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Exhibit 4.10 

MERGER AGREEMENT  

    

    

  entered into by and among, inter alia, 

  on the one side, 

  

  

  TIM INTERNATIONAL N.V.  

  and, on the other side, 

  BRASIL TELECOM S.A. 

  dated as of 

  APRIL 28th, 2005  

  

MERGER AGREEMENT 

  This MERGER  AGREEMENT (this "Agreement") is entered into on this 28th  day of April, 2005, in  the City of São Paulo, State of São Paulo, Brazil, by and among, on the one  side, 

1.  TIM INTERNATIONAL N.V., a  company organized and existing under the laws of the Netherlands, with head  office at 1629 Strawinskylaan WTC, Tower B, 16th floor, 1077 ZX Amsterdam, The  Netherlands ("TIMINT"); 

2.  TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A., a company organized and existing under the laws of  Brazil, with head office at Avenida das Américas, 3434, Bloco 1, 6.° andar,  Centro Empresarial Mário Henrique Simonsen, Barra de Tijuca, Rio de Janeiro,  RJ, Brazil, CNPJ/MF no. 02.600.854/0001 -34 ("TIMB"); 

(TII  and TI are sometimes also individually referred to as a "TI Party"  and, collectively, as the "TI Parties"), and, on the other side; 

3.  BRASIL TELECOM S.A., a  company organized and existing in accordance with the laws of Brazil, with head  office at SIA SUL, ASP, Lote D, Bloco B, Brasília, DF, Brazil, CNPJ/MF no.  76.535.764/0001 -43 ("BT"); 

4.  14 BRASIL TELECOM CELULAR S.A., a wholly-owned subsidiary of BT organized and existing in accordance  with the laws of Brazil, with head office at SIA SUL ASP, Lote D, Bloco B,  Térreo – parte, Brasília, DF, Brazil, CNPJ/MF no. 05.423.963/0001 -11 ("BTC"); 

(BT and  BTC are sometimes also individually referred to as a "BT Party"  and, collectively, as the "BT Parties"); 

WHEREAS:  

A. BT holds (i) concessions to exploit  domestic long distance ("LDN") switched fixed telephony  service ("STFC") and local STFC in Region II under the General  Licensing Plan ("PGO"); (ii) authorizations to exploit Local  STFC and LDN STFC in Regions I and III and Sectors 20, 22 and 25 of Region II  of the PGO; and authorizations to exploit International Long Distance ("LDI")  STFC in Regions I, II and III of the PGO; 

B. BTC, a wholly-owned subsidiary (subsidiária  integral) of BT, holds authorizations to render personal mobile service  ("SMP") in Region II, Areas 5, 6, 7 covering all such Region  II of the PGA-SMP, (the "BTC Authorizations") and the relevant  "E" radiofrequency sub-bands associated with the BTC Authorizations  (the "BTC Frequencies"); 

  C. TIMINT is the controlling shareholder of  TIMB, which, in turn, is the direct or indirect controlling shareholder of  certain companies that hold SMP Authorizations in Regions I, II and III of the  PGA-SMP and LDN STFC and LDI STFC authorizations in Regions I, II and III of  the PGO; 

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D. TIMINT and BT have decided to merge BTC into TIMB, convinced that, once  implemented and followed by the other actions described below, such merger will  result in value creation for BT, the only shareholder of BTC, and for TIMB, and  that implementation of such merger will enable the group of Telecom Italia  International N.V. and BT, including BTC and TIMB, to resolve the overlapping  of mobile and fixed licenses referred to in ANATEL's Act no. 41.780/2004 and to  comply with ANATEL's orders contained in such Act; 

E. In this regard, the Parties wish to  regulate herein those and other obligations, covenants and agreements among  them; 

  NOW,  THEREFORE, in  consideration of the mutual promises, covenants and agreements set forth  herein, the parties agree to enter into this Agreement in accordance with the  following terms and conditions: 

  1.  DEFINITIONS; INTERPRETATION  

  1.1  Defined Terms  

  In  addition to the terms defined in the preamble above, as used in this Agreement  the following capitalized terms shall have the following meaning: 

  "Affiliate" shall mean, with respect  to any person, any other person directly or indirectly Controlling or  Controlled by such person or otherwise under direct or indirect common Control  with such person. For the avoidance of doubt, (i) an investment fund that is  managed by a person shall be deemed as an Affiliate of such person, and (ii) a  limited partnership in which a person serves as the general partner shall be  deemed as an Affiliate of such person. 

  "  Anatel" shall me an Agência  Nacional de Telcomunicações, the national telecommunication agency of  Brazil. 

  "Authorization" shall mean an  authorization, consent, approval, order, resolution, license, concession,  permit, notice, exemption, filing, registration or notarization of any Court or  Governmental Authority. 

  "Business  Day" shall mean any  day on which banks are open in the cities of São Paulo and Rio de Janeiro. 

  "CADE" shall mean the Conselho  Administrativo de Defesa Econômica, the Brazilian antitrust agency. 

  "Chamber" shall have the meaning set  forth in Section 11.10 

  "Claim" shall mean any claim,  demand, lawsuit, action, litigation, arbitration or administrative proceeding  filed or brought by or against a person. 

  "Control" shall mean the power  jointly or severally to direct or to cause the direction of the management and  policies of a person and to appoint the majority of the managers (administradores) of such person, whether through the ownership of voting securities, by 

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contract or otherwise. The terms "Controlling",  "Controlled" and other similar expressions shall have a meaning  corollary to that of Control. 

    "Governmental  Authority" shall mean  any nation or government, any state, municipality or other political  subdivision thereof, any court, tribunal or arbitration tribunal or authority,  autarchies, agencies and any body or person exercising executive, legislative,  judicial, regulatory or administrative functions of or pertaining to  government, including CADE, CVM and Anatel. 

    "Indemnified  Party" shall have the  meaning set forth in Section 9.4. 

    "Indemnifying  Party" shall have the  meaning set forth in Section 9.4. 

    "Indemnity  Claim" shall have the  meaning set forth in Section 9.4. 

    "Law" shall mean any law,  decree, provisional measure (medida provisória), regulation, regulatory  requirement, rule, ordinance, ruling, decision, treaty, directive, guideline,  policy, writ, judgment, preliminary relief, injunction, order or request of any  Governmental Authority, including fiscal or monetary authority, and their  interpretation, administration and application, whether or not having the force  of formal law. 

  "Lien"  shall mean any liens (gravames), encumbrances (ônus), including  any security interests (direitos reais de garantia) such as pledges (penhor) or mortgages (hipoteca), guarantees, chattel mortgages (alienações  fiduciárias), antichresis (anticreses), seizures (penhora), arrests (arrestos), injunctions (liminares or antecipações de tutela), judgments (sentenças), usufructs (usufrutos), options,  shareholders agreements and any other rights, claims or charges of third  parties (including rights of first refusal, promises, covenants, conditions or  restrictions of any kind). 

  "Loss" shall have the meaning set  forth in Section 9.2. 

  "Merger  Protocol" shall have  the meaning set forth in Section 2.1.

  "Rules" shall have the meaning set forth in  Section 11.11. 

  "Subsidiary" shall mean any Affiliate  of TIMB that holds SMP Authorizations; 

  1.2  Rules of Interpretation  

  In this  Agreement, unless the contrary intention appears: 

  (a) a reference in this Agreement to the  singular includes a reference to the plural and vice versa; 

  (b) a "person" includes any  individual, company, corporation, investment fund, trust, unincorporated  association or body of persons (including a partnership, joint venture or  consortium), Governmental Authority, international or multilateral organization  or other entity, as well as its successors, transferees and assigns; 

  (c) an "amendment" includes  any modification, supplement, novation, restatement or re-enactment and "amended" is to be construed accordingly; 

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(d) a provision of Law is a reference to that provision as amended or re-enacted; 

    (e) an Article, Section, Schedule or Exhibit  is a reference to an article of, section of, schedule to or exhibit to this  Agreement; 

    (f) the terms "including",  "include" or "includes" shall be deemed to be followed  by the phrase "but not limited to"; and 

  (g) the index to and the headings in this  Agreement are for convenience only and are to be ignored in the interpretation  of this Agreement. 

  2.  STEPS OF THE MERGER  

  2.1  Execution of the Merger Protocol  

  BT,  BTC, TIMINT and TIMB shall, oil the same date hereof, execute and deliver the  merger protocol (the "Merger Protocol"), whose model is  attached hereto as Annex 1. 

  2.2  Hiring the Appraiser  

  As soon  as possible after the execution of the Merger Protocol, BT shall hire the  appraiser named in the Merger Protocol and instruct it to carry out the  appraisal of the intrinsic equity value of BTC and TIMB. The appraiser shall  also be required to provide a fairness opinion to BT on the fairness of the  consideration to be received by BT in connection with the merger of BTC into TIMB.  The cost of such appraisals and of the fairness opinion shall be borne  exclusively by BT. 

  2.3  Appraisals  

  BT will  contractually bind the appraiser to prepare its appraisal within thirty days of  the date hereof. The appraisals are to determine the intrinsic equity value of  each of TIMB and BTC as of March 31, 2005, in each case considering any intercompany  debt in either BTC or TIMB as equity to the extent such debt will be  capitalized by the time the merger occurs. The valuation of BTC shall take into  account the effects of the indebtedness (for these purposes, any vendor  financing accounts payable, any accounts payable past due by more than 90 days  and any accounts payable with a maturity of greater than 90 days from the date  hereof will also be considered as debt) but not those of any commercial  arrangements between TIMB and BTC entered into after the date hereof. BTC will  furnish to such appraiser its audited (or subjected to limited review) March  31, 2005, financial statements, as well as such additional historical financial  information and forecasts normally required for similar assignments,

to the  extent available, for such appraiser to establish BTC's intrinsic equity value.  TIMB will furnish to such appraiser its audited (or subjected Lo limited review)  March 31, 2005, financial statements, as well as such additional historical  financial information and forecasts normally required for similar assignments,  to the extent available, for such appraiser to establish TIMB' s intrinsic  equity value. All such information and forecasts shall be supplied by TIMB and  BTC to the appraiser and thereafter used by the appraiser solely for the  purposes of establishing TIMB's and BTC's respective intrinsic equity value,  and will be subject to a confidentiality agreement, including a provision that  the appraiser shall commit that the information and forecasts of 

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any TI Party are not furnished to or shared with any  BT Party, or vice versa, without the Party in question's prior consent (except  to the extent unavoidably reflected in the appraisal report). The values  determined through such appraisal must be specific point estimates and not a  range or ranges. The appraiser shall deliver to each of TIMB and BT, on the  same date, a copy of both appraisal reports and the fairness opinion. 

