    Reference is made to the
loan agreement dated as of March 24, 2004 between Brasil Telecom S.A. (the “Borrower”),
the financial institutions listed on the signature pages thereto as lenders and Sumitomo
Mitsui Banking Corporation, as agent and collection agent.  



    Pursuant to the
provisions of Section (4) of Article XIV of 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 any 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 such Section (4) of Article XIV of 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 such Article XIV of the Agreement and
(iv) it will promptly forward to the Borrower at its address as specified in Section (9)
of Article XV of the Agreement any summons, complaint or other legal process which it
receives in connection with its appointment as such agent of the Borrower.  




______________________________ 



1  Insert either
Tokyo or New York.

2  Insert either (i) the Tokyo District Court or (iii) the courts of
the State of New York and the courts of the United States of America in New York.  




    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.



	 	Very truly yours,
	 	[Name of Process Agent
	 
	 
	 
	 
	 	By: ______________________________
	 	         Name:
	 	         Title:





 





Annex H 




Form of Assignment and
Assumption Agreement 




    AGREEMENT dated as of
__________ between [NAME OF ASSIGNOR (the “Assignor”) and [NAME OF ASSIGNEE (the “Assignee).



    WHEREAS, this Assignment
and Assumption Agreement (the “Agreement”) relates to the Loan Agreement dated as of
March 24, 2004 between Brasil Telecom, S.A., as borrower, the Assignor and the other
financial institutions listed on the signature pages thereto and Sumitomo Mitsui Banking
Corporation, as agent and collection agent (the “Agent”)(as amended from time to time,
the “Loan Agreement”);



    WHEREAS, as provided
under the Loan Agreement, the Assignor has a Commitment to make Disbursements to the
Borrower in an aggregate principal amount at any time outstanding not to exceed ¥ __________;



    WHEREAS, Disbursements
made to the Borrower by the Assignor under the Loan Agreement in the aggregate principal
amount of ¥ __________ are outstanding at the date hereof; and



    WHEREAS, the Assignor
proposes to assign to the Assignee all of the rights of the Assignor under the Loan
Agreement in respect of a portion of its Commitment thereunder in an amount equal to ¥ __________
(the “Assigned Amount”), together with a corresponding portion of each of its outstanding
Disbursements, and the Assignee proposes to accept such assignment and assume the
corresponding obligations of the Assignor under the Loan Agreement.



    NOW THEREFORE, in
consideration of the foregoing and the mutual agreements contained herein, the parties
hereto agree as follows:



    SECTION 1. Definitions.
All capitalized terms not otherwise defined herein have the respective meanings set
forth in the Loan Agreement. 



    SECTION 2. Assignment.
The assignor hereby assigns and sells to the Assignee all of the rights of the Assignor
under the Loan Agreement to the extent of the Assigned Amount and a corresponding portion
of each outstanding Disbursement thereunder, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor under the
Loan Agreement to the extent of the Assigned Amount. Upon the execution and delivery
hereof by the Assignor and the Assignee [and the execution of the consent attached hereby
by the Borrower and the Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a LENDER under the
Loan Agreement with a Commitment in an amount equal to the Assigned Amount and acquire
the rights of the Assignor with respect to a corresponding portion of each outstanding
Disbursement and (ii) the Commitment of the Assignor shall, as of the date hereof, be
reduced by the Assigned Amount, and the Assignor shall be released from its obligations
under the Loan Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the Assignor. 



    SECTION 3. Payment. As
consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee
shall pay to the Assignor on the date hereof in immediately available funds the amount
heretofore agreed between them. Commitment fees accrued before the date hereof are for
the account of the Assignor and such fees accruing on and after the date hereof with
respect to the Assigned Amount are for the account of the Assignee. Each of the Assignor
and the Assignee agrees that if it receives any amount under the Loan Agreement which is
for the account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party’s interest therein and promptly pay
the same to such other party. 



    [SECTION 4. Consent of
the Borrower and the Agent. This Agreement is conditioned upon the consent of the
Borrower and the Agent pursuant to Section (2)(c) of Article XV the Loan Agreement.] 



    SECTION 5. Non-Reliance
on Assignor. The Assignor makes no representation or warranty in connection with, and
shall have no responsibility with respect to, the solvency, financial condition or
statements of the Borrower, or the validity and enforceability of the Borrower’s
obligations under the Loan Agreement or any Note or any other Transaction Document. The
Assignee acknowledges that it has, independently and without reliance on the Assignor,
and based on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs and
financial condition of the Borrower. 



    SECTION 6. Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of New York. 



    SECTION 7. Counterparts.
This Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same
instrument. 




 






    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered by heir duly
authorized officers as of the date first above written.



	 	[NAME OF ASSIGNOR
	 
	 
	 	By:_____________________
	 	         Name:
	 	         Title:
	 
	 
	 	[NAME OF ASSIGNEE
	 
	 
	 	By:____________________
	 	         Name:
	 	         Title:





 





The undersigned consents
to the foregoing assignment.



BRASIL TELECOM S.A.




By:
 _____________________         

         Name:   

         Title:




SUMITOMO MITSUI BANKING
CORPORATION, as Agent




By:
 ______________________

         Name: 

         Title: