Document:

Provided By MZ Data Products

Exhibit 4.5  

Form KM-10-99 BT
                                                                                             OPIC
Contract of Insurance No. F431 Brazil 

OVERSEAS PRIVATE
INVESTMENT CORPORATION

CONTRACT OF INSURANCE
FOR FIXED INCOME SECURITIES

Against

INCONVERTIBILITY

as described below,

between the Overseas
Private Investment Corporation ("OPIC") and The Bank of New York, not in its individual
capacity but solely as trustee (in such capacity, together with its successors and
permitted assigns, the “Trustee”) of a grantor trust established under New York law (the “Trust”)
pursuant to the Insurance Trust Agreement dated as of February 17, 2004 (the “Trust
Agreement”) between Brasil Telecom S.A. (the “Foreign Enterprise”), a sociedade anônima
organized under the laws of the Federative Republic of Brazil, and the Trustee. The
Trustee is the “Insured” hereunder.  

TABLE OF CONTENTS 

Page  

Article I
 Subject of Insurance and Exchange of Promises.  

	1.01	Subject	1 
	1.02	Promises	1 
	1.03	Maximum Aggregate Compensation and Maximum Aggregate
	 	Compensation Liability; Adjustment to Maximum Aggregate Compensation and	 
	 	Covered Scheduled Payment Amounts for Departing Noteholder	2 
	1.04	Full Faith and Credit	2 
	1.05	Term	2 
	1.06	Premiums	2 

Article II
                                                 Inconvertibility - Scope of Coverage.

	2.01	Inconvertibility of Local Currency	3 
	2.02	Exclusions	3 

Article III
                                             Conditions,
Rate and Amount of Compensation.

	3.01	Conditions and Rate of Compensation	5 
	3.02	Adjustment 	7 
	3.03	Limitations	7 

Article IV
                                                              Procedures.

	4.01	Application for Compensation	8 
	4.02	Assignment to OPIC	10 
	4.03	Obligations of the Foreign Enterprise	11 
	4.04	Recoveries	11 
	4.05	Arbitration	12 
	4.06	Termination of Contract and Coverage for Departing Noteholder and Refund of Premiums	12 
	4.07	Legal and Miscellaneous	12 
	4.08	Notices	13 
	4.09	Intentionally Omitted	13 
	4.10	Exercise of Remedies	13 
	4.11	Interpretation	13 
	4.12	Payments on OPIC Business Days	13 

i

Article V
                                                          Duties
of Insured.

	5.01	Duties	14 
	5.02	Default	17 
	5.03	Non-Waiver	18 
	5.04	Cure	18 
	5.05	Limitation of Liability	18 

Article VI
                                                              Definitions

	6.01	Defined Terms	19 

	EXHIBIT A	-	Scheduled Payments
	EXHIBIT B	-	Form of Subsequent Application
	EXHIBIT C	-	Form of Assignment Agreement
	EXHIBIT D	-	Form of Participation Agreement

ii

Article I - Subject of Insurance and Exchange of Promises. 

1.01    Subject.  

         1.    Notes. Brasil
Telecom S.A. (the “Foreign Enterprise”, the “Company”, or the “Issuer” as it is
referred to in other Transaction Documents) has received or will receive
US$200,000,000 on account of the issuance of the Notes (as defined herein) to the
Noteholders (as defined herein) pursuant to the Indenture (as defined herein).  

         The
Foreign Enterprise shall repay the Notes in accordance with their terms and the terms
of the Indenture. This Contract of Insurance for Fixed Income Securities (this “Contract”)
shall cover up to two scheduled payments of interest (the “Covered Scheduled Payments”)
to be made by the Foreign Enterprise as set forth in the schedule attached to this
Contract as Exhibit A (the "Scheduled Payments"). This Contract does not cover
any principal payments due under the Indenture or Notes, or any other payments apart
from the Covered Scheduled Payments.  

         The
 Noteholders  have assigned or will assign to the Insured all of their rights to receive
up to two Covered  Scheduled  Payments (defined in the Indenture as the assignment of the
“Covered Interest Period Amounts”).  In  exchange,  the  Noteholders  shall  become  the
 beneficiaries  (each  an  “Insurance  Trust Beneficiary”) of the Insurance Trust. 

         Capitalized
 terms used in this  Contract and not  otherwise  defined  herein have the meanings set
forth in Article VI. 

         Ninety
 percent (90%) of each Covered  Scheduled  Payment (the “Insured  Portion”) is insured
under this  Contract,   subject  to  the  provisions  of  Section 1.03  with  respect  to
 the  Maximum  Aggregate Compensation payable under this Contract. 

         2.
    Project. Pursuant to the Company Support Agreement (the “CSA”) between the
Foreign Enterprise, the Insured and OPIC, dated February 17, 2004, the Foreign
Enterprise shall apply the net proceeds from the sale of the Notes to finance the
2004 and 2005 investment program. The investment program provides for the expansion
and modernization of the telecommunications network owned and operated by the Foreign
Enterprise, as described in the Application for Insurance, as that term is defined
under the CSA (the "Project").  

1.02    Promises.  

         OPIC
promises  that if acts occur during the term of this  Contract  that satisfy the
 requirements for coverage in Article II, then,  subject to  satisfaction  of the
conditions in Article III, OPIC will pay the Insured  the amount of  compensation
 provided in Article  III, in  accordance  with the  procedures  in Article IV. 

         The
 Insured  promises to comply  with its  obligations  under this  Contract,  including,
 without limitation,  the  procedures in Article IV and the duties in  Article V.  If the
Insured fails to so comply, the Insured may lose its right to compensation hereunder in
accordance with the terms hereof. 

1.03    Maximum Aggregate Compensation
and Maximum Aggregate Compensation Liability; Adjustment to Maximum Aggregate
Compensation and Covered Scheduled Payment Amounts for Departing Noteholder.  

         1.
    OPIC will not pay compensation under this Contract in an aggregate amount that
exceeds US$16,875,000 (the "Maximum Aggregate Compensation"), except for payments
of Default Interest. The liability of OPIC to pay compensation under this Contract
as of any date shall not exceed (a) the lesser of (i) the sum of the Insured Portion of
up to two Covered Scheduled Payments unpaid and outstanding as of that date, and (ii)
the difference between the Maximum Aggregate Compensation and the aggregate amount of
compensation paid under this Contract as of such date (the "Maximum Aggregate
Compensation Liability") plus (b) Default Interest.  

         2.    If a Noteholder withdraws from the Insurance Trust (a “Departing  Noteholder”)
pursuant to Section 4.06.1,  (i) the Maximum  Aggregate  Compensation  under this
Contract shall be reduced by an amount proportionate  to the  Departing  Noteholder’s
 interest  in the Notes;  and (ii) the amount of the  Covered Scheduled Payments shall be
reduced to reflect the Departing Noteholder’s interest in the Notes. 

1.04    Full Faith and Credit.  

         The
full faith and credit of the United  States of America is pledged to secure the full
payment by OPIC of its obligations under this Contract. 

1.05    Term.  

         This
Contract shall enter into force on February 17, 2004 (the "Effective Date") and
shall terminate on August 17, 2015, unless terminated earlier (Section 4.06; Section
5.02), except for any obligations of OPIC to pay compensation hereunder as to any
Scheduled Payment payable on or prior to the date of such termination; provided,
however, that this Contract shall terminate automatically and become null and void in
the event that, within 5 Business Days after the Effective Date: (a) the
Initial Purchaser has not purchased the Notes pursuant to the Purchase Agreement
dated February 9, 2004 between the Foreign Enterprise and the Initial Purchaser; (b)
the Noteholders have not assigned to the Insured the Covered Scheduled Payments
pursuant to the terms of the Indenture; and (c) OPIC has not received the premium
due pursuant to Section 1.06.  

         It
is a condition to the  effectiveness  of OPIC's  obligations  hereunder that (x) OPIC
shall have received the  certificate  required by Section 5.01.2 (b)(ii) at the time of
the initial resale of the Notes by the Initial  Purchaser,  (y) the Foreign Enterprise
shall have executed and delivered to OPIC the CSA and such agreement shall be in full
force and effect without  default,  and (z) OPIC shall have received a legal opinion  in
 form  and  in  substance,  and  from  counsel,   satisfactory  to  OPIC  with  respect
 to  the enforceability  of the  obligations  of the  Foreign  Enterprise  under  the CSA
and the  other  Transaction Documents to which the Foreign Enterprise is a party. 

1.06    Premiums.  

         The
 Insured  shall pay to OPIC the  premium  in one  single  installment  due upon or prior
to the Effective Date of the Contract.  The premium due to OPIC shall be $2,281,453.75. 

2

Article II – Inconvertibility - Scope of Coverage. 

         2.01    Inconvertibility of Local Currency.  

         Local
Currency shall be deemed  inconvertible  and compensation  shall be payable with respect
to a Subsequent  Scheduled  Payment,  subject to the exclusions  (Section  2.02),
 conditions  (Section  3.01.1), adjustment (Section 3.02) and limitations (Section 3.03): 

         1.    
Conversion and Transfer. If the Insured or the Foreign Enterprise is unable legally  

         (a)    
to convert Local Currency held by or for the Foreign Enterprise in a Deposit
Account to pay a Scheduled Payment (or part thereof) (a "Triggering Scheduled
Payment") into U.S. dollars through any customary legal channels for transactions of
the type contemplated in the Transaction Documents on any of the Business Days during
the Waiting Period, except at an exchange rate that is less favorable than the
exchange rate described under Section 3.01.3 for that day, or  

         (b)    
to transfer from the Host Country to the United States amounts held in a Deposit
Account in U.S. dollars to pay a Scheduled Payment (or part thereof) on any Business
Day during the Waiting Period (also a "Triggering Scheduled Payment")  

and such inability
to convert or transfer causes a Prospective Payment Default with respect to the
Scheduled Payment next succeeding the Triggering Scheduled Payment (the "Subsequent
Scheduled Payment"); or  

         2.    
Certain Government Actions. If the conversion into U.S. dollars of Local
Currency held by or for the Foreign Enterprise in a Deposit Account for payment of a
Scheduled Payment (or part thereof) or the transfer from the Host Country to the
United States of U.S. dollars held in such account, is directly prevented by an act
or series of acts attributable to the Foreign Governing Authority which:  

         (a)    
     violates international law (without regard to the availability of local remedies), 

         (b)    
     causes a Prospective  Payment  Default with respect to the Subsequent  Scheduled
 Payment, and 

         (c)    
     continues for the Waiting Period; 

provided, however,
that such act or series of acts does not otherwise (x) result in the inability of the
Foreign Enterprise to control or dispose of most or all of its property in the Host
Country or to operate the Project, (y) substantially deprive the Insured of its
fundamental rights as creditor, including, without limitation, rights against
security or commercial guaranties of repayment, or (z) substantially deprive the
owners of the Foreign Enterprise of their fundamental rights as owners of the
Foreign Enterprise.  