    2.4  Determination of the Consideration of the Merger 

  On the  2nd Business Day following the day on which the approvals referred to in  Section 2.10(c) shall have been received, TIMB shall deliver to BT a notice  where TIMB shall specify to BT the consideration that will be paid to BT in  respect of the merger, according to the criteria of the Merger Protocol. 

  2.5  Shareholders' Meetings of TIMB  

  Subject  to the fulfillment of the conditions precedent set forth in Section 2.10, on  the 2nd Business Day date following the day on which TIMB and BT receive the  notice referred to in Section 2.4, above (the "Date of the Merger"),  a meeting of the shareholders of TIMB shall be held, at which TIMINT, as the  majority shareholder of TIMB, shall (i) approve the Merger Protocol, (ii)  authorize a capital increase in the same amount as that contained in the  notification referred to in the Section 2.4, (ii) ratify the appointment of the  appraiser by BT, (iii) approve the appraisal reports, and (iv) approve the  merger, using the consideration contained in the notification referred to in  Section 2.4. 

  2.6  Shareholder's Meeting of BTC  

  On the  Date of the Merger, a meeting of the sole shareholder of BTC shall be held, at  which BT, as the sole shareholder of BTC, shall approve the Merger Protocol,  the appraisal reports and the merger, using the consideration contained in the  notification referred to in Section 2.4, and shall authorize BTC's officers to  carry out all actions necessary for the merger, including the subscription of  the capital increase of TIMB. 

  2.7  Consummation of the Merger 

  Immediately  following the shareholders' meetings referred to in Sections 2.5 and 2.6 BT and  BTC shall cause BTC's officers to carry out all actions necessary for the  merger, including the subscription of the capital increase of TIMB. TIMB will  be responsible for the of the merger documents with the Commercial Registry and  for their publication. BT shall use its best efforts to cause its officers,  directors and employees to fully cooperate with TIMB in transferring to TIMB  the operations, clients, assets and obligations of BTC. 

  2.8  Transactions after the Merger  

  After  BTC is merged into TIMB, it shall thereafter be incumbent solely upon TIMB to  resolve the overlap of mobile licenses, which solution shall constitute part of  the filings referred to in Section 2.9, below, provided that TIMB or its  Subidiaries shall maintain their existing and original SMP licenses with  national coverage, but will return its LDN and LDI licenses to Anatel. 

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2.9 Anatel and CADE Filings  

  Within  ten Business Days of the date hereof, TIMB and BT shall submit a filing  relating to the merger for the prior approval of Anatel. Within fifteen  Business Days of the date hereof, TIMB and BT shall jointly submit a filing  relating to the merger for the approval of CADE, also as required by applicable  Law, provided that such Ming will be made within twenty Business Days of the  date hereof if any administrative order or injunction now in force is lifted  prior to the said fifteenth Business Day. TIMB shall coordinate such filings  and BT shall fully cooperate with TIMB and its counsel in connection therewith.  The Parties shall cooperate with each other and provide in reasonable time all  information that may be required in connection with such filings. Unless  otherwise agreed to by the Parties, all legal and filing costs related to the  CADE and Anatel filings shall be shared in equal parts among TIMB and BT. 

  2.10  Conditions Precedent to the Merger  

  The  obligations of the TI Parties to hold the shareholders' meetings relating to  the merger and to approve and consummate the merger shall be subject to the  fulfillment and satisfaction, at or prior to the Date of the Merger, of the  following conditions precedent, unless otherwise waived in writing by the TI  Parties: 

  (a) all representations and warranties of each  BT Party contained in this Agreement shall be true and correct in all material  respects as of the date hereof, and such representations and warranties shall  be true and correct in all material respects as of the Date of the Merger as if  made at and as of such time; 

  (b) the BT Parties shall have performed and  complied with all agreements and conditions required by this Agreement to be  performed or complied with by them prior to or on the Date of the Merger; 

  (c) the parties shall have submitted to Anatel  and, if the Date of Merger is later than the stipulated filing date, to CADE  the filings referred to in Section 2.9; and both Anatel's consent for the  merger and any other transactions contemplated in the filings and any consent  therefor of CADE required pursuant to any administrative order or injunction  now in force, shall have been obtained and shall be in full force and effect; 

  (d) no Law or other legal restraint shall  prevent or otherwise affect the consummation of the transactions contemplated. 

  3.  CERTAIN OBLIGATIONS.  

  3.1  Right to Terminate Agreements  

  The BT  Parties agree, for themselves and their respective Affiliates, that TIMB and  its Affiliates shall have the right to terminate at their sole discretion, at  any time after the Date of the Merger, without cause, any agreements entered  into prior to the Date of the Merger between BTC on one side, and BT or any of  their respective Affiliates or related parties on the other side on other than  an arm' s length basis, and such termination shall not give rise to any  liability or obligation for TIMB or any of its Affiliates to pay damages,  penalties, costs, 

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expenses or any other amounts, whether contemplated in  such agreements or not. A list of all contracts and agreement between or among  BTC and BT or any Affiliate of BT shall be delivered to TIMB on the Date of the  Merger. 

    3.2  Termination of Guarantees  

  The BT  Parties shall, prior to the Date of the Merger, use their best efforts to cause  all guaranties granted by BTC, either in the form of personal guaranties (garantias  fidejussórias) or in the form of collateral (garantias reais) in  respect of any third parties' obligations to be released by the respective  creditors. In the event that any such guaranty may not be released, BT shall  provide the TI Parties, as the case may be, with counter-guaranties reasonably  satisfactory to them. 

  3.3  Financial information  

  TIMB  shall deliver to BT, within 45 days of the expiry of each calendar quarter, the  audited (or subject to limited review) financial statements of TIMB which will  be consolidated into the quarterly financial statements of its parent company.  TIMB shall also timely respond to any reasonable requests or inquiries of BT  with respect to such financial statements whenever such response is necessary  for BT's own reporting or auditing requirements or obligations, provided that  TIMB is not obligated to disclose any confidential information. 

  Further,  to the extent it will be possible and legally permissible, TIMINT shall use  commercially reasonable efforts to allow BT to designate a Board member in  TIMB. Such right of designation shall in any event automatically expire when BT  will cease to own at least 50% of the participation acquired on the Date of the  Merger. 

  3.4  Tag- Along /Drag- Along  

  In the  event TIMINT, on or prior to the second anniversary of the date hereof, intends  to sell its participation in TIMB to a third party (the "Potential  Buyer"), (i) BT shall be granted a tag-along right allowing BT to sell its  participation in TIMB to the Potential Buyer on the same terms and conditions  agreed between TIMINT and the Potential Buyer; and (u) TIMINT shall be granted  a drag-along right on BT participation in TIMB allowing TIMINT to compel BT to  transfer its participation in TIMB to the Potential Buyer on the same terms and  conditions TIMINT will transfer to the Potential Buyer its own participation in  TIMB. 

  The  final terms and conditions of the above rights will be negotiated between the  Parties before the Date of the Merger. 

  4.  INTERIM AGREEMENTS BETWEEN BTC, BT AND TIMB OR ITS SUBSIDIARIES  

  In  anticipation of the merger transaction that continues to be the ultimate  objective of the parties, and, as soon as practicable after signature of this  Agreement, BTC, BT and TIMB and/or the Subsidiaries will, to the fullest extent  permitted by applicable regulation and antitrust rules, enter into one or more  commercial agreements as follows: 

  (i) The  Subsidiaries will provide BTC a National Roaming Agreement on a  most-favored-customer basis allowing BTC to offer access to nationwide services  to its customers 

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utilizing GSM technology, provided that BTC shall not  have any roaming agreement domestically other than with Subsidiaries. 

  (ii)  The Subsidiaries will facilitate BTC's access to GSM-based International  Roaming with Subsidiaries abroad as well as third-party carriers allowing BTC  to offer international services to its customers. 

  (iii)  The relevant Subsidiaries and BTC will enter into reciprocal GSM-based Regional  Roaming Agreements on a most-favored-customer basis allowing each to benefit  from the need to make only such network expansion investments as it  specifically wants or to substitute for such using said roaming services. 

  Through  these agreements BTC will: (a) increase the coverage to the same extent of the  Subsidiaries, also considering the planned coverage expansion of the  Subsidiaries, and (b) reduce expenditures for investments relative to required  capacity upgrades that will now be provided by the Subsidiaries. 

  (iv) BT  will be the preferred provider of TIMB for leased lines, cables and backbone  transmission facilities that will be granted on a "most favored  customer" basis; and 

  (v) BT  will be a provider of TIMB and the Subsidiaries, on a "most favored  customer" basis, for Site and Infra-Structure Sharing to support its  Network rollout plan. 

  The  commercial agreements will expire at the earlier of (i) the Date of the Merger  or (ii) one year of their execution; provided that those referred to in items  (iv) and (v), above, shall survive for their stated terms. 

  5.  AGREEMENTS BETWEEN BT AND TIMB OR ITS SUBSIDIARIES  

  5.1.  Negotiation of Operational Agreements 

  Concurrently  with the merger of BTC into TIMB and, if applicable, the other transactions  referred to in Section 2.8, it is envisaged that BT and TIMB or the  Subsidiaries, as the case may be, will, in order to increase for BT the  advantages of the merger, enter into a Long Distance services agreement,  pursuant to which BT will provide such services to TIMB, or the Subsidiaries,  as the case may be, and into other operational agreements. In addition, the  existing agreements between BT and BTC will be reviewed and amended, or  integrated into the new agreements, as necessary for their terms and conditions  to reflect arms' length bases. The specific terms and conditions of each of  such new agreements and of any amendments to existing agreements will be  negotiated and agreed to by BT and TIMB, or the Subsidiaries, as the case may  be, on an arm's length basis to the fullest extent permitted by applicable  regulations and antitrust rules, and will be based on the following principles: 

  (a) BT will rely on the mobile network of TIMB  and the Subsidiaries to continue offering its distinctive offer based on  convergent services, in compliance with current regulation; 

  (b) BT will exploit the highest know-how of the  GSM technology provided by TIMB in order to offer innovative value added  services and mobile office solutions to its customers; 

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(c) BT  will create synergies between the two distribution networks: 

    (1) BT will increase the capillarity of its  commercial presence by exploiting the distribution network of TIMB and the  Subsidiaries in Region II (more than 3.400 Points of Sale, of which more than  700 Corporate and 15 owned Points of Sale), where a range of services would be  provided, from a "friendly contact point" (information on BT  services) to the sale of convergent services, and 

    (2) BT will earn from the promotion of the  services of TIMB and the Subsidiaries through its distribution network; 

    (d) BT will be the preferred provider of TIMB  and the Subsidiaries for long distance services, on a "most favored  customer" basis, to the extent permissible under applicable regulation; 

    (e) BT will be a preferred provider of TIMB  and the Subsidiaries, for leased lines, cables and backbone transmission  facilities that will be granted on a "most favored customer" basis,  and subject to any requirements of non-discrimination; 

    (f) BT will be a preferred provider of TIMB  and the Subsidiaries, on a "most favored customer" basis, for Site  and Infra-Structure Sharing to support its Network rollout plan; 

    (g) BT and TIMB will jointly evaluate the  opportunities of creating synergies from the optimization of operating  processes like logistics (e.g. optima' management of network and IT spare parts  using the warehouses of both operators). 

