Brazil - Piratininga Electric Power Project : Loan 0095 - Guarantee Agreement - Conformed

LOAN NUMBER 95 BR Guarantee Agreement (Piratininga Electric Power Project) BETWEEN THE UNITED STATES OF BRAZIL AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED FEBRUARY 24, 1954 4@uarantee Agreement AGREEMENT, dated 14February 24, 1954, between THE UNITED STATES OF BRAZIL (hereinafter called the Guarantor) and INTEPNATIONAL BANK FOR RECONSTRUCTION ANi) DEVELOPMENT (hereinafter called the Bank). AVUEREAS by an agreement of even date herewith between the Bank and Brazilian Traction, Light and Power Com- pany, Limited (hereinafter called the Borrower), which agreement and the schedules therein referred to are here- inafter called the Loan Agreement, the Bank has agreed to make to the Borrower a loan in various currencies in an aggregate principal amount equivalent to eighteen million seven hundred and ninety thousand dollars ($18,790,000), on the terms and conditions set forth in the Loan Agree- ment, but only on condition that the Guarantor agree to guarantee such loan as herein provided; and TYHEREAS the Guarantor represents and warrants that the giving of such guarantee is authorized by Law No. 1518 of December 24, 1951 and Articles 22 and 23 of Law No. 1628 of June 20, 1952 of the Guarantor; and WHEREAS the Guarantor, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to guarantee such loan as herein provided; Now THEREFORE the parties hereto hereby agree as follows: ARTICLE I SECTION 1.01. The parties to this Guarantee Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated October 15, 1952 subject, however, to the modi- fications set forth in Schedule 3 to the Loan Agreement (said Loan Regulations No. 4 as so modified being herein- 4 after called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Wherever used in this Guarantee Agree- ment, unless the context shall otherwise require, the respec- tive terms which are defined in Section 1.02 of the Loan Agreement shall have the respective meanings therein set f orth. ARTICLE II SECTION 2.01. Without limitation or restriction upon any of the other covenants on its part in this Agreement con- tained, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and the interest and other charges on, the Loan, the principal of and interest on the Bonds, the premium, if any, on the prepayment of the Loan or the redemption of the Bonds, all as set forth in the Loan Agreement and in the Bonds, and in the Indenture. SECTION 2.02. If the Guarantor shall default in the per- formance of any agreement on its part in this Guarantee Agreement contained, the Bank, at its option, may by notice to the Guarantor require that the Guarantor pay the principal amount of all the Bonds which shall then be out- standing and unpaid, and the interest accrued and unpaid thereon to the date of payment thereof, and forthwith upon the giving of such notice such principal and interest shall become immediately due and payable by the Guarantor, anything in this Guarantee Agreement, the Loan Agree- ment, the Indenture, the Indenture of Guarantee or the Bonds to the contrary notwithstanding. Such principal and interest in respect of any Bond shall be paid, at the place designated in the Indenture for the payment of principal thereof and interest thereon, upon surrender of such Bond at said place in negotiable form, together with all unpaid coupons (if any) appurtenant thereto. If and when any such Bond shall have been so surrendered and such payment shall have been made with respect thereto, the Guarantor shall succeed to all rights of the bolder of such Bond thereunder and under the Indenture; provided, however, that nothing herein contained shall be deemed to confer upon the Guarantor or any successor in interest to the Guarantor any right to declare the principal of any such Bond to be due and payable by the Borrower or to require payment thereof prior to the maturity date specified therein, except upon the occurrence of an Event of Default as provided in the Indenture; and provided further that neither the Guarantor nor any successor in interest to the Guarantor shall succeed to any right of any such holder under any guarantee by the Bank. The exercise by the Bank of its right hereunder to require payment by the Guarantor of the principal of, and interest on, the Bonds shall not impair or affect any right of the Bank under the Loan Agreement in respect of the commitment charge, commission or service charge on the Loan or any other right, power or remedy which the Bank may have under this Guarantee Agreement or the Loan Agreement. ARTICLE III SECTIOg 3.01. It is the intention of the Guarantor that no other external debt shall have priority over the Loan in the allocation or realization of foreign exchange. Accord- ingly, the Guarantor covenants that, unless the Bank shall otherwise agree in writing, any privilege or priority (in- cluding any mortgage, pledge or charge on any property, assets, revenues or receipts of the Guarantor or any of its political subdivisions or any agency of any of them) which the Guarantor or any such political subdivision or agency shall create or permit to be created as security for the payment of any external debt shall equally and ratably secure the payment of the Loan and the Bonds, and, in the creation of any such privilege or priority, express pro- vision shall be