         2.02    
Exclusions.  

         No
compensation for inconvertibility shall be payable if 

         1.    
Pre-existing Restrictions.  

3

         (a)    
     On the date of this  Contract,  the Foreign  Enterprise or the Insured would in
comparable circumstances  have been unable legally (1) to convert Local Currency into
U.S. dollars,  or (2) to transfer such U.S. dollars from the Host Country to the United
States; and 

         (b)    
     On the date of this Contract,  the Insured,  (or a lender or trustee situated
similarly to the Insured),  the Foreign  Enterprise,  or a company situated similarly to
the Foreign  Enterprise,  should have known about such restriction; or 

         2.    
Insured's Diligence. The Insured has not made all reasonable efforts to convert
or cause the Foreign Enterprise to convert the Local Currency held in the Deposit
Account referred to in Section 2.01.1 or Section 2.01.2, into U.S. dollars and to
transfer or cause the Foreign Enterprise to transfer such U.S. dollars from the Host
Country to the United States, in each case, through all customary legal channels for
transactions of the type contemplated in the Transaction Documents; or  

         3.    
Provocation. The preponderant cause of the loss occurring with respect to the
Project is an act by the Insured (or any entity controlled by, controlling or under
common control with the Insured) or the Foreign Enterprise and a court of competent
jurisdiction in the United States or Brazil has entered a final judgment that such
act constituted a violation of Corrupt Practices Laws; or  

         4.    
Use Restricted by Expropriatory Action. The use of such Local Currency is
restricted by an expropriatory action as described in clauses (x), (y) or (z) of the
proviso to Section 2.01.2.  

4

Article III – Conditions,
Rate and Amount of Compensation.

         3.01    
Conditions and Rate of Compensation.  

         1.    
Conditions Precedent. The following shall be conditions precedent to OPIC's
obligation to pay compensation under this Contract:  

         (a)    
The Insured shall (or shall require the Foreign Enterprise to, and the Foreign
Enterprise shall) perform, at the election of OPIC, one of the obligations specified
in clauses (i), (ii), and (iii) below (hereinafter referred to as the "Prior Delivery
Obligations"), subject to the restrictions set forth therein and to any legal
restrictions, in accordance with the procedures set forth in Section 4.02:  

	                              	         (i)     deliver
to OPIC (A) inconvertible Local Currency, in an amount equal to the
Insured Portion of the Subsequent Scheduled Payment (or part thereof) at the rate of
exchange specified in Section 3.01.2(a), or (B) non-transferable
U.S. dollars, in an amount equal to the Insured Portion of the
Subsequent Scheduled Payment (or part thereof) (in either case in
the form of (1) funds immediately available to OPIC in the Host
Country or, (2) at OPIC's option, in cash); provided, however, that
OPIC may not require the delivery set forth in this clause (i) if
either (x) the Foreign Enterprise or the Insured has, but is unable
legally to deliver, such Local Currency or non-transferable U.S.
dollars, or (y) the Foreign Enterprise or the Insured can demonstrate that it had,
and has the right to, but, because of an expropriatory action of the
type described in the proviso to Section 2.01.2, no longer has,
such Local Currency or non-transferable U.S. dollars, or 

	                              	         (ii)     assign
to OPIC, or, at OPIC's option,  grant to OPIC a participation in,                   the
Insured's  right to receive the Insured  Portion of the Subsequent  Scheduled  Payment
                  (or part thereof), or

	                             	          (iii)     (A)
assign to OPIC, or, at OPIC's option,  grant to OPIC a participation
                  in, the  Insured  Portion of the  Deposit  Account  (or part  thereof)
in which such Local                   Currency is, or  non-transferable  U.S.  dollars
(Section  3.01.1(a)(i))  are, held by, or                   for,  or at the  direction
 of, the  Foreign  Enterprise,  and (B) assign to OPIC,  or, at                   OPIC's
option,  grant to OPIC a  participation  in, all rights of such Person with respect
                  to the  Insured  Portion  thereof and all claims with  respect  thereto
 arising out of an                   Inconvertibility  Event, including without
limitation claims against the Foreign Governing                   Authority.

         (b)    
     If the Insured  receives or has the right to receive,  at any time,  any Local
Currency or non-transferable  U.S.  dollars  representing a payment with respect to the
Insured  Portion of a Subsequent Scheduled  Payment (or part thereof),  such additional
Local Currency,  non-transferable  U.S.  dollars,  or rights  thereto,  shall also be
delivered  to OPIC,  as OPIC may elect,  as described in Section  3.01.1 (a) above. 

         (c)    
The Prospective Payment Default remains uncured on the Payment Date relating
to the Subsequent Scheduled Payment that is the subject of a claim for compensation
(the "Subsequent Payment Date").  

5

         2.    
Rate of Compensation.  

         (a)    
     If the Insured delivers Local Currency or an assignment of, or a participation  in,
rights denominated  in  Local  Currency  with  respect  to  a  Subsequent  Scheduled
 Payment  (or  part  thereof), compensation  shall be the U.S.  dollar  equivalent  of
the Local  Currency at the  exchange  rate  (Section 3.01.3) in effect on the day 5
Business Days before the Subsequent Payment Date. 

         (b)    
     If  the  Insured  delivers  non-transferable  U.S.  dollars  or  an  assignment  of,
 or a participation  in,  rights   denominated  in  U.S.  dollars,   compensation  shall
 be  the amount  of  such non-transferable  U.S.  dollars  delivered  or  the  U.S.
 dollar  amount  of  the  rights  so  assigned  or participated. 

         (c)    
If the Prior Delivery Obligations have been satisfied and OPIC makes any claim
payment after the Subsequent Payment Date and the Subsequent Scheduled Payment has not
otherwise been paid, OPIC shall also pay interest on the lesser of (i) the
compensation otherwise payable and (ii) the Insured Portion of the Subsequent
Scheduled Payment at the applicable default rate of interest payable under the
Indenture for the period beginning on the third (3rd) day after the end of the
Processing Period (Section 4.01.6) and ending on the date of payment of compensation by
OPIC ("Default Interest").  

         (d)    
     If  OPIC  has  reason  to  believe   that  the   requirements   of
  inconvertibility   or nontransferability  (as set forth in Article II) will be
satisfied if the Insured or the Foreign  Enterprise attempts to convert Local Currency or
transfer U.S.  dollars during the Waiting Period,  OPIC may notify the Insured thereof
and, upon satisfaction of the Prior Delivery  Obligations,  pay compensation with respect
to Local  Currency at the  exchange  rate  (Section  3.01.3) in effect on the earlier of
(i) the date that such Local Currency is delivered to OPIC and (ii) the date 5 Business
Days before the Subsequent Payment Date. 

         3.    
Exchange Rate.  

         (a)    The exchange
rate used to calculate  compensation hereunder shall be the official exchange rate for
the exchange of Local  Currency  into U.S.  dollars in the Host Country  applicable  to
the type of remittance involved. 

         (b)    If, however, 

	 	         (i)    U.S.
 dollars were not generally  available at the  applicable  official
                  exchange rate; and

	 	         (ii)    conversion
 of Local  Currency  into U.S.  dollars was effected  through                   another
 customary  legal  channel  for  transactions  of  the  type  contemplated  in the
                  Transaction Documents;

	                             	         then the
exchange rate shall be the effective rate obtained through that channel.

         (c)    
     In either  case,  the  exchange  rate shall be net of all  deductions  for
 governmentally imposed charges, such as taxes and commissions. 

6

3.02      Adjustment.  

         The
Insured shall provide notice to OPIC if it has Actual  Knowledge that U.S.  dollars have
become available to the Foreign  Enterprise for payment of any portion of the Subsequent
 Scheduled Payment covered by a Completed  Application  (Section  4.01.1) or a Revised
 Application in accordance  with Section 4.01.5. OPIC shall have no obligation  to pay
 compensation  hereunder to the extent that any such U.S.  dollars are available on the
Subsequent  Payment Date. If OPIC has paid  compensation  to the Insured,  to the extent
of any U.S.  dollars that are so available on the  Subsequent  Payment  Date,  (i) the
Insured  shall return to OPIC,  within five Business Days after the date of such
Subsequent  Payment Date, the  compensation  paid to the Insured by OPIC with respect to
such  Subsequent  Scheduled  Payment,  together with, to the extent that any amounts are
available  therefor,  interest  actually accrued thereon as a consequence of any
investments of such funds required to be made pursuant to the terms of the Indenture,
 calculated  from the date of such receipt and (ii) OPIC shall  return to the  Insured
any  inconvertible  Local  Currency or  non-transferable U.S. dollars delivered to OPIC
pursuant to Section  3.01(1)(a)(i)  hereof in connection with such Subsequent Payment
 Date.  To the extent  that OPIC has paid a claim and has an  unsatisfied  reimbursement
 obligation from the Foreign Enterprise under the CSA and the Foreign  Enterprise
 transfers U.S. dollars to the Insured in excess of any amounts  then  required to be
paid under the Note,  the Insured  shall return such funds to the Foreign Enterprise and
shall notify OPIC promptly thereof. 

3.03    Limitations.  

         1.    
Amount. Compensation paid by OPIC shall not exceed (a) the lesser of (i) the
Maximum Aggregate Compensation Liability on the applicable Subsequent Payment Date
referred to in the applicable Completed Application and (ii) the Insured Portion of the
Subsequent Scheduled Payment referred to in the applicable Completed Application, plus
(b) Default Interest (Section 3.01.2(c)).  

         2.    
Other Charges. Penalty interest, penalty fees and all other charges for late
payment (other than Default Interest in accordance with Section 3.01.2(c)) are not
covered under this Contract and shall not be considered in the calculation of
compensation.  

         3.    
Adjustments. Compensation may be adjusted as provided in Section
5.02(a)(ii) and Section 5.02 (b).  

7

Article IV - Procedures. 

4.01     Application for Compensation.  

         1.    
Completed Application. OPIC is obligated under this Contract to pay compensation
only on the basis of a Completed Application. For the purposes of this Contract, a
Completed Application (a "Completed Application") means an application for
compensation under this Contract including all of the following:  

         (a)    
     a timely submitted Final Application; 

         (b)    
     all timely submitted Responses, Other Source Information, and Rebuttal Information;
and 

         (c)    
     any other information and documentation required by this Contract to be contained
therein. 