    6.  AGREEMENTS PENDING THE MERGER  

  The  Parties agree as follows with respect to the period between the execution of  this Agreement and the consummation of the merger: 

  6.1  General  

  Each of  the Parties will use all reasonable efforts to take or cause to be taken all  actions and to do all things necessary in order to consummate and make  effective the transactions contemplated by this Agreement, including  satisfaction of the merger conditions set forth in Section 2.10. 

  6.2  Operation of Business  

  BT (i)  shall manage BTC's business in the usual, regular and ordinary course  consistent with past practice and without deviation from the current budget  parameters, to be prepared on a monthly basis from March to September 2005  consistently with the financial information and forecasts to be provided to the  appraiser as per Section 2.3, (ii) will not declare or pay dividends or make  any other distributions to shareholders, and (iii) shall not enter into any new  agreements, assume new liabilities, commitments or obligations, or give any  guarantees, surety bonds, endorsements, insurance or the like in excess of the  equivalent to the amount of € 1 million on the date hereof for any single  transaction, except 

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in the case of a prior written approval that will not  be unreasonably withheld if in the ordinary course of business. 

  6.3  Reasonable Access  

  BT and  BTC shall permit the TI Parties and their respective representatives, counsel  and accountants to have access at reasonable times, and in a manner so as not  to interfere with the normal operations of BTC's business, to the premises,  properties, financial statements and contracts of, and other relevant  information pertaining to, BTC, subject to any antitrust restrictions  applicable. 

  7.  REPRESENTATIONS AND WARRANTIES RELATING TO THE BT PARTIES  

  The BT  Parties, jointly and severally, hereby make the following representations and  warranties TIMB, each of which is material to and is being relied upon by the  TIMB: 

  7.1  Legal Status  

  Each BT  Party is duly organized and validly existing, and has the full requisite  authority (capacidade) and power to own and dispose of its assets and properties  and to transact the business in which it is engaged, to do all things necessary  or appropriate in respect of its business and to consummate the transactions or  agreements contemplated by this Agreement. 

  7.2  Corporate Approvals  

  Each BT  Party has authorized the execution and delivery of this Agreement and each of  the transactions and agreements contemplated hereby. No other corporate action  is necessary to authorize such execution. 

  7.3  Validity and Enforceability  

  This  Agreement shall, upon its execution by the BT Parties, constitute valid and  binding obligations of each such BT Party, enforceable against such BT Party,  as the case may be, in accordance with its terms. 

  7.4  Authorizations  

  Other  than the Authorizations and filings mentioned in Section 2.9 and except as may  be required for purposes of Sections 4 and 5 above, the execution by each BT  Party of this Agreement, the performance by each BT Party of its obligations  hereunder and the consummation by each BT Party of the transactions or agreements  contemplated hereby do not require such BT Party, as the case may be, to obtain  any Authorization or to make any filing with or give any notice to any  Governmental Authority or other third party. 

  7.5  No Conflicts  

  The  execution and delivery by each BT Party of this Agreement do not, and the  consummation of the transactions or agreements contemplated herein and the  compliance with the terms hereof shall not, (i) materially conflict, (ii)  result in any material violation of or default (with or without notice or lapse  of time, or both), (iii) give rise to any right of 

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termination, cancellation or acceleration of any  material obligation except with respect to BNDES financing agreement executed  between BT&BNDES prior to the date hereof (iv) give rise to any loss of any  material right or benefit, (v) result in the creation of any Liens upon any of  the material assets or properties of any of such BT Party, with or under any  provision of (a) the by-laws or articles of association of such BT Party, (b) any  material contract, agreement, instrument, note, bond, mortgage, indenture, deed  of trust, license, lease, commitment or other arrangement to which such BT  Party, is a party or by which any of its respective assets or properties are  bound, or (c) any applicable Law, subject to the conditions set forth in  Section 2.10(c) above. 

    7.6  No Broker's Fees  

  No  agent, broker, person or firm acting on behalf of any BT Party or any of its  Affiliates or related parties is, or will be, entitled to any commission or broker's  or finder's fees from any of the TI Parties or BTC or any of the TI Parties'  respective Affiliates, in connection with any of the transactions contemplated  by this Agreement. 

  7.7  Permits  

  BTC  possesses all material licenses, permits, certificates, consents, orders,  approvals and other authorizations from, and has made all material declarations  and fílings with, all Governmental Authorities, presently required or necessary  to own or lease, as the case may be, and to operate its properties and to carry  on its businesses as now conducted ("Permits"); BTC has fulfilled and  performed all of its material obligations with respect to such Permits and no  event has occurred which allows, or after notice or lapse of time would allow,  revocation or termination thereof or results in any other material impairment  of the rights of BTC; and BTC has not received any notice of any proceeding  relating to revocation or modification of any such Permit. 

  7.8  Taxes  

  All Tax  returns required to be filed by BTC have been filed and all such returns are  true, complete, and correct in all material respects. All material Taxes that  are due from BTC have been paid other than those (i) currently payable without  penalty or interest or (ii) being contested in good faith and by appropriate  proceedings and for which adequate reserves have been established in accordance  with generally accepted accounting principles of Brazil, consistently applied  ("(lAAP"). To the knowledge of BTC, after reasonable inquiry, there  are no actual or proposed Tax assessments against BTC that would, individually  or in the aggregate, have a material adverse effect on the financial standing  of BTC. The accruals and reserves on the books and records of BTC in respect of  any material Tax liability for any period not finally determined are adequate  to meet any assessments of Tax for any such period. For purposes of this  Agreement, the term "Tax" and "Taxes" shall m

ean all  Federal, state, municipal and foreign taxes, contributions, social security  payments or contributions, and other assessments of a similar nature (whether  imposed directly or through withholding), including any interest, additions to  tax, or penalties applicable thereto. 

  7.9  Financial Statements  

  The  March 31, 2005, audited (or subjected to limited review) financial statements  and related notes of BTC (the "Financial Statements") present fairly  the financial position, results of operations and cash flows of BTC, as of the  respective dates and for the 

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respective periods to which they apply and have been  prepared in accordance with GAAP. Subsequent to the dates as of which the  Financial Statements were prepared (i) BTC has not incurred any liabilities,  direct or contingent, that are material, individually or in the aggregate, to  BTC, or has entered into any transactions not in the ordinary course of  business, (ii) there has not been any material decrease in the capital stock or  any material increase in long-term indebtedness or any material increase in  short-term indebtedness of BTC, or any payment of or declaration to pay any  dividends or any other distribution with respect to BTC, (iii) none of the  Working Capital accounts are deficient relative to the business needs even on  an interim basis and (iv) there has not been any Material Adverse Change in the  properties, earnings, assets, liabilities or financial condition of BTC (each  of clauses (i), (ii) and (iii), a "Material Adverse Change"). To the  knowledge

 of BTC after reasonable inquiry, there is no event that is reasonably  Iikely to occur, which if it were to occur, would, individually or in the  aggregate, have a Material Adverse Effect. 

    7.10  Agreements of BTC  

  The BT  Parties represent and warrant that (i) all material agreements of BTC have been  made on arms' length bases, reflecting normal market conditions, providing for  adequate compensation, and that (ii) except as listed on Schedule 7.10 hereto,  BTC has entered into no agreements, assumed no liabilities, commitments to pay  or obligations, or given any guarantees, surety bonds, endorsements, insurance  or the like in excess of an amount equivalent to € 10 million on the date  hereof 

  7.11  Absence of Financial Liabilities  

  The BT  Parties represent and warrant that, except for the vendor financing and the  remaining SMP license fees and the accounts payable deemed debt per Section 2.3  also listed on Schedule 7.11 hereto, BTC does not have and on the Date of the  Merger shall not have (i) any debt for borrowed money; (ii) any debt evidenced  by debentures, notes or other similar instruments; (iii) any liabilities  assumed as the deferred payment for property, authorizations, licenses or the  like, conditional sale obligations, or liabilities under any title retention (reserva  de domínio) agreement; (iv) liabilities of any other type of credit  transaction; or (v) guarantees in respect of any indebtedness referred to in  (i) through (iv). 

  7.12  Litigation  

  There  is no action, claim, suit, demand, hearing, notice of violation or deficiency,  or proceeding, domestic or foreign (collectively, "Proceedings"), pending  or, to the knowledge of BTC, threatened in writing, that (i) either is not  reflected or recorded in the Financial Statements or that may cause a Loss to  BTC in excess of the equivalent of € 100,000, or (ii) seeks to restrain,  enjoin, prevent the consummation of, or otherwise challenge any of this  Agreement or any of the transactions contemplated herein. 

  8.  REPRESENTATIONS AND WARRANTIES RELATING TO TI PARTIES  

  The TI  Parties, jointly and severally, hereby make the following representations and  warranties to BT, each of which is material to and is being relied upon by BT: 

  12 

8.1 Legal Status  

  Each TI  Party is company duly organized and validly existing under the laws of the  Netherlands or Brazil, as the case may be, and has the full requisite (capacidade) and power to own and dispose of its assets and properties and to transact  the business in which it is engaged, to do all things necessary or appropriate  in respect of its business and to consummate the transactions or agreements  contemplated by this Agreement. 

