Where:Tijt less than or equal to Tijto x 1,05 x FtWhere:Tijt = tariff proposed in the National Long-Distance Service Basic Plan for timej, at distance degree i, net of taxesTijto = tariff in effect in the National Long-Distance Service Basic Plan fortime j, at distance degree i, net of taxesMijto = minutes of the National Long-Distance Service, observed in the NationalLong-Distance Service Basic Plan for time j, at distance degree i, since thelast tariff adjustmentMT = total minutes of the National Long-Distance Service, observed in theNational Long-Distance Service Basic Plan for time j, at distance degree i,since the last tariff adjustmenti = distance tariff degree of the National Long-Distance Service contained inthe Tariff Structure of the Servicet = date proposed for adjustmentto = data of the last adjustmentFt = ISTt —— ISTtoWhere:IST = Index of updating of rates composed from existing price indexes, pursuantto the terms of the regulations.k = X + FAX = transfer factorFA = smoothing factor SECTION 1. For the period between January 1, 2006 and December 31, 2007,Anatel will establish the X transfer factor based on a simplified methodologythat includes, among others, the physical and economic data relative to thenational long-distance minute, as well as material factors, personnel, servicesand depreciation. SECTION 2. From January 1, 2008, Anatel will establish the X transferfactor based on a methodology that considers the optimization of the serviceprovision costs, pursuant to the terms of the regulations. SECTION 3. If the value from the calculation of the X transfer factor isnegative, the value 0 (zero) will be adopted for it. SECTION 4. The smoothing factor is: I – 0 (zero) for IST variations, in the period considered, up to 10% (ten percent); II – 0.01 (zero point zero one), for IST variations, in the period considered, above 10% (ten percent) and up to 20% (twenty percent); and III – 0.02 (zero point zero two), for IST variations, in the period considered, above 20% (twenty percent). SECTION 5. If the restatement period involves values different to thetransfer factor, the restatement will be applied progressively, observing theperiods involved and the respective formulae and effective criteria. SECTION 6. If the date of the last restatement is prior to the effectivedate of this Agreement, the restatement will be applied progressively, observingthe periods involved and the respective formulae and criteria in force. SECTION 7. If the restatement is made in periods subsequent to twelvemonths, the formula, which includes the transfer factor, shall be appliedprogressively, considering periods of twelve months, and, finally, the residueof months, if any. SECTION 8. Anatel may establish new tariff follow-up criteria, includingtransfer factor values at the time of amendment of this Agreement, pursuant tothe terms of Clause 3.2., considering the conditions in force at the time. CLAUSE 12.2. The follow-up of National Long-Distance Network (TU-RIU)shall comply with the provisions of Clause 25.2 and the regulations. SOLE SECTION . Anatel may establish new follow-up criteria of NationalLong-Distance Network use tariffs at the time of amendment of this Agreement,pursuant to the terms contemplated in Clause 3.2, and considering the conditionsin force at the time. CLAUSE 12.3. The follow-up of local mode STFC rates in the NationalLong-Distance mode, in calls involving other telecommunications services, mustcomply with the specific regulations.CHAPTER XIII – PROTECTION OF THE ECONOMIC SITUATION OF CARRIER AND REVISION OFTARIFFS CLAUSE 13.1. A basic presupposition of this Agreement is the preservation,in the broad competition system of fair equivalence among the provision andremuneration, the parties being prohibited unjustified enrichment at the expenseof the other party or of service users, pursuant to the terms provided for inthis Chapter. SECTION 1. The Carrier will not be obliged to bear losses as a result ofthis Agreement, except if they result from some of the following factors: I – their negligence, ineptitude or omission in exploiting the service; II – risks normal to the business activity; III – inefficient management of their business, including that which is characterized by the payment of operating and administrative costs incompatible with the parameters verified in the market; or IV – their incapacity to take advantage of market opportunities, including with respect to expansion and increase of the service provision contemplated in this license. SECTION 2. Unjustified enrichment by Carrier resulting from the followingis prohibited: I – appropriation of economic gains not arising directly out of business efficiency, especially when resulting from the publication of new rules on the service; and II – transfer of revenues to third parties, at the expense of the application of the tariff mode principle, as established in Section 7 of Clause 6.1. SECTION 3. Carrier will be entitled to resume its initial status ofcharges and retributions when circumstances of force majeure or calamitiessignificantly affect the exploitation of the service, always in compliance, as aparameter, the reflex of these situations on private service providers. SECTION 4. In assessing the appropriateness of the resumption covered bythe previous paragraph, among other factors, the existence of coverage of theevent that motivated the change in the initial economic situation by theInsurance Plan contemplated in Clause 24.1 will be considered. CLAUSE 13.2. The resumption of the Agreement’s economic situation will beacceptable when it is demonstrated that the factors indicated in Section 1 ofthe previous clause did not occur. This will be done preferably by revising therates or by any other mechanism, which, at the discretion of Anatel, isconsidered appropriate to neutralize the situation verified. SECTION 1. The revision of rates will remove any other neutralizationmechanism of unjustified enrichment of the parties, overcoming the event towhich it referred. SECTION 2. Only one, complete and final measure will be adopted toneutralize a distortion, with respect to the event that produced it. CLAUSE 13.3. Regardless of the provisions of Clause 13.1, the revision ofthe rates that integrate the Local Service Basic Plan in favor of Carrier or theusers will be appropriate, pursuant to the terms of Article 108 of Law 9.472, of1997, when one of the following specific situations is verified: I – unilateral modification of this Agreement, imposed by Anatel, representing an expressive variation of costs or revenues, for more or less, so that the increase or reduction of rates is imposed by the need to avoid unjustified enrichment by any of the parties; II – change in the tax order subsequent to the execution of this Agreement, which leads to an increase or reduction in Carrier’s potential profitability; III – supervening occurrences, arising from the fact of the principal or Administration resulting, with evidence, on alteration of Carrier’s costs; IV – specific change in the law, causing a direct impact on Carrier’s revenues so as to affect the continuity or quality of the service provided; or V – legislative change leading to a benefit to Carrier, including that which grants or suppresses an exemption, reduction, discount or any other tax or tariff privilege, according to the provisions of Section 3 of Article 108, Law 9.472, of 1997. SECTION 1. The loss or reduction of Carrier’s gains resulting from freeexploitation of the service under competitive conditions or conditions ofinefficient management of its own business will not lead to revision of rates. SECTION 2. The event of revision contemplated in item II of the heading ofthis clause will not apply when the change in the tax order leads to thecreation, suppression, increase or reduction in taxes applicable to the incomeor profit or Carrier, such as Income Tax, which do not lead to administrative oroperating liens. SECTION 3. There shall be no revision of rates in the events contemplatedin this Clause when the events that led to it have already been covered by theInsurance Plan contemplated in Clause 24.1. SECTION 4. Carrier’s contributions to the Universalization Fund ofTelecommunication Services (Fundo de Universalizacao dos Servicos deTelecomunicacoes) and to the Telecommunications Technological Development Fund(Fundo para o Desenvolvimento Tecnologico das Telecomunicacoes) will not lead torevision of rates. CLAUSE 13.4. The revision of tariffs will not be appropriate when it ischaracterized that the impacts that motivated Carrier’s request can beneutralized by efficient exploitation of the service, by market expansion or bythe generation of alternative or complementary revenues associated to thepurpose of this Agreement, in compliance with the competitive conditionsverified at the time. SOLE SECTION . The reduction of revenue resulting from discounts orreduction of rates will not lead to revision thereof. CLAUSE 13.5. The rates revision procedure may be initiated by Carrier’srequirement or by Anatel’s determination. SECTION 1. When Carrier initiates the rates revision procedure, thefollowing requirements must be complied with: I – be accompanied by technical or expert report, demonstrating clearly and convincingly the occurrence’s impact on the formation of the rates or on the estimate of Carrier’s revenues; II – be accompanied by all the documents necessary to demonstration of the acceptance of the claim; III – Carrier shall indicate its intention to review the rates, informing the impacts and eventual alternatives of balancing rates; and IV – Carrier shall bear all costs with diligences and studies necessary to full instruction of the request; SECTION 2. The procedure of rates revision initiated by Anatel shall becommunicated to Carrier, consigning a deadline for latter’s pronouncement,accompanied by a copy of the reports and studies conducted to characterize thesituation that led to the revision. SECTION 3. The rates revision procedure will be concluded within a periodnot longer than 120 (one hundred and twenty) days, except in case its extensionis necessary to complement the instruction. SECTION 4. Anatel shall have to approve the requirement, and Carrier mustprovide ample disclosure of new maximum amounts for the revised tariffs,pursuant to the terms stated herein.CHAPTER XIV – ALTERNATIVE, COMPLEMENTARY AND ACCESSORY REVENUES CLAUSE 14.1. Carrier may obtain other alternative sources of revenues,provided that this does not lead to failure to comply with the rules set forthin the Telecommunication Services Regulations and other rules edited by Anatel. SOLE PARAGRAPH. In compliance with the terms of the regulations, Carrier,its associated companies, subsidiaries or controlling companies may not subjectthe offer of the service licensed herein to tied consumption with any otherservice, or offer benefits to the user by virtue of the enjoyment of additionalservices to that contemplated herein, even if provided by third parties. CLAUSE 14.2. Anatel may determine that Carrier offers to users provisions,conveniences or utilities related to the purpose of the license. In this case,the parties must adjust the unit prices of these services, in compliance withmarket parameters and the right to fair remuneration.CHAPTER XV – RIGHTS AND GUARANTEES OF USERS AND OTHER PROVIDERS CLAUSE 15.1. In compliance with the rules and parameters set forth in thisAgreement, the following are rights of the users contemplated in this license: I – access to the service and its enjoyment within the quality, regularity and efficiency standards, contemplated in this Agreement, its attachments and effective rules; II – the possibility of requesting the suspension or interruption of the service provided by Carrier; III – non-discriminatory treatment with respect to the service’s access and fruition conditions; IV – obtaining of adequate information with respect to the conditions of provision of the service, rates and prices practiced; V – inviolability and confidentiality of communication, in compliance with constitutional and legal hypotheses and conditions of the breach of telecommunications confidentiality; VI – obtain, for free, by request sent to user service maintained by Carrier, non-disclosure of its access code; VII – service not to be suspended without subscriber’s request, except in the event of a debt arising directly out of his use or as a result of noncompliance with the duties set forth in Article 4 of Law 9.472, of 1997; VIII – previous knowledge of all and any alteration in the service provision conditions that affect it directly or indirectly; IX – privacy in the collection documents and use of its personal data by Carrier; X – efficient and prompt reply to his complaints by Carrier, pursuant to the terms of Clause 16.7; XI – complaints or declarations against Carrier sent to Anatel and to the consumer defense bodies; XII – compensation for damages caused by the infringement of his rights; XIII – see that the terms of the Execution Agreement through which the service was contracted have been complied with; XIV – choose freely the domestic and international long distance telephone services; XV – not be obliged to consume services or acquire goods or equipment in which he is not interested, and not be compelled to submit to this condition in order to receive the service contemplated in the license, pursuant to the terms of the regulations; XVI – obtain, prior to collection, information about the re-inclusion of