         2.    
Application Binding on Insured. The Insured shall be bound in any subsequent
dispute with OPIC by all submissions of fact contained in a Completed Application
(regardless of whether such Completed Application was submitted by another trustee
while such trustee was the Insured hereunder), and OPIC shall not be required to
pay compensation on the basis of any information not contained in a Completed
Application.  

         3.    
Procedures for Submissions. The procedures for submissions with respect to
applications for compensation are as follows:  

         (a)    
Not later than 15 days after a Triggering Payment Date, the Insured shall submit
to OPIC a draft application for compensation (a "Draft Application"), including,
without limitation, factual information and documentation that, in its view,
demonstrates the Insured's right under this Contract to compensation with respect to
the Subsequent Scheduled Payment in the amount claimed. Any document submitted to
OPIC in connection with an application for compensation that is written in a language
other than English shall be submitted in the original language, accompanied by an
English translation certified as true and correct by a party acceptable to OPIC.  

         (b)    
For a period of 45 days from the date on which such Draft Application is
submitted to OPIC (the "Initial Period"), the Insured may submit to OPIC amended
and restated versions of the Draft Application, and OPIC may issue written
information requests (each, an "Information Request") to the Insured and/or any
other person (including, without limitation, the Foreign Enterprise) on any matter
reasonably related to the claim.  

         (c)    
The Insured shall promptly deliver to OPIC a full, written response (a
"Response") to each Information Request delivered to it by OPIC from time to time,
but in any event not later than (i) with respect to Information Requests delivered
during the Initial Period, 10 days from the date of receipt of such Information
Request and (ii) with respect to Information Requests delivered during the
Additional Period, not later than seven days from the date of receipt of such
Information Request. During the Initial Period, any Information Request delivered
by OPIC after a period of 35 days from the date on which the initial Draft Application
is delivered to OPIC shall be deemed an Information Request delivered during the
Additional Period.  

         (d)    
     At any time prior to the last day of the Additional Period, OPIC shall promptly
deliver to the Insured a reasonably detailed description of any non-public factual
information received by OPIC from time to time from sources other than the Insured or the
Foreign Enterprise on which OPIC intends to rely in making its 

8

determination on the
claim ("Other Source Information"), but in any event not later than 10 days from the
date of receipt thereof by OPIC. Notwithstanding the foregoing, OPIC shall not be
obligated to disclose any information that is classified, business confidential,
deliberative, or privileged, or information the disclosure of which would be
prohibited by law. The Insured may submit to OPIC in writing information necessary to
rebut any Other Source Information described therein ("Rebuttal Information") not later
than (i) with respect to Other Source Information received by the Insured during the
Initial Period, 10 days from the date of receipt of such Other Source Information, and
(ii) with respect to Other Source Information received by the Insured during the
Additional Period, not later than 7 days from the date of receipt of such Other
Source Information. During the Initial Period, any Other Source Information
delivered by OPIC after a period of 35 days from the date of delivery to OPIC of
the initial Draft Application shall be deemed to be Other Source Information delivered
during the Additional Period.  

         (e)    
Not later than the last day of the Initial Period, the Insured shall submit to
OPIC a revised version of its Draft Application ("Revised Application"), clearly
marked as such, which shall contain (i) the substance of the Draft Application and all
Responses and Rebuttal Information submitted to OPIC by the Insured during the Initial
Period, revised as deemed appropriate by the Insured, (ii) any other information
deemed relevant by the Insured, and (iii) a legal opinion from counsel licensed to
practice law in the Host Country, who shall be reasonably acceptable to OPIC, to the
effect that under the laws and regulations of the Host Country as in effect on the
date of this Contract, the Insured (or a lender or trustee situated similarly to
the Insured), the Foreign Enterprise, or a company situated similarly to the
Foreign Enterprise, would in comparable circumstances have been able legally (A)
to convert Local Currency into U.S. dollars and (B) to transfer such U.S. dollars
from the Host Country to the United States.  

         (f)    
During the period of 45 days from the date of submission to OPIC of the
Revised Application (the "Additional Period"), OPIC may deliver to the Insured
and/or any other person, Information Requests on any matter raised in (i) the
Revised Application and (ii) any Response or Rebuttal Information received after the
Initial Period. The Insured shall respond to Information Requests, and shall be
notified of and may respond to Other Source Information upon which OPIC intends to
rely, in accordance with the provisions of Section 4.01.3(c) and (d), respectively.  

         (g)    
Not later than the last day of the Additional Period, the Insured shall submit to
OPIC a final version of its application for compensation ("Final Application"),
clearly marked as such, the contents of which shall be limited to (i) the substance of
the Revised Application, and (ii) the substance of all Responses and Rebuttal
Information submitted to OPIC by the Insured during the Additional Period. The Final
Application shall be deemed to include all factual information and documentation
submitted by the Insured to demonstrate the Insured's right under this Contract to
compensation in the amount claimed.  

         (h)    
     The date of  submission  to OPIC of the  Completed  Application  shall be deemed to
be the date of  submission  to OPIC of the Final  Application,  unless one or more
 Information  Requests  or Other Source Information  remains  outstanding as of the end
of the Additional Period then ending, in which event, and provided that a Final
 Application  has been  delivered to OPIC, the date of submission of the Completed
Application  shall be deemed to be the later of (i) the date on which  OPIC  receives a
timely  Response  or Rebuttal  Information to the last such outstanding  Information
Request or Other Source Information,  as the case may be,  and (ii) the date that is 7
days  after  the date of  delivery  of the last  such  outstanding Information Request or
Other Source Information, as the case may be. 

9

         (i)    
     The  Insured  may  withdraw  a Final  Application  at any time,  but the right to
 recover compensation will be lost for any acts covered by a withdrawn Final Application. 

         4.    
One-Year Deadline. A Completed Application with respect to a Prospective Payment
Default may not be submitted to OPIC more than one year after the Triggering Payment
Date with respect to such Prospective Payment Default.  

         5.    
Subsequent Consecutive Defaults. If OPIC pays compensation for an initial,
uncured Prospective Payment Default (the "Initial Claim Payment"), then, with
respect to each subsequent, consecutive, uncured Prospective Payment Default (a
"Subsequent Prospective Payment Default") as to which the Insured submits a
certification substantially in the form of Exhibit B signed by a duly authorized
representative of the Insured, OPIC will consider the Completed Application
submitted in respect of the Initial Claim Payment as the Insured's Revised
Application in respect of such Subsequent Prospective Payment Default. Subject to
the provisions of this Contract, with respect to each such Subsequent Prospective
Payment Default, OPIC shall pay compensation on the basis of such Revised Application
unless, on the basis of the corresponding Completed Application, OPIC determines
that the Revised Application contains a material misrepresentation or the claim
is not compensable under Article II. If OPIC compensates the Insured for a
Prospective Payment Default and the Insured receives a Subsequent Scheduled Payment
(or portion thereof), other than as a result of payments by OPIC, the Insured may not
utilize the certification in the form of Exhibit B unless OPIC has paid compensation
with respect to a new initial, uncured Prospective Payment Default.  

         6.    
Processing Period. From the date of its receipt of a Completed Application
which is timely filed (Section 4.01.1), (a) OPIC shall have a period in which to
complete processing of such Completed Application (the "Processing Period") equal
to the greater of (i) 30 days after the date of receipt of such Completed
Application and (ii) the period from the date of receipt of such Completed
Application until the Subsequent Payment Date, and (b) subject to Section
4.12, OPIC shall pay compensation under this Contract no later than 2 days after the
end of the Processing Period.  

         7.    
Discharge of Company Obligations. The Transaction Documents provide that, except
to the extent that OPIC has requested and received Local Currency, or non-transferable
U.S. dollars in accordance with Section 3.01, payment by OPIC shall not
discharge the corresponding U.S. dollar-denominated obligations of the Foreign
Enterprise under the Notes and OPIC shall be subrogated to the rights of the Insured
to receive such payments in accordance with the terms of the Indenture.  

4.02    Assignment to OPIC.  

         1.    
Execution. (a) In connection with the Prior Delivery Obligations (Section
3.01.1), if OPIC elects any of the options provided for in Section 3.01.1(a), OPIC
shall specify such option in a written notice from OPIC to the Insured.  

         (b)    
     If OPIC elects the option provided for in Section 3.01.1(a)(ii) or 3.01.1(a)(iii),
the Insured shall deliver, executed by the appropriate party, as indicated in such notice
(i) an assignment of the Insured's rights (or the Foreign Enterprise’s rights) in the
Insured Portion of the Subsequent Scheduled Payment (or part thereof) or such Deposit
Account, as the case may be, substantially in the form of Exhibit C or (ii) a
participation agreement granting to OPIC a participation in the Insured's rights (or the
Foreign Enterprise’s rights) in the 

10

Insured Portion of the
Subsequent  Scheduled Payment (or part thereof) or such Deposit Account,  as the case may
be, substantially in the form of Exhibit D. 

         2.    
Additional Actions in Connection with Participation. If OPIC requires the
Insured to transfer to OPIC a participation as provided in Section
3.01.1(a)(iii), then, in exchange for reimbursement of reasonable out-of-pocket
expenses, OPIC may, to the extent of such participation, direct the Insured to take
any action, consistent with the terms of the Trust Agreement and the Notes, with
regard to the Notes or rights to which such participation relates as OPIC may reasonably
require, provided that such action is unlikely to result in a substantial detriment
to the Insured's or the Noteholders' interests.  

         3.    
OPIC's Right to Decline. Without prejudice to the rights of the Insured
under this Contract or to OPIC's rights of subrogation under the Transaction
Documents and at law, OPIC may decline to accept an assignment of all or any portion
of the Insured's or the Noteholders' rights or interests pursuant to this Section
4.02.  

4.03    Obligations of the
Foreign Enterprise.  

         The
Insured shall not release the Foreign  Enterprise  from its obligation to make those
 Scheduled Payments (or any part thereof) for which the Insured has received  Local
Currency or  non-transferable  U.S. dollars until OPIC has agreed to accept  delivery of
such Local Currency or  non-transferable  U.S.  dollars in discharge of the  obligation
of the Foreign  Enterprise to make such Scheduled  Payment,  the Insured has delivered
 such amounts to OPIC,  and the Insured has received  compensation  hereunder.  The
Insured  shall not release the Foreign  Enterprise from its obligation to make Scheduled
 Payments (or any part thereof) if OPIC agrees to accept an  assignment  of, or
 participation  in, the  Insured's or the Foreign  Enterprise’s right in the  Deposit
 Account,  as the case may be, or to  receive  such  Scheduled  Payments  (or any part
thereof) in lieu of receiving Local Currency or  non-transferable  U.S.  dollars in
exchange for the payment by OPIC of  compensation  hereunder  unless  OPIC  notifies  the
 Insured  in writing  that it has  received payments from the Foreign  Enterprise under
the CSA  representing  such previously  compensated  amounts and then only to the extent
of such payments by the Foreign Enterprise to OPIC. 