  8.2  Corporate Approvals  

  Each TI  Party has authorized the execution, delivery and performance of this Agreement  and each of the transactions and agreements contemplated hereby. No other  corporate action (including shareholder or management approval) is necessary to  authorize such execution, delivery and performance. 

  8.3  Validity and Enforceability  

  This  Agreement shall, upon its execution by such TI Party, constitute the valid and  binding obligation of such TI Party, enforceable against such TI Parties in  accordance with its terms. 

  8.4  Authorizations  

  Other  than the Authorizations and filings mentioned in Section 2.9 and except as may  be required for purposes of Sections 4.1 and 5.1 above, the execution and  delivery by each TI Party of this Agreement to which is or shall be a party,  the performance by each TI Party of its respective obligations hereunder and  the consummation by each TI Party of the transactions or agreements  contemplated hereby do not require such TI Party to obtain any Authorization or  to make any fíling with or give any notice to any Governmental Authority or  other third party. 

  8.5  No Conflicts  

  The  execution and delivery by each TI Party of this Agreement do not, and the  consummation of the transactions or agreements contemplated herein and the  compliance with the terms hereof shall not, (i) materially conflict, (ii)  result in any material violation of or default (with or without notice or lapse  of time, or both), (iii) give rise to any right of termination, cancellation or  acceleration of any material obligation, (iv) give rise to any loss of any material  right or benefit, (v) result in the creation of any Liens upon any of the  material assets or properties of any of such TI Party, with or under any  provision of (a) the by-laws or articles of association of such TI Party, (b)  any material contract, agreement, instrument, note, bond, mortgage, indenture,  deed of trust, license, lease, commitment or other arrangement to which such TI  Party, is a party or by which any of its respective assets or properties are  bound, or (c) any applicable Law, subject to the conditions set forth in  Se

ction 2.10 above. 

  8.6  No Broker's Fees  

  No  agent, broker, person or firm acting on behalf of any TI Party or any of its  Affiliates or related parties is, or will be, entitled to any commission or  broker's or finder's fees from 

  13 

any of the BT Parties or any of the BT Parties'  respective Affiliates, in connection with any of the transactions contemplated  by this Agreement. 

    8.7  Financial Statements  

  The  March 31, 2005, audited (or subjected to limited review) financial statements  and related notes of TIMB (the "Financial Statements") present fairly  the financial position, results of operations and cash flows of TIMB, as of the  respective dates and for the respective periods to which they apply and have  been prepared in accordance with GAAP. Subsequent to the dates as of which the  Financial Statements were prepared (i) TIMB has not incurred any liabilities,  direct or contingent, that are material, individually or in the aggregate, to  TIMB, or has entered into any transactions not in the ordinary course of  business, (ii) there has not been any material decrease in the capital stock or  any material increase in long-term indebtedness or any material increase in  short-term indebtedness of TIMB, or any payment of or declaration to pay any  dividends or any other distribution with respect to TIMB, (iii) none of the  Working Capital accounts are deficient or excessive relative to the busi

ness  needs even on an interim basis and (iv) there has not been any Material Adverse  Change in the properties, earnings, assets, liabilities or financial condition  of TIMB (each of clauses (i), (ii) and (iii), a "Material Adverse  Change"). To the knowledge of TIMB after reasonable inquiry, there is no  event that is reasonably likely to occur, which if it were to occur, would,  individually or in the aggregate, have a Material Adverse Effect. 

  8.8  Permits  

  TIMB  possesses all material licenses, permits, certificates, consents, orders,  approvals and other authorizations from, and has made all declarations and  filings with, all Governmental Authorities, presently required or necessary to  own or lease, as the case may be, and to operate its properties and to carry on  its businesses as now conducted ("Permits"); TIMB has fulfilled and  performed all of its material obligations with respect to such Permits and no  event has occurred which allows, or after notice or lapse of time would allow,  revocation or termination thereof or results in any other material impairment  of the rights of TIMB; and TIMB has not received any notice of any proceeding  relating to revocation or modification of any such Permit. 

  8.9  Taxes  

  All Tax  returns required to be filed by TIMB have been filed and all such returns are  true, complete, and correct in all material respects. All material Taxes that  are due from BTC have been paid other than those (i) currently payable without  penalty or interest or (ii) being contested in good faith and by appropriate  proceedings and for which adequate reserves have been established in accordance  with GAAP. To the knowledge of TIMB, after reasonable inquiry, there are no  actual or proposed Tax assessments against TIMB that would, individually or in  the aggregate, have a material adverse effect on the financial standing of  TIMB. The accruals)s and reserves on the books and records of TIMB in respect  of any material Tax liability for any period not finally determined are  adequate to meet any assessments of Tax for any such period. For purposes of  this Agreement, the term "Tax" and "Taxes" shall mean all  Federal, state, municipal and foreign taxes, contributions, social

 security  payments or contributions, and other assessments of a similar nature (whether  imposed directly or through withholding), including any interest, additions to  tax, or penalties applicable thereto. 

  14

8.10 Litigation  

  There  is no action, claim, suit, demand, hearing, notice of violation or deficiency,  or proceeding, domestic or foreign (collectively, "Proceedings"),  pending or, to the knowledge of TIMB, threatened in writing, that (i) either is  not reflected or recorded in the Financial Statements or that may cause a Loss  to TIMB in excess of the equivalent of € 100,000, or (ii) seeks to restrain,  enjoin, prevent the consummation of, or otherwise challenge any of this  Agreement or any of the transactions contemplated herein. 

  9.  INDEMNIFICATION  

  9.1  Survival of Representations, Warranties and Covenants  

  The  representations, warranties and covenants of the Parties contained in this  Agreement shall be true correct, accurate and not misleading as of the date on  which they are given as well as on the Date of the Merger, and shall survive  for a period of two years as of the Date of the Merger, provided that those  relating to Taxes shall survive for a period of five years therefrom. If  written notice of a claim has been given prior to the expiration of the  applicable representations and warranties by any Party, then the relevant  representations and warranties, as well as the indemnification provisions  contained in this Section 9, shall survive as to such claim. 

  9.2  Indemnification by BT  

  BT shall  at all times indemnify each TI Party and its respective successors and assigns,  and shall at all times hold each of the foregoing persons harmless for any and  all direct or indirect (excluding lost profits – lucros cessantes) liabilities,  losses, damages, claims, fees, costs, expenses, interest, awards, judgments,  fines and penalties (including, without limitation, disbursements or transfers  of economic value for attorneys' fees, courts costs, placement of bonds or  surety, judicial deposits and out-of-pocket expenses) (each, a "Loss") actually incurred or suffered by any of the foregoing persons as a result of  the breach by any BT Party of any representation or warranty made in this  Agreement or any covenant, obligation or agreement contained in this Agreement. 

  9.3  TI Parties' Indemnification  

  The TI  Parties shall at all times indemnify BT and its respective successors and  assigns and shall at all times hold each of the foregoing persons harmless for  any and all direct or indirect Losses (excluding lost profits - lucros cessantes) actually incurred or suffered by any of the  foregoing persons as a result of the breach by the TI Parties of any  representation or warranty made in this Agreement or any covenant, obligation  or agreement contained in this Agreement. 

  9.4  Indemnification Procedures  

  If any  party that shall be indemnified in accordance with Sections 9.1 to 9.3 (any of  such parties, an "Indemnified Party") shall incur or suffer  any Loss (other than by reason of a Third Part Claim, as hereinafter defined)  that may be subject to indemnification pursuant to this Agreement, such  Indemnified Party shall give notice (a "Claim Notice") to the parties  against which indemnification shall be sought in accordance with Sections 9.1  to 9.3 (any 

  15 

of such parties, an "Indemnifying Party") of any matter that the Indemnified Party believes has given or could give  rise to a right of indemnification under this Agreement promptly, but in no  event later than 90 (ninety) days after the Indemnified Party first learns of  such claim, stating the amount of the Loss, if known, and method of computation  thereof, if possible, and containing a reference to the provisions of this  Agreement in respect of which such right of indemnification is claimed or  arises, and requiring prompt indemnification of such Loss from the Indemnifying  Parties (any such notice, an "Indemnity Claim"). The  Indemnifying Parties shall, as soon as practicably possible after receipt of  such notice but in no event later than 5 (five) days from such receipt,  indemnify and reimburse the Indemnified Party for the actual amount of the Loss  suffered, net of any taxes or withholdings applicable to the payment or  reimbursement of th

e relevant amount to the Indemnified Party. 

  (a) In  the event any claim or demand in respect of which an Indemnified Party might  seek indemnity under Sections 9.1. to 9.3 is asserted against or sought to be  collected from such Indemnified Party by a Person other than a Party hereto, or  any Affiliate of such Party (a "Third Party Claim"), the  Indemnified Party shall deliver a Claim Notice with reasonable promptness to  the Indemnifying Party. If the Indemnified Party fails to provide the Claim  Notice with reasonable promptness after the Indemnified Party receives notice  of such Third Party Claim, the Indemnifying Party will not be obligated to indemnify  the Indemnified Party with respect to such Third Party Claim to the extent that  the Indemnifying Party has been irreparably prejudiced by such failure of the  Indemnified Party. The Indemnifying Party will notify the Indemnified Party as  soon as practicable, but in no event later than within 5 days of receipt of the  Claim Notice (the "Dispute Period") whether the I

ndemnifying Party  disputes its liability to the Indemnified Party and whether the Indemnifying  Party desires, at its sole cost and expense, to defend the Indemnified Party  against such Third Party Claim. 