the debts contested when a complaint is considered groundless; and XVII – collection of services outside the regulatory terms shall be made through a separate invoice and previous negotiation with user; SECTION 1. Carrier shall comply with duty of caring strictly for theconfidentiality inherent to the telephone service and for the confidentiality ofdata and information, using means and technologies that ensure this right tousers. SECTION 2. Carrier will provide the technological resources necessary tosuspend the non-disclosure of telecommunications determined by a judicialauthority, pursuant to the regulations. SECTION 3. Carrier shall, in connection with its subscribers, in additionto the legal, contractual and regulatory provisions, comply with the otherconsumer protection rules, especially Law No. 8.078, of September 11, 1990. CLAUSE 15.2. In addition to the rights mentioned in the previous clause,the other telecommunication service providers will be granted with the followingrights: I – to interconnection with Carrier’s network in non-discriminatory economic and operating conditions, under technically appropriate conditions and at isonomic and fair prices, which strictly meet the needs of the service provision, in compliance with the regulations edited by Anatel; II – to receive the service requested from Carrier without any discrimination, at market prices or at prices negotiated by the parties and with the applicable reductions as a result of the costs avoided, including due to large scale consumption, in compliance with the regulations; and III – to obtain all the necessary information to the provision of the service operated by them, including those related to invoicing, except for Carrier’s right to preserve its data covered by business confidentiality, as well as the rights of third parties; SECTION 1. The conflicts between Carrier and other providers will besettled administratively by Anatel, pursuant to the terms of the regulations; SECTION 2. Anatel may, as a precaution, establish the conditions necessaryto overcome the conflict, including defining values, deadlines for complianceand any other elements essential to the effectiveness of the provisionaldecision. SECTION 3. Anatel will follow up permanently on the relationship among theproviders who use the service licensed herein and Carrier, so as to repressconduct which may lead to unfair losses to any of the parties, or whichconstitute a violation of the economic order and free competition. In theseevents, it will inform such conduct to the Administrative Council for EconomicDefense – CADE, after performing its attributions, according to the provisionsin Article 19, item XIX, of Law 9.472, of 1997. CLAUSE 15.3. In compliance with the regulation, the right of any user tothe provision and enjoyment of the value added services, which shall occur undertechnically appropriate conditions and at isonomic and fair prices, will beguaranteed. Carrier may not set up any obstacle or restriction to the enjoymentof the service licensed herein. SOLE SECTION . One understands by value added service every activity thatadds to the service contemplated in this license, without being confused withit, new utilities, related to access, storage, presentation, movement orrecovery of information.CHAPTER XVI – RIGHTS, GUARANTEES AND OBLIGATIONS OF CARRIER CLAUSE 16.1. In addition to other obligations arising out of thisAgreement and inherent to the provision of the service, it will be incumbentupon Carrier to: I – provide the service in strict compliance with the provisions hereof, submitting fully to the regulations edited by Anatel; II – implement all the equipment and facilities necessary to the provision, continuity, modernization, expansion and universalization of the service in this license, within the specifications set forth in this Agreement; III – keep in perfect operation and working conditions the telecommunications network, in quantity and extension and locations relevant and sufficient to the proper provision of the service; IV – provide the financial resources necessary to compliance with the universalization and continuity parameters set forth in this Agreement and to the proper provision of the service; V – provide to Anatel, in the manner and periodicity contemplated in the regulations, accounts and information of a technical, operating, economic, financial and accounting nature, as well as supply to it all the data and elements relative to the service, which are requested; VI – keep the public use terminals, whether permanent or temporary, as contemplated in this Agreement; VII – submit to Anatel’s inspection, permitting access by its agents to the facilities that integrate the service as well as its accounting records; VIII – keep separate accounting records for the STFC mode, contemplated herein, according to the established accounts plan, and have an inventory of all the assets and components of the company’s property, plant and equipment, pursuant to the regulations; IX – maintain a system of information and service to user, pursuant to the terms of Clause 16.7.; X – care for the integrity of the assets linked to the provision of the service; XI – submit to Anatel’s approval, prior to use, the draft of the Standard Agreement to be executed with the subscribers, as well as all the alterations, amendments or variants applicable thereto. XII – submit to prior approval by Anatel the operating agreements or service agreements, of association or partnership, which it intends to execute with foreign entities; XIII – forward for publication at Anatel’s Library a copy of the agreements and contracts related to the provision of the service licensed herein with domestic and foreign providers of telecommunication services; XIV – forward for publication in Anatel’s Library a copy of agreements and contracts related to the provision of the service licensed herein, which involve waiver or transfer of revenue, for amounts higher than R$3,000,000.00 (three million reais) per year; XV – disclose, free of charge, directly or through third parties, the access codes of its subscribers and other STFC subscribers, in the public and private system, in the concession area, excluding those that expressly require omission of their personal data; XVI – supply, in reasonable terms and prices and non-discriminatorily the list of its subscribers for purposes of publication in telephone directories to those that wish to disclose it; XVII – respect strictly the duty of non-disclosure and confidentiality of telecommunications, in compliance with legal and contractual prescriptions; XVIII – respect the privacy of subscribers in relation to the collection documents and all personal information pertaining to them; XIX – comply, at its own expense, after compliance with Clause 8.2 hereof, all the universalization targets set forth in this Agreement; XX – implement expansion and universalization projects of the service determined by Anatel, according to reimbursement thresholds, the implementation terms and conditions established, in compliance with Clause 8.3; XXI – submit previously to Anatel all and any alteration it intends to make to its bylaws with respect to split-up, merger, transformation, incorporation, as well as transfer of the control or alteration in the capital stock; XXII – comply with all the rights of the other telecommunication service providers, not practicing any discriminatory conduct or conduct geared to hinder the latter’s activities; XXIII – use, whenever required by the regulations, equipment with certification issued or homologated by Anatel; XXIV – comply with the rules and technical standards in force in Brazil, not practicing any discrimination in respect of the goods and equipment produced in Brazil; XXV – place at the disposal of the authorities and civil defense agents, as well as institutions that provide Public Emergency Service, in the event of a public calamity, all the means, systems and availabilities requested with view to provide to them support or assistance to the populations affected; XXVI – attend with priority the President of the Republic, his official representatives, his escorts and support personnel, as well as foreign Heads of State, when in official visits or displacements across the Brazilian territory, providing all the means necessary for appropriate communication of these authorities, in compliance with the regulations edited by Anatel; XXVII – pay all the charges relative to inspection and operation of its facilities, according to the regulations; XXVIII – pay all the sums relative to public prices, especially for the right of use of scarce resources; XXIX – publish annually, regardless of the corporate legal system to which it is subject, a balance sheet and financial statements drawn up at the end of each fiscal year, in compliance with the provisions of the legislation in force and the regulations edited by Anatel; XXX – comply with the rules effective in Brazil with respect to use of foreign labor, including in the most qualified offices; XXXI – indemnify, in compliance with the regulations, users for damages effective arising out of non-provision of the service, which would be required, due to the continuity parameters and universalization targets contemplated herein; XXXII – remedy the damages caused by violation of the users’ rights; XXXIII – not expend with management service agreements, including of technical assistance, with foreign entities, in relation to the annual revenue of the Switched Fixed Telephone Service, net of taxes, amounts higher than 0.1% (zero point one percent) per year until the end of the concession; XXXIV – comply with the agreements executed by Brazil and other countries and international bodies, as regulated by Anatel; XXXV – provide at least 6 (six) dates for maturity of the collection document of the service to the user; XXXVI – attend promptly all users’ requests registered in Anatel’s Customer Service, and answer in writing; XXXVII – supply data, information, reports and accounting records when thus requested by the inspectors, in the period assigned, under penalty of incurring in the sanctions contemplated in this Agreement; and XXXVIII – submit to Anatel all the contracts, agreements or adjustments executed by Carrier and its controlling shareholders, whether direct or indirect, or associated companies, especially those that cover management, engineering, accounting, consulting, purchases, supplies, constructions, loans, sales of shares, goods, as well as agreements executed: a) with natural persons or legal entities who, with Carrier, integrate directly or indirectly a same controlled company; and b) with natural persons or legal entities who have directors or administrators in common with Carrier. SECTION 1. The decisions relative to item XXXIII of this clause in serviceand technical assistance agreements between Carrier and third parties linked tothe controlling shareholders shall be taken in a special shareholders’ meeting,and Carrier must include in its Bylaws, that the preferred shares will havevoting right in these decisions, without prejudice to the provisions of Section1 of Article 115 of Law No. 6.404 of December 15, 1976, amended by Law 10.303,of October 31, 2001. SECTION 2. In cases of conflict between Carrier and othertelecommunication service providers in establishing fair and reasonable values,Anatel may, provisionally, determine such values, terms for compliance and anyother elements essential to the effectiveness of the provisional decision. CLAUSE 16.2. Without prejudice to the other provisions contemplated inthis Agreement and to the guarantees set forth in the Law, Carrier’s rights areas follows: I – exploit the service granted within its business strategy, freely defining its investments, in compliance with the regulations edited by Anatel and the provisions of this Agreement; II – appoint a representative to follow up on the Anatel’s activity of inspection; III – interrupt, pursuant to the terms of Clause 9.3 of this Agreement, or not comply with the request for provision of a service to the subscriber defaulting on his contractual obligations toward Carrier; IV – request the filing or arbitration proceedings, in the events and form prescribed in Chapter XXXIII of this Agreement; V – have the economic conditions of exploitation of the service preserved against alterations that lead to unjustified enrichment by the Union or the users, pursuant to the provisions of Chapter XIII; VI – request the revision of the rates applied to the service licensed, according to the provisions hereof; VII – request from Anatel confidentiality of information collected in the performance of the activity of inspection, pursuant to the terms of this Agreement; VIII – use in the performance of the services equipment and infrastructure that does not belong to it, in compliance with the provisions of Clause 22.1 of this Agreement; and IX – contract with third parties the development of activities inherent, accessory or complementary to the service, as well as the implementation of associated project. CLAUSE 16.3. For the duration of the Agreement, Carrier will be the soleentity responsible, before third parties, for acts practiced by its staff,agents and contractors, in the provision of the Switched Fixed TelephoneService, as well as for the use of the equipment, facilities or networks,excluding the Union and Anatel from any claims and/or indemnities. CLAUSE 16.4. Carrier may not present obstacles to