4.04     Recoveries.  

         Notwithstanding
anything to the contrary in Section 3.01.1 or Section 4.02, to the extent that
security is held for the benefit of the Insured on behalf of all Noteholders, any
assignment elected under Section 4.02 shall include an assignment only of the
Insured Portion of the Insured's rights in such security. Nothing in this section
shall in any way affect OPIC's independent right to effect recovery under this
Contract through agreements between the Government of the United States of America
and the Foreign Governing Authority or under any other agreements or procedures,
without any obligation to share the proceeds thereof. The Insured, by accepting the
assignment of the Covered Scheduled Payments and the Noteholders, by accepting the
Notes, shall be deemed under the terms of the Indenture (and the Indenture shall so
provide), to have acknowledged that such independent right of recovery of OPIC
will not be subject to any pari passu sharing arrangements relating to the rights to
which OPIC may be subrogated in connection with this Contract including, without
limitation, by virtue of any subrogation under the Transaction Documents or any
assignment pursuant to Section 4.02.  

11

4.05    
Arbitration.  

         Any
 dispute,  controversy  or claim  arising  out of,  relating  to,  or in  connection
 with this Contract,  or  the  breach,  termination  or  validity  thereof,  shall  be
 determined  by  arbitration  in Washington,  D.C.  according  to the  then  prevailing
 International  Arbitration  Rules  of  the  American Arbitration  Association.   The
 number  of  arbitrators  shall  be  three.  Unless  the  Insured  initiates arbitration,
 OPIC's liability with respect to the claim for  compensation  hereunder and any related
claims or causes of action  shall  expire one year  after  OPIC  notifies  the  Insured
of its final  determination concerning  a Completed  Application.  A decision by the
 arbitrators  shall be final and  binding,  and any court having jurisdiction may enter
judgment on it. 

4.06    
Termination of Contract and Coverage for Departing Noteholder and Refund of
Premiums  

         1.    
Termination of Contract. The Insured may terminate this Contract effective as
of any date, and, subject to any reduction permitted by Section 5.02 (a) (ii) or 5.02
(b), OPIC shall refund the unused portion of the premium (calculated on a pro rata
basis) to the Insured within 30 Business Days after termination of this Contract,
provided, however, that (i) if this Contract is terminated by the Insured within
three years from the Effective Date, then OPIC shall keep the first three years of
premium and shall only refund the remainder to the Insured of any amounts due. In no
event shall termination of this Contract affect any rights or obligations of
either party relating to periods prior to such termination.  

         2.    
Termination of Coverage for Departing Noteholder. Any Noteholder may withdraw
from the Trust effective as of any date by giving notice to the Insured in accordance
with the terms of the Trust Agreement. Upon receipt of such notice, the Insured shall
(a) reassign the Departing Noteholder’s pro rata interest in the Covered Scheduled
Payments to the Departing Noteholder, and (b) give notice to OPIC of the reassignment,
which shall terminate the Departing Noteholder’s interest in the coverage under this
Contract. Upon OPIC’s receipt of such notice, (i) the Maximum Aggregate Compensation
under this Contract and the amount of the Covered Scheduled Payments shall be reduced
as provided in Section 1.03.2, and (ii) OPIC shall refund to the Insured a pro rata
share of the prepaid premium proportionate to the Departing Noteholder’s interest in
the Notes; provided, however, that if a Departing Noteholder’s interest in the Trust
and coverage under this Contract is terminated in accordance with Section 4.06.1
within three years from the Effective Date, OPIC shall keep the pro rata share of the
first three years of premium and shall only refund the remainder to the Insured.  

4.07    Legal and Miscellaneous.  

         THIS
CONTRACT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED THEREIN.  This Contract constitutes the complete agreement
between the parties and supersedes any prior negotiations, understandings and agreements
between them with respect to the subject matter hereof.  This Contract may be modified,
or its terms waived, only by an instrument in writing signed by the parties hereto.  The
captions and headings herein are for convenience only and shall not affect the
interpretation or construction of this Contract. This contract may be executed in
separate counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same agreement. 

12

4.08    Notices.  

         Notices
must be in writing, and shall be effective when received.  Notices shall be given to the
Insured and OPIC at their addresses below (unless changed in writing): 

The Bank of New York,
101 Barclay Street,  New York, NY,10286
Attention: Corporate Trust Department, (Fax:
 (212) 815-5206) 

Overseas Private
Investment Corporation, 1100 New York Avenue, N.W., Washington, D.C. 20527, Attention:
Vice-President, Insurance. (Fax: (202)408-5142), Re: Contract No. F431 (Brazil) 

4.09 [INTENTIONALLY
OMITTED] 

4.10    Exercise of
Remedies.  

         Only
the Insured may exercise the rights and obligations of the Insured under this
Contract. No individual Noteholder shall have or exercise any rights or perform any
obligation under this Contract in lieu of the Insured. The Trust Agreement provides
that the related Noteholders shall be bound by the actions of the Insured
hereunder, including, without limitation, the grant of assignments or
participations as described in Section 3.01.1, and the submission of a Completed
Application on the terms set forth in Section 4.01.1. The remedies provided for under
this Contract are cumulative and are not exclusive of any other remedies provided by
law; provided, however, that OPIC shall not be liable for any make-whole premiums,
break-funding costs, consequential or punitive damages, or other amounts, other than
compensation payable in accordance with the terms of this Contract.  

4.11    
Interpretation.  

         With
 respect  to the  interpretation  of any  provision  of this  Contract,  in the  event
 of any inconsistency  between the terms of the Indenture or any other  Transaction
 Document,  or any  description, summary or  characterization  of the terms of this
 Contract in any offering  materials  with respect to the Notes and the terms of this
Contract,  the terms of this Contract  shall govern.  None of OPIC, its officers or any
of its employees takes any responsibility for any description,  summary or other
 characterization of OPIC or the insurance coverage under this Contract  contained in any
prospectus,  offering document or other information  provided to  Noteholders,  rating
 agencies or others,  regardless  of whether  such Person has knowledge  thereof.  The
Trust  Agreement  provides,  and at all times shall  provide,  that the Insured and each
 Noteholder,  by  accepting  its  Note  and  the  benefit  of this  Contract,  if  any,
 agree  that no description,  summary or  characterization  of OPIC or the insurance
 coverage  under this Contract shall be treated as an amendment,  interpretation  or
 construction of this Contract that binds OPIC or be introduced in any proceeding for
such purpose. 

4.12    Payments on
OPIC Business Days.  

         Notwithstanding
 any other provision of this Contract,  if the date of any payment to be made by or to
OPIC under this Contract shall fall on any day on which OPIC's  offices in Washington,
 D.C. are not open for  business,  the  payment  due on such  date  shall be made on the
next  succeeding  day on which  OPIC's offices in Washington, D.C. are open for business. 

13

Article V – Duties of
Insured. 

5.01    Duties.  

         1.    
Representations   

(a)    The Insured
represents and warrants that the Notes and the Indenture contain a provision whereby
each Noteholder is deemed, by its purchase and acquisition of an interest in a Note,
to represent to OPIC and such Insured that as of the date of such purchase and
acquisition, (i) it has not been convicted, or been party to a final adverse
administrative determination, of an offense under the Foreign Corrupt Practices
Act of 1977 (Pub. L. 95-213, §§101-104), as amended, (ii) it has not been suspended,
debarred or voluntarily excluded from procurement or non-procurement dealings
with the United States government pursuant to Executive Order 12549, dated February
18, 1986 (51 CFR 6370), and (iii) it acknowledges that OPIC has issued this
Contract based on statutory (22 U.S.C. §2191) and policy goals as well as
underwriting considerations, including, among other things, upon the covenants,
representations and warranties of the Foreign Enterprise set forth, or to be set
forth, in the Transaction Documents and the CSA regarding, inter alia, worker
rights, environmental protection practices, worker health and safety practices,
compliance with Corrupt Practices Laws, and other matters (the “Noteholder Representations”).  

(b)     The Insured
represents and warrants that the Rule 144A Restricted Global Note and the
Indenture contain a provision whereby each Noteholder that purchases an interest in
the Rule 144A Restricted Global Note is deemed, by its purchase and acquisition of such
interest, to represent and warrant to OPIC and the Insured (i) that as of the date of
its purchase and acquisition of such interest, it is a U.S. Holder, and (ii) that any
reoffer, resale, pledge or other transfer by it of its interest in the Rule 144A
Restricted Global Note during the 40-day period after the original issuance of the
Notes to the Initial Purchaser shall be made only to a U.S. Holder whose interest
therein shall be represented by the Rule 144A Restricted Global Note (the "U.S.
Holder Representations").  

(c)    The Insured
 represents and warrants that (i) any  statements made by it to OPIC in connection with
this Contract are true and complete to the best of its knowledge,  (ii) it meets the
 requirements set forth in Section  5.01.2(a) below,  (iii) the Trust Agreement and the
Indenture  include  provisions  requiring or enabling,  as the case may be, the Insured
and the Noteholders to take the actions  specified to be taken by it or them in this
 Contract,  and (iv) to the best of its  knowledge,  interests  in the Notes have been or
will be acquired as described in the Trust Agreement and Indenture. 

         2.    
Ownership and Eligibility.  

         (a)    
     The Insured. 

	                           	          On  the
Effective Date, the Insured, in its individual capacity shall be, and
                  throughout the term of this Contract shall continue to be:

	                                      	                  (A)     a
citizen of the United States; or

14

	                                       	         (B)     a
 corporation  or other  association  created under the laws of
                           the United  States,  its states,  territories  or the District
of Columbia,  more                            than  fifty  percent  (50%) of which is
 beneficially  owned by  citizens  of the                            United States; or

	                                       	         (C)     a
 corporation  created  under  foreign law in which more than a
                           ninety-five  percent (95%)  interest is owned by entities
 eligible  under (A) or                            (B); or

	                                   	          (D)     an
entity  created  under  foreign law which is wholly  owned by
                           entities eligible under (A) or (B);

	                            	and  shall
be acting as the Trustee under the Trust Agreement.

	                   	 If the
Insured ceases to satisfy the foregoing eligibility requirements, a successor
trustee which satisfies the foregoing eligibility requirement and is
otherwise reasonably satisfactory to OPIC immediately shall be duly
appointed pursuant to the Trust Agreement; provided, however, that
if the Insured ceases to satisfy the foregoing eligibility
requirements after a Completed Application has been filed,
OPIC shall pay any compensation due to such existing Trustee
according to the schedule in Section 4.01.6, and a successor trustee,
that is an Eligible Investor, shall be duly appointed pursuant to
the Trust Agreement within 60 days after compensation is paid. 

