Document:

Guaranty Supplement dated January 7, 2005 by STERIS Isomedix Services, Inc.

 Exhibit 10.20 
  
 GUARANTY SUPPLEMENT 
  
 To the Holders of the Series A-1 Notes, Series 
   A-2 Notes and
Series A-3 Notes (as 
   hereinafter defined) of STERIS Corporation 
   (the “Company”) 
  

	 	Re:	STERIS Isomedix Services, Inc. 

  
 Ladies and Gentlemen: 
  
 WHEREAS, in order to refinance certain debt and for general corporate purposes, the Company issued (a) $40,000,000 aggregate principal amount of its 4.20%
Senior Notes, Series A-1, due December 15, 2008 (the “Series A-1 Notes”), (b) $40,000,000 aggregate principal amount of its 5.25% Senior Notes, Series A-2, due December 15, 2013 (the “Series A-2 Notes”) and (c) $20,000,000
aggregate principal amount of its 5.38% Senior Notes, Series A-3, due December 15, 2015 (the “Series A-3 Notes”; the Series A-1 Notes, Series A-2 Notes and the Series A-3 Notes shall be collectively referred to herein to the
“Notes”) pursuant to those certain Note Purchase Agreements dated as of December 17, 2003 (the “Note Purchase Agreements”) between the Company and each of the purchasers named on Schedule A thereto (the “Initial Note
Purchasers”). 
  
 WHEREAS, as a condition precedent to their
purchase of the Notes, the Initial Note Purchasers required that certain subsidiaries of the Company enter into a Subsidiary Guaranty as security for the Notes (the “Guaranty”). 
  
 Pursuant to Section 9.7 of the Note Purchase Agreements, the Company has agreed to cause the undersigned, STERIS Isomedix
Services, Inc., a corporation organized under the laws of Delaware (the “Additional Guarantor”), to join in the Guaranty. In accordance with the requirements of the Guaranty, the Additional Guarantor desires to amend the definition of
Guarantor (as the same may have been heretofore amended) set forth in the Guaranty attached hereto so that at all times from and after the date hereof, the Additional Guarantor shall be jointly and severally liable as set forth in the Guaranty for
the obligations of the Company under the Note Purchase Agreements and Notes to the extent and in the manner set forth in the Guaranty. 
  
 The undersigned is the duly elected Vice President and Treasurer of the Additional Guarantor, a subsidiary of the Company, and is duly authorized to
execute and deliver this Guaranty Supplement to each of you. The execution by the undersigned of this Guaranty Supplement shall evidence its consent to and acknowledgment and approval of the terms set forth herein and in the Guaranty and by such
execution the Additional Guarantor shall be deemed to have made in favor of the Holders the representations and warranties set forth in Section 5 of the Guaranty. 
  

 Upon execution of this Guaranty Supplement, the Guaranty shall be deemed to be amended as set forth
above. Except as amended herein, the terms and provisions of the Guaranty are hereby ratified, confirmed and approved in all respects. 
  
 Any and all notices, requests, certificates and other instruments (including the Notes) may refer to the Guaranty without making specific reference to
this Guaranty Supplement, but nevertheless all such references shall be deemed to include this Guaranty Supplement unless the context shall otherwise require. 
  

Dated: January 7, 2005 
  

			
	 STERIS ISOMEDIX SERVICES, INC.

		
	By:	 	 
	 	 	 William L. Aamoth

	 	 	 Vice President and Treasurer

	
	 Accepted and Agreed:

	
	 STERIS CORPORATION

		
	 By:
	 	 
	 	 	 William L. Aamoth

	 	 	 Vice President and Corporate Treasurer

  

 2 

 EXHIBIT A 
  
 Note Holders 
  

			
	 Acacia Life Insurance Company
 Lincoln, Nebraska
68510-2234
  
 American United Life Insurance Company
 Indianapolis, Indiana 46206-0368
  
 Ameritas Life Insurance Corp.
 Lincoln, Nebraska 68510-2234
  
 Equitable Life Insurance Company of Iowa
 c/o
ING Investment Management LLC
 Minneapolis, Minnesota 55401-2121
  
 Golden American Life Insurance Company
 c/o ING Investment Management
LLC
 Minneapolis, Minnesota 55401-2121
  
 Life Insurance Company of Georgia
 c/o ING Investment Management
LLC
 Minneapolis, Minnesota 55401-2121
  
 MONY Life Insurance Company of America
 c/o MONY Life Insurance
Company
 New York, New York 10019
  
 Pioneer Mutual Life Insurance Company
 c/o American United Life Insurance
Company
 Indianapolis, Indiana 46208-0368
  
 Primerica Life Insurance Company
 Hartford, Connecticut 06115-0449

 
 The Prudential Insurance Company of America
 c/o Prudential Capital Group
 Chicago, IL 60601
  
 ReliaStar Life Insurance Company
 c/o ING Investment Management LLC
 Minneapolis, Minnesota 55401-2121
  
 Security Life of Denver Insurance Company
 c/o ING Investment Management LLC
 Minneapolis, Minnesota
55401-2121
  
 The State Life Insurance Company
 c/o American United Life Insurance Company
 Indianapolis, Indiana
46208-0368
  
 Teachers Insurance and Annuity Association of America
 New York, New York 10017-3206
  
 TIAA-CREF Life Insurance Company
 New York, New York 10017-3206
  
 The Travelers Insurance Company
 Hartford,
Connecticut 06115-0449
  
 The Travelers Life and Annuity Company
 Hartford, Connecticut 06115-0449
	 	 

  

 EXECUTION COPY 
  

 SUBSIDIARY GUARANTY 
  
 Dated as of December 17, 2003 
  

	 	Re:	$40,000,000 4.20% Senior Notes, Series A-1, due December 15, 2008 

	 	 	$40,000,000 5.25% Senior Notes, Series A-2, due December 15, 2013 

	 	 	$20,000,000 5.38% Senior Notes, Series A-3, due December 15, 2015 

  
 of 
  
 STERIS CORPORATION 
  

  
 TABLE
OF CONTENTS 
  
 (Not a part of
the Agreement) 
  

					
	 SECTION

	  	 HEADING

	  	PAGE

			
	 Parties
	  	 	  	1
			
	 Recitals
	  	 	  	1
			
	 SECTION 1.
	  	 DEFINITIONS
	  	2
			
	 SECTION 2.
	  	 GUARANTY OF NOTES AND NOTE PURCHASE
AGREEMENTS
	  	2
			
	 SECTION 3.
	  	 GUARANTY OF PAYMENT AND PERFORMANCE
	  	2
			
	 SECTION 4.
	  	 GENERAL PROVISIONS RELATING TO THE
GUARANTY
	  	3
			
	 SECTION 5.
	  	 REPRESENTATIONS AND WARRANTIES OF THE
GUARANTORS
	  	8
			
	 SECTION 6.
	  	 GUARANTOR COVENANTS
	  	9
			
	 SECTION 7.
	  	 [RESERVED]
	  	9
			
	 SECTION 8.
	  	 GOVERNING LAW
	  	9
			
	 SECTION 9.
	  	 [RESERVED]
	  	10
			
	 SECTION 10.
	  	 AMENDMENTS WAIVERS AND CONSENTS
	  	10
			
	 SECTION 11.
	  	 NOTICES
	  	11
			
	 SECTION 12.
	  	 MISCELLANEOUS
	  	11
			
	 SECTION 13.
	  	 RELEASE
	  	12
			
	 Signature
	  	 	  	14

  

 -i- 

 SUBSIDIARY GUARANTY 
  

	 	Re:	$40,000,000 4.20% Senior Notes, Series A-1, due December 15, 2008 

	 	 	$40,000,000 5.25% Senior Notes, Series A-2, due December 15, 2013 

	 	 	$20,000,000 5.38% Senior Notes, Series A-3, due December 15, 2015 

  
 This SUBSIDIARY GUARANTY dated as of December 17, 2003 (the or this “Guaranty”) is entered into on a joint
and several basis by each of the undersigned, together with any entity which may become a party hereto by execution and delivery of a Guaranty Supplement in substantially the form set forth as Exhibit A hereto (a “Guaranty
Supplement”) (which parties are hereinafter referred to individually as a “Guarantor” and collectively as the “Guarantors”). 
  