works of publicinterest, whatever their nature, whenever it becomes necessary to removefacilities or telephone networks to permit interventions promoted, directly orindirectly, by any body or entity of the Public Administration. CLAUSE 16.5. Carrier shall agree directly with each Municipal City Hall ofthe service exploitation areas as well as with the other public service carriersthe conditions to erection of posts and crosspieces for suspension of its aircable lines, as well as underground ducts and channels intended for the passageof cables under streets and public areas. SECTION 1. Carrier will provide with the holders of public or privategoods on or under which it has to pass ducts or channels or install supports forplacement of same, obtaining the respective consent or servitude for such end. SECTION 2. Carrier shall promote with the relevant municipal authoritiesthe discussions necessary to set up conditions to overcome network interferencesnecessary to the provision of the service, including with respect to cut andpruning of trees. SECTION 3. Carrier is entirely responsible, at its account and risk, forall the constructions, facilities and use of equipment for the provision of theservice. It is expressly understood that Carrier is responsible for liaisingwith the municipal, state or federal bodies for the control of soil use,edifications and environmental control. CLAUSE 16.6. Carrier may use posts, ducts, conduits and easementspertaining to or controlled by other telecommunication service providers or ofother public interest services, in compliance with the regulations. SOLE SECTION . Carrier shall provide to the other telecommunicationservice providers, classified by Anatel as of collective interest, or meansunder its ownership or controlled by it, mentioned in the heading of thisclause. CLAUSE 16.7. Carrier will maintain for the entire duration of thisconcession, a central office of information and user service, operating 24(twenty-four) hours per day, qualified to receive and process requests,complaints and claims sent by users personally or through any long distancemeans of communication, pursuant to the regulations. SECTION 1. Carrier shall disclose to all users the addresses and accesscodes to its central information office and user service, which shall be setforth in the Switched Fixed Telephone Service Provision Agreement, in thecollection document, in the Compulsory and Free Telephone Directory – LTOG, inthe collection document on the Internet, among others. SECTION 2. Carrier shall provide and disclose an easy access and free codefor sending users’ requests by telephone. SECTION 3. All the requests, claims or complaints sent by users, by anymedia, shall receive a sequential order number, which will be informed to theinterested party to enable its follow-up, pursuant to the regulations. SECTION 4. Carrier will inform user within the deadlines defined in theGeneral Quality Targets Plan of the measures taken in connection with theirrequest, claim or complaint. SECTION 5. If Anatel verifies that there is difficulty of access by usersof the central information office and users service, it may determine to Carrierto expand the available access media, under penalty of considering theobligation contemplated in this clause as not met. CLAUSE 16.8. In the contracting of services and in the acquisition ofequipment and material linked to the service contemplated herein, Carrierundertakes to consider offers from independent suppliers, including domesticones, and base its decisions, with respect to the different offers submitted, incomplying with the objective price criteria, delivery conditions and technicalspecifications established in the relevant regulations. SECTION 1. In the events where offers are equivalent, the Carrier companyundertakes to use as a selection criteria the preference of the services offeredby companies based in Brazil, equipment, software and materials produced inBrazil, and, among them, those produced with national technology. Theequivalence mentioned in this clause will be calculated when, cumulatively: I – the domestic price is smaller or equal to the price of the imported good, placed in the domestic territory, including applicable taxes; II – the delivery period is compatible with the needs of the service; and III – the technical specifications established in the relevant regulations are met and have certification issued or accepted by Anatel, when applicable. SECTION 2. By services it is understood those related to research anddevelopment, planning, project, implementation and physical installation,operation, maintenance, as well as acquisition of software, supervision andevaluation tests of telecommunication systems. CLAUSE 16.9. Except for the alterations subject to the previous approvalof Anatel, the Carrier shall maintain the commitments of compliance with theroutes in optical fiber cables contained in Attachment 03 – Optical Routes,hereof. CLAUSE 16.10. The payment or transfer of the sums due to othertelecommunication service providers is an obligation of Carrier, pursuant to theterms of the regulations, unjustified non-payment or retention characterizing asobstacle to the competition, subjecting Carrier to the sanctions contemplated inClause 26.1. CLAUSE 16.11. Upon request, Carrier will provide to the collectiveinterest telecommunication services providers, with which it has networkinterconnection, the services of invoicing, charging, attendance and collection,inisonomic, fair and reasonable conditions, pursuant to the terms of theregulations and applicable tax legislation. SOLE SECTION . The services mentioned in this clause will be implementedwithin 30 (thirty) days of request, regardless of the conclusion of thenegotiations among the parties, or of eventual requests for settlement ofconflicts submitted to Anatel, in compliance with Section 2 of Clause 16.1. CLAUSE 16.12. Carrier will assure any other collective interesttelecommunication services provider interconnection with its network, incompliance with the specific regulations and the rules hereof. SOLE SECTION . If Carrier does not conclude, within the regulatoryperiods, the interconnection agreement and does not present objective evidenceof the existence of a technical impediment, Anatel will establish,provisionally, a term for implementation of the interconnections, regardless ofthe conclusion of business negotiations or of eventual arbitration requestssubmitted to Anatel. CLAUSE 16.13. Carrier undertakes to supply the resources necessary tointerconnection of collective interest telecommunication services providers inthe form of industrial exploitation, pursuant to the regulations. SOLE SECTION . If Carrier does not supply the resources, within theregulatory deadlines, and does not evidence objectively that there is nocapacity for attendance, Anatel will establish, provisionally, conditions forattending the request, including, if necessary, the sums to be adopted. CLAUSE 16.14. Carrier undertakes to supply the resources necessary to theimplementation of telecommunication networks, including the access network, ofcollective interest service providers, in the form of industrial exploitation,pursuant to the regulations. SECTION 1. If Carrier does not supply the resources within 60 (sixty)days, counted from the request and does not evidence objectively the lack ofcapacity for attendance, Anatel will establish, provisionally, conditions toattend the request, including, if necessary, the values to adopted. SECTION 2. The date of establishment of the service provision agreementbetween the user and the provider defines the chronological order of attendanceof the request for resources by Carrier. SECTION 3. If there are multiple requests for the same user, Carrierundertakes to supply the resources requested, in compliance with thechronological order of requests from the providers. CLAUSE 16.5. Carrier undertakes to comply with the General CompetitionTargets Plan and to implement the resale of the service contemplated in thelicense, pursuant to the terms of the regulations. CLAUSE 16.16. Carrier undertakes to allow access, non-discriminatorily andpursuant to the terms of the regulations, to the information in its list ofsubscribers necessary for purposes of disclosure of the telephone directories. SECTION 1. The access mentioned in this clause shall be implemented in 30(thirty) days after the request, provided that the existence of an obstacle isnot evidenced. SECTION 2. Access shall be remunerated, based on fair and reasonablevalues. SECTION 3. In the events of conflict between Carrier and the interestedparties in disclosing its list of subscribers, in establishing fair andreasonable prices, Anatel may, provisionally, determine such amounts.CHAPTER XVII – OBLIGATIONS AND PREROGATIVES OF ANATEL CLAUSE 17.1. In addition to other prerogative inherent to its function as a regulatory body and the other obligations arising out of this Agreement, it will be incumbent upon Anatel to: I – follow-up and inspect the provision of the service and conserve reversible goods, seeking to comply with rules, specifications and instructions established in this Agreement and its attachments; II – perform inspections to check the adequacy of the facilities and equipment, determining necessary repairs, removals, rebuilding or replacements, at Carrier’s expense; III – regulate permanently the provision of the licensed service; IV – intervene in the execution of the service when necessary, to ensure its regularity and faithful compliance with the Agreement and relevant legal rules; V – apply the penalties contemplated in the service’s regulation, specifically, in this Agreement; VI – decide on Alternative Local Service Plans presented by Carrier; VII – fix, authorize the restatement and revise tariffs, pursuant to the terms and provisions of this Agreement; VIII – act within the limits contemplated herein with view to prevent the unjustified enrichment of the parties, pursuant to this Agreement; IX – care for the good quality of the service, receive, calculate and settle complaints and claims from users, informing them, within 90 (ninety) days, the measures that have been taken to repress violations of their rights; X – declare the license extinguished in the cases contemplated in this Agreement; XI – care for ensuring interconnection, settling occasional pending issues between Carrier and the other providers; XII – care for compliance with the universalization targets contemplated in this Agreement and the targets established in subsequent Targets Plans; XIII – follow up permanently on the relationship between Carrier and the other telecommunication services providers, settling conflicts and establishing, provisionally, values, deadlines for compliance and any other conditions essential to the effectiveness of the provisional decision; XIV – repress conducts by Carrier that go against the competition system, in compliance with CADE’s legal attributions; XV – propose, upon request of Carrier, to the President of the Republic, through the Communications Ministry, the declaration of public utility for purposes of misappropriation or institution of administrative easement, of the goods necessary to the implementation or maintenance of the service contemplated herein. XVI – perform inspections of the service pursuant to the provisions of this Agreement; XVII – collect the charges of the FISTEL (Telecommunications Inspection Fund), FUST (Fund for the Universalization of Telecommunication Services) and others that are created, which Anatel is responsible to collect, adopting the measures contemplated in the legislation in force; XVIII – order Carrier to take steps aimed at protecting the public interest to ensure the enjoyment of the service, in compliance with the provisions of the regulations and of this Agreement; XIX – order Carrier to compensate users for its failure to comply with the obligations in this Agreement and in the Regulations; XX – decree Carrier’s intervention in the cases contemplated in Article 110 of Law No. 9.472 of 1997 and in this Agreement; XXI – collect the values of public prices, especially for the right of use of scare resources; and XXII – order modification or revoking of contracts, agreement or adjustments made by Carrier and its controlling shareholders, whether direct or indirect, or associated companies, especially those that cover the direction, management, engineering, accounting, consulting, procurement, supplies, constructions, loans, sales of shares, goods, when these go against the legislation, rules, the economic order or the public interest.CHAPTER XVIII – THE CARRIER CLAUSE 18.1. Carrier is a company organized according to the laws ofBrazil, as a joint stock company, whose exclusive purpose is the exploitation ofthe service contemplated in this concession, except for the services inaccordance to the provisions of Section 3, Article 207 of Law No. 9.472 of 1997. SOLE SECTION . If Carrier’s statutory alteration is approved, thedocuments that formalize it will be sent to Anatel to be filed, and will becomea full part of this Agreement, pursuant to the terms of the regulations. CLAUSE 18.2. Carrier and its controllers undertake to maintain, for theentire licensing period, at least, all the service provision and qualificationconditions existing when this Agreement came into force. CLAUSE 18.3. Carrier and its controllers undertake to ensure, for theentire duration of the licensing period, the effective existence