(b)    
     The Noteholders. 

         (i)    
"U.S. Holder" means a Noteholder that (x) is an Eligible Investor on
the date of its purchase and acquisition of an interest in a Rule 144A
Restricted Global Note and (y) is the sole and exclusive beneficial
owner of such interest. A Noteholder shall not be deemed to be the
sole and exclusive beneficial owner of any portion of its interest
in a Rule 144A Restricted Global Note with respect to which it does not bear the
financial risk of non-payment (other than the risk insured by OPIC).
Solely for purposes of clause (y) above, the persons or entities
bearing the financial risk of non-payment on such Notes (in either
case, other than the risk insured by OPIC) with respect to a
beneficial interest in such Note will be treated as the beneficial
owners of such Note regardless of whether such persons or entities are
the registered owners of such Note.  

         (ii)    
    The Insured shall cause the Initial Purchaser to certify in writing to OPIC that (i) as
of the date of original issuance of the Notes, the Initial Purchaser is an Eligible
Investor, (ii) the Initial Purchaser believes, after reasonable inquiry based on the
Initial Purchaser’s existing “know your customer” or similar business practices, that
each person that is purchasing an interest in the Rule 144A Restricted Global Note from
it in the initial resale and placement of such Notes is an Eligible Investor, (iii) it
believes, after reasonable inquiry based on the Initial Purchaser’s existing “know your
customer”or similar business practices, after giving effect to such initial resale and
placement of the Notes with investors on the date of issuance (but not thereafter) that
at least 65% of the aggregate of the outstanding principal amount of interests in the
Notes are represented by interests in the Rule 144A Restricted Global Notes and at least
75%  of the aggregate of the outstanding principal amount of interest in the Notes are
held by Eligible Investors and (iv) the Initial Purchaser understands that Section 1001
of Title 18 of the United States Code provides for imprisonment for not more than five
years, as well as fines, for 

15

	                              	submitting false,
 fictitious  or fraudulent  statements in connection  with any                   matter
before an agency of the United States Government.

         3.    
Assignment. The Insured shall not assign this Contract, or any of its rights
hereunder, without OPIC's written consent, which consent shall not be withheld
unreasonably, except to a successor trustee that is duly appointed pursuant to the
Trust Agreement. Notwithstanding the foregoing, this Contract or any rights under
it, cannot be assigned to citizens or entities which do not meet the eligibility
requirements of Section 5.01.2(a).  

         4.    
Premiums. This Section is replaced in its entirety by Section 1.06  

         5.    
Reports and Access to Information. In order that OPIC may perform its statutory
duties, including settling claims and reporting to the Congress (22 U.S.C. §2200a),
the Insured shall furnish, or cause the Foreign Enterprise to furnish, OPIC with
such information as OPIC may reasonably request and which is within the Insured's
ability to provide, including, without limitation:  

         (a)    
     information regarding the Foreign Enterprise's application for this Contract; and 

         (b)    
     information  regarding  the  Notes,  including,  without  limitation,  copies of the
Trust Agreement, Notes, Indenture, and the other Transaction Documents. 

         6.    
Compulsory Notice. The Insured shall notify OPIC as promptly as reasonably
practicable of any circumstances of which it has Actual Knowledge that may render
OPIC liable under this Contract and of any Prospective Payment Default or other defaults
(regardless of cause) of which the Insured has Actual Knowledge. The Insured shall
notify OPIC promptly if it has Actual Knowledge that the Foreign Enterprise may not be
able to convert Local Currency and/or transfer U.S. dollars.  

         7.    
Preservation, Transfer, and Continuing Cooperation. The Insured shall, at the
sole cost and expense of the Foreign Enterprise, at all times take all reasonable
action to preserve and enforce its rights as a creditor to the extent consistent with
its duties and authorized under the Trust Agreement. With respect to any claim, prior
to the fulfillment of the Prior Delivery Obligations, the Insured shall, at the sole
cost and expense of the Foreign Enterprise, to the extent consistent with its
duties and authorized under the Trust Agreement, in consultation with OPIC, take all
reasonable measures to pursue available administrative and judicial remedies and to
negotiate in good faith with the Foreign Governing Authority and other potential
sources of compensation. After fulfillment of the Prior Delivery Obligations,
in exchange for reimbursement of reasonable out-of-pocket expenses of the Insured by
OPIC, the Insured shall take all actions reasonably requested by OPIC to assist OPIC in
preserving the property, interest and rights transferred to OPIC and in prosecuting
related claims, to the extent consistent with its duties and authorized under the
Trust; provided, however, that the Insured shall not have any such obligation with
respect to any obligations of the Foreign Enterprise that have been released in
accordance with the terms hereof following the delivery of Local Currency to OPIC or
following delivery of notice by OPIC to the Insured, as provided by Section 4.03
hereof, of the reimbursement by the Foreign Enterprise to OPIC of such previously
compensated amounts pursuant to the CSA.  

         8.    
Other Agreements. The Insured shall not enter into any agreement with any
Foreign Governing Authority with respect to compensation for any acts potentially
within the scope of coverage of Article II without OPIC's prior written consent.  

16

         9.    
Modifications. No provision of any Note or any other Transaction Document
shall be modified, waived or amended without OPIC's prior written consent, which
consent shall not be withheld unreasonably; provided, however, that the consent of
OPIC shall not be required if such modification, waiver or amendment (a) does not
relate to a Scheduled Payment, (b) with respect to the Notes, does not require the
consent of each of the Noteholders under the terms of the Indenture, (c) does not
present a material possibility of adversely affecting the rights, benefits or
obligations of OPIC under this Contract and (d) does not present a material
possibility of adversely affecting the enforcement of any rights under the
Transaction Documents that are material to the rights, benefits or obligations of
OPIC, as subrogee or otherwise; provided, further, that in no event shall the
Insured consent to any rescheduling or restructuring of the Scheduled Payments
without OPIC's prior written consent.  

         10.    
Enforcement of Certain Covenants, Representations and Warranties. In the event
that the Insured obtains Actual Knowledge regarding a breach or potential breach of the
Noteholder Representations, the U.S. Noteholder Representation and Warranty or the
representations, warranties or covenants by the Foreign Enterprise under the CSA,
the Insured shall give prompt notice thereof to OPIC and shall consult in good faith
with OPIC regarding such breach or potential breach and the actions to be taken with
respect thereto, including, without limitation, the Foreign Enterprise's
compliance and, if necessary, the enforcement of remedies under the Transaction
Documents, the CSA or otherwise, all in the manner required by the Transaction
Documents.  

         11.    
Default under the CSA. The Insured acknowledges that (a) OPIC has entered
into this Contract in consideration of the Foreign Enterprise entering into the CSA,
and (b) an Event of Termination under the CSA shall be a default (Section 5.02)
hereunder, which may result, among other things, in OPIC's termination of this Contract.  

         12.    
Other Insurance. The Insured shall not obtain any insurance from any other
party covering the Notes against the risks insured hereunder.  

5.02     Default.  

         (a)    
     Material  breach of this Contract by the Insured,  or an Event of Termination  (as
defined in the CSA) under the CSA or a material  misrepresentation  by the  Insured  or a
 misrepresentation  by the Initial  Purchaser  with  respect  to  clause  (i)  of  its
 certificate   delivered   pursuant  to  Section 5.01.2(b)(ii) shall constitute a default
hereunder, and OPIC may: 

	                            	         (i)      refuse
to pay compensation to the Insured; or

	                              	         (ii)     if
such  default  was in  existence  at the time OPIC paid  compensation
                  hereunder,  recover  such  paid  compensation  from any  subsequent
 compensation  payable                   hereunder or from any premium required to be
refunded hereunder (Section 4.06.1); or

	                            	          (iii)    terminate
 this  Contract  effective  as of the date of the  default  by                   giving
notice to the Insured.

         The
absence in the Trust Agreement,  the Indenture,  or the Notes of any provision  required
hereby or stated herein to be provided or contained therein shall constitute a material
breach of this Contract. 

17

         (b)    
     In the event that any  Noteholder,  by its  purchase and  acquisition  of an
interest in a Note  makes a  misrepresentation  to OPIC with  respect to the  matters
 referred  to in  Section  5.01.1(a) hereof,  then OPIC may reduce any compensation
 payable to the Insured hereunder with respect to a Completed Application  by the portion
of such  compensation  which  corresponds to the aggregate  principal  amount of
interests  in the Notes  held by such  Noteholder.  To the  extent  that OPIC has
 already  paid in full any compensation  which should have been reduced  pursuant to this
clause,  the Trust  Agreement  provides  that OPIC may  recover  the amount of the
 reduction  from any  Noteholder  whose  compensation  should have been reduced pursuant
to this clause (b). 

5.03      Non-Waiver.  

         Neither
OPIC's failure to invoke its rights nor its acceptance of premiums shall constitute
 waiver of any of its rights, even if OPIC knows of a breach by the Insured. 

5.04     Cure.  

         OPIC
may permit the Insured to cure a breach in a manner  satisfactory  to OPIC,  but shall
have no obligation to allow breaches to be cured. 

5.05    Limitation of
Liability.  

         (a)    
     This  agreement  is executed  and  delivered  by the Insured  acting not
 individually  or personally  but solely as Trustee under the Trust  Agreement in the
exercise of the powers and the authority conferred on and vested in it under the Trust
Agreement, 

         (b)    
     The  undertakings  and  agreements  herein  made on the part of the  Insured  are
made and intended,  not as personal  undertakings  and  agreements by the Insured,  but
are made and intended for the purpose of binding only the estates created pursuant to the
Trust Agreement, 

         (c)    
     Nothing  herein  contained  shall be construed  as creating any  liability on the
Insured, individually  or  personally,  to  perform  any  covenant  either  expressed  or
 implied  herein,  all such liability,  if any, being  expressly  waived by the parties
who are signatories to this agreement and by any person claiming by, through or under
such parties, and 

         (d)    
     Under no circumstances shall the Insured be personally liable for the payment of any
indebtedness or expenses of the estates created pursuant to the Trust Agreement or be
personally liable for the breach or failure of any obligation or covenant made or
undertaken by the Insured under this Contract. 

18

Article VI – Definitions 

6.01     Defined Terms.  

The following
capitalized terms used herein shall have the definitions specified below: 

"Actual Knowledge",
when used with respect to the Insured, means actual knowledge of any officer of the
Insured responsible for the administration of the Trust.  

"Additional Period"
has the meaning set forth in Section 4.01.3(f).  