made to that effect; provided, however, that this Section shall not apply (1) to the creation of any mort- gage, pledge or other charge or priority on any property purchased, at the time of the purchase, solely as security for the payment of the purchase price of such property; or (2) to any pledge of commercial goods to secure debt ma- turing not more than one year after its date and to be paid out of the proceeds of sale of such commercial goods; or (3) to any pledge by or on behalf of the Guarantor of any of its assets in the ordinary course of banking business to secure any indebtedness maturing not more than one year after its date. SECTION 3.02. (a) The Guarantor and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Guarantor, such information shall include information with respect to financial and economic condi- tions in the territories of the Guarantor and the inter- national balance of payments position of the Guarantor. On the part of the Bank, such information shall include such information as shall be available to the Bank regard- ing the performance of the obligations of the Borrower under the Loan Agreement. (b) The Guarantor and the Bank shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof, and shall in- form each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. (c) The Guarantor shall afford all reasonable oppor! tunity for accredited representatives of the Bank to visit any part of the territories of the Guarantor for purposes related to the Loan. SgCTION 3.03. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Guarantor or laws in effect in its 7 territories; provided, however that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 3.04. This Agreement, the Loan Agreement and 'the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Guarantor or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof. SECTION 3.05. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Guarantor or laws in effect in its territories. ARTICLE IV SECTION 4.01. The Guarantor agrees to execute and deliver to the Trustee in office under the Indenture, when and if requested by the Bank, an Indenture of Guarantee substantially in the form annexed hereto and marked "Annex 1." Such Indenture of Guarantee shall not limit or impair the rights of the Bank under this Guarantee Agreement. SECTION 4.02. The Guarantor agrees to endorse its guarantee hereunder on the Bonds as more fully set forth in the form of Indenture of Guarantee annexed hereto and marked "Annex 1." ARTICLE V SECTION 5.01. If and to the extent that the Guarantor shall pay any amount or amounts on account of its guaran- tee of the Loan or the Bonds, the Guarantor may obtain from the Borrower a lien (including bonds issued under the Indenture other than Bonds), to secure the repayment of such amount or amounts, provided that such lien shall be 8 obtained through the operation of the provisions of the In- denture. SECTION 5.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Guarantor: Ministerio da Fazenda, Avenida Presidente Antonio Carlos 375, Rio de Janeiro, Brazil For the Bank: International Bank for Reconstruction and Development 1818 H Street, N. W., Washington, D. C., U. S. A. SECTION 5.03. The Minister of Finance of the Guarantor is designated for the purposes of Section 8.03 of the Loan Regulations, and if appointed by him, Desenvolvimento is designated for the same purposes. IN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have caused this Guarantee Agreement to be signed in their re- spective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. THE UNITED STATES OF BRAZIL By MARIO DA CAMARA Authorized Representative INTERNATIONAL BANK FOR RECON- STRUCTION AND DEVELOPMENT By R. L. GARNER Vice-Preside-nt 9 ANNEX A INDENTURE OF GUARANTEE BETWEEN THE UNITED STATES OF BRAZIL AND NATIONAL TRUST COMPANY, LIMITED. Indenture of Guarantee, dated ............, 1954, be- tween THE UNITED STATES OF BRAZIL (hereinafter called the Guarantor), party of the first part, and NATIONAL TRUST COMPANY, LIMITED, a corpora- tion duly organized and existing under the laws of the Prov- ince of Ontario, Canada, as trustee, (hereinafter called the Trustee) party of the second part; WHEREAS Brazilian Traction, Light and Power Company, Limited, a corporation duly organized and existing under the laws of Canada (hereinafter called the Company) has executed with the Trustee its Collateral Trust Indenture dated as of January 1, 1949 (hereinafter called the In- denture), which Indenture provides, among other things, for the issuance, authentication and delivery of Collateral Trust Bonds of the Company; and WHEREAs by a guarantee agreement dated February 1954 between the Guarantor and International Bank for Reconstruction and Development (hereinafter called the Bank) (such guarantee agreement being herein called the Guarantee Agreement) a copy of which Guarantee Agree- ment has been lodged with the Trustee, the Guarantor has agreed, among other things, to guarantee the due and punctual payment of the principal of, the premium, if any, on redemption of, the interest on and the sinking fund pay- ments in connection with all Collateral Trust Bonds issued and authenticated under the Indenture and delivered to the Bank pursuant to an agreement (hereinafter called the Loan Agreement) dated February , 1954, between the Bank and the Company, a copy of which Loan Agreement