andperformance, in the domestic territory, of the centers of deliberation andimplementation of strategic, management, logistic, commercial, operational andtechnical decisions, involved in compliance with this Agreement, includingcausing this obligation to reflect on the composition and decision-makingprocedures of its administrative bodies. SOLE SECTION . Carrier shall maintain, in its Bylaws, for the duration ofthis Agreement, provisions that guarantee compliance with the provisions in theheading of this clause.CHAPTER XIX – TRANSFER OF THE LICENSE AND CONTROL OF CARRIER CLAUSE 19.1. Anatel may authorize the transfer of the license or thecontrol, whether direct or indirect, of Carrier, in compliance with the GeneralLicensing Plan and Law No. 9.472 of 1997, when: I – the assignee fulfills all the requirements established pursuant to the terms of Article 97 and 98 of Law 9.472 of 1997; and II – this measure does not adversely affect the competition and does not put at risk the performance of the Agreement and the general rules that protect the economic order. SOLE SECTION . Failure to comply with any provision of this clause willlead to forfeiture of this license. CLAUSE 19.2. Carrier’s shares, which do not alter its control, may befreely given as pledge. SOLE SECTION . In the event of the pledge of shares leading to encumbranceof Carrier’s equity, provisions must be set forth in loan agreements, whichsubmit the creditors, in the event of execution, to the rules in this Chapter.CHAPTER XX – THE INSPECTION SYSTEM CLAUSE 20.1. Anatel will perform the inspection of the service licensedherein to ensure compliance with the presuppositions of universalization andcontinuity inherent to the public system of its provision, as well as to carefor compliance with the targets and commitments set forth in this Agreement. SECTION 1. The inspection to be performed by Anatel will compriseinspection and follow-up of activities, equipment, facilities, contracts and theeconomic situation of Carrier, whether by direct performance of its inspectionagents or by formal requisition, implying ample access to all of Carrier’s dataand information or those of third parties, which shall be timely supplied, asrequested, according to the provisions herein. SECTION 2. The information collected during the inspection will bepublished in the Library, with the exception of those, which, by Carrier’srequest, are considered by Anatel as confidential. SECTION 3. The information that come to be considered as confidential,pursuant to the terms of the previous paragraph, will only be used in theprocedures correlated to this Agreement; Anatel and those appointed by it shallanswer for any disclosure, whether ample or restricted, of such informationoutside the scope of their use. SECTION 4. Anatel’s inspection shall also cover follow-up and control ofCarrier’s actions in the technical, accounting, commercial andeconomic-financial areas, and may establish guidelines and procedures necessaryto the effectiveness of the inspection as well as suspend all and any activitiesincompatible with the universalization, quality, safety and continuity ofservice requirements. SECTION 5. Carrier’s accounts will be presented separately for the STFCmode contemplated herein, and shall comply with the accounts plan established,pursuant to the regulations, as well as record and calculate, separately, theinvestments and costs of its different network components. SECTION 6. Carrier undertakes to provide to Anatel, pursuant to theregulations, relevant information, among others: I – those of economic-financial and accounting nature, including information on the balance sheet, income statements, indebtedness, statement of changes in financial position; II – those of a business nature, including, net and gross revenues, total number of minutes and billed calls and number of defaulting subscribers per service plan. III – those of technical-operational nature, including installed capacity per sector of external plan, commuting and transmission ports, introduction plans of new technologies per service and sector; and IV – the others, such as the number of own employees and employees hired per activity. SECTION 7. Anatel’s inspection does not diminish nor exempt Carrier’sliability with respect to the adjustment of its works and facilities, thecorrectness and legality of its accounting records and of its financial andcommercial transactions. SECTION 8. It is Carrier’s duty to provide the relevant information withinthe term stipulated by Anatel’s inspection. CLAUSE 20.2. Carrier, through the appointed representative, may follow upon all and any inspection activity by Anatel, but may not hinder or prevent theinspection’s actions, under penalty of incurring the penalties contemplated inthis Agreement.CHAPTER XXI – ACCOUNTABILITY BY CARRIER CLAUSE 21.1. Pursuant to the terms of the regulations, and as defined byAnatel, Carrier shall sent periodically to Anatel information and statisticaland detailed reports of the STFC mode contemplated herein, containing, amongother elements: I – expansion, coverage and occupation of the telephony network indicators; II – technical data with respect to the contracting and use of the service contemplated in this license, segmented by class of subscriber, nature of plan contracted, tariff structure item, nature of communication and by the time of use; III – the data relative to the use of the network and of Carrier’s resources, segmented by nature of the providers involved, type of communication, type and coverage of the resource used, time of use and by other applicable criteria; IV – the technical data relative to the items of additional, complementary and accessory revenues, as provided in this Agreement; V – the income statement itemizing revenues and the relevant expenses relative to the items mentioned in items I, II, III and IV of this clause; VI – the standardized monthly balance sheet, quarterly information – ITR, financial statements of each fiscal year and the other information and documents related to each fiscal year, duly audited; VII – the date relative to the financial transactions made by Carrier, including those relative to the issued of debt instruments; VIII – data which enables to characterize the technological state of the equipment used, as well as the level of operability of plant; and IX – data relative to the quantity and level of qualification of human resources, its own and third parties; SECTION 1. The supply of the data mentioned in this clause does not exemptnor diminish Carrier’s responsibility in connection with the adequacy,correctness and legality of its accounting records and financial and commercialtransactions. SECTION 2. Failure to comply with the requests, recommendations anddeterminations contained in this clause subjects Carrier to the application ofthe sanctions established in this Agreement. CLAUSE 21.2. The supply of the information requested must, wheneverpossible, be transformed into continuous and automated information supplyprocesses, by suggestion of Carrier, and will be adopted or not at thediscretion of Anatel.CHAPTER XXII – ASSETS LINKED TO THE LICENSE CLAUSE 22.1. This license is composed by the collection of all the assetsbelonging to the equity of Carrier, which are restricted to it, as well as thoseof its controlling company, subsidiary, associated company or of third parties,and which are indispensable to the provision of the service licensed hereunder,especially those identified as such in Attachment 01 – Identification ofReversible Assets of the National Long-Distance Switched Fixed Telephone ServiceProvision. SECTION 1. The collection is also composed of assets restricted to theconcession of the authorizations for use of the spectrum of radio frequenciesgranted to it and, where applicable, the right of use of orbital positions, incompliance with articles 48 and 161 of Law 9.472 of 1997, and moreover theprovisions of Clause 4.1 of this Agreement. SECTION 2. In relation to the assets restricted to the license, Carriermay only use directly in the provision of the service licensed herein equipment,infrastructure, software or any other asset not in under its ownership by priorand express consent of Anatel, who may waive this requirement in the casesprovided in the regulations. SECTION 3. If there is a risk to the continuity of the services or if thereversal of goods restricted to the license is prevented, Anatel may denyauthorization to use third party’s assets or require that the relevant agreementcontain a clause by which the owner undertakes, in the event of the license’sextinction, to uphold the agreements and subrogate to Anatel the rights arisingfrom it. SECTION 4. Carrier undertakes, pursuant to the regulations, to presentannually a list containing the assets restricted to the license, according tothe definition in Clause 22.1. SECTION 5. The regulation will provide on the identification and controlof reversible assets, especially, with respect to cases of disposal, encumbranceor substitution, which will depend on previous approval by Anatel. These assetsmust be clearly identified in the list presented annually by Carrier. SECTION 6. Assets indispensable to the provision of the service and whoseuse is shared by Carrier integrate the list presented annually by Carrier. CLAUSE 22.2. Carrier undertakes to present quarterly to Anatel, from the18th (eighteenth) year of duration of this Agreement: I – a list containing all the assets that are part of its equity and are indispensable to the provision of the service licensed herein, especially those assets identified as reversible assets of the Switched Fixed Telephone Service provision in the National Long-Distance mode; II – a report on the stock of spare and expansion parts; III – an economic-financial report, including the degree of indebtedness and compliance with obligations toward third parties; and IV – a report containing information on human resources and qualification of personnel.CHAPTER XXIII – REVERSAL SYSTEM CLAUSE 23.1. Upon extinction of the license all the assets restricted tothe license, defined in Chapter XXII, will revert automatically to Anatel, butCarrier will retain the right to the indemnities contemplated in the legislationand this Agreement; SOLE SECTION . Within 180 (one hundred and eighty) days of the coming ofthe license’s extinction, an inspection of the assets that integrate it will bemade, and a Term of Return and Reversal of Assets drawn up, indicating in detailthe assets’ condition of conservation. One or more representatives of Carriermay attend this inspection. CLAUSE 23.2. Carrier undertakes to deliver the reversible assets inperfect conditions of operability, use and maintenance, without prejudice tonormal wear and tear resulting from use. SOLE SECTION . The reversible assets will be transferred to Anatel, freeand clear of any liens or charges, in compliance with Section 2 of the clausebelow. CLAUSE 23.3. There will be indemnification with respect to the reversibleassets covered in this Chapter at the end of the contractual term, except forthe provisions in this Clause. SECTION 1. Carrier will only be indemnified if at the end of theconcession there are assets that are not yet fully amortized, whose acquisitionAnatel has previously authorized, in order to ensure the continuity of thelicensed service and that the same is up to date. SECTION 2. Alternatively or complementarily to the indemnity contemplatedin the previous paragraph, Anatel may admit the transfer of assets, which havebeen given as a guarantee for its own financing, subrogating itself in thefinanced portion not yet paid. CLAUSE 23.4. At the end of the license, Anatel will value the assetsmentioned in Clause 22.1, and may reject the reversal of assets, which itconsiders non-essential or of no use for application in the service’sexploitation, guaranteeing Carrier’s right to claiming fees to be paid to theopposing party, including through the elaboration and presentation, at itsexpense, of reports or studies that show the need for the reversal. SOLE SECTION . If Carrier does not agree with Anatel’s decision withrespect to the provisions in this clause, an appeal against the disputeresolution process prescribed in this Agreement will be accepted.CHAPTER XXIV – INSURANCE PLAN CHAPTER 24.1. During the entire term of the license, Carrier shallmaintain with an Insurance Company of size compatible with the capital to beinsured, and registered at the sector’s regulating bodies, the followinginsurance policies necessary to guarantee the effective and thorough coverage ofthe risks inherent to the development of all the activities contemplated herein: I – all risks type insurance for material damages covering loss, destruction or damage to all or any asset integrating the license. Such insurance must contemplate all coverage included according to international standards; II – insurance for preservation of economic conditions for continuity of exploitation of the service, covering, at least, the operating costs against variations in Carrier’s revenues, arising out of claims or modifications in the conditions of exploitation of the Agreement, not covered by the material damages insurance, provided that the agreement of this insurance mode is admitted by Brazilian rules and expressly authorized by the Institute of Reinsurance of Brazil – IRB or equivalent body; and III – insurance to ensure compliance with the obligations relative to quality and universalization contemplated in