 R E C I T A L S

  
 A. Each Guarantor is a direct or indirect subsidiary of
STERIS Corporation, an Ohio corporation (the “Company”). 
  
 B. In order to refinance certain debt and for general corporate purposes, the Company has entered into those certain Note Purchase Agreements dated as of December 17, 2003 (the “Note Purchase
Agreements”) between the Company and each of the purchasers named on Schedule A thereto (the “Initial Note Purchasers”; the Initial Note Purchasers, together with their successors, assigns or any other future holder of the
Notes (as defined below), the “Holders”), providing for, inter alia, the issue and sale by the Company to the Initial Note Purchasers of $40,000,000 aggregate principal amount of its 4.20% Senior Notes, Series A-l, due
December 15, 2008, $40,000,000 aggregate principal amount of its 5.25% Senior Notes, Series A-2, due December 15, 2013 and $20,000,000 aggregate principal amount of its 5.38% Senior Notes, Series A-3, due December 15, 2015. 
  
 C. The Initial Note Purchasers have required as a condition to their purchase
of the Notes that the Company cause each of the undersigned to enter into this Guaranty and to cause each Subsidiary (as defined in the Note Purchase Agreements) that after the date hereof delivers a guaranty pursuant to the Bank Credit Agreement
(as defined in the Note Purchase Agreements) to enter into a Guaranty Supplement, in each case as security for the Notes, and the Company has agreed to cause each of the undersigned to execute this Guaranty and to cause such additional Subsidiaries
to execute a Guaranty Supplement, in each case in order to induce the Initial Note Purchasers to purchase the Notes and thereby benefit the Company and its Subsidiaries. 
  
 D. Each of the Guarantors will derive substantial direct and indirect benefit from the sale of the Notes to the Initial Note
Purchasers. 
  

 -1- 

 NOW, THEREFORE, as required by the Note Purchase Agreements and in
consideration of the premises and other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, each Guarantor does hereby covenant and agree, jointly and severally, as follows: 
  

	SECTION 1.	DEFINITIONS. 

  
 Capitalized terms used herein shall have the meanings set forth in the Note Purchase Agreements unless herein defined or the context shall otherwise
require. 
  

	SECTION 2.	GUARANTY OF NOTES AND NOTE PURCHASE AGREEMENTS. 

  
 (a) Subject to the limitation set forth in Section 2(b) hereof and to
the provisions of Section 13 hereof, each Guarantor jointly and severally does hereby absolutely and unconditionally guarantee unto the Holders: (1) the full and prompt payment of the principal of, Make-Whole Amount, if any, and interest on
the Notes from time to time outstanding, as and when such payments shall become due and payable whether by lapse of time, upon redemption or prepayment, by extension or by acceleration or declaration or otherwise (including (to the extent legally
enforceable) interest due on overdue payments of principal, Make-Whole Amount, if any, or interest at the rate set forth in the Notes and interest accruing at the then applicable rate provided in the Notes after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) in Federal or other immediately available
funds of the United States of America which at the time of payment or demand therefor shall be legal tender for the payment of public and private debts, (2) the full and prompt performance and observance by the Company of each and all of the
obligations, covenants and agreements required to be performed or owed by the Company under the terms of the Notes and the Note Purchase Agreements and (3) the full and prompt payment, upon demand by any Holder, of all reasonable actual out of
pocket costs and expenses, legal or otherwise (including attorneys’ fees), if any, as shall have been expended or incurred in the protection or enforcement of any rights, privileges or liabilities in favor of the Holders under or in respect of
the Notes, the Note Purchase Agreements or under this Guaranty or in any consultation or action in connection therewith or herewith and in each and every case irrespective of the validity, regularity, or enforcement of any of the Notes or Note
Purchase Agreements or any of the terms thereof or any other like circumstance or circumstances. 
  
 (b) The liability of each Guarantor under this Guaranty shall not exceed an amount equal to a maximum amount as will, after giving effect to such maximum
amount and all other liabilities of such Guarantor, contingent or otherwise, result in the obligations of such Guarantor hereunder not constituting a fraudulent transfer, obligation or conveyance. 
  

	SECTION 3.	GUARANTY OF PAYMENT AND PERFORMANCE. 

  
 This is a guarantee of payment and performance and each Guarantor hereby
waives, to the fullest extent permitted by law, any right to require that any action on or in respect of any Note or the Note Purchase Agreements be brought against the Company or any other Person or that resort be had to any direct or indirect
security for the Notes or for this Guaranty or any other remedy. Any Holder may, at its option, proceed hereunder against any Guarantor in the first instance to collect monies when due, the payment of which is guaranteed hereby, without first
proceeding against the Company or any other Person and without first resorting to any direct or indirect security for the Notes or for this Guaranty or any other remedy. The liability of each 

  

 -2- 

 
Guarantor hereunder shall in no way be affected or impaired by any acceptance by any Holder of any direct or indirect security for, or other guaranties of,
any Debt, liability or obligation of the Company or any other Person to any Holder or by any failure, delay, neglect or omission by any Holder to realize upon or protect any such guarantees, Debt, liability or obligation or any notes or other
instruments evidencing the same or any direct or indirect security therefor or by any approval, consent, waiver, or other action taken, or omitted to be taken by any such Holder. 
  
 The covenants and agreements on the part of the Guarantors herein contained shall take effect as joint and several covenants
and agreements, and references to the Guarantors shall take effect as references to each of them and none of them shall be released from liability hereunder by reason of the guarantee ceasing to be binding as a continuing security on any other of
them. 
  

	SECTION 4.	GENERAL PROVISIONS RELATING TO THE GUARANTY. 

  
 (a) Each Guarantor hereby consents and agrees that any Holder or Holders
from time to time, with or without any further notice to or assent from any other Guarantor may, without in any manner affecting the liability of any Guarantor under this Guaranty, and upon such terms and conditions as any such Holder or Holders may
deem advisable: 
  
 (1) extend in whole or in
part (by renewal or otherwise), modify, change, compromise, release or extend the duration of the time for the performance or payment of any Debt, liability or obligation of the Company or of any other Person secondarily or otherwise liable for any
Debt, liability or obligations of the Company on the Notes, or waive any Default with respect thereto, or waive, modify, amend or change any provision of any other agreement or this Guaranty; or 
  
 (2) sell, release, surrender, modify, impair, exchange or
substitute any and all property, of any nature and from whomsoever received, held by, or for the benefit of, any such Holder as direct or indirect security for the payment or performance of any Debt, liability or obligation of the Company or of any
other Person secondarily or otherwise liable for any Debt, liability or obligation of the Company on the Notes; or 
  
 (3) settle, adjust or compromise any claim of the Company against any other Person secondarily or otherwise liable for any Debt, liability
or obligation of the Company on the Notes. 
  
 Each Guarantor
hereby ratifies and confirms any such extension, renewal, change, sale, release, waiver, surrender, exchange, modification, amendment, impairment, substitution, settlement, adjustment or compromise and that the same shall be binding upon it, and
hereby waives, to the fullest extent permitted by law, any and all defenses, counterclaims or offsets which it might or could have by reason thereof, it being understood that such Guarantor shall at all times be bound by this Guaranty and remain
liable hereunder. 
  

 -3- 

 (b) Each Guarantor hereby waives, to the fullest extent permitted by law: 
  
 (1) notice of acceptance of this Guaranty by the Holders or
of the creation, renewal or accrual of any liability of the Company, present or future, or of the reliance of such Holders upon this Guaranty (it being understood that every Debt, liability and obligation described in Section 2 hereof shall
conclusively be presumed to have been created, contracted or incurred in reliance upon the execution of this Guaranty); 
  
 (2) demand of payment by any Holder from the Company or any other Person indebted in any manner on or for any of the Debt, liabilities or
obligations hereby guaranteed; and 
  
 (3)
presentment for the payment by any Holder or any other Person of the Notes or any other instrument, protest thereof and notice of its dishonor to any party thereto and to such Guarantor. 
  
 The obligations of each Guarantor under this Guaranty and the rights of any Holder to enforce such obligations by any
proceedings, whether by action at law, suit in equity or otherwise, shall not be subject to any reduction, limitation, impairment or termination (other than by payment in full of the Notes and the obligations of the Company under the Note Purchase
Agreements), whether by reason of any claim of any character whatsoever or otherwise and shall not be subject to any defense, set-off, counterclaim (other than any compulsory counterclaim), recoupment or termination whatsoever. 
  