  (b) If  the Indemnifying Party notifies the Indemnified Party within the Dispute Period  that the Indemnifying Party desires to defend the Indemnified Party with  respect to the Third Party Claim, then the Indemnifying Party will have the  right to defend, with counsel reasonably satisfactory to the Indemnified Party,  at the sole cost and expense of the Indemnifying Party, such Third Party Claim  by all appropriate proceedings, which proceedings will be diligently prosecuted  by the Indemnifying Party to a final conclusion or will be settled at the  discretion of the Indemnifying Party (but only with the consent of the  Indemnified Party, which consent will not be unreasonably withheld, in the case  of any settlement that provides for any relief other than the payment of  monetary damages as to which the Indemnified Party will be indemnified in  full). The Indemnifying Party will have control of such defense and  proceedings, including (except as provided in the immediately preceding  sentence) any settle

ment thereof; provided, however, that the  Indemnified Party may, at the sole cost and expense of the Indemnified Party,  at any time prior to the Indemnifying Party' s delivery of the notice referred  to in the first sentence of this clause (i), file any motion, answer or other  pleadings or take any other action that the Indemnified Party reasonably  believes to be necessary or appropriate to protect its interests; and provided  further, that if requested by the Indemnifying Party, the Indemnified Party  will, at the sole cost and expense of the Indemnifying Party, provide  reasonable cooperation to the Indemnifying Party in contesting any Third Party  Claim that the Indemnifying Party elects to contest. The Indemnified Party may  retain separate counsel to represent it in, but not control, any defense or  settlement of any Third Party Claim controlled by the Indemnifying Party  pursuant to this clause (i), and the Indemnified Party will bear its own costs  and expenses with respect to such s

eparate counsel, except as provided in the  preceding 

  16

sentence and except that the Indemnifying Party will  pay the costs and expenses of such separate counsel if (x) in the Indemnified  Party's reasonable judgment, it is advisable, based on advice of counsel, for  the Indemnified Party to be represented by separate counsel because a conflict  or potential conflict exists between the Indemnifying Party and the Indemnified  Party or (y) the named parties to such Third Party Claim include both the  Indemnifying Party and the Indemnified Party and the Indemnified Party  determines reasonably, based on advice of counsel, that defenses are available  to it that are unavailable to the Indemnifying Party. Notwithstanding the  foregoing, the Indemnified Party may retain or take over the control of the  defense or settlement of any Third Party Claim the defense of which the  Indemnifying Party has elected to control if the Indemnified Party irrevocably  waives its right to indemnity with respect to such Third Party Claim and  Indemnifying Party

receives appropriate releases absolving it of any and all  liability thereunder. 

If the  Indemnifying Party fails to notify the Indemnified Party within the Dispute  Period that the Indemnifying Party desires to defend the Third Party Claim, or  if the Indemnifying Party gives such notice but fails to prosecute diligently  or settle the Third Party Claim, then the Indemnified Party will have the right  to defend, at the sole cost and expense of the Indemnifying Party, the Third  Party Claim by all appropriate proceedings, which proceedings will be  prosecuted by the Indemnified Party in good faith or will be settled at the  discretion of the Indemnified Party (with the consent of the Indemnifying  Party, which consent will not be unreasonably withheld). The Indemnified Party  will have full control of such defense and proceedings, including (except as  provided in the immediately preceding sentence) any settlement thereof; provided,  however, that if requested by the Indemnified Party, the Indemnifying Party  will, at the sole cost and expense of the Indemnifying Party, provide

  reasonable cooperation to the Indemnified Party and its counsel in contesting  any Third Party Claim which the Indemnified Party is contesting. Notwithstanding  the foregoing provisions of this clause (b), if the Indemnifying Party disputes  its liability hereunder to the Indemnified Party with respect to such Third  Party Claim and if such dispute in resolved in favor of Indemnifying Party in  the manner provided in clause (c) below, the Indemnifying Party will not be  required to bear the costs and expenses of the Indemnified Party's defense or  of the Indemnifying Party's participation therein at the Indemnified Party's  request, and the Indemnified Party will reimburse the Indemnifying Party in  full for all reasonable costs and expenses incurred by the Indemnifying Party  in connection with such litigation.

(c) If  the Indemnifying Party notifies the Indemnified Party that it does not dispute  its liability to the Indemnified Party with respect to the Third Party Claim or  fails to notify the Indemnified Party within the Dispute Period whether the  Indemnifying Party disputes its liability to the Indemnified Party with respect  to such Third Party Claim, the Loss arising from such Third Party Claim will be  conclusively deemed a liability of the Indemnifying Party and the Indemnifying  Party shall pay the amount of such Loss to the Indemnified Party on demand  following the final determination thereof. If the Indemnifying Party has timely  disputed its liability with respect to such claim, the Indemnifying Party and  the Indemnified Party will proceed in good faith to negotiate a resolution of  such dispute, and if not resolved through negotiations within the Resolution  Period, such dispute shall be resolved by arbitration as provided hereinafter. 

(d) In  the event any Indemnified Party should have a claim against any Indemnifying  Party that does not involve a Third Party Claim, the Indemnified Party shall  deliver un Indemnity Notice with reasonable promptness to the Indemnifying  Party. The failure by 

  17

any Indemnified Party to give the Indemnity Notice  shall not impair such party's rights hereunder except to the extent that an  Indemnifying Party demonstrates that it has been irreparably prejudiced  thereby. The Indemnifying Party and the Indemnified Party will proceed in good  faith to negotiate a resolution of such dispute, and if not resolved through  negotiations within the Resolution Period, such dispute shall be resolved by  arbitration as provided hereinafter. 

  10.  TERMINATION  

  10.1  Termination  

  Anything  contained herein to the contrary notwithstanding, this Agreement may be  terminated and the transactions contemplated hereby abandoned at any time prior  to the Date of the Merger by, on one side, the TI Parties (which for purposes  of this Section shall act together and shall be deemed to be a single party),  and, on the other side, the BT Parties (which for purposes of this Section  shall act together and shall be deemed to be a single party): 

  (a) by mutual written agreement of the Parties  hereto; 

  (b) by any TI Party, if any of the conditions  set forth in Section 2.10 shall have become impossible of fulfillment, and  shall not have been waived by the TI Parties; 

  (c) by any TI Party, if the merger does not  occur on or prior to November 30, 2005. If, after the date of November 30, 2005, a TI Party does not  terminate this Agreement, BT shall be released from the covenants from the  covenants and obligations set forth in Sections 6.2 and 6.3, above; 

  (d) by any TI Party, upon occurrence of a  direct or indirect change of Control of BTC. 

  10.2  Effects of Termination  

  In the  event of termination of this Agreement pursuant to this Section 10, written  notice thereof shall forthwith be given to the other party and the transactions  contemplated by this Agreement shall be terminated, without further action by  either party. 

  10.3  No Release  

  Termination  of this Agreement notwithstanding, nothing in this Section 10 shall be deemed  to release either party from any liability for any breach by such party of any  of its obligations under this Agreement or to impair the right of either party  to compel specific performance by the other party of its obligations under this  Agreement. 

  11.  MISCELLANEOUS  

  11.1  Notices  

  Any  notices, requests, claims, demands, instructions and other communications to be  given hereunder to any party shall be in writing and delivered in person, sent  by certified mail, postage prepaid, return receipt requested, or by facsimile transmission  with a confirmed 

  18 

telephonic transmission answer back, to the following  addresses (or at such other address or number as is given in writing by other  party to the other pursuant hereto): 

    If  to the TI Parties:  

    TIM  BRASIL SERVIÇOS E PARTICIPAÇÕES S.A. 

  Avenida das Américas, 3434 

  Bloco 1, 6.° andar 

  Centro Empresarial Mário Henrique Simonsen 

  Barra de Tijuca 

  Rio de Janeiro, RJ, Brazil 

  Attn. Mr. Mario Cesar Pereira de Araujo - fax n° +55 21 40094205 

  TIM  INTERNATIONAL N.V.

  1629 Strawinskylaan 

  WTC Tower B, 16th floor 

  1077 ZX Amsterdam, The Netherlands 

  Attn. Mr. Francesco Lobianco – fax n° +31 20 3011102 

  If  to BTC (prior to the Date of the Merger):  

  14  BRASIL TELECOM CELULAR S.A. 

  SIA SUL ASP 

  Lote D, Bloco B, Térreo – parte 

  Brasília, DF, Brazil 

  Attn. Ms. Carla Cico (CEO) - fax n° +55 61 4151237 

  Attn. Mr. Sami Arap Sobrinho (General Counsel) - fax n° +55 61 4151870 

  If  to BT:  

  BRASIL  TELECOM S.A. 

  SIA SUL, ASP, 

  Lote D, Bloco B 

  Brasília, DF, Brazil 

  Attn. Ms. Carla Cico (CEO) - fax n° +55 61 4151237 

  Attn. Mr. Sami Arap Sobrinho (General Counsel) - fax n° +55 61 4151870 

  11.2  Effects, Amendments and Assignment  

  This  Agreement, all of the provisions hereof and the Annexes hereto shall be binding  upon and inure to the benefit of the Parties hereto and their respective  successors and permitted assigns. This Agreement may be amended only upon the  mutual written consent of the parties hereto. No party shall assign its rights,  interests, obligations or liabilities under this Agreement or delegate its  duties without the prior written consent of the other party. 

  11.3  Confidentiality  

  19 

The existence and the coming into force of this  Agreement, as well as all information disclosed by any Party (or its  representatives) whether before or after the date hereof, in connection with  the transactions contemplated by, or the discussions and negotiations  preceding, this Agreement to any other Party (or its representatives) shall be  kept confidential by such other Party and its representatives and shall not be  used by any Persons other than as contemplated by this Agreement, except to the  extent that the Party disclosing such information can prove (i) it was known by  the recipient when received, (ii) it is or hereafter becomes lawfully  obtainable from other sources, (iii) is necessary or appropriate to disclose to  a Public Authority having jurisdiction over the Parties, (iv) as may otherwise  be required by law or (v) to the extent such duty as to confidentiality is  waived in writing by the other Party. If this Agreement is terminated, each  Party shall use all com

mercially reasonable efforts to return, upon written  request from the other Party, all documents (and reproductions thereof)  received by it or its Representatives from such other Party (and, in the case  of reproductions, all such reproductions made by the receiving Party) that  include information not within the exceptions contained in the first sentence  of this Section 11.3, unless the recipients provide assurances reasonably  satisfactory to the requesting Party that such documents have been destroyed. 

  11.4  Entire Agreement  

  This  Agreement constitutes the entire agreement between the parties with respect to  the subject matter hereof and thereof and supersedes any prior agreement or  understanding between the parties with respect to the same matter. There are no  representations, warranties, undertakings or agreements between the parties  with respect to the subject matter of this Agreement except as set forth herein  or therein. 

  11.5  Further Assurances  

  Consistent  with the terms and conditions hereof, each party shall do and perform or cause  to be done and performed all such further acts and things and shall execute and  deliver all such other instruments, certificates, and other documents as any  other party hereto may reasonably require in order to carry out the intent and  accomplish the purposes of this Agreement and the consummation of the  transactions contemplated hereby. 