this Agreement (Performance Bond, letter of credit and sum maintained as pledge) of the investment amount estimated per year for compliance with the targets contemplated in this Agreement. SECTION 1. Carrier shall cause to be set forth in the insurance policiesInsurer’s obligation to inform in writing, at least 30 (thirty) days in advance,to Carrier and Anatel, any facts, which may lead to the total or partialcancellation of the policies contracted, reduction of coverage, increase ofself-insurance or reduction of insured amounts. SECTION 2. The policies issued in compliance with the provisions in thisclause may not contain obligations, restrictions or provisions that collide withthe provisions of this Agreement or with the regulations and shall contain anexpress declaration by Insurer that it knows this agreement fully, includingwith respect to the limits of Carrier’s rights. SECTION 3. In the event of noncompliance by Carrier of the obligation tomaintain in full force the insurance policies contemplated, Anatel, regardlessof its authority to decree intervention or forfeiture of this license mayproceed to the contracting and direct payment of the relevant premiums, Carrierbeing responsible for the costs. SECTION 4. Annually, by the end of January, Carrier shall present acertificate issued by the insurer(s) and confirming that all the premiums havingfallen due in the previous year were paid and that the policies contracted arein full force or have been renewed. In this case, the terms of the new policiesmust be sent. SECTION 5. The insurance policies necessary to ensure effective andthorough coverage of the risks inherent to the development of all the activitiescontemplated herein shall be in force from January 1, 2006 and be presented toAnatel by January 30, 2006. SECTION 6. Anatel may alter its coverage or presentation terms of thepolicies mentioned in this clause, with view to adjust these requirements to theregulations edited by the Private Insurance Superintendence – SUSEP or to theconditions established by the Reinsurance Institute of Brazil – IRB, also whenrules are edited that prevent the contracting of the insurance mentioned hereinor when there are no ample and competitive market conditions, which permit itscontracting at reasonable prices.CHAPTER XXV – INTERCONNECTION CLAUSE 25.1. Carrier is obliged to permit, facilitate, provide and effectinterconnection to the network operated by it, of networks of other collectiveinterest telecommunication service providers, in the public or private system,in compliance with and ensuring compliance with the rules edited by Anatel inthis respect. CLAUSE 25.2. From January 1, 2008, values for the Long-Distance NetworkUse Tariff (TU-RIU) will be adopted, that consider a long-term cost model,established pursuant to the terms of the regulations and of the provisions ofClause 13.1. SECTION 1. The maximum values of the Long-Distance Network Use Tariffs(TU-RIU) will be limited to the product of multiplier M by the Degree 4 tariffof the national long-distance service, in compliance with the time modulationand other conditions established in Attachment No. 02 of this Agreement and inthe Regulations, whereas from January 1, 2006 to December 31, 2007, M will equal0.3 (zero point three); SECTION 2. When the application of the provisions of the previousparagraph result in an increase in the TU-RIU value, this value may only bepracticed as of the next readjustment of local service use tariffs of Degree 4of the LDN service. SECTION 3. In the case of adopting tariffs relative to the maintenance ofthe right of use, which include the total number of minutes of use, the TU-RLvalues will be established as a result of a reference number of minutes of use. CLAUSE 25.3. Carrier will have the same rights and will comply with thesame interconnection conditions to which the other telecommunication serviceproviders of collective interest are subject. SOLE SECTION. Carrier shall provide for interconnection the networkelements with greatest technically possible disaggregating level, in compliancewith Anatel’s regulations. CLAUSE 25.4. In the event of unjustified refusal of interconnection,Anatel may, without prejudice to other measures, decree intervention in theCarrier. SOLE SECTION. Unjustified refusal of interconnections is characterizedby: I – failure to present an interconnection agreement within the terms determined by the regulations; II – non provision of interconnection within the terms determined by the regulations; III – failure to comply with provisional measures, involving the provision of interconnection, determined by Anatel. CLAUSE 25.5. Unjustified refusal of interconnection is a serious offense,subjecting Carrier to the sanctions contemplated in Chapter XXVI of thisAgreement, without prejudice to other measures adopted by Anatel. SOLE SECTION. If the unjustified refusal of interconnection involves badfaith, the provisions of Article 177 of Law 9.472 of 1997 are applied as well.CHAPTER XXVI – SANCTIONS CLAUSE 26.1. Upon performance of this Agreement, Carrier is subject to thefollowing sanctions, which will be applied by a circumstantiated decision byAnatel, which is assured it right of defense, pursuant to the terms of itsInternal Rules and without prejudice to the other penalties contemplated in theregulations: I – for violation of the provisions of this Agreement, leading to noncompliance with the universalization targets: fine of up to R$50,000,000.00 (fifty million reais); II – for act or omission contrary to the provisions set forth in this Agreement, leading to losses to the competition in the telecommunications sector: fine of up to R$50,000,000.00 (fifty million reais); III – for violation of the contractual provisions, leading to noncompliance with the quality targets and parameters in the provision of the service: fine of up to R$ 40,000,000.00 (forty million reais); IV – for another act or omission not covered by the previous items, leading to violation of the user rights defined in this Agreement or leading it to incur losses: fine of up to R$ 30,000,000.00 (thirty million reais); V – for act or omission that violates the provisions of Clause 16.8 of this Agreement, with respect to the contracting of services and acquisition of equipment and materials produced in Brazil: fine of R$ 30,000,000.00 (thirty million reais); VI – for any act or omission which creates an obstacle to or hinders the performance of Anatel’s fiscal activity contemplated in this Agreement: fine of up to R$ 20,000,000.00 (twenty million reais); VII – for action or omission leading to failure to comply with Anatel’s determination: fine of up to R$ 15,000,000.00 (fifteen million reais); VIII – for act, omission or negligence putting at risk the Safety of the facilities: fine of up to R$ 15,000,000.00 (fifteen million reais); IX – for act or omission causing damage or putting at risk the assets or equipment restricted to the concession: fine of up to R$ 10,000,000.00 (ten million reais); and X – for failure to comply with any obligation expressly contemplated in this Agreement, except those indicated in the previous items, whose sanctions are already established: fine of up to R$ 10,000,000.00 (ten million reais); SECTION 1. The offense prescribed in item I of this clause will becharacterized when Carrier does not comply, within the deadlines contemplated inthis Agreement, with its obligations with respect to expansion of the service,expansion of the service provision, by means of public use telephones andattendance to localities, according to the General Universalization Targets Planand will be applied, taking into account, in addition to the general principlesset forth in this Chapter, the following factors: a) the difference between the implementation stage and the target defined in the Agreement; b) possibility of recovery of the implementation schedule at the expense of Carrier; c) losses for the policy reflected in the General Universalization Targets Plan; d) damages caused to the direct beneficiaries of the targets not complied with; and e) eventual circumstances of a technical or economic order, which may attenuate Carrier’s liability, without eliminating it. SECTION 2. The gravity of the offense prescribed in item II above will bedefined exclusively as a result of the general criteria prescribed in Clause26.2 and will be characterized by Carrier’s conduct, which directly orindirectly may lead to losses to the competition in the sector, especially: a) posing an obstacle or difficulty to the option of another provider of the licensed service or of the domestic and international long distance service; b) refusal to provide interconnection to a telecommunications service provider; c) posing obstacles or difficulties to the activity of value added service providers; d) refusal or procrastination in extending, in isonomic conditions, co-invoicing to other collective interest service providers, thus characterized by its non-implementation within 30 (thirty) days, counted as of the request; e) for unjustified non-payment of the amounts owed to other telecommunications services provider; f) refusal or procrastination in providing, in isonomic conditions, the resources necessary to the implementation of telecommunications networks, including the network of access, of providers of collective interest services in the form of industrial exploitation, thus characterized by its non-implementation within 60 (sixty) days, counted as of the request; g) subjection of the provision of the licensed or offered service to benefits as a result of the acquisition by user of a service alien to this Agreement; h) performance of any telecommunications service other than the purpose of a license granted by Anatel in its favor; i) non-preservation of the quality levels practiced in the own network, with respect to the interconnection; and j) procrastination in delivery or inadequate supply of information essential to the activity of the other providers, especially as far as the registration bases are concerned; SECTION 3. The offense prescribed in item III of this clause will becharacterized by the repeated provision of the licensed service falling short ofthe quality parameters, defined in the General Quality Targets Plan or byevidenced violation of the indicators, mentioned in Chapter VI. In the firsthypothesis, the offense will be considered as serious, especially: a) non-allocation in the operation and maintenance of the service of human and material resources necessary to the preservation of the minimum quality standards; b) negligence in modernizing the network, which affects the quality of the service; c) collection and remittance of indicators to Anatel in disagreement to the regulations; and d) refusal, omission or procrastination in the provision of information on quality. SECTION 4. The offense prescribed in item IV above will be classified indegrees of gravity according to the number of users affected and the lossesproduced, being characterized by violation, through an act of committing oromission, direct or indirect, of obligation contemplated in this Agreement,which does lead go against its duties with respect to universalization andquality, but which leads to violation of users’ rights, especially: a) interruption in the provision of the services for a period longer than that established in the Quality Targets Plan, except for the occurrence of the situations contemplated in the sole Section of Clause 7.1; b) refusal in providing a service granted to any interested party; c) noncompliance with the duty of providing information to user; d) violation of confidentiality of telecommunications, beyond the legal hypotheses, even if practiced by third parties in the facilities under Carrier’s responsibility; e) failure to maintain the central information office and of service to user as prescribed in this Agreement; f) collection of tariff or price not in accordance with the rules stipulated in this Agreement and in the regulations; g) restriction of the exercise of right to free choice among the service plans and service providers; h) non-compensation of users, as provided in the regulations or by determination of Anatel; i) non-guarantee of the access code portability right, pursuant to the terms of the regulations; and j) noncompliance with the Agency’s determinations, in the manner and period established. SECTION 5. The sanction contemplated in item V above will be characterizedby verification of the violation of the obligations contained in Clause 16.8 andits gravity will be defined as provided in the regulations. SECTION 6. The gravity of the offense prescribed in item VI above will bedefined as a result of the relevance of the tax activity hindered and will becharacterized by a violation, in act committed or omission, direct or indirect,by Carrier or its representatives, which prevents or hinders the inspectionperformed by Anatel, its representatives, agents or even by the users,especially: a) carrier’s refusal to comply with the request for information formulated by Anatel, in connection with the licensed service or to the assets related to it; b) posing of obstacle to the performance of Anatel’s inspectors; c) omission in complying with a disclosure obligation provided in this Agreement, or in the regulations; and d) not sending or sending not timely any information, datum, report or document, which, by force of the regulations or this Agreement, should have been sent to Anatel. SECTION 7. The seriousness