 (c) Subject to Section 13 hereof, the obligations of the Guarantors
hereunder shall be binding upon the Guarantors and their successors and assigns, and shall remain in full force and effect until the entire principal, interest and Make-Whole Amount, if any, on the Notes and all other sums due pursuant to Section
2 shall have been paid and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to or the consent of the
Guarantors: 
  
 (1) the genuineness, validity,
regularity or enforceability of the Notes, the Note Purchase Agreements or any other agreement or any of the terms of any thereof, the continuance of any obligation on the part of the Company, any other Guarantors or any other Person on or in
respect of the Notes or under the Note Purchase Agreements or any other agreement or the power or authority or the lack of power or authority of the Company to issue the Notes or the Company to execute and deliver the Note Purchase Agreements or any
other agreement or of any other Guarantors to execute and deliver this Guaranty or any other agreement or to perform any of its obligations hereunder or the existence or continuance of the Company or any other Person as a legal entity; or

  
 (2) any default, failure or delay, willful or
otherwise, in the performance by the Company, any other Guarantor or any other Person of any obligations of any kind or character whatsoever under the Notes, the Note Purchase Agreements, this Guaranty or any other agreement; or 
  

 -4- 

 (3) any creditors’ rights, bankruptcy, receivership or other insolvency proceeding
of the Company, any other Guarantor or any other Person or in respect of the property of the Company, any other Guarantor or any other Person or any merger, consolidation, reorganization, dissolution, liquidation, the sale of all or substantially
all of the assets of or winding up of the Company, any other Guarantor or any other Person; or 
  
 (4) impossibility or illegality of performance on the part of the Company, any other Guarantor or any other Person of its obligations
under the Notes, the Note Purchase Agreements, this Guaranty or any other agreements; or 
  
 (5) in respect of the Company, any other Guarantors or any other Person, any change of circumstances, whether or not foreseen or
foreseeable, whether or not imputable to the Company, any other Guarantors or any other Person, or other impossibility of performance through fire, explosion, accident, labor disturbance, floods, droughts, embargoes, wars (whether or not declared),
civil commotion, acts of God or the public enemy, delays or failure of suppliers or carriers, inability to obtain materials, action of any Federal or state regulatory body or agency, change of law or any other causes affecting performance, or any
other force majeure, whether or not beyond the control of the Company, any other Guarantors or any other Person and whether or not of the kind hereinbefore specified; or 
  
 (6) any attachment, claim, demand, charge, Lien, order, process, encumbrance or any other happening or event
or reason, similar or dissimilar to the foregoing, or any withholding or diminution at the source, by reason of any taxes, assessments, expenses, Debt, obligations or liabilities of any character, foreseen or unforeseen, and whether or not valid,
incurred by or against the Company, any Guarantor or any other Person or any claims, demands, charges or Liens of any nature, foreseen or unforeseen, incurred by the Company, any Guarantor or any other Person, or against any sums payable in respect
of the Notes or under the Note Purchase Agreements or this Guaranty, so that such sums would be rendered inadequate or would be unavailable to make the payments herein provided; or 
  
 (7) any order, judgment, decree, ruling or regulation (whether or not valid) of any court of any nation or
of any political subdivision thereof or any body, agency, department, official or administrative or regulatory agency of any thereof or any other action, happening, event or reason whatsoever which shall delay, interfere with, hinder or prevent, or
in any way adversely affect, the performance by the Company, any Guarantor or any other Person of its respective obligations under or in respect of the Notes, the Note Purchase Agreements, this Guaranty or any other agreement; or 
  
 (8) the failure of any Guarantor to receive any benefit from
or as a result of its execution, delivery and performance of this Guaranty; or 
  
 (9) any failure or lack of diligence in collection or protection, failure in presentment or demand for payment, protest, notice of
protest, notice of default and of nonpayment, any failure to give notice to any Guarantor of failure of the Company, any 

  

 -5- 

 
Guarantor or any other Person to keep and perform any obligation, covenant or agreement under the terms of the Notes, the Note Purchase Agreements, this
Guaranty or any other agreement or failure to resort for payment to the Company, any other Guarantor or to any other Person or to any other guaranty or to any property, security, Liens or other rights or remedies; or 
  
 (10) the acceptance of any additional security or other
guaranty, the advance of additional money to the Company or any other Person, the renewal or extension of the Notes or amendments, modifications, consents or waivers with respect to the Notes, the Note Purchase Agreements or any other agreement, or
the sale, release, substitution or exchange of any security for the Notes; or 
  
 (11) any merger or consolidation of the Company, any other Guarantor or any other Person into or with any other Person or any sale, lease, transfer or other disposition of any of the assets of the Company, any other
Guarantor or any other Person to any other Person, or any change in the ownership of any shares of the Company, any other Guarantor or any other Person; or 
  
 (12) any defense whatsoever that: (i) the Company or any other Person might have to the payment of the Notes (principal, Make-Whole
Amount, if any, or interest), other than payment thereof in Federal or other immediately available funds, or (ii) the Company or any other Person might have to the performance or observance of any of the provisions of the Notes, the Note Purchase
Agreements or any other agreement, whether through the satisfaction or purported satisfaction by the Company, any other Guarantor or any other Person of its debts due to any cause such as bankruptcy, insolvency, receivership, merger, consolidation,
reorganization, dissolution, liquidation, winding-up or otherwise, other than the defense of indefeasible payment in full in cash of the Notes; or 
  
 (13) any act or failure to act with regard to the Notes, the Note Purchase Agreements, this Guaranty or any other agreement or anything
which might vary the risk of any Guarantor or any other Person; or 
  
 (14) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Guarantor or any other Person in respect of the obligations of any Guarantor or other Person under this
Guaranty or any other agreement, other than the defense of indefeasible payment in full in cash of the Notes; 
  
 provided that the specific enumeration of the above-mentioned acts, failures or omissions shall not be deemed to exclude any other acts, failures or omissions, though not specifically mentioned above, it being
the purpose and intent of this Guaranty and the parties hereto that the obligations of each Guarantor shall be absolute and unconditional and shall not be discharged, impaired or varied except pursuant to Section 13 hereof and by the payment
of the principal of, Make-Whole Amount, if any, and interest on the Notes in accordance with their respective terms whenever the same shall become due and payable as in the Notes provided and all other sums due and payable under the Note Purchase
Agreements, at the place specified in and all in the manner and with the 

  

 -6- 

 
effect provided in the Notes and the Note Purchase Agreements, as each may be amended or modified from time to time. Without limiting the foregoing, it is
understood that repeated and successive demands may be made and recoveries may be had hereunder as and when, from time to time, the Company shall default under or in respect of the terms of the Notes or the Note Purchase Agreements and that
notwithstanding recovery hereunder for or in respect of any given default or defaults by the Company under the Notes or the Note Purchase Agreements, this Guaranty shall remain in full force and effect and shall apply to each and every subsequent
default. 
  
 (d) All rights of any Holder may be transferred or
assigned at any time and shall be considered to be transferred or assigned at any time or from time to time upon the transfer of such Note in accordance with the Note Purchase Agreements whether with or without the consent of or notice to the
Guarantors under this Guaranty or to the Company. 
  
 (e) To the
extent of any payments made under this Guaranty, the Guarantors shall be subrogated to the rights of the Holder or Holders upon whose Notes such payment was made, but each Guarantor covenants and agrees that such right of subrogation shall be junior
and subordinate in right of payment to the prior indefeasible final payment in cash in full of all amounts due and owing by the Company with respect to the Notes and the Note Purchase Agreements and by the Guarantors under this Guaranty, and the
Guarantors shall not take any action to enforce such right of subrogation, and the Guarantors shall not accept any payment in respect of such right of subrogation, until all amounts due and owing by the Company under or in respect of the Notes and
the Note Purchase Agreements and all amounts due and owing by the Guarantors hereunder have indefeasibly been finally paid in cash in full. If any amount shall be paid to any Guarantor in violation of the preceding sentence at any time prior to the
indefeasible payment in cash in full (or other satisfaction agreed to by the Holders) of the Notes and all other amounts payable under the Notes, the Note Purchase Agreements and this Guaranty, such amount shall be held in trust for the benefit of
the Holders and shall, except to the extent the Holders have received payment, promptly be paid to the Holders to be credited and applied to the amounts due or to become due with respect to the Notes and all other amounts payable under the Note
Purchase Agreements and this Guaranty, whether matured or unmatured. Each Guarantor acknowledges that it has received direct and indirect benefits from the financing arrangements contemplated by the Note Purchase Agreements and that the waiver set
forth in this paragraph (e) is knowingly made as a result of the receipt of such benefits. 
  