  11.6  Third Party Beneficiaries  

  All  rights of the TI Parties under this Agreement may be exercised by TIMB and or  any of its Subsidiaries to which the clients, activities, operations, assets or  liabilities of BTC are transferred, directly or indirectly, by TIMB, in any  manner whatsoever, including spin-off and or merger and or sale. Except as  specifically set forth or referred to herein, nothing expressed or implied is  intended or shall be construed to confer upon any person, other than the  Parties hereto and their successors and permitted assigns, any rights or  remedies under or by reason of this Agreement. 

  11.7  Controlling Language  

  The  parties may execute this Agreement in versions in the English and in the  Portuguese languages, provided that the English language version of this  Agreement shall be controlling for all purposes except that of the Protocol,  where the Portuguese shall prevail. 

  20 

11.8 Severability  

  In the  event any term or provision of this Agreement shall be deemed to be illegal,  invalid or unenforceable for any reason, such illegality, invalidity or  unenforceability will not affect any other term or provision of this Agreement  and the parties shall endeavor to replace the invalid or null and void  provision(s) with such which correspond best to the intentions of the parties  hereto. 

  11.9  Governing Law  

  This  Agreement (including the arbitration clause set forth in section 11.10) and the  other Protocol shall be governed by, and construed in accordance with, the laws  of Brazil. 

  11.10  Arbitration  

  Any  dispute, controversy or claim between the TI Parties, on the one side, and the  BT Parties, on the other, arising out of or relating to this Agreement and to  the Protocol (including the breach, termination or invalidity hereof or  thereof) shall be finally settled by binding arbitration in accordance with the  Rules of Arbitration (the "Rules") of the International  Chamber of Commerce – ICC (the "Chamber"), in accordance with  the provisions of this Section. For purposes of this Section or any arbitration  initiated pursuant hereto, (i) the TI Parties shall always act together as a  block and shall be deemed to be a single party, and (ii), prior to the Date of  Merger, the BT Parties shall always act together as a block and shall be deemed  to be a single party. 

  (a) The arbitration tribunal shall consist of  three (3) arbitrators, elected and replaced in accordance with this section and  with the Chamber's Rules. Each party shall appoint one (1) arbitrator, and such  party-appointed arbitrators shall appoint the third arbitrator, who shall serve  as the chairman of the arbitral tribunal. 

  (b) The party willing to initiate the  arbitration shall deliver a written notice to the other party, which notice  shall (i) describe in reasonable detail the dispute, controversy or claim, (ii)  demand the submission of such dispute, controversy or claim to arbitration, and  (iii) contain the name of the arbitrator to be appointed by such party to the  arbitral tribunal. 

  (c) The other party shall have a period of ten  (10) days as of the receipt of the notice mentioned in the preceding paragraph  to appoint the second arbitrator to the arbitral tribunal. Should such party  fail to timely appoint its arbitrator pursuant to this paragraph, such  arbitrator shall be appointed by the Chamber pursuant to the provisions of the  Rules. 

  (d) The two arbitrators so appointed shall,  within ten (10) days as of the date on which the second arbitrator was  appointed, jointly appoint the third arbitrator and chairman of the arbitral  tribunal. If the two party-appointed arbitrators cannot agree on the  appointment of the third arbitrator within such 10-day period, then such  arbitrator shall be appointed by the Chamber, pursuant to the provisions of the  Rules. 

  (e) The arbitration shall take place in the  City of Brasilia, DF, Brazil, and the language to be used  in the arbitration proceedings shall be English. 

  21

(f) The arbitrators shall not decide or render judgments in equity. 

    (g) The arbitration award shall be issued and  delivered in the City of Brasilia, DF, Brazil , and shall contain (i) a report,  including the name of the parties and a summary of the dispute submitted to  arbitration; (ii) the basis and grounds of the decision, addressing the matters  of fact and matters of law; (iii) the decision, in which the arbitrators shall  solve the matters submitted to the arbitration and shall establish the deadline  for the parties to comply with the decision, if applicable; and (iv) the date  on which and the place where the arbitration award has been issued. The  arbitration award shall be signed by all of the arbitrators. The arbitration  award shall be final, conclusive and binding upon all parties. 

    (h) Prior to the institution of the  arbitration, any party can seek in court the required interim, urgent,  preventive or coercive measures. After the institution of the arbitration, the  arbitrators shall be authorized to, at their own initiative or at the request  of either party, to seek in court any required urgent, preventive or coercive  measures, as per the provisions of article 22, paragraph 4, of Law No. 9,307 of  September 23, 1996. 

    (i) Should a party resist to the institution  of arbitration, such party shall be subject to a penalty in an amount  equivalent to 1 million, payable to the other party, without prejudice to such  other party's right to initiate the lawsuit contemplated by article 7 of Law  No. 9,307/96. Any challenges by a party to the appointment of an arbitrator  based on such arbitrator's suspicion or impediment shall not be deemed as  resistance to the institution of the arbitration. 

       IN  WITNESS WHEREOF, the parties execute this instrument on the date and in the  place first above written, in five (5) counterparts of same tenor and content,  in the presence of the undersigned witnesses .

  22

TIM INTERNATIONAL N.V.  

	 
	 
	 
	 
	 

	 
	/s/ Marco De Benedetti 
	 
	/s/ Francesco S. Lobianco 
	 

	 	 		 	 
	 
	Marco De Benedetti 
	 
	Francesco S. Lobianco 
	 

	 
	Managing Director 
	 
	Managing Director 
	 

TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.  

	 
	 
	 
	 
	 

	 	 		 	 
	 
	Marco E. Patuano 
	 
	 
	 

	 
	Attorney-in-fact 
	 
	 
	 

BRASIL TELECOM S.A.  

	 
	 
	 
	 
	 

	 
	/s/ Carla Cico 
	 
	/s/ Sami Arap Sobrinho 
	 

	 	 		 	 
	 
	Carla Cico 
	 
	Sami Arap Sobrinho 
	 

	 
	Chief Executive Officer 
	 
	Chief Legal Officer 
	 

14 BRASIL TELECOM CELULAR S.A.  

	 
	 
	 
	 
	 

	 
	/s/ Carla Cico 
	 
	/s/ Sami Arap Sobrinho 
	 

	 	 		 	 
	 
	Carla Cico 
	 
	Sami Arap Sobrinho 
	 

	 
	Chief Executive Officer 
	 
	Chief Legal Officer 
	 

Witnesses:  

	 
	 
	 
	 
	 

	1. 
	 
	 
	2. 
	 

	 	 		 	 
	 
	Name: 
	 
	 
	Name: 

	 
	RG: 
	 
	 
	RG: 

	 
	CPF: 
	 
	 
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23 

ANNEX 1  

  PROTOCOL AND JUSTIFICATION 

    OF THE MERGER OF 14 BRASIL TELECOM CELULAR S.A.  INTO TIM BRASIL

  SERVIÇOS E PARTICIPAÇÕES S.A.  

       By  this private instrument, 1) BRASIL TELECOM S.A., a Brazilian company with head  office at SIA SUL, ASP, Lote D, Bloco B, Brasília, DF, Brazil, CNPJ/MF no.  76.535.764/0001 -43, herein represented by its Officers, [name and personal  data of signing officers] (hereinafter referred to as "BRASIL  TELECOM"); 2) TIM INTERNATIONAL N.V., a Dutch company with head office at  1629 Strawinskylaan WTC, Tower B, 16th floor, 1077 ZX Amsterdam, The Netherlands,  herein represented by its attorney-in-fact, [name and personal data of  attorney-in-fact] (hereinafter "TIMINT"); 3) 14 BRASIL TELECOM  CELULAR S.A., a Brazilian wholly-owned subsidiary of BRASIL TELECOM with head  office at SIA SUL ASP, Lote D, Bloco B, Térreo – parte, Brasília, DF, Brazil,  CNPJ/MF no. 05.423.963/0001 -11, herein represented by its Officers, [name  and personal data of signing officers] (hereinafter referred to as "  BRASIL TELECOM CELUL
AR"); and 4) TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A., a  Brazilian company with head office at Avenida das Américas, 3434, Bloco 1, 6.°  andar, Centro Empresarial Mário Henrique Simonsen, Barra de Tijuca, Rio de  Janeiro, RJ, Brazil, CNPJ/MF no. 02.600.854/0001 -34, herein represented by its  Officers, [name and personal data of signing officers] (hereinafter  referred to as "TIM"); 

       WHEREAS,  BRASIL TELECOM is the only shareholder of BRASIL TELECOM CELULAR; 

       WHEREAS  TIMINT is the controlling shareholder of TIM BRASIL SERVIÇOS E PARTICIPAÇÕES  S.A.; 

       The  parties agree to enter into this Protocol and Justification of the merger of  BRASIL TELECOM CELULAR into TIM, pursuant to articles 224 and 225 of Law  6,404/76, as follows: 

I.  REASONS AND PURPOSES OF THE OPERATION  

       The  merger of BRASIL TELECOM CELULAR into TIM, once implemented and followed by the  other actions described below, will result in higher efficiency for BRASIL  TELECOM, the only shareholder of BRASIL TELECOM CELULAR, and for TIM. 

1.1 Background. 

       The  National Telecommunications Agency – Anatel issued a competitive bidding  process in August 2002 for the award of new personal communication service  ("SMP") in the D and E frequency sub-bands (the "Tender"). 

       BRASIL  TELECOM holds (i) concessions to exploit domestic long distance ("LDN")  switched fixed telephony service ("STFC") and local STFC in Region II  under the General Licensing Plan ("PGO"); (ii) authorizations to  exploit Local STFC and LDN STFC in Regions I and III and Sectors 20, 22 and 25  of Region II of the PGO; and authorizations to exploit International Long  Distance ("LDI") STFC in Regions I, II and III of the PGO; 

  24 

     BRASIL TELECOM CELULAR,  a wholly-owned subsidiary (subsidiária integral) of BT, holds  authorizations to render personal mobile service ("SMP") in Region  Areas 5, 6, 7 covering all such Region II of the PGA-SMP, (the "BRASIL  TELECOM CELULAR Authorizations") and the relevant "E"  radiofrequency sub-bands associated with the BRASIL TELECOM CELULAR  Authorizations (the "BRASIL TELECOM CELULAR Frequencies"); 

       TIMINT  is the controlling shareholder of TIM, which, in turn, is the direct or  indirect controlling shareholder of certain companies that hold SMP  Authorizations in Regions I, II and III of the PGA-SMP and LDN STFC and LDI STFC  authorizations in Regions I, II and III of the PGO; 

       ANATEL,  on January 16, 2004, issued Act no. 41.780, which was published in the Diário  Oficial da Union on January 19, 2004. Such Act acknowledges certain regulatory  overlaps regarding BRASIL TELECOM, BRASIL TELECOM CELULAR, and TIM, providing  specific rules for their solution. 