has been lodged with the Trustee; and 10 WHEREAs by said Guarantee Agreement between the Guarantor and the Bank, the Guarantor has further agreed, among other things, to execute an indenture of guarantee substantially in the form of this Indenture of Guarantee; Now THEREFORE the parties hereto hereby agree as follows: FmRST: Whenever used in this Indenture of Guarantee, unless the context shall otherwise require, the term Col- lateral Trust Bonds or Collateral Trust Bond means Collateral Trust Bonds, or a Collateral Trust Bond, issued and authenticated pursuant to the Indenture; and the term Guaranteed Bonds or Guaranteed Bond means Collateral Trust Bonds, or a Collateral Trust Bond, entitled to the benefit of this Indenture of Guarantee as in Article Ninth hereof provided. SECOND: Without limitation or restriction upon any of the other covenants on its part in this Indenture of Guarantee contained, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of the Guar- anteed Bonds, the sinking fund payments in connection therewith, the premium, if any, on the redemption thereof and the interest thereon, all as provided in the Guaranteed Bonds and in the Indenture. THIRD: The Guarantor hereby covenants as follows: Section 1. The principal of the Guaranteed Bonds, the interest accruing thereon, the sinking fund payments in connection therewith, and the premium, if any, on the redemption thereof, as specified in the Guaranteed Bonds and the Indenture, shall be paid without deduction for and free from any and all taxes, duties, imposts and fees of any nature now or at any time bereafter imposed by the 11 Guarantor or by any taxing authority thereof or therein, including income taxes, and shall be paid free from all restrictions of the Guarantor, its political subdivisions or its agencies; but this provision shall not be applicable to the payments made under the provisions of any Guaranteed Bond to the holder thereof when such Guaranteed Bond is beneficially owned by an individual or corporate resident of the Guarantor. Section 2. This Indenture of Guarantee, the Indenture, and the Guaranteed Bonds shall be free of any issue, stamp or other tax imposed by the Guarantor or any taxing authority thereof or therein. FouRTH: If the Guarantor shall default in the perform- ance of any agreement on its part in the Guarantee Agree- ment contained and if the Bank, at its option, shall by notice to the Guarantor as provided in the Guarantee Agree- ment require that the Guarantor pay the principal amount of all the Guaranteed Bonds which shall then be outstand- ing and unpaid, and the interest accrued and unpail there- on to the date of payment thereof, then forthwith upon the giving of such notice such principal and interest shall be- come immediately due and payable by the Guarantor and, in respect of any such Guaranteed Bond, shall be paid, at the place designated in the Indenture for the payment of principal thereof and interest thereon, upon surrender of such Guaranteed Bond at said place in negotiable form, together with all unpaid coupons (if any) appurtenant thereto; all as, and with such effect as, more fully set forth in the Guarantee Agreement. FrFTH: The Guarantor agrees that its obligations under any agreements on its part contained in this Indenture of Guarantee are not subject to any prior notice to, demand upon or action against the Company or to any prior notice to or demand upon the Guarantor with regard to any de- 12 fault by the Company in respect of any obligations on its part iontained in the Indenture or the Guaraniteed Bonds and shall not be affected by any enforcement of any mort- gage, lien, priority or charge created by the Indenture or by any vxercise or enforcement of any right or power there- by conforred. No extension of time or forbearance given to the Comipany in respect of the performance of any of its obligations under the Indenture or the (uaranteed Bonds, and no tailure of any holder of the Bonds or of the Trus- tee under the Indenture to give any notice or to make any demand or protest whatsoever, or strictly to assert any right or pursue any remedy against the Company in respect of the Indenture or the Guaranteed Bonds or to enforce any mortgage, lien, priority or charge created by the In- denture or otherwise, and no modification of the provisions of the Indenture in accordance with the terms thereof, and no failure of the CoMpany to comply with any require- incit of any law, regulation or order of tle Guarantor or any of its political subdivisions or agencies, shall in any way terminate, diminish or limit the unconditional guarantee of the Guarantor hereunder, or any other ob- ligation of the Guarantor hereunder, it being the intent of the parties hereto that the obligations of the Guarantor shall not be discharged except by performance and then only to the extent of such performance. SIXTH The Guarantor agrees to endorse its guarantee hereunder upon (a) each Collateral Trust Bond issued for delivery to the Bank pursuant to the Loan Agreement and (b) each Collateral Trust Bond issued in exchange for, on transfer of or (subject to the provisions of Article Seventh hereof) in substitution for Collateral Trust Bonds speci- fied in clause (a) or clause (c) of this Article, and (c) each Collateral Trust Bond issued in exchanre for, on transfer Sr to the provisions of Article Sfventh