of the offense prescribed in item VIII of thisclause will be defined as a result of the proportion of risk generated and willbe characterized by Carrier’s conduct going against the rules provided in thisAgreement and in the regulations, violating the rules and technical safetystandards or which put at risk the facilities related to the licensed service,especially: a) the use, in the licensed service, of non-certified equipment or equipment homologated by Anatel, pursuant to the terms of the regulations; b) non allocation in the operation and maintenance of the service of human resources and materials necessary to the preservation of minimum safety standards; and c) non-adoption of precautions recommended for the service licensed herein. SECTION 8. The seriousness of the offense prescribed in item IX of thisclause will be defined according to the relevance, economic importance andessential nature of the goods involved and will be characterized by Carrier’sconduct, which goes against the provisions in this Agreement or in theregulations and which may put at risk the assets or equipment linked to thisconcession, or hinder the reversal of the same, especially: a) for non-maintenance of inventory and registration of the assets mentioned in Clause 22.1; b) for the use, directly in the provision of the service contemplated in this license, of third party assets, without the previous consent of Anatel or without same being waived; c) for negligence in the conservation of reversible assets, in compliance with the regulation; and d) for failure to supply the information contemplated in Clause 22.1. SECTION 9. The sanction contemplated in item X above will be characterizedby verification of violation of the contractual obligation not comprised in theprevious items, especially: a) by failure to comply with the provisions of item XXX of Clause 16.1; and b) by the refusal or procrastination in permitting access, pursuant to the terms of the regulations, to information from its list of subscribers, necessary for purposes of disclosure of the telephone directories. SECTION 10. The sanction contemplated in item VII above will becharacterized by failure to comply with an order by Anatel, especially whichaims to ensure compliance with users’ rights; SECTION 11. The sanction contemplated in item II above is of contractualnature and Anatel will apply it regardless of the measures adopted by CADE. SECTION 12. Failure to collect any fine fixed pursuant to the terms of theprovisions in this clause in the term set by Anatel will characterize a seriousfault, leading to intervention by Carrier pursuant to the terms of theprovisions in Chapter XXXI, in addition to leading to the collection of anarrears fine of 0.33% (zero point thirty-three percent) per day, up to the limitof 10% (ten percent), plus the reference basic rate SELIC for federalinstruments, to be applied on the debt amount, considering all the days ofarrears in the payment. CLAUSE 26.2. For application of the contractual fines contemplated in thisChapter, the rules contained in Heading VI of Book III of Law No. 9.472 of 1997and in the regulations will be observed. SECTION 1. In the definition of seriousness of the sanctions and insetting the fines, Anatel shall observe the following circumstances: I – proportionality between the intensity of the penalty and seriousness of offense, including with respect to the number of users affected; II – the damages resulting from the offense to the service and to users; III – the advantage gained by Carrier by virtue of the offense; IV – Carrier’s participation in the market within its geographic area of service provision; V – Carrier’s economic and financial situation, especially its capacity to generate revenue and its equity; VI – Carrier’s record; VII – the specific relapse, understood as the repetition of a fault of equal nature after having received the previous notification, within 2 (two) years, counted as of the notification of the act of filing the suit; and VIII – the general aggravating or mitigating circumstances of the offense; SECTION 2. Regardless of the specific graduation criteria contemplated ineach item of the previous clause and of others contemplated in the regulation,the graduation of penalties will be according to the following scale: I – the offense will be considered light when it arises out of involuntary or excusable conduct by Carrier and from which it does not obtain any benefit; II – the offense will be considered as of average gravity when it arising out of inexcusable conduct, but which does not contribute to Carrier any benefit or advantage, or affect a significant number of users; and III – the offense will be considered serious when Anatel verifies the presence of one of the following factors: a) Carrier has acted in bad faith; b) the offense generates a direct or indirect benefit to Carrier; c) carrier is a recidivist in the offense; d) the number of users affected is significant; and e) in the event contemplated in Section 13 of the previous clause. SECTION 3. At the discretion of Anatel, in the offenses classified aslight, the penalty of warning may be applied to Carrier; SECTION 4. The provisions of the Anatel’s internal regulations will beapplied with respect to the application of the sanctions contemplated in thisChapter. CLAUSE 26.3. The fines contemplated in this Chapter will be appliedwithout prejudice of characterization of the hypotheses of intervention ordeclaration of forfeiture contemplated in this Agreement. SOLE SECTION. In the event of total or partial unenforceability of theadjustment or of unjustified delays of more than 120 (one hundred and twenty)days in compliance with the targets contemplated in this Agreement, Carrier willbe subject to have the forfeiture of its license decreed, pursuant to the termsof Clause 27.4. CLAUSE 26.4. The maximum values of the fines contemplated in this Chapterare basic for the month of June of 1998 and will be readjusted by applying theIGP-DI (General Market Price Index – Internal Availability).CHAPTER XXVII – EXTINCTION OF THE LICENSE CLAUSE 27.1. The Concession Agreement will be considered as extinct in thefollowing events: I – end of the service’s concession period; II – takeover, according to Article 113 of Law No. 9.472, of 1997; III – forfeiture, pursuant to the terms of Article 114 of Law No. 9.472, of 1997, and this Agreement; IV – amicable or judicial termination, pursuant to Article 115 of Law No. 9.472, of 1997; and V – cancellation. SECTION 1. ONCE THE LICENSE IS EXTINCT, Anatel will regain its rights andduties in respect of the provision of the licensed service, with reversal of theassets mentioned in Clause 22.1, Carrier being preserved the right to theindemnities contemplated in the legislation and this Agreement. SECTION 2. After the license’s extinction, Anatel will conduct thenecessary surveys, assessments and liquidations, within 180 (one hundred andeighty) days counted as of the date the service was accepted, except in theevent of termination of the contractual period, when Anatel shall adopt thesemeasures in advance. SECTION 3. When the license is extinguished before the contractual term,Anatel, without prejudice to other applicable measures, may: I – occupy, temporarily, securities and real estate and use its personnel employed in the provision of the service, necessary to the continuity of same; and II – maintain the contracts executed by Carrier with third parties for the term and in the conditions initially agreed. CLAUSE 27.2. There will be reversal of the termination of the contractualterm without indemnification, except when the event contemplated in Clause 23.3occurs. CLAUSE 27.3. Pursuant to the terms of Article 113 of Law No. 9.472, of1997, one considers takeover the resumption of the service by Anatel for thelicense period, given the extraordinary motive of public interest, by a specificlaw that authorizing it, preceded by payment of compensation. CLAUSE 27.4. This Agreement may have its forfeiture declared by an act ofthe Management Council of Anatel, preceded by an administrative proceeding thatensures ample defense to Carrier, in the following events: I – transfer of corporate control, split-up, merger, transformation of Carrier or its incorporation or reduction of its capital without prior approval by Anatel; II – irregular transfer of the Agreement; III – failure to comply with the transfer commitment mentioned in Clause 19.1 and Article 87 of Law No. 9.472 of 1997; IV – bankruptcy or dissolution of Carrier; V – failure to comply with coverage requirements by insurance plans against the obligations contemplated in Clause 24.1 and if this omission cannot, at Anatel’s discretion, be remedied by the intervention; VI – when, pursuant to the terms of Article 114, item IV, of Law No. 9.472, of 1997, any of the events contemplated in Clause 28.1 occur, and, at the discretion of Anatel, the intervention is considered inconvenient, harmless or unjustly beneficial to Carrier; and VII – non compliance with the universalization targets of the PGMU, approved by Decree No. 2592, of May 15, 1998. SECTION 1. The intervention will be considered unnecessary when the demandfor the service contemplated in the license can be met, by permission by otherproviders regularly and immediately. SECTION 2. The declaration of forfeiture will not do away with theapplication of the applicable penalties pursuant to the terms of this Agreementfor offenses practiced by Carrier, nor will it affect the right to indemnitydefined pursuant to the terms of the following Chapter. CLAUSE 27.5. Carrier will be entitled to judicial or amicable contractualtermination, when by action or omission of the Public Power, the performance ofthe Agreement becomes excessively onerous, pursuant to the terms of Article 115of Law No. 9.472, of 1997. SOLE SECTION. The introduction or expansion of the competition amongdifferent providers of the service contemplated in the concession does notconstitute a motive for contractual termination, it being certain that Carrierassumes this concession aware that it will perform its activities without anyreserve or exclusivity in the market. CLAUSE 27.6. Anatel will decree the cancellation in the event of anirregularity that cannot be remedied and which is serious, verified in thisAgreement.CHAPTER XXVIII – THE INDEMNITY CLAUSE 28.1. For purposes of calculation of the indemnity that Anatel owesto Carrier, in the vents expressly contemplated herein, one shall observe thefollowing: I – end of the contractual term – no indemnity will be due, except if it is evidenced that failure to pay means unjustified enrichment by the Union as a result of reversal of the assets not yet fully amortized, in compliance with the provisions in Clause 23.3, discounting the value of the damages caused and of the fines threatened, as well as, when applicable, the financial obligations not met; II – takeover – in compliance with the provisions of Article 113 of Law No. 9.472, of 1997, the indemnity, which will be paid prior to the act, must correspond to the value of the assets which revert to the licensing power, deducting depreciation, the value of damages caused and of the fines threatened, as well as, when applicable, the financial obligations not paid; III – forfeiture – regardless of the application of penalties and of compensation for damages arising out of the default, pursuant to the terms of the Agreement, Carrier may only postulate an indemnity if there is evidence that unjustified enrichment is occurring by the Union due to the reversal of assets not fully amortized or depreciated, deducting the value of damages caused and of the fines threatened, as well as, when applicable, the financial obligations not met; IV – amicable or judicial termination – no indemnification shall apply, except if otherwise fixed in a judicial sentence; and V – cancellation – only when evidenced that the Carrier did not concur to illegality, will the compensation be due corresponding only to the effective value of the assets that revert to the Union, calculated on the date of the cancellation decree, provided that these assets are still not fully amortized by the exploitation of the services, deducting moreover the value of the damages caused and of the fines applied, as well as, when applicable, the financial obligations not met. SECTION 1. The provisional value to be anticipated by Anatel for thetakeover cases will be calculated as prescribed in the specific law that issuedthe authorization. SECTION 2. When there is forfeiture by evidenced fault of Carrier, it willalso lead to: a) retention of the credits from the Agreement, including with appropriation of revenues from payments made by the users of the service; b) responsibility for losses caused to the Union and to users; c) application of fines pursuant to the terms of the provisions in this Agreement and in the effective legislation; and d) loss of the insurance-guarantee contemplated in Clause 24.1. SECTION 3. With the exception of the hypothesis of takeover, theindemnification appropriate for the other cases of extinction of the Agreementwill be calculated pursuant to the terms of this Chapter and apportioned by thenumber of months on which the license would still be effective, the firstinstallment must be due after 1 (one) year of extinction of the Agreement. SECTION 4. Anatel may transfer to the provider who succeeds Carrier in theexploitation of the service, the burden of paying the relevant indemnities,assuming