1.2 The  Merger and Further Transactions. 

       After  BRASIL TELECOM CELULAR is merged into TIM, it is envisaged that its activities,  assets, liabilities and clients relating to the provision of SMP are absorbed  by operational subsidiaries of TIM (the "Subsidiaries"). 

1.3  Strategic Advantages of the Merger. 

       The  implementation of the merger and of the operations referred to in section 1.2  will enable the group of Telecom Italia International N.V. and BRASIL TELECOM,  including BTC and TIM, to eliminate the overlapping of licenses referred to in  ANATEL's Act no. 41.780/2004 and to comply with ANATEL's orders contained in  such Act. 

       The  Brazilian market is characterized by an increasing competition on pricing. The  larger, nationwide mobile players, capable of exploiting significant economies  of scale, will have competitive advantages, leading to a concentration of the  market. BRASIL TELECOM is aware that BRASIL TELECOM CELULAR, as a fourth entrant  in only one region, will face a disadvantage in developing profitably only a  regional business. 

       In  addition, BRASIL TELECOM, in order to retain its most valuable customers, needs  to provide them a nationwide mobile offer, enriched by innovative value added  services, focusing on convergent services as distinctive element. 

       With  the merger and the operations referred to in section 1.2 above, (i) TIM and the  Subsidiaries, alter the required prior approvals of Anatel and any prior  consent of CADE, will absorb the operations and customers of BRASIL TELECOM  CELULAR, (ii) the Licenses will be returned to the Brazilian granting  authority, and (iii) TIM' s Subsidiaries will renounce their long distance  licenses and, to the extent permitted by existing regulation, rely on BRASIL  TELECOM for all its long distance requirements that would be granted on a  preferred customer basis (subject to any requirements of non-discrimination),  providing significant additional scale to BRASIL TELECOM. 

1.4  Regulatory Approvals. 

       The  merger and the transactions referred to in section 1.2 above must be submitted  for approval of ANATEL and CADE. 

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1.5 Operational Agreements. 

       Concurrently  with the merger of BRASIL TELECOM CELULAR into TIM and the other operations  referred to in section 1.2 above, it is envisaged that BRASIL TELECOM and TIM,  or the Subsidiaries, as the case may be, will, in order to increase for BRASIL  TELECOM the advantages of the merger, enter into a Long Distance services  agreement, pursuant to which BRASIL TELECOM will provide such services to TIM,  or the Subsidiaries, as the case may be, and into other operational agreements.  In addition, the existing agreements between BRASIL TELECOM and BRASIL TELECOM  CELULAR will be reviewed and amended, or integrated into the new agreements, as  necessary for their terms and conditions to reflect arms' length bases. The  specific terms and conditions of each of such new agreements and of any  amendments to existing agreements will be negotiated and agreed to by BRASIL  TELECOM and TIM, or the Subsidiaries, as the case may be, on an arm's length  conditions respecting the existing se

ctorial and antitrust regulations, and  will be based on the following principles: 

       a)  BRASIL TELECOM will rely on the mobile network of TIM and the Subsidiaries to  continue offering its distinctive offer based on convergent services in  compliance with current regulation; 

       b)  BRASIL TELECOM will exploit the highest know-how of the GSM technology provided  by TIM in order to offer innovative value added services and mobile office  solutions to its customers; 

       c)  BRASIL TELECOM will create synergies between the two distribution networks: 

            (i)  BRASIL TELECOM will increase the capillarity of its commercial presence by exploiting  the distribution network of TIM and the Subsidiaries in Region II (more than  3.400 Points of Sale, of which more than 700 Corporate and 15 owned Points of  Sale), where a range of services would be provided, from a "friendly  contact point" ( information on BRASIL TELECOM services) to the sale of  convergent services, and 

            (ii)  BRASIL TELECOM will earn from the promotion of services of TIM and the  Subsidiaries through its distribution network; 

       d)  BRASIL TELECOM will be the preferred provider of TIM and the Subsidiaries for  long distance services and on a preferential and on a "most favored  customer" basis, to the extent permissible under applicable regulation; 

       e)  BRASIL TELECOM will be a preferred provider of TIM and the Subsidiaries for  leased lines, cables and backbone transmission facilities that will be granted  on a "most favored customer" basis and subject to any requirements of  non-discrimination; 

       f)  BRASIL TELECOM will be a preferred provider of TIM and the Subsidiaries, on a  "most favored customer" basis, for Site and Infra-Structure Sharing  to support its Network rollout plan; 

       g)  BRASIL TELECOM and TIM will jointly evaluate the opportunities of creating  synergies from the optimization of operating processes like logistics (e.g.  optimal management of network and IT spare parts using the warehouses of both  operators). 

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1.6 Arficipated Results of the Merger. 

  For the  reasons above, it is anticipated that the merger will result in increased  efficiency for BRASIL TELECOM and for TIM, namely: 

  a) For  BRASIL TELECOM: 

  (i)  nationwide coverage in providing, whether directly or indirectly in accordance  with existing regulation, telecommunication services, 

  (ii)  enhancement of attractiveness to business customers 

  (iii)  economies of scale, 

  (iv)  provision of long distance services to TIM and the Subsidiaries on a preferred  and non-discriminatory basis, 

  (v)  access to value added services of TIM and the Subsidiaries,

  (vi)  assurance of technological evolution, 

  (vii)  avoidance of new mobile capital expenses and start-up losses, 

  (viii)  minimized risk; 

  b) For  TIM: 

  (i)  enrichment of convergent offer, 

  (ii)  exploitment of BRT distribution network and use of the distribution network of  TIM and the Subsidiaries for fixed services.

  2.  STATUS OF BRASIL TELECOM CELULAR PRIOR TO THE MERGER 

  2.1 The  capital of BRASIL TELECOM CELULAR, which has been fully paid, is one billion  and four hundreds million reais (R$1,400,000,000.00), divided into 1,400,000  (one million and four hundred thousands) common shares with no par value. 

  2.2.  All shares of BRASIL TELECOM CELULAR's capital are free and clear of liens and  encumbrances. 

  2.3  BRASIL TELECOM CELULAR is a wholly-owned subsidiary (subsidiária integral) of  BRASIL TELECOM. 

  3.  STATUS OF TIM PRIOR TO THE MERGER  

  3.1 The  capital of TIM, which has been fully paid, is R$ 9.280.705.828,77, divided into  eleven billion seven hundred thirty million five hundred twenty-three thousand  one hundred thirty-two (11.730.523.131) common shares with no par value. The  authorized capital of TIM is ten billion 

  27 

reais (R$10.000.000.000,00) 

  3.2 All  shares of TIM's capital are free and clear of liens and encumbrances. 

  4.  CRITERIA FOR THE EVALUATION OF BRASIL TELECOM CELULAR AND TIM, AND DATE OF THE  MERGER  

  4.1 For  purposes of determining the amount of the increase of TIM's capital and the  exchange ratio of the shares of  BRASIL TELECOM CELULAR, BRASIL TELECOM will  hire an independent appraiser. Such appraiser will be Merrill Lynch as proposed  by BRASIL TELECOM and accepted by TIMINT. Such appraiser will establish the  intrinsic equity value of TIM and the intrinsic equity value of BRASIL TELECOM  CELULAR as of March 31, 2005,   in each case considering any intercompany debt in either  BRASIL TELECOM CELULAR or TIM as equity to the extent such debt will be  capitalized by the time the merger occurs. Similarly the appraiser's valuation  of BRASIL TELECOM CELULAR shall not take into account any commercial  arrangements between TIM and BRASIL TELECOM CELULAR entered into after the date  hereof. The valuation of BTC shall take into account the effects of the  indebtedness of BRASIL TELECOM CELULAR (for these purposes, any vendor  financing accounts payable past due by more than 90 days and any accounts  payab

le  with a maturity greater than 90 days from the date of this Protocol  will also be considered as debt). BRASIL TELECOM CELULAR will furnish to such  appraiser its audited (or subjected to limited review) March 31, 2005 financial  statements, as well as the historical financial information and forecasts  normally required for similar assignments, to the extent available, for such  appraiser to establish BRASIL TELECOM CELULAR's intrinsic net equity value. TIM  will furnish to such appraiser its audited (or subjected to limited review)  March 31, 2005 financial statements, as well as the historical financial  information and forecasts normally required for similar assignments, to the  extent available, for such appraiser to establish TIM's intrinsic net equity  value. All such information and forecasts shall be supplied to the appraiser  and used by the appraiser solely for the purposes of establishing TIM's and  BRASIL TELECOM CELULAR's respective intrinsic equity value, and will be subject  to a confident

iality agreement including a provision that the appraiser shall  commit that the information and forecasts of one Party are not furnished to or  shared with the other without such Party's prior consent (except to the extent  unavoidably reflected in the appraisal report). BRASIL TELECOM will  contractually bind such appraiser to prepare its appraisal within 30 days of  the date hereof. The appraiser shall also be required to provide a fairness  opinion to BRASIL TELECOM on the fairness of the consideration to be received  by BT in connection with the merger of BRASIL TELECOM CELULAR into TIM. The  appraiser's cost shall be borne exclusively by BRASIL TELECOM. The values  determined through the appraisal must be specific point estimates and not a  range or ranges. 

  4.2 The  intrinsic equity value (as described above) of BRASIL TELECOM CELULAR as per  the appraisal report will be the value of the capital increase of TIM. 

  5.  ELEMENTS WHICH WILL FORM THE ASSETS TO BE MERGED INTO TIM.  

  5.1 TIM  will succeed BRASIL TELECOM CELULAR in all of its rights and obligations, as  provided by applicable law, including but not limited to all contracts,  agreements, licenses, agreements related to leased lines, cables and backbone  transmission facilities. 

  6.  INCREASE OF TIM'S CAPITAL  

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6.1 It is estimated that the increase of TIM's capital  will be in the amount of sixty-seven million Reais (R$ 67.000.000,00) . 