 (f) To the extent of any payments made under this Guaranty, each Guarantor making such payment shall have a right of contribution from the other
Guarantors, but such Guarantor covenants and agrees that such right of contribution shall be subordinate in right of payment to the rights of the Holders for which full payment has not been made or provided for and, to that end, such Guarantor
agrees not to claim or enforce any such right of contribution unless and until all of the Notes and all other sums due and payable under the Note Purchase Agreements have been fully and irrevocably paid and discharged. 
  
 (g) Each Guarantor agrees that to the extent the Company, any other Guarantor
or any other Person makes any payment on any Note, which payment or any part thereof is subsequently invalidated, voided, declared to be fraudulent or preferential, set aside, recovered, 

  

 -7- 

 
rescinded, or otherwise defeased or is required to be retained by or repaid to a trustee, receiver, or any other Person under any bankruptcy code, common
law, or equitable cause, then and to the extent of such payment, the obligation or the part thereof intended to be satisfied shall be revived and continued in full force and effect with respect to the Guarantors’ obligations hereunder, as if
said payment had not been made. The liability of the Guarantors hereunder shall not be reduced or discharged, in whole or in part, by any payment to any Holder from any source that is thereafter paid, returned or refunded in whole or in part by
reason of the assertion of a claim of any kind relating thereto, including, but not limited to, any claim for breach of contract, breach of warranty, preference, illegality, invalidity, or fraud asserted by any account debtor or by any other Person.

  
 (h) No Holder shall be under any obligation: (1) to marshal
any assets in favor of the Guarantors or in payment of any or all of the liabilities of the Company under or in respect of the Notes or the obligations of the Guarantors hereunder or (2) to pursue any other remedy that the Guarantors may or may not
be able to pursue themselves and that may lighten the Guarantors’ burden, any right to which each Guarantor hereby expressly waives. 
  
 (i) The obligations of each Guarantor under this Guaranty rank pari passu in right of payment with all other Debt of such Guarantor which is not
secured or which is not expressly subordinated in right of payment to any other unsecured Debt of such Guarantor. 
  

	SECTION 5. 	REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. 

  
 Each Guarantor represents and warrants to each Holder that: 
  
 (a) Such Guarantor is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on (1) the business, operations, affairs,
financial condition, assets or properties of the Company and its subsidiaries, taken as a whole, or (2) the ability of such Guarantor to perform its obligations under this Guaranty, or (3) the validity or enforceability of this Guaranty. Such
Guarantor has the power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Guaranty and to perform the
provisions hereof. 
  
 (b) This Guaranty has been duly authorized
by all necessary action on the part of such Guarantor, and upon execution and delivery of this Guaranty and of the Note Purchase Agreements and receipt of consideration for the Note Purchase Agreements and the Notes, this Guaranty will constitute a
legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except as such enforceability may be limited by (1) applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and (2) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 
  

 -8- 

 (c) The execution, delivery and performance by such Guarantor of this Guaranty will not (1) contravene,
result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Guarantor under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, charter document or
by-law, or any other material agreement or instrument to which such Guarantor is bound or by which such Guarantor or any of its properties may be bound or affected, (2) conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Guarantor or (3) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to
the such Guarantor. 
  
 (d) No consent, approval or authorization
of, or registration, filing or declaration with, any Governmental Authority by the Guarantor is required in connection with the execution, delivery or performance by such Guarantor of this Guaranty. 
  
 (e) Such Guarantor has capital not unreasonably small in relation to its
business or any contemplated or undertaken transaction and has assets having a value both at fair valuation and at present fair salable value greater than the amount required to pay its debts as they become due and greater than the amount that will
be required to pay its probable liability on its existing debts as they become absolute and matured. Such Guarantor does not intend to incur, or believe or should have believed that it will incur, debts beyond its ability to pay such debts as they
become due. Such Guarantor will not be rendered insolvent by the execution and delivery of, and performance of its obligations under, this Guaranty. Such Guarantor does not intend to hinder, delay or defraud its creditors by or through the execution
and delivery of, or performance of its obligations under, this Guaranty. 
  

	SECTION 6.	GUARANTOR COVENANTS. 

  
 From and after the date of issuance of the Notes by the Company and continuing so long as any amount remains unpaid thereon each Guarantor agrees to
comply with the terms and provisions of Sections 9.1, 9.2, 9.3, 9.4 and 9.5 of the Note Purchase Agreements, insofar as such provisions apply to such Guarantor, as if said Sections were set forth herein in full. 
  

	SECTION 7.	[RESERVED] 

  

	SECTION 8.	GOVERNING LAW. 

  
 (a) THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE THEREIN. 
  
 (b) Each
Guarantor hereby (1) irrevocably submits and consents to the jurisdiction of the federal court located within the County of New York, State of New York (or if such court lacks jurisdiction, the State courts located therein), and irrevocably agrees
that all actions or proceedings relating to this Guaranty may be litigated in such courts, and (2) waives any objection which it may have based on improper venue or forum non conveniens to the conduct of 

  

 -9- 

 
any proceeding in any such court and waives personal service of any and all process upon it, and (3) consents that all such service of process be made by
delivery to it at the address of such Person set forth in Section 11 below or to its agent referred to below at such agent’s address set forth below (with a courtesy copy to such Guarantor at the address set forth in Section 11)
and that service so made shall be deemed to be completed upon actual receipt. Each Guarantor hereby irrevocably appoints CT Corporation System, with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011, as its agent for the
purpose of accepting service of any process within the State of New York. Nothing contained in this section shall affect the right of any Holder to serve legal process in any other manner permitted by law or to bring any action or proceeding in the
courts of any jurisdiction against a Guarantor or to enforce a judgment obtained in the courts of any other jurisdiction. 
  
 (c) The parties hereto waive any right to have a jury participate in resolving any dispute, whether sounding in contract, tort, or otherwise, between them
arising out of, connected with, related to or incidental to the relationship established between them in connection with this Guaranty, any financing agreement, any loan party document or any other instrument, document or agreement executed or
delivered in connection herewith or the transactions related hereto. The parties hereto hereby agree and consent that any such claim, demand, action or cause of action shall be decided by court trial without a jury and that any of them may file an
original counterpart or a copy of this Guaranty with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury. 
  

	SECTION 9.	[RESERVED] 

  

	SECTION 10.	AMENDMENTS, WAIVERS AND CONSENTS. 

  
 (a) This Guaranty may be amended, and the observance of any term hereof may be waived (either retroactively or
prospectively), with (and only with) the written consent of each Guarantor and the Required Holders. 
  
 (b) The Guarantors will provide each Holder (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such Holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof. The Guarantors will deliver executed
or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 10 to each Holder promptly following the date on which it is executed and delivered by, or receives the consent or approval
of, the requisite Holders. 
  
 (c) The Company will not directly
or indirectly pay or cause to be paid any remuneration, whether by way of fee or otherwise, or grant any security, to any Holder as consideration for or as an inducement to the entering into by any Holder of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each Holder even if such Holder did not consent to such waiver or amendment. 
  

 -10- 

 (d) Any amendment or waiver consented to as provided in this Section 10 applies equally to all
Holders and is binding upon them and upon each future holder and upon the Guarantors. No such amendment or waiver will extend to or affect any obligation, covenant or agreement not expressly amended or waived or impair any right consequent thereon.
No course of dealing between the Guarantors and any Holder nor any delay in exercising any rights hereunder shall operate as a waiver of any rights of any Holder. As used herein, the term “this Guaranty” and references thereto shall mean
this Guaranty as it may from time to time be amended or supplemented. 
  
 (e) Solely for the purpose of determining whether the Holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Guaranty,
Notes directly or indirectly owned by any Guarantor, the Company or any of their respective subsidiaries or Affiliates shall be deemed not to be outstanding. 
  

	SECTION 11.	NOTICES. 

  
 All notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any
such notice must be sent: 
  
 (1) if to an
Initial Note Purchaser or such Initial Note Purchaser’s nominee, to such Initial Note Purchaser or such Initial Note Purchaser’s nominee at the address specified for such communications in Schedule A to the Note Purchase Agreements, or at
such other address as such Initial Note Purchaser or such Initial Note Purchaser’s nominee shall have specified to any Guarantor or the Company in writing, 
  
 (2) if to any other Holder, to such Holder at such address as such Holder shall have specified to any
Guarantor or the Company in writing, or 
  
 (3)
if to any Guarantor, to such Guarantor c/o the Company at its address set forth at the beginning of the Note Purchase Agreements to the attention of Corporate Treasurer, or at such other address as such Guarantor shall have specified to the Holders
in writing. 
  