again the obligation of payment, if the new provider delays itspayments for more than 90 (ninety) days.CHAPTER XXIX – COUNCIL OF USERS CLAUSE 29.1. Carrier will organize and maintain in permanent operation aCouncil of Users, integrated by representatives from organizations of thedifferent user classes and official consumer defense bodies, of a consultingnature and geared to orientation, analysis and assessment of the services andquality of service by Carrier, as well as for formulation of suggestions andproposals for improvement of services. SOLE SECTION. Anatel will establish by means of a specific regulationrules for the installation and operation of the Users Council.CHAPTER XXX – THE ENVIRONMENT AND ENVIRONMENTAL CONTROL CLAUSE 30.1. Carrier will adopt, at its own account and risk, all themeasures set forth in the Brazilian legislation and regulation or, failing that,adopt the best practices on the environment, especially in respect of: I – use of the surface and sub-surface; II – construction of towers, posts and other provisions for fixing electromagnetic radiation equipment; III – human exposure to electric, magnetic and electromagnetic fields. The limits established in Anatel’s regulations must be complied with. IV – minimization of use of natural resources and energy; and V – with respect to the historic-cultural equity and to the indigenous communities. SOLE SECTION. Carrier will present to the competent bodies,whenever this is required, environmental impact reports, and also provide toobtain the respective license, according to the applicable legislation.CHAPTER XXXI – INTERVENTION CLAUSE 31.1. Carrier’s intervention may be decreed by Anatel,at its discretion and in the public interest, by means of a specific andmotivated act by its Management Council, pursuant to the terms of Section V ofChapter II, Heading II, of Law No. 9.472, of 1997, especially in the followingcases: I – unjustified shutdown of the service, which is understood as the interruption of the provision outside the events contemplated in this Agreement, and without presenting the reasons considered by Anatel as apt to justify it; II – repeated inadequacy or insufficiencies in the service provided, characterized by failure to comply with the quality parameters contemplated in this Agreement and in the regulation, even after notification of a deadline, by Anatel, to regularize the situation; III – practice of bad administration, which puts at risk the continuity of the service, especially that which results in economic-financial imbalance; IV – recidivist practice of offenses defined as serious pursuant to the terms of Clause 26.1; V – noncompliance with universalization targets, understood as unjustified failure to comply with the implementation schedule of the universalization obligations present in this Agreement; VI – unjustified refusal or procrastination of interconnection, understood as the negation, delay or any attitude that delays the negotiation or effectuation of the connection to its network requested by another provider, in compliance with the regulations; VII – practices of offenses to the economic order, so as to repress behaviors prejudicial to the free, ample and fair competition among service providers; and VIII – omission in rendering accounts to Anatel or posing obstacle to the inspecting activity, which presuppose the practice of any of the occurrences contemplated in the previous items. CLAUSE 31.2. The act of intervention shall necessarilyindicate the term, motives, objectives and limits, in addition to designatingthe intervener. SOLE SECTION. The term and the limits of intervention shallbe compatible and proportional to the motives that caused the intervention. CLAUSE 31.3. The intervention will be preceded byadministrative proceedings brought by Anatel, wherein ample right of defense ofCarrier shall be guaranteed. SOLE SECTION. When an immediate intervention is essential,Anatel may decree it provisionally, without previous manifestation by Carrier.In this case, the proceedings shall be brought immediately on the date of thedecree and concluded within 180 (one hundred and eighty days), in which termCarrier may exercise its ample right to defense. CLAUSE 31.4. The decree of intervention will not affect theregular progress of Carrier’s business or its normal operation, producing,however, the immediate removal of its administrators. CLAUSE 31.5. The duties of the intervener may be attributed tothe agent of Anatel’s staff, a specifically appointed person, collegiate orcompany, Carrier bearing the costs of his remuneration. SECTION 1. Anatel may appeal against the acts practiced by theIntervener. SECTION 2. The intervener shall be render accounts of andanswer for the acts he practices. SECTION 3. For acts of disposal and disposition of Carrier’sequity, the intervener will need previous authorization by Anatel. CLAUSE 31.6. The intervention will not be decreed when, at thediscretion of Anatel, it is considered unnecessary. SOLE SECTION. The intervention will be considered unnecessaryin the events prescribed in Section 1 of Clause 27.4, as well as in thosecontemplated in Article 114, item IV, of Law 9.472, of 1997.CHAPTER XXXII – EXPROPRIATIONS AND ADMINISTRATIVE IMPOSITIONS CLAUSE 32.1. If necessary, for implementation, provision ormodernization of the service, to perform any misappropriation or administrativeservitude, the burdens will be borne fully by Carrier, and Anatel shall requestto the President of the Republic, through the Communications Ministry, to issuea public utility decree.CHAPTER XXXIII – ARBITRATION CLAUSE 33.1. Anatel, performing its function of regulatingbody, as prescribed in articles 8 and 19 of Law 9.472, of 1997, as well as inits Internal Regulations, shall settle eventual conflicts that may arise in amatter of application and interpretation of the concession rules. Carrier mayresort to the arbitration procedures, provided in this Chapter, exclusively whennon-reconciled to Anatel’s decision in connection with the following matters: I – violation of Carrier’s right of protection of its economicsituation, as prescribed in Chapter XIII; II – revision of tariffs, provided in Chapter XIII; and III – indemnities due upon extinction of this Agreement, including withrespect to reverted assets. SOLE SECTION. Submission of any management to arbitrationdoes not exempt Anatel and Carrier from the obligation to ensure full compliancewith this Agreement, nor does it permit interruption of the activities linked tothe concession. CLAUSE 33.2. The arbitration procedure will begin uponcommunication sent by one party to the other, requesting that the ArbitrationCourt, covered in this Chapter, be convened, and indicating in detail the matterthat has generated the controversy. SOLE SECTION. Anatel may reject the convening of theArbitration Court, if it demonstrates, with reasons and justification, that thecontroversy does not belong in the list of matters contemplated in Clause 33.1. CLAUSE 33.1. The Arbitration Court will consist of 5 (five)members, appointed as follows: I – 2 (two) permanent members and their respective deputies appointed by Anatel’s Management Council, among specialists in the areas related to the controversial matter, who do not belong to its staff, and at least one of whom will preside it, who has specific knowledge of the juridical regulation of telecommunications; II – 2 (two) permanent members and their respective deputies appointed by Carrier, among specialists in the areas related to the controversial matter, who are not its employees, and at least one of whom will have specific knowledge of the juridical regulation of telecommunications; III – 1 (one) permanent member and respective deputy appointed by the members mentioned in the previous items; SECTION 1. The Arbitration Court may be assisted by technicalexperts, whom it considers convenient to appoint. SECTION 2. The Court is considered as constituted on the dateon which all the arbitrators accept their appointments and inform both partiesthereof. SECTION 3. The Court will judge according to the constitutedright and its decisions have cogent power, regardless of judicial homologation. CLAUSE 33.4. If Anatel does not reject such questioning or ifit is overcome, the Process covered in this Chapter will begin, which shall obeythe following procedure: I – the parties will have 10 (ten) days counted as of receipt of the communication covered in the heading of the previous clause to appoint the members of the Arbitration Court, which shall be convened immediately after acceptance by all its members; II – if one of the parties is inert or has offered resistance to the convening of the Arbitration Court, the other party may use the authority contemplated in Article 7 of Law No. 9.307, of September 23, 1996; III – Once the Arbitration Court has been convened, the successive term of 25 (twenty-five) days will commence for the parties to present their reasons on the controversial matter. The parties may take this opportunity to present reports, expert examinations, opinions, attach documents or information that they deem relevant to support their position; IV – once the memorials have been presented, the Court will analyze the reasons exposed and may, upon request of one of its members, order the elaboration of reports, expert examinations, opinions, request information or documents for the parties, perform diligences and take the steps it understands necessary for the perfect presentation of evidence on the controversial matter; V – during the collection of the elements mentioned in the previous item, the parties will always be allowed to confront each other, in compliance with the principles of informality and consensus and speed, which will characterize the procedure; VI – once the evidence has been presented, a common period of 15 (fifteen) days will be granted for the parties to present their final allegations; VII – once the period prescribed in the previous item has elapsed, regardless of the presentation of the final allegations, the Court will render its decision within 30 (thirty) days; VIII – there will be no appeal against the decision of the Arbitration Court, except a request for reconsideration, applicable only in the event of the decision having been adopted by majority of only one vote; and IX – the arbitration proceedings may only be invalidated in the events prescribed in Article 32 of Law 9.307, of 1966. SOLE SECTION. The expenses with the arbitration proceeding,covering also the costs of reports, opinions and expert examinations, as well asthe fees of the members of the Court, will be imputed to Carrier or Anatel,according to a decision by the Arbitration Court.CHAPTER XXXIV – RESOLUTION OF CONFLICTS CLAUSE 34.1. Eventual conflicts, which may arise betweenCarrier and other telecommunications service providers of collective interest,on a matter of interpretation and application of the regulation, may besubmitted to Anatel in the course of its duties as regulating body, asprescribed in Article 8 and 19 of Law No. 9.472, of 1997, by means of: I – composition of conflicts meeting; II – mediation process; and III – arbitration proceedings. SOLE SECTION. The adoption of the instruments provided inthis clause does not adversely affect the use of other forms of administrativeresolution of conflicts among the providers, pursuant to the terms of Anatel’sInternal Rules.CHAPTER XXXV – THE APPLICABLE LEGAL SYSTEM AND APPLICABLE DOCUMENTS CLAUSE 35.1. This concession is governed, without prejudice tothe other rules that integrate the Brazilian juridical order, Law 9.472, of July16, 1997, and the regulations arising out of it, especially of competence by theExecutive Power, according to the provisions of Article 18 of said law, and thelatter shall always prevail when there is a collision with the former. CLAUSE 35.2. In the provision of the service licensed herein,the national policies of telecommunications and regulations of Anatel shall becomplied with as a full part of this Agreement, especially the documents listedbelow: I – General Licensing Plan; II – General Universalization Targets Plan; III – General Quality Targets Plan; IV – General Competition Targets Plan; V – Telecommunications Services Regulations; VI – Switched Fixed Telephone Service Regulations; VII – General Interconnection Regulations; VIII – Numbering Regulation for the Switched Fixed Telephone Service; IX – Administrative Regulations on Numbering Resources; X – Regulation on Remuneration for the Use of the Networks of the STFC Providers; XI – Local Areas Regulations; XII – Regulations for the Use of Telecommunications Services and Networks in Access to Internet Services; XIII – Access Codes Portability Regulations; XIV – Sanctions Regulations; XV – Accounts Separation and Allocation Regulations; XVI – Regulations of Dedicated Line Industrial Exploitation; XVII – Tariff Regulations; XVIII – Regulation of Systemic Interruptions of the Switched Fixed Telephone Service; XIX – Reversible Assets Control Regulations; XX – Regulation on Supply, Commercialization and Resale of the STFC; XXI – Regulations for the Provision of STFC with Use of Non-Geographic Access Codes; XXII – Regulations on disclosure of subscribers’ lists and edition and distribution of the compulsory and free telephone directory; XXIII – Regulations on supply of information for purpose of disclosure of subscribers’ list. CLAUSE 35.3. In interpreting the rules and provisions setforth in this Agreement, the