  6.2 The  number of shares that will be issued to BRASIL TELECOM will be the number that  assures BRASIL TELECOM a percentage interest in TIM after the merger equal to  the ratio obtained by dividing the intrinsic equity value of BRASIL TELECOM  CELULAR (resulting from the appraisal report as per 4.1 above) by the sum of  the intrinsic value of TIM (resulting from the appraisal report as per 4.1  above) and that of BRASIL TELECOM CELULAR (resulting from the appraisal report  as per 4.1 above), as follows: 

  NS =  ES(IEVBTC/IEVT ), 

  where: 

  NS =  number of new shares of TIM's capital that will be issued to BRASIL TELECOM 

  ES =  number of existing shares of TIM's capital 

  IEVBTC  = intrinsic equity value of BRASIL TELECOM CELULAR as appraised in the  appraisal report which is adopted pursuant to paragraph 4 hereof 

  IEVT  = intrinsic equity value of TIM as appraised in the appraisal report which is  adopted pursuant to paragraph 4 hereof 

  6.3 It  is estimated that, after the merger, TIM's capital will be R$ 9.347.705.828,77,  consisting of 11.847.828.360 common shares, all of which with no par value. The  definitive figures will be those which result from the foregoing criteria of  this section 6 and the appraisal report. 

  7.  GENERAL CONDITIONS OF THE MERGER  

  7.1 The  shares of BRASIL TELECOM CELULAR's capital held by BRASIL TELECOM, its only  shareholder, will be extinguished with the merger. The new shares of the  capital of TIM that, pursuant to paragraph 6.3 hereof, are created as a result  of the merger, will be attributed to BRASIL TELECOM. 

  7.2 The  common shares created by reason of the merger will confer upon its holder the  same rights currently conferred by the shares of the same type. 

  7.3 As  a result of the merger, TIM's by-laws will be amended in order to reflect the  capital increase set forth in section 6. No other amendments will be effected  in TIM's by-laws. 

  7.4 As  a result of the merger, BRASIL TELECOM CELULAR will be extinguished. 

  7.5 The  parties may execute this Protocol in versions in the English and in the  Portuguese languages, provided that the Portuguese language version of this  Protocol shall be controlling for all purposes. 

  7.6  This Agreement shall be governed by, and construed in accordance with, the laws  of Brazil. 

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     And, having thus agreed,  the parties execute this instrument in four originals of equal form and content  in the presence of the two undersigned witnesses. 

	 
	 
	 

	 
	Rio de Janeiro, 28 April 2005 
	 

	 
	 
	 

	 
	 
	 

	 
	Brasil Telecom    S.A.  
	 

	 
	 
	 

	 
	By: _______________________________
	 

	 
	Name:  ____________________________
	 

	 
	Title: _____________________________
	 

	 
	 
	 

	 
	By: _______________________________
	 

	 
	Name:  ____________________________
	 

	 
	Title: _____________________________
	 

	 
	 
	 

	 
	 
	 

	 
	TIM    International N.V.  
	 

	 
	 
	 

	 
	By: /s/    Marco De Benedetti  
	 

	 
	Name: Marco De    Benedetti  
	 

	 
	Title: Managing    Director 
	 

	 
	 
	 

	 
	By: /s/    Francesco Lobianco 
	 

	 
	Name: Francesco    Lobianco 
	 

	 
	Title: Managing    Director 
	 

	 
	 
	 

	 
	14 Brasil    Telecom Celular S.A.  
	 

	 
	 
	 

	 
	By: _______________________________
	 

	 
	Name:  ____________________________
	 

	 
	Title: _____________________________
	 

	 
	 
	 

	 
	By: _______________________________
	 

	 
	Name:  ____________________________
	 

	 
	Title: _____________________________
	 

	 
	 
	 

	 
	TIM Brasil    Serviços e Participações S.A.  
	 

	 
	 
	 

	 
	By: _______________________________
	 

	 
	Name:  ____________________________
	 

	 
	Title: _____________________________
	 

	 
	 
	 

	 
	 
	 

	 
	By: _______________________________
	 

	 
	Name:  ____________________________
	 

	 
	Title: _____________________________
	 

30 

	
         
	 
	 
	 
	 
	 

	1. 
	________________________________
	 
	2. 
	________________________________
	 

	 
	Name: __________________________
	 
	 
	Name: __________________________
	 

	 
	Identity card no:    _________________ 
	 
	 
	Identity card no:    _________________ 
	 

31EX-10.1

Terms of Metal Management, Inc. Fiscal 2008 RONA Incentive Compensation Plan Applicable to

Executive Officers

Purpose

The purpose of the Fiscal 2008 RONA Incentive Compensation Plan (the “Plan”) is to advance the
interests of Metal Management, Inc. (the “Company”) by motivating officers, managers and other key
employees of the Company and its subsidiaries to achieve the Company’s operating and financial
goals through the opportunity to earn bonus compensation.

The objective of the Plan is to maintain flexibility in the determination of individual awards
while providing guidelines for senior managers that are financially sound and practical.

As in prior fiscal years, the Plan will measure performance based on each subsidiary’s or region’s,
or the Company’s return on net assets (“RONA”), as specified below. The purpose of using RONA as a
measure of performance is to motivate senior management to effectively manage working capital and
to maximize asset utilization.

Administration

The Plan is administered by the Compensation Committee of the Board of Directors (the “Compensation
Committee”). The Compensation Committee consists of members of the Board who are not employees and
who are not eligible for participation in this Plan. Awards under the Plan may be made, at the
discretion of the Compensation Committee, in the form of a cash bonus, stock options and restricted
stock, or any combination thereof

The Compensation Committee may establish such rules and regulations, as it deems necessary for the
Plan and its interpretation. The Compensation Committee may delegate some or all of its
administrative powers and responsibilities under the Plan to the Chief Executive Officer for
employees other than any ‘covered employee’ (as defined in Section 162(m) of the Internal Revenue
Code of 1986).

Eligibility

Employees eligible to participate in the Plan include those employees in the following job
categories. To be eligible for payment, employees must be actively employed by the Company at the
end of the fiscal year, March 31, 2008. Bonus targets, expressed as a percentage of base salary at
threshold, target and maximum levels, for the Company’s senior management are as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bonuses as % of Base Salary Paid in Fiscal Year
	Job Category	 	Threshold	 	Target	 	Maximum
	Senior Management	 	 	 	 	 	 	 	 	 	 	 	 
	Chief Executive Officer
	 	 	50	%	 	 	100	%	 	 	200	%
	CFO/Other Named Executive Officers
	 	 	25	%	 	 	50	%	 	 	100	%

The Threshold level indicates the minimum acceptable performance level that will generate a bonus
award. The award pools for achieving between the threshold and maximum levels will be compensated
using a linear method. Awards above the maximum level of performance are subject to the discretion
and determination of the Compensation Committee.

Compensation Committee Discretion

When the Compensation Committee determines RONA performance, they may exclude any or all
“extraordinary items” as determined under U.S. generally accepted accounting principles and any
other unusual or non-recurring items, including, without limitation, the charges or costs
associated with restructurings of the Company, discontinued operations, and the cumulative effects
of accounting changes. The Compensation Committee also may adjust RONA performance and Adjusted
Enterprise Value (as defined below) for the year as it deems equitable in recognition of unusual or
non-recurring events affecting the Company, region or business unit (including, without limitation,
mergers, acquisitions and divestitures); changes in applicable tax laws or accounting principles;
or such other factors as the Compensation Committee may determine (including, without limitation,
any adjustments that would result in the Company paying non-deductible compensation to a covered
employee).

The Compensation Committee, in its discretion and for reasons sufficient to the Compensation
Committee, can adjust the bonus award payable to any participant up or down, based upon his or her
achievement of threshold, target or maximum level; provided, however the Compensation Committee may
not lower the bonus award payable to a participant below threshold level, unless the Compensation
Committee determines, in its discretion, that the participant has (i) failed to satisfactorily
perform his or her duties and responsibilities, (ii) violated in some material respect written
Company policies or procedures, (iii) engaged in fraud or conduct resulting or intending to result
directly or indirectly in gain or personal enrichment for the participant at the Company’s expense,
or (iv) otherwise acted, or failed to act, in a manner that warrants forfeiting all or a part of
his or her bonus.

Performance Measure

Senior management will be evaluated based on the Company’s and/or the regional operating
performance in accordance with the table set forth below.

	 	 	 
	Job Category	 	Performance Measure
	CEO/President/CFO

Senior Corporate Executives

	 	

100% Company Performance
	 

	 	 
	 
	 	 
	Regional Presidents

	 	50% Company Performance / 50% Regional Performance
	 

	 	 

Other Conditions Underlying the RONA Program for Fiscal 2008 

	1.	 	The RONA program has a continuous payout process that operates on a linear payout schedule.
The payout schedule will begin for EBITDA levels that are over the threshold level, but do not
exceed the maximum level. Awards will be determined by matching actual performance to the
appropriate point on the linear payout schedule.

	2.	 	If the Company, a region or a subsidiary exceeds their maximum level of EBITDA, the
Compensation Committee has the discretion to provide additional awards over and above the
maximum level.

	3.	 	Participants in the RONA Plan for which a part of their bonus is subject to Company wide
performance and/or regional performance cannot receive a RONA award through Company wide
and/or regional wide participation that is greater than the RONA level earned through their
own subsidiary. This means that if the Company overall earns a target award and a RONA
participant works for a subsidiary that does not earn threshold level of performance, then
that RONA plan participant will not be eligible for any payment based on the overall
performance of the Company or the region.

	4.	 	The allocation of corporate overhead will be based on each subsidiary’s management of working
capital (50%) and the Adjusted Enterprise Value (50%).

Calculation of RONA Returns

In order for bonus awards to be made under the Plan, each subsidiary, region, and the Company must
achieve a minimum RONA return of 16%, after the allocation of corporate overhead expenses and after
earning the bonus payout. Based on the Company’s aggregate enterprise value before any Changes in
Net Assets, this would equate to EBITDA of approximately $119.0 million after deduction of
corporate overhead and bonus expense. The target and maximum RONA returns have been established at
20% and 24%, respectively, for Fiscal 2008. The Compensation Committee evaluated the performance
requirements for each subsidiary or business unit and region and modified certain performance
thresholds accordingly. Bonus awards are determined for each business on a stand-alone or region
basis except for Corporate for which awards will be determined on a Company-wide basis.

Award Distributions

At the end of the fiscal year, the program will be administered and awards determined by the CEO
and President subject to the approval of the Compensation Committee. It is contemplated that
payments under the RONA Plan will be distributed in the last payroll of May 2008. Awards under the
Plan will be made, at the discretion of the Compensation Committee, in the form of a cash bonus,
stock options and restricted stock, or any combination thereof.

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