 Notices under this Section 11 will be
deemed given only when actually received. 
  

	SECTION 12.	MISCELLANEOUS. 

  
 (a) No remedy herein conferred upon or reserved to any Holder is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this Guaranty now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such 

  

 -11- 

 
right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle any Holder to exercise any remedy reserved to it under the Guaranty, it shall not be necessary for such Holder to physically produce its Note in any proceedings instituted by it or to give any notice, other than such
notice as may be herein expressly required. 
  
 (b) The Guarantors
will pay all sums becoming due under this Guaranty by the method and at the address specified in the Note Purchase Agreements, or by such other method or at such other address as any Holder shall have from time to time specified to the Guarantors in
writing for such purpose, without the presentation or surrender of this Guaranty or any Note. 
  
 (c) Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. 
  
 (d) If the whole or any part of this Guaranty shall be now or hereafter
become unenforceable against any one or more of the Guarantors for any reason whatsoever or if it is not executed by any one or more of the Guarantors, this Guaranty shall nevertheless be and remain fully binding upon and enforceable against each
other Guarantor as if it had been made and delivered only by such other Guarantors. 
  
 (e) This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of each Holder and its successors and assigns so long as its Notes remain outstanding and unpaid.

  
 (f) This Guaranty may be executed in any number of
counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

  

	SECTION 13.	RELEASE. 

  
 Notwithstanding anything that may be contained herein to the contrary, the Holders agree that, in accordance with Section 2.2(e) of the Note Purchase
Agreements, this Guaranty shall be automatically released and discharged without the necessity of further action on the part of the Holders if, and to the extent, the corresponding guaranty given pursuant to the terms of the Bank Credit Agreement is
released and discharged; provided that in the event the Guarantor shall again become obligated under or with respect to the previously discharged Guaranty pursuant to the terms and provisions of the Guaranty, the Bank Credit Agreement or any
additional bank loan agreement entered into by the Company pursuant to which such lenders make available to the Company credit facilities which are pari passu with the Notes, then the obligations of such Guarantor under this Guaranty shall be
reinstated and any release thereof previously given shall be deemed null and void, and such Guaranty shall again benefit the Holders on an equal and pro rata basis and such Guaranty shall once again be subject to the terms of the
Intercreditor 

  

 -12- 

 
Agreement. Any release by the Holders shall be deemed to have occurred concurrently with the release and discharge under the Bank Credit Agreement. The
Company shall promptly notify the Holders of any release of a Subsidiary Guaranty pursuant to this Section 13 and shall deliver evidence of any release or discharge of a guaranty or Lien in customary form. 
  
 [Intentionally Blank] 
  

 -13- 

 IN WITNESS WHEREOF, the undersigned has caused this
Subsidiary Guaranty to be duly executed by an authorized representative as of this 17th day of December, 2003.

  

					
	 ECOMED, INC.

	 AMERICAN STERILIZER COMPANY

	 STERIS EUROPE, INC.

	 STERIS ASIA PACIFIC, INC.

	 STERIS INC.

	 STERIS LATIN AMERICA, INC.

	 HTD HOLDING CORP.

	 HSTD LLC

	 HAUSTED, INC.

	 ISOMEDIX INC.

	 ISOMEDIX OPERATIONS INC.

	 STERILTEK, INC.

	 STRATEGIC TECHNOLOGY ENTERPRISES, INC.

		
	 By:
	 	 /s/ William L. Aamoth

	 	 	 Name:
	 	 William L. Aamoth

	 	 	 Title:
	 	 Treasurer

  

 -14- 

					
	Accepted and Agreed:
	
	STERIS CORPORATION
		
	By:	 	 /s/ William L. Aamoth

	 	 	 Name:
	 	 William L. Aamoth

	 	 	 Title:
	 	 TreasurerProvided by MZ Data Products

MERGER AGREEMENT 

entered into by and
among, inter alia, 
 on the one
side, 

TIM INTERNATIONAL N.V. 

and, on the other side,

BRASIL TELECOM S.A. 

  

dated as of

APRIL 28th, 2005 

MERGER AGREEMENT 

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

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

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

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

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

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

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

WHEREAS:

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

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

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

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

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

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

	1.  	DEFINITIONS;
INTERPRETATION  

	 	1.1  	Defined
Terms  

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

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

“Anatel” shall mean Agência
Nacional de Telcomunicações, the national telecommunication agency of Brazil.

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

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

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

“Chamber” shall have
the meaning set forth in Section 11.10

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

“Control”  shall mean
the power jointly or severally to direct or to cause the direction of the  management
 and policies of a          person and to appoint the majority of the managers
 (administradores) of such person,  whether through the ownership of voting
         securities,  by contract or  otherwise.  The terms  “Controlling”,  “Controlled”  and
other similar  expressions  shall have a          meaning corollary to that of Control.

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

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

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

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

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

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

“Loss” shall have the
meaning set forth in Section 9.2.

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

“Rules” shall have the
meaning set forth in Section 11.11.

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

	 	1.2  	Rules
of Interpretation  

	In  this
  Agreement, unless the contrary intention appears: 

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

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

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

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

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

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

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

	2.  	STEPS
OF THE MERGER  

	 	2.1  	Execution
of the Merger Protocol  

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

	 	2.2  	Hiring
the Appraiser  

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

	 	2.3  	Appraisals  

BT will  contractually
 bind the appraiser to prepare its appraisal within thirty days of the date hereof.  The
appraisals are          to  determine  the  intrinsic  equity  value  of each of TIMB and
BTC as of March  31,  2005,  in each  case  considering  any          intercompany  debt
in either BTC or TIMB as equity to the extent such debt will be  capitalized by the time
the merger occurs.          The  valuation  of BTC shall take into  account the effects
of the  indebtedness  (for these  purposes,  any vendor  financing          accounts
 payable,  any accounts  payable  past due by more than 90 days and any  accounts
 payable with a maturity of greater          than 90 days from the date hereof will also
be considered as debt) but not those of any commercial  arrangements  between TIMB
         and BTC entered into after the date hereof.  BTC will furnish to such  appraiser
its audited (or subjected to limited  review)          March 31, 2005,  financial
 statements,  as well as such additional  historical  financial  information and
forecasts normally          required for similar  assignments,  to the extent  available,
 for such appraiser to establish BTC’s  intrinsic  equity value.          TIMB will
furnish to such  appraiser its audited (or subjected to limited  review) March 31, 2005,
 financial  statements,  as          well as such additional  historical  financial
 information and forecasts  normally required for similar  assignments,  to the
         extent  available,  for such appraiser to establish TIMB’s intrinsic equity
value. All such information and forecasts shall be          supplied by TIMB and BTC to
the  appraiser  and  thereafter  used by the  appraiser  solely for the  purposes of
 establishing          TIMB’s and BTC’s respective intrinsic equity value, and will be
subject to a confidentiality agreement,  including a provision          that the
 appraiser  shall commit that the  information  and forecasts of any TI Party are not
furnished to or shared with any          BT Party,  or vice versa,  without the Party in
question’s  prior consent (except to the extent  unavoidably  reflected in the
         appraisal  report).  The values determined  through such appraisal must be
specific point estimates and not a range or ranges.          The  appraiser  shall
 deliver to each of TIMB and BT, on the same date,  a copy of both  appraisal  reports
and the  fairness          opinion.

	 	2.4  	Determination
of the Consideration of the Merger  

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

	 	2.5  	Shareholders’ Meetings
of TIMB  

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

	 	2.6  	Shareholder’s
Meeting of BTC  

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

	 	2.7  	Consummation
of the Merger  

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

	 	2.8  	Transactions
after the Merger  

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

	 	2.9  	Anatel
and CADE Filings  

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

	 	2.10  	Conditions
Precedent to the Merger  

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

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

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

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

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

	3.  	CERTAIN
OBLIGATIONS.  

	 	3.1  	Right
to Terminate Agreements  

The BT Parties agree,
 for themselves and their  respective  Affiliates,  that TIMB and its Affiliates shall
have the right to          terminate at their sole  discretion,  at any time after the
Date of the Merger,  without cause,  any  agreements  entered into          prior to the
Date of the Merger between BTC on one side, and BT or any of their  respective
 Affiliates or related  parties on          the other side on other than an arm’s length
basis,  and such  termination  shall not give rise to any liability or obligation
         for TIMB or any of its Affiliates to pay damages,  penalties,  costs,  expenses
or any other amounts,  whether contemplated in          such  agreements or not. A list
of all  contracts  and  agreement  between or among BTC and BT or any Affiliate of BT
shall be          delivered to TIMB on the Date of the Merger.