general hermeneutics rules and the rules andprinciples contained in Law No. 9.472, of 1997, in addition to the documentsmentioned in the previous item, shall be taken into account.CHAPTER XXXVI – VENUE CLAUSE 36.1. The Venue of the Judiciary Section of the FederalCourts of Brasilia, Federal District is hereby elected to settle all questionsarising out of this Agreement, which cannot be resolved through the procedure ofsolution of differences set forth in Chapter XXXII – Arbitration.CHAPTER XXXVII – FINAL AND GENERAL PROVISIONS CLAUSE 37.1. The Agreement signed herein will enter into forceat the time of publication of its extract in the Official Gazette of the Union. CLAUSE 37.2. This Agreement may be amended unilaterally by asupervening juridical provision, by virtue of a law or an act by the LicensingPower.IN WITNESS WHEREOF, the parties sign it in 3 (three) counterparts of equal tenorand form, before the witnesses, who also sign it, for it to produce its legaland juridical effects. Brasilia, December, 2005 For Anatel: For Carrier:- ———————— ——————————PLINIO DE AGUIAR JUNIOR RONALDO IABRUDI DOS SANTOS Deputy President PEREIRA Chief Executive Officer- ——————————— —————————— PEDRO JAIME ZILLER DE ARAUJO ALAIN STEPHANE RIVIERE Director Regulation OfficerWitnesses:- ———————————— —————————— HAMILTON ALVADIA MARTINS AIRTON LUCIANO ARAGAOID: 019983471-4 Ministry of Defense ID: 271.835 SSP-DF ATTACHMENT NO. 01 QUALIFICATION OF THE REVERSIBLE ASSETS OF THE NATIONAL LONG- DISTANCE FIXED SWITCHED TELEPHONE SERVICE PROVISIONa) Infrastructure and equipment for switching and transmission, including public terminals;b) Infrastructure of external network equipment;c) Infrastructure of energy and air-conditioning equipment;d) Infrastructure and equipment of the Service and Service Provision Centers;e) Infrastructure of equipment of operation support systems; andf) Other indispensable elements to the provision of the service. ATTACHMENT NO. 02 NATIONAL LONG-DISTANCE SERVICE BASIC PLAN TELEMAR NORTE LESTE S.A. SECTOR 011. GENERAL PROVISIONS1.1. The Switched Fixed Telephone Service Basic Plan in the nationalLong-Distance mode is governed by the regulation in force, by the acts cited inthis attachment and by others that may succeed it.1.1.1. Other conditions for the provision of the local mode STFC in the LDNmode, contemplated in the regulation, including with respect to other classes ofsubscribers are part of this attachment as if included in it.1.2. The tariffs presented are maximum and net of taxes and socialcontributions.2. USE OF THE NATIONAL LONG-DISTANCE SWITCHED FIXED TELEPHONE SERVICE2.1. For Fixed to Fixed Calls2.1.1. The tariff system for the Switched Fixed Telephone Service in thenational Long-Distance mode (STFC LDN) takes into consideration the distancebetween the centers of areas under tariffs of the call destination and originlocations, its time of duration, type of call performed and the time thereof.2.1.2. Locations that are centers of tariff areas are approved under the termsof the Tariff Regulation of the STFC Provided in the Public Service.2.1.3. The use of STFC LDN shall be charged by Time of Use, and the tariff unitshall be the tenth of minute (six seconds) and the minimum time of tariff shallbe thirty (30) seconds, under the terms of the Tariff Regulation of the STFCProvided in the Public Service.2.1.4. According to the terms of Act n. 51.300 of 06/30/2005, the maximumamounts for the tariff minute of the STFC LDN, in view of the distance betweenthe tariff area centers and the time of call are:
2.1.5. The time modulation is that established by the Tariff Regulation of theSTFC Provided in the Public Service, as follows:
2.1.6. The charging of any increase on the amounts defined above shall not beallowed, irrespective of the duration of the call.2.1.7. The tariff method per time of use shall be adopted for nationallong-distance calls originated in TUP and intended to accesses of STFC, based onthe amount of UTP (VTP), as provided for in the Tariff Regulation of the STFCProvided in the Public Service, the first unit being applicable when answeringthe call and the following ones every period of time, in seconds correspondingto (VTP/Dn) x 60, where Dn is the amount of tariff degree where the call inquestion fits.2.2. For calls involving other telecommunications services.2.2.1. The criteria and procedures to charge calls involving the Mobile PersonalService (SMP) are defined in the regulation.188.8.131.52. The tariff unit is the tenth of minute (six seconds) and the minimumtime of tariff is thirty (30) seconds.184.108.40.206. The maximum amounts of communication minute involving the SMP (VC-2 andVC-3), considering the nature of the call and according to the provision setforth in Act n. 42.422 of 02/06/2004, are presented in the table below:
220.127.116.11. The reduced tariff time for calls intended to SMP shall be from Mondayto Saturday, from 12 am to 7 am and from 9 pm to 12 am, and on Sundays andholidays, from 12 am to 12 am, as provided for in the regulation.2.2.2. The criteria and procedures to charge calls involving the SpecializedMobile Service (SME) are defined in the regulation.18.104.22.168. The tariff unit is the tenth of minute (six seconds) and the minimumtime of tariff is thirty (30) seconds.22.214.171.124. The maximum amounts of communication minute involving the SME (VC-2 andVC-3), considering the nature of the call and according to the provision setforth in Act n. 54.687 of 12/12/2005, are presented in the table below:
2.2.3. For national long-distance calls originated in TUP and intended to otherservices of public interest, whose register areas are differentiated and do notcomprise the tariff area of originating TUP, the measurement method per time ofuse shall be adopted, based on the amount of UTP (VTP) and in the communicationamount where the call in question fits.2.2.4. The criteria and procedures for charging the calls to othertelecommunications services of collective interest are defined by ANATEL underthe terms of the applicable regulation. ATTACHMENT N. 03 OPTICAL ROUTES TELEMAR NORTE LESTE S.A. SECTOR 01 INSTALLEDANGRA DOS REIS (RJ) – BARRA DO PIRAI (RJ)ANGRA DOS REIS (RJ) – BARRA MANSA (RJ)ANGRA DOS REIS (RJ) – PETROPOLIS (RJ)ANGRA DOS REIS (RJ) – RESENDE (RJ)ANGRA DOS REIS (RJ) – RIO DE JANEIRO (RJ)ANGRA DOS REIS (RJ) – VOLTA REDONDA (RJ)BARRA DO PIRAI (RJ) – BARRA MANSA (RJ)BARRA DO PIRAI (RJ) – PETROPOLIS (RJ)BARRA DO PIRAI (RJ) – RESENDE (RJ)BARRA DO PIRAI (RJ) – RIO DE JANEIRO (RJ)BARRA DO PIRAI (RJ) – VOLTA REDONDA (RJ)BARRA MANSA (RJ) – PETROPOLIS (RJ)BARRA MANSA (RJ) – RESENDE (RJ)BARRA MANSA (RJ) – RIO DE JANEIRO (RJ)BARRA MANSA (RJ) – VOLTA REDONDA (RJ)BELFORD ROXO (RJ) – DUQUE DE CAXIAS (RJ)BELFORD ROXO (RJ) – ITABORAI (RJ)BELFORD ROXO (RJ) – ITAGUI (RJ)BELFORD ROXO (RJ) – MARICA (RJ)BELFORD ROXO (RJ) – MESQUITA (RJ)BELFORD ROXO (RJ) – NILOPOLIS (RJ)BELFORD ROXO (RJ) – NITEROI (RJ)BELFORD ROXO (RJ) – NOVA IGUACU (RJ)BELFORD ROXO (RJ) – QUEIMADOS (RJ)BELFORD ROXO (RJ) – RIO DE JANEIRO (RJ)BELFORD ROXO (RJ) – SAO GONCALO (RJ)BELFORD ROXO (RJ) – SAO JOAO DE MERITI (RJ)BELFORD ROXO (RJ) – TERESOPOLIS (RJ)CABO FRIO (RJ) – CAMPOS DOS GOYTACAZES (RJ)CABO FRIO (RJ) – ITAPERUNA (RJ)CABO FRIO (RJ) – MACAE (RJ)CABO FRIO (RJ) – NOVA FRIBURGO (RJ)CABO FRIO (RJ) – RIO DE JANEIRO (RJ)CAMPOS DOS GOYTACAZES (RJ) – ITAPERUNA (RJ)CAMPOS DOS GOYTACAZES (RJ) – MACAE (RJ)CAMPOS DOS GOYTACAZES (RJ) – NOVA FRIBURGO (RJ)CAMPOS DOS GOYTACAZES (RJ) – RIO DE JANEIRO (RJ)DUQUE DE CAXIAS (RJ) – ITABORAI (RJ)DUQUE DE CAXIAS (RJ) – ITAGUAI (RJ)DUQUE DE CAXIAS (RJ) – MARICA (RJ)DUQUE DE CAXIAS (RJ) – MESQUITA ((RJ)DUQUE DE CAXIAS (RJ) – NILOPOLIS (RJ)DUQUE DE CAXIAS (RJ) – NITEROI (RJ)DUQUE DE CAXIAS (RJ) – NOVA IGUACU (RJ)DUQUE DE CAXIAS (RJ) – QUEIMADOS (RJ)DUQUE DE CAXIAS (RJ) – RIO DE JANEIRO (RJ)DUQUE DE CAXIAS (RJ) – SAO GONCALO (RJ)DUQUE DE CAXIAS (RJ) – SAO JOAO DE MERITI (RJ)DUQUE DE CAXIAS (RJ) – TERESOPOLIS (RJ)ITABORAI (RJ) – ITAGUAI (RJ)ITABORAI (RJ) – MARICA (RJ)ITABORAI (RJ) – MESQUITA (RJ)ITABORAI (RJ) – NILOPOLIS (RJ)ITABORAI (RJ) – NITEROI (RJ)ITABORAI (RJ) – NOVA IGUACU (RJ)ITABORAI (RJ) – QUEIMADOS (RJ)ITABORAI (RJ) – RIO DE JANEIRO (RJ)ITABORAI (RJ) – SAO GONCALO (RJ)ITABORAI (RJ) – SAO JOAO DE MERITI (RJ)ITABORAI (RJ) TERESOPOLIS (RJ)ITAGUAI (RJ) – MARICA (RJ)ITABORAI (RJ) – MESQUITA (RJ)ITABORAI (RJ) – NILOPOLIS (RJ)ITABORAI (RJ) – NITEROI (RJ)ITABORAI (RJ) – NOVA IGUACU (RJ)ITABORAI (RJ) – QUEIMADOS (RJ)ITABORAI (RJ) – RIO DE JANEIRO (RJ)ITABORAI (RJ) – SAO GONCALO (RJ)ITABORAI (RJ) – SAO JOAO DE MERITI (RJ)ITABORAI (RJ) – TERESOPOLIS (RJ)ITAPERUNA (RJ) – MACAE (RJ)ITAPERUNA (RJ) – NOVA FRIBURGO (RJ)ITAPERUNA (RJ) – RIO DE JANEIRO (RJ)MACAE (RJ) – NOVA FRIBURGO (RJ)MACAE (RJ) – RIO DE JANEIRO (RJ)MARICA (RJ) – MESQUITA (RJ)MARICA (RJ) – NILOPOLIS (RJ)MARICA (RJ) – NITEROI (RJ)MARICA (RJ) – NOVA IGUACU (RJ)MARICA (RJ) – QUEIMADOS (RJ)MARICA (RJ) – RIO DE JANEIRO (RJ)MARICA (RJ) – SAO GONCALO (RJ)MARICA (RJ) – SAO JOAO DE MERITI (RJ)MARICA (RJ) – TERESOPOLIS (RJ)MESQUITA (RJ) – NILOPOLIS (RJ)MESQUITA (RJ) – NITEROI (RJ)MESQUITA (RJ) – NOVA IGUACU (RJ)MESQUITA (RJ) – QUEIMADOS (RJ)MESQUITA (RJ) – RIO DE JANEIRO (RJ)MESQUITA (RJ) – SAO GONCALO (RJ)MESQUITA (RJ) – SAO JOAO DE MERITI (RJ)MESQUITA (RJ) – TERESOPOLIS (RJ)NILOPOLIS (RJ) – NITEROI (RJ)NILOPOLIS (RJ) – NOVA IGUACU (RJ)NILOPOLIS (RJ) – QUEIMADOS (RJ)NILOPOLIS (RJ) – RIO DE JANEIRO (RJ)NILOPOLIS (RJ) – SAO GONCALO (RJ)NILOPOLIS (RJ) – SAO JOAO DE MERITI (RJ)NILOPOLIS (RJ) – TERESOPOLIS (RJ)NITEROI (RJ) – NOVA IGUACU (RJ)NITEROI (RJ) – QUEIMADOS (RJ)NITEROI (RJ) – RIO DE JANEIRO (RJ)NITEROI (RJ) – SAO GONCALO (RJ)NITEROI (RJ) – SAO JOAO DE MERITI (RJ)NITEROI (RJ) – TERESOPOLIS (RJ)NOVA FRIBURGO (RJ) – RIO DE JANEIRO (RJ)NOVA IGUACU (RJ) – QUEIMADOS (RJ)NOVA IGUACU (RJ) – RIO DE JANEIRO (RJ)NOVA IGUACU (RJ) – SAO GONCALO (RJ)NOVA IGUACU (RJ) – SAO JOAO DE MERITI (RJ)NOVA IGUACU (RJ) – TERESOPOLIS (RJ)PETROPOLIS (RJ) – RESENDE (RJ)PETROPOLIS (RJ) – RIO DE JANEIRO (RJ)PETROPOLIS (RJ) – VOLTA REDONDA (RJ)QUEIMADOS (RJ) – RIO DE JANEIRO (RJ)QUEIMADOS (RJ) – SAO GONCALO (RJ)QUEIMADOS (RJ) – SAO JOAO DE MERITI (RJ)QUEIMADOS (RJ) – TERESOPOLIS (RJ)RESENDE (RJ) – RIO DE JANEIRO (RJ)RESENDE (RJ) – VOLTA REDONDA (RJ)RIO DE JANEIRO (RJ) – SAO GONCALO (RJ)RIO DE JANEIRO (RJ) – SAO JOAO DE MERITI (RJ)RIO DE JANEIRO (RJ) – TERESOPOLIS (RJ)RIO DE JANEIRO (RJ) – VOLTA REDONDA (RJ)SAO GONCALO (RJ) – SAO JOAO DE MERITI (RJ)SAO GONCALO (RJ) – TERESOPOLIS (RJ)SAO JOAO DE MERITI (RJ) – TERESOPOLIS (RJ) Exhibit 4.2 SCHEDULE OF OMITTED AUTHORIZATIONS In August 2001, 15 fixed-line telecommunications carriers that providedservices in 15 states of Region I were merged into Telecomunicacoes do Rio deJaneiro S.A., or Telerj, the sixteenth carrier of Region I from the state of Riode Janeiro whose legal successor is Telemar Norte Leste S.A., or Tmar. See “Item3. Key information-Effects of corporate reorganization” and “Item 4. Informationon the Company-Our history and development-Corporate reorganization.” Because ofthe historical existence of 16 fixed-line telecommunications carriers in RegionI, we have 16 separate agreements with Anatel in connection with certainservices of our telecommunications concession in Region I. As these agreementsare identical in every case except for their reference number and the state ofRegion I covered by them, we have, for ease of reference, filed only therelevant standard concession agreement approved by Anatel and provided thisschedule to indicate the concession agreements that we have omitted from filingas exhibits to the Annual Report on Form 20-F of Tele Norte Leste ParticipacoesS.A., or TNL, for the fiscal year ended December 31, 2005.1. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 01, Contract No. 125/2006-ANATEL, dated December 2005.2. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 02, Contract No. 126/2006-ANATEL, dated December 2005.3. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 04, Contract No. 128/2006-ANATEL, dated December 2005.4. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 05, Contract No. 129/2006-ANATEL, dated December 2005.5. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 06, Contract No. 130/2006-ANATEL, dated December 2005.6. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 07, Contract No. 131/2006-ANATEL, dated December 2005.7. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 08, Contract No. 132/2006-ANATEL, dated December 2005.8. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 09, Contract No. 133/2006-ANATEL, dated December 2005.9. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 10, Contract No. 134/2006-ANATEL, dated December 2005.10. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 11, Contract No. 135/2006-ANATEL, dated December 2005.11. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 12, Contract No. 136/2006-ANATEL, dated December 2005.12. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 13, Contract No. 137/2006-ANATEL, dated December 2005.13. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 14, Contract No. 138/2006-ANATEL, dated December 2005.14. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 15, Contract No. 139/2006-ANATEL, dated December 2005.15. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 16, Contract No. 140/2006-ANATEL, dated December 2005.16. Concession Agreement for LDN Switched, Fixed-Line Telephone Service between Anatel and Telemar Norte Leste S.A. – Area 17, Contract No. 141/2006-ANATEL, dated December 2005.