"Business Day",
subject to Section 4.12, means a day other than a day on which banking institutions in
The City of New York, New York and Brasilia, Federative Republic of Brazil are
permitted or required by law, executive order or governmental decree to remain closed.  

"Company" has the
meaning set forth in Section 1.01.  

"Company Support
Agreement" means the Company Support Agreement (“CSA”) dated the Effective Date
between OPIC and the Foreign Enterprise.  

"Completed
Application" has the meaning set forth in Section 4.01.1  

"Contract" has the
meaning set forth in Section 1.01.  

"Corrupt Practices
Laws" means (i) the United States Foreign Corrupt Practices Act of 1977 (Pub. L. No.
95-213, §§101-104), as amended, and (ii) any other applicable law, regulation, order,
decree, or directive having the force of law and relating to bribery, kick-backs, or
similar corrupt business practices.  

"Covered Scheduled
Payments" has the meaning set forth in Section 1.01  

"Default Interest" has
the meaning set forth in Section 3.01.2(c).  

"Deposit Account"
means a time or demand deposit account (as understood with reference to U.S. banking
regulations) (i) that is at all times maintained with a commercial banking
institution or trust company under the regulation and supervision of the Foreign
Governing Authority, (ii) that does not provide for any reinvestment of amounts
contained therein, and (iii) from which all funds may be withdrawn on demand, and may
be a trust account that meets the foregoing requirements.  

"Draft Application"
has the meaning set forth in Section 4.01.3(a).  

"Effective Date" has
the meaning set forth in Section 1.05.  

19

"Eligible Investor"
means (1) a person created under the laws of the United States, any state or territory
thereof, or the District of Columbia (an "Entity"), more than fifty percent (50%)
of the beneficial ownership of which is held by citizens of the United States, or (2) a
wholly owned subsidiary of an Entity that satisfies the criteria set out in clause (1)
of this sentence.  

         A
person shall satisfy the beneficial  ownership  criteria set forth in clause (1) of the
preceding sentence if: 

         (a)    
it is a stock insurance  company and more than 50% of the beneficial  ownership of its
         stock is held by citizens of the United States; or 

         (b)    
it is a mutual insurance company and  policyholders  representing more than 50% of the
         aggregate coverage issued by such mutual insurance company are citizens of the
United States; or 

         (c)    
it is an insurance  company  purchasing  for a separate  account,  as described  under
         Rule  144A(a)(1)(i)(A) of the Securities Act, and more than 50% of the
beneficial ownership of such          separate account is held by citizens of the United
States; or 

         (d)    
it is a registered  investment company described under Rule  144A(a)(1)(i)(B)  or Rule
         144A(a)(1)(iv)  of the Securities  Act and the beneficial  owners of more than
50% of its interests          are citizens of the United States; or 

         (e)    
(1) it is an entity described under Rule 144A(a)(1)(i)(D) or (E) of the Securities
Act (a "plan") and the beneficiaries of more than 50% of the interests in
such plan are citizens of the United States or (2) it is a trust whose
participants are exclusively plans as described under Rule
144A(a)(1)(i)(F) of the Securities Act and more than 50% of (A) the assets of such
trust are held for the benefit of plans satisfying the criteria set forth in
clause (e)(1) and (B) the participants in such trust satisfy the criteria set
forth in clause (e)(1); or  

         (f)    
it is an organization described in §501(c)(3) of the Internal Revenue Code and more
than 50% of the identified beneficiaries of such organization are citizens of
the United States; provided, however, that, if such organization does not
have identified beneficiaries, it will satisfy the criteria set forth in
clause (1) of the preceding sentence if more than 50% of the persons
controlling the investment decisions of such organization are citizens of the
United States; or  

         (g)    
it is a  corporation,  partnership  or business  trust and more than 50% of the stock,
         partnership  interests or trust interests,  respectively,  of such entity are
beneficially owned by          citizens of the United States; or 

         (h)    
it is a  registered  investment  adviser  described  under  Rule  144A(a)(1)(i)(I)  or
         registered  dealer  described  under Rule  144A(a)(ii)  or (iii) and more than
50% of the ownership          interests  in such entity are  beneficially  owned by
 citizens  of the United  States or, if it is          purchasing for an account other
than its own, the beneficial  owners of more than 50% of such other          account are
citizens of the United States; or 

         (i)    
it is a  bank  or  savings  and  loan  association,  more  than  50% of the  ownership
         interests of which are beneficially owned by citizens of the United States. 

20

         A
corporation  organized under the laws of the United States or its states and territories
shall be deemed to be an "Eligible  Investor" if more than fifty  percent (50%) of its
issued and  outstanding  stock is owned by U.S.  citizens  either  directly or
 beneficially.  Where shares of stock of a corporation  with widely  dispersed  public
 ownership  are held in the names of  trustees  or  nominees  (including,  without
limitation,  stock brokerage  firms) with addresses in the United States,  such shares
shall be deemed to be owned by U.S.  citizens  unless such  corporation,  OPIC, or the
Insured has knowledge to the contrary.  The beneficial  ownership  of U.S.  corporations
 shall be  determined  by  tracing  back  through  any  foreign ownership of their shares
to the ultimate beneficial owners. 

         The
 criteria  set forth in (a) through  (i) above are not  intended  to be  exclusive  and
nothing herein will prevent an Entity that  otherwise  meets the  criteria  set forth in
the first  sentence of this definition from being an "Eligible Investor" for purposes of
this Contract. 

"Final Application"
has the meaning set forth in Section 4.01.3(g).  

"Foreign Enterprise"
has the meaning set forth in Section 1.01.  

"Foreign Governing
Authority" means any of (a) the central government of the Host Country; (b) the
government of any political subdivision of the Host Country; (c) any organ, agency,
official, employee or other agent or instrumentality of either (a) or (b), acting
within the scope of its authority or under color of such authority; and (d) the
governmental authorities in de facto control of that portion of the Host Country in
which the Project is located.  

"Government-Related
Entity" means an entity whose actions are attributable to the Foreign Governing
Authority under principles of international law.  

"Host Country" means
the Federative Republic of Brazil.  

"Inconvertibility
Event" means an event covered by this Contract and described in Section 2.01.  

"Indenture" means the
Indenture, dated as of February 17, 2004.  

"Information Request"
has the meaning set forth in Section 4.01.3(b).  

"Initial Claim
Payment" has the meaning set forth in Section 4.01.5.  

"Initial Period" has
the meaning set forth in Section 4.01.3(b).  

"Initial Purchaser"
means Citigroup Global Markets, Inc.  

“Insurance Trust
Property” has the meaning assigned to such term in the Trust Agreement.  

"Insured" has the
meaning set forth on the cover page of this Contract.  

"Insured Portion" has
the meaning set forth in Section 1.01.  

21

"Local Currency"
means the coin or currency of the Host Country which at the time of the relevant
payment is legal tender for the payment of public and private debts.  

"Maximum Aggregate
Compensation" has the meaning set forth in Section 1.03.  

"Maximum Aggregate
Compensation Liability" has the meaning set forth in Section 1.03.  

"Noteholder" or
"Holder" means the person or entity from time to time acquiring interests in the
Notes, either at original issuance or in the secondary market therefor.  

"Noteholder
Representations" has the meaning set forth in Section 5.01.1(a).  

"Notes" means the
US$200,000,000 9.375% notes due 2014 issued by the Foreign Enterprise under the
Indenture, which initially shall be represented by a Rule 144A Restricted Global Note and
a Regulation S Unrestricted Global Note and which shall include the exchange notes issued
in connection with the exchange offer referred to in the Indenture pursuant to which the
Foreign Enterprise will issue notes registered under the Securities Act having terms
identical to the notes issued under the Indenture which are initially represented by the
Rule 144A Restricted Global Note and the Regulation S Unrestricted Global Note.  

"OPIC" has the meaning
set forth on the cover page of this Contract.  

"Other Source
Information" has the meaning set forth in Section 4.01.3(d).  

"Payment Date" means
each February 17 and August 17 (or, if such date is not a Business Day, then the next
immediately succeeding date that is a Business Day).  

"Person" means an
individual, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture or any nation
or government, any state, province or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority) thereof, and any entity
exercising executive, legislative, judicial, regulatory authority) thereof, and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.  

"Prior Delivery
Obligations" has the meaning set forth in Section 3.01.1(a).  

"Processing Period"
has the meaning set forth in Section 4.01.6(a).  

"Project" has the
meaning set forth in Section 1.01.  

"Prospective Payment
Default" means, with respect to a Subsequent Scheduled Payment (or portion thereof),
the prospective insufficiency of U.S. dollars in the Debt Service Reserve Account
as of the close of business on the Triggering Payment Date to make such Subsequent
Scheduled Payment (or portion thereof).  

"Rebuttal Information"
has the meaning set forth in Section 4.01.3(d).  

"Regulation S
Unrestricted Global Note” has the meaning set forth in the Indenture.  

22

“Response” has the
meaning set forth in Section 4.01.3 (c).  

“Revised Application” has
the meaning set forth in Section 4.01.3(e).  

“Rule 144A Restricted
Global Note” has the meaning set forth in the Indenture.  

“Scheduled Payments” has
the meaning set forth in Section 1.01 and as described in Exhibit A.  

“Securities Act” shall
mean the United States Securities Act of 1933, as amended.  

“Subsequent Scheduled
Payment” has the meaning set forth in Section 2.01.1.  

“Subsequent Payment
Date” has the meaning set forth in Section 3.01.2(a).  

“Subsequent
Prospective Payment Default” has the meaning set forth in Section 4.01.5.  

“Transaction Documents” means
this Contract, the Trust Agreement, the Notes, the CSA, and the Indenture.  

“Triggering Payment
Date” means the Payment Date for the relevant Triggering Scheduled Payment.  

"Triggering Scheduled
Payment" has the meaning set forth in Section 2.01.1(a).  

"Trust" has the
meaning set forth on the cover page of this Contract.  

"Trust Agreement" has
the meaning set forth on the cover page of this Contract.  

"Trustee" has the
meaning set forth on the cover page of this Contract.  

"U.S. dollars" or
"dollars" or "US$" or "$" means the lawful currency of the United States of America.  

"U.S. Holder" has the
meaning set forth in Section 5.01.2(b)(ii).  

"U.S. Holder
Representations" has the meaning set forth in Section 5.01.1(b).  

"Waiting Period"
means the period from the Triggering Payment Date to the last day of the
Processing Period.  

23

         IN
WITNESS WHEREOF, each of the parties hereto has caused this OPIC Contract of
Insurance No. F431 (Brazil) to be executed and delivered on its behalf by its
authorized representative to be effective as of February 17, 2004.  