	 	3.2  	Termination
of Guarantees  

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

	 	3.3  	Financial
information  

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

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

	 	3.4  	Tag-
Along /Drag- Along  

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

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

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

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

(i) The Subsidiaries
 will provide BTC a National  Roaming  Agreement on a  most-favored-customer  basis
allowing BTC to offer          access to  nationwide  services  to its  customers
 utilizing  GSM  technology,  provided  that BTC shall not have any roaming
         agreement domestically other than with Subsidiaries.

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

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

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

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

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

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

	5.  	AGREEMENTS
BETWEEN BT ANS TIMB OR ITS SUBSIDIARIES 

	 	5.1  	Negotiation
of Operational Agreements  

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

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

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

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

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

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

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

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

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

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

	6.  	AGREEMENTS
PENDING THE MERGER  

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

	 	6.1  	General  

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

	 	6.2  	Operation
of Business  

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

	 	 6.3  	Reasonable
Access  

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

	7.  	Representations
and Warranties relating to the BT parties  

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

	 	7.1  	Legal
Status  

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

	 	7.2  	Corporate
Approvals  

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

	 	7.3  	Validity
and Enforceability  

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

	 	7.4  	Authorizations  

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

	 	7.5  	No
Conflicts  

The execution and
delivery by each BT Party of this Agreement do not, and the  consummation of the
 transactions or agreements          contemplated herein and the compliance with the
terms hereof shall not, (i) materially  conflict,  (ii) result in any material
         violation  of or default  (with or without  notice or lapse of time,  or both),
 (iii) give rise to any right of  termination,          cancellation or acceleration of
any material  obligation  except with respect to BNDES financing  agreement  executed
 between          BT&BNDES prior to the date hereof (iv) give rise to any loss of any
material  right or benefit,  (v) result in the creation of          any Liens upon any of
the  material  assets or  properties  of any of such BT Party,  with or under any
 provision  of (a) the          by-laws  or  articles  of  association  of such BT Party,
 (b) any  material  contract,  agreement,  instrument,  note,  bond,          mortgage,
 indenture,  deed of trust, license, lease, commitment or other arrangement to which such
BT Party, is a party or by          which any of its respective  assets or properties are
bound,  or (c) any applicable  Law,  subject to the conditions set forth          in
Section 2.10(c) above.

	 	7.6  	No
Broker’s Fees  

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

	 	7.7  	Permits  

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

	 	7.8  	Taxes  

All Tax  returns
 required  to be filed by BTC have been filed and all such  returns  are true,  complete,
 and correct in all          material  respects.  All material  Taxes that are due from
BTC have been paid other than those (i) currently  payable  without          penalty or
interest or (ii) being  contested in good faith and by  appropriate  proceedings  and for
which  adequate  reserves          have been established in accordance with generally
accepted accounting  principles of Brazil,  consistently  applied (“GAAP”).          To
the knowledge of BTC, after  reasonable  inquiry,  there are no actual or proposed Tax
assessments  against BTC that would,          individually or in the aggregate,  have a
material adverse effect on the financial  standing of BTC. The accruals and reserves
         on the books and records of BTC in respect of any material Tax  liability for
any period not finally  determined  are adequate          to meet any  assessments  of
Tax for any such period.  For purposes of this  Agreement,  the term “Tax” and “Taxes” shall
mean          all Federal,  state,  municipal  and foreign  taxes,  contributions,
 social  security  payments or  contributions,  and other          assessments of a
similar nature (whether imposed directly or through withholding),  including any
interest,  additions to tax,          or penalties applicable thereto.

	 	7.9  	Financial
Statements  

The March 31, 2005,
 audited (or subjected to limited  review)  financial  statements and related notes of
BTC (the “Financial          Statements”)  present fairly the financial  position,
 results of operations and cash flows of BTC, as of the respective dates          and for
the  respective  periods to which they apply and have been prepared in accordance  with
GAAP.  Subsequent to the dates          as of which the Financial  Statements were
prepared (i) BTC has not incurred any liabilities,  direct or contingent,  that are
         material,  individually  or in the  aggregate,  to BTC, or has entered into any
 transactions  not in the  ordinary  course of          business,  (ii)  there  has not
been any  material  decrease  in the  capital  stock or any  material  increase  in
 long-term          indebtedness  or any  material  increase  in  short-term
 indebtedness  of BTC, or any  payment of or  declaration  to pay any          dividends
or any other  distribution  with respect to BTC, (iii) none of the Working Capital
 accounts are deficient  relative          to the business  needs even on an interim
 basis and (iv) there has not been any Material  Adverse  Change in the  properties,
         earnings,  assets,  liabilities  or  financial  condition  of BTC (each of
clauses (i),  (ii) and (iii),  a “Material  Adverse          Change”). To the knowledge
of BTC after reasonable inquiry,  there is no event that is reasonably likely to occur,
which if it          were to occur, would, individually or in the aggregate, have a
Material Adverse Effect.

	 	7.10  	Agreements
of BTC  

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

	 	7.11  	Absence
of Financial Liabilities  

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

	 	7.12  	Litigation  

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

	8.  	REPRESENTATIONS AND WARRANTIES RELATING TO TI PARTIES  

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

	 	8.1  	Legal
Status  

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

	 	8.2  	Corporate
Approvals  

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

	 	8.3  	Validity
and Enforceability  

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

	 	8.4  	Authorizations  

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

	 	8.5  	No
Conflicts  

The execution and
delivery by each TI Party of this Agreement do not, and the  consummation of the
 transactions or agreements          contemplated herein and the compliance with the
terms hereof shall not, (i) materially  conflict,  (ii) result in any material
         violation  of or default  (with or without  notice or lapse of time,  or both),
 (iii) give rise to any right of  termination,          cancellation  or  acceleration of
any material  obligation,  (iv) give rise to any loss of any material right or benefit,
 (v)          result in the creation of any Liens upon any of the material  assets or
properties of any of such TI Party,  with or under any          provision of (a) the
by-laws or articles of association of such TI Party, (b) any material  contract,
 agreement,  instrument,          note, bond, mortgage,  indenture,  deed of trust,
license, lease, commitment or other arrangement to which such TI Party, is a
         party or by which any of its respective  assets or properties are bound, or (c)
any applicable Law,  subject to the conditions          set forth in Section 2.10 above.

	 	8.6  	No
Broker’s Fees  

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

	 	8.7  	Financial
Statements  

The March 31, 2005,
 audited (or subjected to limited review)  financial  statements and related notes of
TIMB (the “Financial          Statements”)  present fairly the financial position,
 results of operations and cash flows of TIMB, as of the respective dates          and
for the  respective  periods to which they apply and have been prepared in accordance
 with GAAP.  Subsequent to the dates          as of which the Financial Statements were
prepared (i) TIMB has not incurred any liabilities,  direct or contingent,  that are
         material,  individually  or in the  aggregate,  to TIMB, or has entered into any
 transactions  not in the ordinary  course of          business,  (ii)  there  has not
been any  material  decrease  in the  capital  stock or any  material  increase  in
 long-term          indebtedness  or any  material  increase in  short-term  indebtedness
 of TIMB,  or any payment of or  declaration  to pay any          dividends  or any other
 distribution  with  respect to TIMB,  (iii) none of the Working  Capital  accounts  are
 deficient or          excessive  relative to the business needs even on an interim basis
and (iv) there has not been any Material  Adverse Change in          the  properties,
 earnings,  assets,  liabilities  or  financial  condition of TIMB (each of clauses  (i),
 (ii) and (iii),  a          “Material Adverse Change”). To the knowledge of TIMB after
reasonable inquiry,  there is no event that is reasonably likely to          occur, which
if it were to occur, would, individually or in the aggregate, have a Material Adverse
Effect.

