Common use of APPLICATION OF THE FUNDS Clause in Contracts

APPLICATION OF THE FUNDS. 3.8.1 The funds obtained by the Issuer from this Placement, including those obtained through exercising the option described in item 3.5 above, will be applied, in accordance with Brazilian Corporate Legislation, to the settlement of debt, notably payment to Tele Norte Leste Participacoes S.A. ("TNL") with regard to their Primary Offering of Debentures and to ABN with regard to tranche C of the Contract for the Acquisition of Notes, as shown in the table below: AMOUNT (R$) SOURCES AT THE ISSUE DATE % ------- ----------------- --- Debentures - 1st Series 1,200,000,000 75% Debentures - 2nd Series 400,000,000 25% ------------- --- Total 1,600,000,000 100% ============= === AMOUNT (R$) USES AT SEPT. 30, 2004 % ---- ----------------- --- Primary Offering of TNL Debentures 1,312,000,000 82% Acquisition of Notes - ABN Tranche C 288,000,000 18% ------------- --- Total 1,600,000,000 100% ============= ===

APPLICATION OF THE FUNDS. 3.8.1 The funds obtained by the Issuer from this Placement, including those obtained through exercising the option described in item 3.5 above, will be applied, in accordance with Brazilian Corporate Legislation, to the settlement of debt, notably payment to Tele Norte Leste Participacoes S.A. ("TNL") with regard to their Primary Offering of Debentures and to ABN with regard to tranche C of the Contract for the Acquisition of Notes, as shown in the table below: AMOUNT (R$) SOURCES AT THE ISSUE DATE % ------- ----------------- --- Debentures - 1st Series 1,200,000,000 75% Debentures - 2nd Series 400,000,000 25% ------------- --- Total 1,600,000,000 100% ============= === AMOUNT (R$) USES AT SEPT. 30, 2004 % ---- ----------------- --- Primary Offering of TNL Debentures 1,312,000,000 82% Acquisition of Notes - ABN Tranche C 288,000,000 18% ------------- --- Total 1,600,000,000 100% ============= ===%