         THE
BANK OF NEW YORK,
         not in its individual capacity but solely as Trustee
         under
the Trust Agreement referenced herein 

         By:   /s/
Peter Pavlyshin                              Date: As of February 17, 2004

         Name: Peter Pavlyshin
          Title: Assistant Vice President  

         OVERSEAS
PRIVATE INVESTMENT CORPORATION 

         By:   /s/
Edith Quintrell                              Date:
As of February 12, 2004
         Name: Edith Quintrell

         Title: Director,
Technical Operations Group, Insurance Department  

EXHIBIT A
 TO
OPIC INSURANCE CONTRACT F431  

DATE OF ISSUANCE OF
NOTES: February 17, 2004

	Dates 	Scheduled Interest Payments 
	August 17, 2004	$9,375,000 
	February 17, 2005	$9,375,000 
	August 17, 2005	$9,375,000 
	February 17, 2006	$9,375,000 
	August 17, 2006	$9,375,000 
	February 17, 2007	$9,375,000 
	August 17, 2007	$9,375,000 
	February 17, 2008	$9,375,000 
	August 17, 2008	$9,375,000 
	February 17, 2009	$9,375,000 
	August 17, 2009	$9,375,000 
	February 17, 2010	$9,375,000 
	August 17, 2010	$9,375,000 
	February 17, 2011	$9,375,000 
	August 17, 2011	$9,375,000 
	February 17, 2012	$9,375,000 
	August 17, 2012	$9,375,000 
	February 17, 2013	$9,375,000 
	August 17, 2013	$9,375,000 
	February 17, 2014	$9,375,000 
	August 17, 2014 (if maturity is extended per Section 2.6 of the Indenture)	$9,375,000 
	February 17, 2015 (if maturity is extended per Section 2.6 of the Indenture)	$9,375,000 
	August 17, 2015 (if maturity is extended per Section 2.6 of the Indenture)	$9,375,000 

A-1

 

EXHIBIT B
 TO
OPIC INSURANCE CONTRACT F431  

FORM OF REVISED
APPLICATION
                                                                                       WITH
RESPECT TO SUBSEQUENT, CONSECUTIVE DEFAULT

[LETTERHEAD OF INSURED]

[Date]

Overseas Private
Investment Corporation
1100 New York Avenue, N.W.
Washington, D.C.  20527
Attn:
 Vice-President, Insurance 

Re:     OPIC
Contract of Insurance No. F431 (Brazil)  

         This
revised application with respect to subsequent consecutive default (“Revised
Application”) is delivered to you pursuant to Section 4.01(5) of the Contract of
Insurance for Fixed Income Securities Against Inconvertibility (as amended,
supplemented and otherwise modified from time to time, the “OPIC Insurance Contract”),
dated as of February 17, 2004, between (i) the Overseas Private Investment
Corporation (“OPIC”), and (ii) The Bank of New York, not in its individual capacity
but solely as trustee (in such capacity, the “Trustee”) of a grantor trust
established under New York law, pursuant to the Insurance Trust Agreement dated as of
February __, 2004, between the Trustee and Brasil Telecom, S.A.  

         All
capitalized terms used and not otherwise defined in this Revised Application shall have
the meanings assigned thereto in the OPIC Insurance Contract. 

         I,
[__________], a duly authorized representative of the Trustee (the “Insured”), hereby
certify, represent and warrant to OPIC on behalf of the Insured as follows:  

	  	(a) 	A
Completed Application dated [_______________] (the “Original Application”),
relating to the occurrence of a Prospective Payment Default under the OPIC Insurance
Contract, was approved by OPIC and payment of the amount requested thereunder was made by
OPIC on [___________].  

	  	(b) 	The
claim set forth in the Original Application, as revised by this certificate, is
compensible under Article II of the OPIC Insurance Contract.  

B-1

	                    	(c) 	The
 inconvertibility  or  non-transferability  event  described as the basis for the claim
in the Original  Application  is continuing as of the date hereof and is the direct cause
of a subsequent,                                     consecutive, uncured Prospective
Payment Default in the amount of [$_________]. 

	                    	(d) 	The
Foreign Enterprise Payment Date related to the Prospective Payment Default is
[__________]. 

         The
Insured hereby  requests that OPIC pay to the Insured the amount set forth in clause (c)
on the date set forth in clause (d) in accordance with the provisions of the OPIC
Insurance Contract. 

IN WITNESS WHEREOF,
the undersigned has executed this Revised Application as of the [__] day of
[__________], [____].  

	 	By:__________________________
	 	        Name:
	 	        Title:
	 
	 	On behalf of:
	 
	 	THE BANK OF NEW YORK,
	 	not in its individual capacity but solely as Trustee

B-2

EXHIBIT C
 TO
OPIC INSURANCE CONTRACT F431  

FORM OF ASSIGNMENT1  

[LETTERHEAD OF INSURED]

[Date]

Overseas Private
Investment Corporation
1100 New York Avenue, N.W.
Washington, D.C.  20527
Attn:
 Vice-President, Insurance 

Re:    OPIC Contract
of Insurance No. F431 (Brazil)  

         This
assignment (“Assignment”) is delivered to you pursuant to Section 4.02.1 of the
Contract of Insurance for Fixed Income Securities Against Inconvertibility (as
amended, supplemented and otherwise modified from time to time, the “OPIC Insurance
Contract”), dated as February 17, 2004, between (i) the Overseas Private Investment
Corporation (“OPIC”), and (ii) The Bank of New York, not in its individual capacity
but solely as trustee (in such capacity, the “Trustee”) of a grantor trust established
under New York law, pursuant to the Insurance Trust Agreement dated as of February 17,
2004, between the Trustee and Brasil Telecom, S.A.  

         All
capitalized  terms used and not otherwise  defined in this  Assignment  shall have the
meanings assigned thereto in the OPIC Insurance Contract. 

         For
value received pursuant to the OPIC Insurance Contract, the [Insured][Foreign Enterprise]
hereby irrevocably and unconditionally, without recourse, representation or warranty
(except as provided below), sells, assigns, transfers, conveys and delivers to OPIC all
of the Insured’s rights and claims in respect of the Insured Portion of the [[Subsequent
Foreign Enterprise Scheduled Payment or part thereof] [Deposit Account]] (or portion
thereof) that is the 

________________________

	1  	In
the event that the terms of this form of assignment are reasonably determined by
OPIC to be insufficient to fully vest OPIC with the Insured’s [or the Foreign
Enterprise’s] right, title and interest in the rights set forth above, as the
case may be as is contemplated by Sections 3.01(a) (ii) or (iii) of the
Insurance Contract, the Insured, and OPIC shall agree on such other form as
is reasonably necessary to effect such assignment and transfer, which
assignment and transfer shall be without recourse, representation or
warranty, except as provided above. 

D-1

subject of the claim
in an amount equal to the U.S. dollar amount of $___________2, plus interest at the
applicable default rate of interest under the Indenture until OPIC is repaid in full.  

         [The
Insured  represents  and  warrants  that its  assignment  hereunder  is  authorized
 under the Indenture and that such rights and claims are free and clear of any claim,
defense,  counterclaim,  right of setoff, lien or encumbrance created or incurred by the
Insured. 

         The
Insured shall hold in trust for the benefit of OPIC and remit promptly to OPIC any
and all amounts received or collected by the Insured in respect of the rights and
claims assigned hereunder, whether received directly from the Foreign Enterprise,
as proceeds of the Insurance Trust Property or otherwise.]3  

         [The
Foreign Enterprise represents and warrants that its assignment hereunder is duly
authorized and that such rights and claims are free and clear of any claim, defense,
counterclaim, right of setoff, lien or encumbrance created or incurred by the Foreign
Enterprise.]4  

         THIS
ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF NEW YORK. 

         IN
WITNESS WHEREOF, the undersigned has executed this Assignment as of the [__]
day of [__________], [____].  

	 	By:___________________________
	 	        Name:
	 	        Title:
	 
	 	On behalf of:
	 
	 	THE BANK OF NEW YORK,
	 	not in its individual capacity but solely as Trustee

__________________________

	2  	Or
the equivalent  amount in local currency of the exchange rate described in Section 3.01.3
of the          OPIC Insurance Contract.

	3  	Include
this language in the case of an assignment of the Insured’s rights.

	4  	Include
this language in case of an assignment of the Foreign Enterprise’s rights.

D-2

EXHIBIT D
 TO
OPIC INSURANCE CONTRACT F431  

FORM OF PARTICIPATION
AGREEMENT5  

         This
PARTICIPATION AGREEMENT (this “Agreement”) entered into as of the date set forth in Item 1
of Schedule I attached hereto (the “Effective Date”) (hereinafter, each reference to
a specific Item shall refer to such Item identified in Schedule I) between
[___________] and the Overseas Private Investment Corporation (“OPIC”).  

         Capitalized
 terms used but not otherwise  defined herein shall have the meanings  assigned thereto
in the OPIC Insurance Contract (as defined below). 

PRELIMINARY STATEMENTS

         A.    
Pursuant to a Contract of Insurance for Fixed Income Securities Against
Inconvertibility (as amended, supplemented and otherwise modified from time to time,
the “OPIC Insurance Contract”), dated as of February 17, 2004, between (i) the
Overseas Private Investment Corporation (“OPIC”), and (ii) The Bank of New York, not
in its individual capacity but solely as trustee (in such capacity, the “Trustee”) of
a grantor trust established under New York law, pursuant to the Insurance Trust
Agreement dated as of February 17, 2004, between the Trustee and Brasil Telecom, S.A.
(the “Foreign Enterprise”). OPIC has agreed to insure certain payments of the
Company under the Company Notes upon the occurrence and continuance of an
inconvertibility or non-transferability event under the OPIC Insurance Contract. In
consideration of payments made by OPIC under the OPIC Insurance Contract following such
an event, OPIC has the right, pursuant to Section 4.02 of the OPIC Insurance Contract,
to request that the Insured execute a participation agreement to evidence certain rights
of OPIC with respect to such payment.  

         B.    
In consideration of compensation paid by OPIC to the Insured under the OPIC
Insurance Contract, the Insured wishes to grant to OPIC, and OPIC wishes to acquire
and assume from the Insured, a 90% participation in the amount, identified in Item
2 (the “Participation”), in all right, title and interest of the Insured and the
Holders in the [Subsequent Scheduled Payment (including without limitation rights in
respect of the Insurance Trust Property] [Deposit Account] (or portion thereof)
identified in Item 3.  