	 	8.8  	Permits  

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

	 	8.9  	Taxes  

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

	 	8.10  	Litigation  

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

	9.  	IDEMNIFICATION 

	 	9.1  	Survival
of Representations, Warranties and Covenants  

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

	 	9.2  	Indemnification
by BT  

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

	 	9.3  	TI
Parties’ Indemnification  

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

	 	9.4  	Indemnification
Procedures  

If any party that
shall be indemnified in accordance with Sections 9.1 to 9.3 (any of such parties,  an  “Indemnified Party”)          shall incur or suffer any Loss (other than by reason of a Third Part
Claim,  as  hereinafter  defined)  that may be subject to          indemnification
 pursuant to this  Agreement,  such  Indemnified  Party  shall give  notice (a “Claim
 Notice”) to the parties          against which  indemnification  shall be sought in
accordance with Sections 9.1 to 9.3 (any of such parties, an “Indemnifying Party”)
of any matter that the  Indemnified  Party believes has given or could give rise to a
right of  indemnification  under          this Agreement  promptly,  but in no event
later than 90 (ninety) days after the Indemnified Party first learns of such claim,
         stating the amount of the Loss, if known, and method of computation  thereof,
 if possible,  and containing a reference to the          provisions of this  Agreement
in respect of which such right of  indemnification  is claimed or arises,  and requiring
 prompt          indemnification  of such Loss from the  Indemnifying  Parties  (any such
 notice,  an  “Indemnity Claim”).  The  Indemnifying          Parties  shall,  as soon
as  practicably  possible  after receipt of such notice but in no event later than 5
(five) days from          such receipt,  indemnify and reimburse the Indemnified  Party
for the actual amount of the Loss suffered,  net of any taxes or          withholdings
applicable to the payment or reimbursement of the relevant amount to the Indemnified
Party.

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

(b)    If the
 Indemnifying  Party notifies the Indemnified  Party within the Dispute Period that the
 Indemnifying  Party desires to          defend the  Indemnified  Party with  respect to
the Third  Party  Claim,  then the  Indemnifying  Party will have the right to
         defend,  with counsel  reasonably  satisfactory  to the Indemnified  Party,  at
the sole cost and expense of the  Indemnifying          Party,  such Third  Party Claim
by all  appropriate  proceedings,  which  proceedings  will be  diligently  prosecuted
 by the          Indemnifying  Party to a final  conclusion or will be settled at the
discretion of the  Indemnifying  Party (but only with the          consent of the
 Indemnified  Party,  which  consent will not be  unreasonably  withheld,  in the case of
any  settlement  that          provides for any relief other than the payment of monetary
 damages as to which the  Indemnified  Party will be indemnified in          full).  The
 Indemnifying  Party will have  control of such  defense  and  proceedings,  including
 (except as provided in the          immediately  preceding sentence) any settlement
thereof;  provided,  however, that the Indemnified Party may, at the sole cost
         and expense of the Indemnified  Party,  at any time prior to the  Indemnifying
 Party’s  delivery of the notice referred to in          the first  sentence  of this
 clause (i),  file any  motion,  answer or other  pleadings  or take any  other  action
 that the          Indemnified Party reasonably believes to be necessary or appropriate
to protect its interests;  and provided further,  that if          requested by the
 Indemnifying  Party,  the Indemnified  Party will, at the sole cost and expense of the
 Indemnifying  Party,          provide  reasonable  cooperation to the  Indemnifying
 Party in contesting any Third Party Claim that the  Indemnifying  Party          elects
to contest.  The  Indemnified  Party may retain  separate  counsel to represent it in,
but not control,  any defense or          settlement of any Third Party Claim  controlled
by the  Indemnifying  Party pursuant to this  clause (i),  and the Indemnified
         Party will bear its own costs and  expenses  with  respect to such  separate
 counsel,  except as  provided  in the  preceding          sentence  and except  that the
 Indemnifying  Party will pay the costs and  expenses  of such  separate  counsel if (x)
in the          Indemnified  Party’s  reasonable  judgment,  it is  advisable,  based on
advice of counsel,  for the  Indemnified  Party to be          represented  by separate
 counsel  because a conflict or potential  conflict  exists  between the  Indemnifying
 Party and the          Indemnified  Party or (y) the named parties to such Third Party
Claim include both the Indemnifying  Party and the Indemnified          Party and the
Indemnified  Party  determines  reasonably,  based on advice of counsel,  that defenses
are available to it that          are unavailable to the Indemnifying Party.
 Notwithstanding  the foregoing,  the Indemnified Party may retain or take over the
         control of the defense or  settlement  of any Third Party  Claim the  defense of
which the  Indemnifying  Party has elected to          control if the  Indemnified  Party
 irrevocably  waives its right to  indemnity  with  respect to such Third  Party  Claim
and          Indemnifying Party receives appropriate releases absolving it of any and all
liability thereunder.

If the  Indemnifying
 Party fails to notify the  Indemnified  Party  within the Dispute  Period  that the
 Indemnifying  Party          desires to defend the Third Party Claim, or if the
Indemnifying  Party gives such notice but fails to prosecute  diligently or
         settle the Third Party Claim,  then the Indemnified  Party will have the right
to defend,  at the sole cost and expense of the          Indemnifying  Party,  the Third
Party Claim by all  appropriate  proceedings,  which  proceedings  will be  prosecuted
 by the          Indemnified  Party in good  faith or will be settled at the  discretion
 of the  Indemnified  Party  (with the  consent of the          Indemnifying  Party,
 which consent will not be unreasonably  withheld).  The Indemnified Party will have full
control of such          defense and  proceedings,  including  (except as provided in the
 immediately  preceding  sentence)  any  settlement  thereof;          provided, however,  that if requested by the Indemnified  Party, the Indemnifying Party will, at
the sole cost and expense of          the  Indemnifying  Party,  provide  reasonable
 cooperation to the  Indemnified  Party and its counsel in contesting any Third
         Party Claim which the Indemnified Party is contesting.  Notwithstanding  the
foregoing  provisions of this clause (b),  if the          Indemnifying  Party disputes
its liability  hereunder to the  Indemnified  Party with respect to such Third Party
Claim and if          such dispute is resolved in favor of Indemnifying  Party in the
manner provided in clause (c)  below, the  Indemnifying  Party          will not be
 required  to bear the costs and  expenses  of the  Indemnified  Party’s  defense or of
the  Indemnifying  Party’s          participation  therein at the Indemnified Party’s
request,  and the Indemnified Party will reimburse the Indemnifying Party in
         full for all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation.

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

(d)    In the event
any  Indemnified  Party should have a claim  against any  Indemnifying  Party that does
not involve a Third Party          Claim,  the Indemnified  Party shall deliver an
Indemnity  Notice with reasonable  promptness to the  Indemnifying  Party. The
         failure by any Indemnified  Party to give the Indemnity  Notice shall not impair
such party’s rights  hereunder  except to the          extent that an Indemnifying Party
 demonstrates that it has been irreparably  prejudiced  thereby.  The Indemnifying Party
and          the  Indemnified  Party will proceed in good faith to  negotiate a
resolution  of such  dispute,  and if not resolved  through          negotiations within
the Resolution Period, such dispute shall be resolved by arbitration as provided
hereinafter.

	10.  	TERMINATION 

	 	10.1  	Termination  

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

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

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

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

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

	 	10.2  	Effects
of Termination  

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

	 	10.3  	No
Release  

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

	11.  	MISCELLANEOUS  

	 	11.1  	Notices  

Any notices, requests,
 claims, demands,  instructions and other communications to be given hereunder to any
party shall be in          writing and  delivered  in person,  sent by  certified  mail,
 postage  prepaid,  return  receipt  requested,  or by facsimile          transmission
with a confirmed  telephonic  transmission  answer back, to the following  addresses (or
at such other address or          number as is given in writing by other party to the
other pursuant hereto):

If to the TI Parties: 

TIM BRASIL SERVIÇOS E
PARTICIPAÇÕES S.A. 

Avenida das Américas, 3434 

Bloco 1, 6.o andar

Centro Empresarial Mário Henrique Simonsen 

Barra de Tijuca

 Rio de Janeiro, RJ, Brazil 

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

TIM INTERNATIONAL N.V.

1629 Strawinskylaan 
 WTC Tower B, 16th floor 
 1077 ZX Amsterdam,
The Netherlands 
 Attn. Mr. Francesco Lobianco – fax n° +31 20 3011102 

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

14 BRASIL TELECOM
CELULAR S.A. 
 SIA SUL ASP 
 Lote D, Bloco B, Térreo – parte 
 Brasília,
DF, Brazil 
 Attn. Ms. Carla Cico (CEO) - fax n° +55 61 4151237 
 Attn. Mr.
Sami Arap Sobrinho (General Counsel) - fax n° +55 61 4151870 

If to BT: 

BRASIL TELECOM S.A.