_________________________

	5  	In
the event that the terms of this form of participation  are reasonably  determined by
OPIC to be          insufficient  to fully vest a  participation  interest  in the
 Insured’s,  the  Noteholders’,  the          Foreign  Enterprise’s or any other person’s
right,  title and interest in such rights and claims as          contemplated  by
Sections  3.01(a)(i) or (iii) of the OPIC  Insurance  Contract as set forth above,
         the  Insured  and OPIC shall  agree on such other form as is  reasonably
 necessary  to effect such          participation,  which participation shall be without
recourse,  representation or warranty,  except          as provided above.  Specifically,
 this form shall be modified in the event the participation is to                    be
granted by the Foreign Enterprise instead of or in addition to the Insured.

D-1

THE PARTICIPATION

The Participation.
As of the Effective Date, the Insured, hereby grants and sells to OPIC, and OPIC
hereby acquires and assumes, subject to the terms and conditions hereof and without
recourse, except as hereinafter provided, the Participation.  

Evidence of
Participation. The Insured will maintain records of all payments received from the
Foreign Enterprise and of all proceeds from the Insurance Trust Property. The
Insured will furnish to OPIC an accounting of all such payments as promptly as
practicable following OPIC’s request therefor.  

Payments by Insured. 

         (a)
Upon  receipt of amounts  from the  Foreign  Enterprise  or the  Insurance  Trust
 Property  or otherwise  with  respect to the  Participation,  the Insured  shall
 promptly pay such amounts to OPIC at an account designated by OPIC. 

         (b)
 Except for  amounts  specified  in (a)  above,  OPIC shall not be  entitled  hereunder
 to any amounts payable under the Indenture with respect to the Notes. 

         (c)
 As and to the extent set forth in the Indenture,  OPIC, upon payment of compensation
under the OPIC  Insurance  Agreement,  shall be  deemed a holder of the Notes to the
 extent of  payments  so made and shall have the right to exercise rights, or to request
the Indenture  Trustee to exercise rights,  under the Indenture  or to  commence  or
 prosecute  any  proceedings  to enforce  its rights to payment of all or any amounts  in
which  OPIC has been  granted  a  participation  hereunder,  or to  directly  make any
 claim in connection therewith.  Nothing herein shall limit any such rights of OPIC. 

INSURED UNDERTAKINGS

Documents;
Information. The Insured will furnish to OPIC copies of any documentation
required to be provided to the holders of the Notes pursuant to the Indenture.  

Standard of Care.
With respect to the Participation, the Insured will owe all of the duties to OPIC
which it owes to a holder of the relevant Notes under the Indenture and OPIC shall
have the rights of such Noteholders.  

Nonrecourse
Participation. The Participation is hereby acquired by OPIC without recourse to the
Insured and for OPIC’s own account and risk. The Insured represents that the
Participation is authorized under the Indenture and the Insurance Trust Agreement, but
makes no representation or warranty as to, and shall have no responsibility for, (i) the
due authorization, execution or delivery of the Transaction Documents by the Foreign
Enterprise or any other Person; (ii) the value, legality, genuineness, validity,
sufficiency, enforceability or collectability of any Note, any Transaction Document, the
Insurance Trust Property, or any collateral or other support for the Notes (including any
Deposit Account, if applicable); (iii) any representation or warranty made by the Foreign
Enterprise or any other Person; (iv) the performance or observance by the Foreign  

D-2

Enterprise or any
other Person (at any time,  whether  prior to or after the  Effective  Date) of any of
the provisions of the  Transaction  Documents  (or any of the Trust’s,  the Foreign
 Enterprise’s  or such other Person’s  other  obligations  in  connection  therewith);
 or (v) any other  matter  relating to the Foreign Enterprise  or any other  Person,  the
 Notes,  any  Deposit  Account,  if  applicable,  or the  Transaction Documents. 

Amendments, Waivers,
Etc. The Insured will give or withhold its agreement to any amendments of the
Transaction Documents or any waivers or consents in respect thereof or exercise or
refrain from exercising any other rights or remedies which the Insured may have under the
Transaction Documents or otherwise, only in accordance with the terms of the Indenture.  

MISCELLANEOUS

Payments Generally.6
All payments to OPIC by the Insured, to the extent received from the Insurance Trust
Property or any other source, shall be made in U.S. dollars.  

Notices. Unless
otherwise specifically provided herein, all notices, consents, directions,
approvals, instructions, requests and other communications given to any party hereto
shall be given in the manner and at the address for notice set forth in Section 4.08 of
the OPIC Insurance Contract.  

Entire Agreement.
This Agreement sets forth the entire agreement between the Insured and OPIC relating to
the Participation and supersedes any prior written or oral statements or agreements
with respect to the matters covered hereby and may not be altered orally.  

Term of Agreement.
The Participation shall terminate upon the earlier of (i) the receipt by OPIC of
aggregate payments equal to the amount of its Participation, plus interest on
such amount at the applicable default rate of interest payable under the
Indenture until paid in full and (ii) the termination of the Indenture.  

Captions. The
captions and headings hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.  

Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK.  

Arbitration. Any
controversy relating to this Agreement shall be settled by arbitration under
Section 4.05 of the OPIC Insurance Contract.  

Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be an
original but all of which, taken together, shall constitute one and the same instrument.  

Expenses. Each party
hereto agrees to bear its own expenses in connection with this Agreement.  

_______________________________

	6  	The
 Participation  is  subject to  provisions,  if any,  of Notes and  Indenture  with
 respect to          repayment or reimbursement.

D-3

Cumulative Rights,
No Waiver. The rights, powers and remedies of the Insured and OPIC hereunder are
cumulative and in addition to all rights, powers and remedies provided at law, in
equity or otherwise. Neither any delay nor any omission by the Insured to exercise any
right, power or remedy shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise thereof or any
exercise of any other right, power or remedy.  

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

	 	By:_________________________
	 	        Name:
	 	        Title:
	 
	 	On behalf of:
	 
	 	THE BANK OF NEW YORK,
	 	not in its individual capacity but solely as Trustee

	 	By:_________________________
	 	        Name:
	 	        Title:
	 
	 	On behalf of:
	 
	 	OVERSEAS PRIVATE INVESTMENT CORPORATION

D-4<pre>
                                                                EXHIBIT 4.1

                      CONSULTING AGREEMENT

AGREEMENT, made this 1st day of March, 2004 by and between ConectiSys
Corporation, having its principal place of business at 24307 Magic Mtn.
Parkway, Suite 41, Valencia, CA  91355, (hereinafter the "Company") and
Clifford Mastricola, having his principal place of business at 2190 Carmel
Valley Rd Del Mar, CA  92014 (hereinafter the "Consultant").  The agreement
will become effective on the first day the consultation commences.

WHEREAS, the Company desires to retain the Consultant for consulting
services on connection with the Company's business affairs on a non-
exclusive basis, and the Consultant is willing to undertake to provide such
services as hereinafter fully set forth:

                          WITNESSETH

NOW THEREFORE, the parties agree as follows:

1.      Term:  The six (6) months from the date hereof. Either party may
cancel this contract with written notice provided seven (7) days prior to
cancellation date.

2.      Nature of Services: The Company hereby engages Consultant to render
the services hereinafter described during the term hereof (its being
understood and agreed that Consultant is free tender the same or similar
services to any other entity selected by it).

(1) Consult with Company as directed concerning on-going strategic
corporate planning, joint ventures and strategic alliances, including any
revision of the Company's client's business plan.

(2) Render advice with respect to leasing and/or other financing
arrangements of Company's product lines.

(3) Assist in negotiation of Company's contracts with suppliers and major
customers when so required by the Company.

(4) Consult with and advise Company with regards to potential mergers and
acquisitions, whether the Company's clients be acquiring or the target of
acquisition.

(5) Evaluate the Company marketing and sales requirements.

3.      Compensation:  It is mutually agreed that the Consultant will be
entitled to compensation of 30,000,000 shares of Company's common stock.

4.      Expenses:  Consultant shall pay his own expenses.

5.      Complete Agreement:  This Agreement contains the entire Agreement
between the parties with respect to the contents hereof supersedes all
prior agreements and understandings between the parties with the respect to
such matters, whether written or oral.  Neither this Agreement, nor any
term or provisions hereof may be changed, waived, discharged or amended in
any manner other than by any instrument in writing, signed by the party
against which the enforcement of the change, waiver, discharge or amendment
is sought.

6.      Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be an original but all of which shall
constitute one Agreement.

7.      Survival:  Any termination of this Agreement shall not, however,
affect the on-going provisions of this Agreement, which shall survive such
termination in accordance with their terms.

8.      Notice:  Any or all notices, designations, consents, offers,
acceptance or other communication provided for herein shall be given in
writing and delivered in person or by registered or certified mail, return
receipt requested, directed to the address shown below unless notice of a
change of address is furnished:

If to Consultant:

Clifford Mastricola
2190 Carmel Valley Road
Del Mar, CA  92014

If to Company:

ConectiSys Corporation
24307 Magic Mtn. Parkway
Suite 41
Valencia, CA  91355
Attention: Robert Spigno

9.      Severability: Whenever possible, each provision of Agreement will
be interpreted in such manner as to be effective and valid under applicable
law. If any provision of this Agreement is held to be invalid, illegal or
unenforceable provision had never been contained herein.

10.     Miscellaneous:

(a)     All final decisions with the respect to consultation, advice and
services rendered by the Consultant to the Company shall rest exclusively
with the Company, and Consultant shall not have any right or authority to
bind the Company to any obligation or commitment. (b)   The parties hereby
agree to submit any controversy or claim arising out of or relating to this
Agreement to final binding arbitration administered by the American
Arbitration Association ("AAA") under its Commercial Arbitration Rules, and
further agree that immediately after the filing of a claim as provided
herein they shall in good faith attempt mediation in accordance with the
AAA Commercial Mediation Rules; provided, however, that the proposed
mediation shall not interfere with or in any way impede the progress of
arbitration.  The parties also agree that (i) the AAA Optional Rules for
Emergency Measures of Protection shall apply to any proceedings initiated
hereunder; (ii) the arbitrator shall be authorized and empowered to grant
any remedy or relief, which the arbitrator deems just and equitable in
nature, including, but not limited to, specific performance, injunction,
declaratory judgment and other forms of provisional relief in addition to a
monetary award; (iii) the arbitrator may make any other decisions including
interim, interlocutory or partial findings, orders and awards to the full
extent provided in Rule 45 of the Commercial Arbitration Rules; and (iv)
the arbitrator shall be empowered and authorized to award attorneys' fees
to the prevailing party in accordance with Rule45 (d).

Agreed and Accepted on March 1, 2004 by and between:

Conectisys Corporation                  Consultant

By: /S/ ROBERT A. SPIGNO                By: /S/ CLIFFORD MASTRICOLA
    -------------------------               ---------------------------
    Robert A. Spigno, CEO                   Clifford Mastricola

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