SIA SUL, ASP, 
 Lote D, Bloco B 

Brasília, DF, Brazil

Attn. Ms. Carla Cico (CEO) - fax n° +55 61 4151237 
 Attn. Mr. Sami Arap
Sobrinho (General Counsel) - fax n° +55 61 4151870 

	 	11.2  	Effects,
Amendments and Assignment  

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

	 	11.3  	Confidentiality  

The  existence  and
the  coming  into  force of this  Agreement,  as well as all  information  disclosed  by
any Party (or its          representatives)  whether  before or after the date  hereof,
 in  connection  with the  transactions  contemplated  by, or the          discussions
 and  negotiations  preceding,  this  Agreement  to any  other  Party  (or  its
 representatives)  shall  be  kept          confidential  by such other Party and its
 representatives  and shall not be used by any Persons other than as contemplated by
         this Agreement,  except to the extent that the Party  disclosing such
 information can prove (i) it was known by the recipient          when received,  (ii) it
is or hereafter becomes lawfully  obtainable from other sources,  (iii) is necessary or
appropriate to          disclose to a Public Authority having  jurisdiction  over the
Parties,  (iv) as may otherwise be required by law or (v) to the          extent such
duty as to  confidentiality  is waived in writing by the other Party. If this Agreement
is terminated,  each Party          shall use all  commercially  reasonable  efforts to
return,  upon written  request from the other Party,  all  documents  (and
         reproductions  thereof) received by it or its  Representatives  from such other
Party (and, in the case of reproductions,  all          such  reproductions  made by the
receiving  Party) that include  information not within the exceptions  contained in the
first          sentence of this Section 11.3,  unless the recipients provide assurances
reasonably  satisfactory to the requesting Party that          such documents have been
destroyed.

	 	11.4  	Entire
Agreement  

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

	 	11.5  	Further
Assurances  

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

	 	11.6  	Third
Party Beneficiaries  

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

	 	11.7  	Controlling
Language  

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

	 	11.8  	Severability  

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

	 	11.9  	Governing
Law  

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

	 	11.10  	Arbitration  

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

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

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

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

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

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

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

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

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

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

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

TIM INTERNATIONAL
N.V.

	____________________________________
Marco De Benedetti	____________________________________
      Francesco S. Lobianco
	Managing Director	Managing Director

  TIM BRASIL SERVIÇOS
E PARTICIPAÇÕES S.A.

	____________________________________
Marco E. Patuano	  
	Attorney-in-fact	  

BRASIL TELECOM S.A.

	____________________________________
Carla Cico	____________________________________
Sami Arap Sobrinho
	Chief Executive Officer	Chief Legal Officer

  14 BRASIL TELECOM
CELULAR S.A.

	____________________________________
Carla Cico	____________________________________
Sami Arap Sobrinho
	Chief Executive Officer	Chief Legal Officer

Witnesses: 

	1. 	____________________________	2. 	____________________________
	 	Name:	 	Name:
	 	RG:	 	RG:
	 	CPF:	 	CPF:

ANNEX 1

PROTOCOL AND
JUSTIFICATION         
             OF THE MERGER OF 14 BRASIL TELECOM CELULAR S.A. INTO

TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.

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

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

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

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

1.       REASONS AND
PURPOSES OF THE OPERATION

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

1.1      Background.

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

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

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

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

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

1.2      The Merger
and Further Transactions.

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

1.3      Strategic
Advantages of the Merger.

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

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

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

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

1.4      Regulatory
Approvals.

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

1.5      Operational
Agreements.

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

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

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

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

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

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

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

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

    

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

        
        

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

            

1.6      Anticipated
Results of the Merger.

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

	         a)  	For
BRASIL TELECOM: 

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

	 	                  (ii)  	enhancement
of attractiveness to business customers 

	 	                  (iii)  	economies
of scale, 

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

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

	 	                  (vi)  	assurance
of technological evolution, 

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

	 	                  (viii)  	minimized
risk; 

	         b)  	For
TIM: 

(i) enrichment of
convergent offer, 

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

2.       STATUS OF
BRASIL TELECOM CELULAR PRIOR TO THE MERGER

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

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

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

3.       STATUS OF TIM
PRIOR TO THE MERGER

3.1      The capital
of TIM,  which has been fully paid, is R$  9.280.705.828,77,  divided into eleven
 billion  seven  hundred  thirty million five hundred  twenty-three  thousand one hundred
 thirty-two  (11.730.523.131)  common shares with no par value. The authorized capital of
TIM is ten billion reais (R$10.000.000.000,00)

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

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

4.1      For  purposes
of  determining  the amount of the  increase of TIM’s  capital  and the  exchange  ratio
of the shares of BRASIL TELECOM  CELULAR,  BRASIL  TELECOM will hire an  independent
 appraiser.  Such  appraiser  will be Merrill  Lynch as proposed by BRASIL TELECOM and
accepted by TIMINT.  Such  appraiser  will  establish the intrinsic  equity value of TIM
and the intrinsic  equity value of BRASIL TELECOM  CELULAR as of March 31, 2005, in each
case  considering any  intercompany  debt in either BRASIL TELECOM CELULAR or TIM as
equity to the extent such debt will be  capitalized  by the time the merger occurs.
 Similarly the  appraiser’s  valuation of BRASIL TELECOM CELULAR shall not take into
account any commercial  arrangements  between TIM and BRASIL TELECOM CELULAR entered into
after the date  hereof.  The  valuation  of BTC shall take into  account the effects of
the  indebtedness  of BRASIL  TELECOM  CELULAR (for these purposes,  any vendor
 financing  accounts  payable past due by more than 90 days and any accounts payable with
a maturity greater than 90 days from the date of this  Protocol will also be considered
as debt).  BRASIL  TELECOM  CELULAR will furnish to such  appraiser its audited (or
subjected to limited  review) March 31, 2005 financial  statements,  as well as the
historical  financial  information  and forecasts  normally  required  for similar
 assignments,  to the extent  available,  for such  appraiser to  establish  BRASIL
 TELECOM CELULAR’s  intrinsic net equity value.  TIM will furnish to such appraiser its
audited (or subjected to limited  review) March 31, 2005 financial statements,  as well
as the historical financial information and forecasts normally required for similar
assignments,  to the extent  available,  for such appraiser to establish  TIM’s
 intrinsic net equity value.  All such  information  and forecasts  shall be supplied to
the  appraiser  and used by the  appraiser  solely for the  purposes of  establishing  TIM’s
and BRASIL  TELECOM  CELUALR’s respective  intrinsic equity value, and will be subject to
a confidentiality  agreement  including a provision that the appraiser shall commit that
the  information  and  forecasts  of one Party are not  furnished to or shared with the
other  without  such Party’s  prior consent (except to the extent  unavoidably  reflected
in the appraisal  report).  BRASIL TELECOM will contractually bind such appraiser to
prepare its  appraisal  within 30 days of the date hereof.  The  appraiser  shall also be
required to provide a fairness  opinion to BRASIL TELECOM on the fairness of the
 consideration  to be received by BT in connection with the merger of BRASIL TELECOM
CELULAR into TIM. The appraiser’s cost shall be borne exclusively by BRASIL TELECOM.  The
values  determined  through the appraisal must be specific point estimates and not a
range or ranges.

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

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

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

6.       INCREASE OF
TIM’S CAPITAL

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

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

NS = ES(IEVBTC /IEVT ),

where:

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

ES = number of
existing shares of TIM’s capital

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

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

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

7.       GENERAL
CONDITIONS OF THE MERGER

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

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

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

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

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

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

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

Rio de Janeiro, 28
April 2005

	  	Brasil Telecom S.A. 
	 
	 	By: ___________________
	 	Name: _________________
	 	Title: __________________
	 
	 	By: ___________________
	 	Name: _________________
	 	Title: __________________
	 
	 
	  	TIM International N.V. 
	 
	 	By: ___________________
	 	Name: Marco De Benedetti
	 	Title: Managing Director
	 
	 	By: ___________________
	 	Name: Francesco Lobianco
	 	Title: Managing Director
	 
	 
	  	14 Brasil Telecom Celular S.A. 
	 
	 	By: ___________________
	 	Name: _________________
	 	Title: __________________
	 
	 	By: ___________________
	 	Name: _________________
	 	Title: __________________
	 
	 
	  	TIM Brasil Serviços e Participações S.A. 
	 
	 	By: ___________________
	 	Name: _________________
	 	Title: __________________
	 
	 	By: ___________________
	 	Name: _________________
	 	Title: __________________

Witnesses: 

	1. _____________________	2. ____________________
	Name: _________________	Name: _________________
	Identity card no.: _________	Identity card no.: _________

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