hereof) . for Collateral Trust Bond i perifed in e ause of this Artielo. Such en(doremont of guarantee Ahe b tantia llV the following ftrm. 13 The United States of Brazil, for value received, as primary obligor and not as surety merely, hereby ab- solutely and unconditionally guarantees to the holder of the within Bond, and pledges its full faith and credit for, the due and punctual payment of the prin- cipal and redemption price of said Bond, and the inter- est thereon and all sinking fund payments in connec- tion with the Bonds of the series designated therein, all in accordance with the provisions of the Indenture in said Bond mentioned. In the event specified in an ndenture of Guarantee dated ............, 1954 be- tween the undersigned and National Trust Company, Limited as Trustee, International Bank for Recon- struction aid Development may require the under- signed forthwith to pay the principal of the within Bond, together with interest thereon accrued and un- paid to the date of payment, at the place specified in the said Indenture for the payment of principal there- of and interest thereon, upon surrender of said Bond at said place in negotiable form, together with all unpaid coupons (if any) appurtenant thereto; all in the manner and with the effect provided in said Indenture of Guarantee. THE UNITED STATES OF BILLZIL By Minister of Finance Countersigned by Authorized Representative Such endorsement of guarantee shall be executed in the name and on behalf of the Guarantor with the facsimile signature of its Minister of Finance or any successor to any such Minister of Finance and shall be countersigned 14 by its authorized representative. In case any Minister of Finance of the Guarantor, or any such successor, whose facsimile signature shall be affixed to any such endorse- ment of guarantee shall cease to be such Minister of Finance of the Guarantor, or such successor, before such endorsement shall have been authenticated as provided in .Article Eighth of this Indenture of Guarantee, such en- dorsement may nevertheless be authenticated as provided in said Article Eighth as though such Minister of Finance, or successor, whose facsimile signature was affixed to such endorsement had not ceased to be such Minister of Finance or successor. In case any such authorized representative of the Guarantor who shall have countersigned any such endorsement shall cease to be such authorized representa- tive of the Guarantor before such endorsement shall have been authenticated as provided in said Article Eighth, such endorsement may nevertheless be authenticated as pro- vided in said Article Eighth as though such authorized rep- resentative who countersigned such endorsement had not ceased to be such authorized representative of the Guaran- tor and any such endorsement may be so countersigned by any person who at the time of countersigning shall be the authorized representative of the Guarantor although at the date of the Collateral Trust Bond bearing such endorsement such person may not have been such authorized representa- tive of the Guarantor. The Guarantor shall furnish to the Trustee from time to time the names and sufficient evidence of the authority of each person by whose signature or fac- simile signature such endorsement of guai'antee is to be ex- ecuted or countersigned as aforesaid, together with the authenticated specimen signature of each such person. SEVENT-: Whenever the Company shall execute a new Collateral Trust Bond in substitution for a mutilated, lost, de-troJ, or ;tolen Guaranteed Bond and its coupons, the Guarantor ;hall not, be obligated to endorse its guarantee thereon unless and until the Guarantor shall be indemni- fied to its satisfaction. 15 EIGHTH: The Trustee shall authenticate the guarantee endorsed upon each Collateral Trust Bond pursuant to Article Sixth hereof by countersignature in substantially the following form: Countersigned for authentication: NATIONAL TRUST COMPANY, LIMITED As Trustee, By Authorized Officer provided, however, that the aggregate principal amount of such Collateral Trust Bonds so authenticated outstanding at any time shall not exceed $18,790,000 or the equivalent thereof in other currencies determined as provided in the Loan Agreement, plus the amount of any Guaranteed Bonds issued in substitution for lost, destroyed, stolen or mutilated Guaranteed Bonds. The Trustee shall be en- titled to rely upon a certificate signed by the President or a Vice-President and by the Treasurer or an Assistant Treasurer of the Company that any Collateral Trust Bond for which such countersignature is requested will be deliv- ered to the Bank pursuant to the provisions of the Loan Agreement and the Trustee shall not be required, as a con- dition of executing such countersignature, to satisfy itself otherwise than by such certificate that such Collateral Trust Bond will be or has been so delivered. NINTH: All Collateral Trust Bonds which shall have endorsed thereon the guarantee of the Guarantor as pro- vided in Article Sixth hereof authenticated as provided in Article Eighth hereof shall be entitled to the benefit of this Indenture of Guarantee; and no other Collateral Trust Bonds shall be entitled to the benefit of this Indenture of Guarantee. 16 TENTH: All covenants and agreements on the part of the Guarantor herein contained are made for the benefit of the Trustee, as trustee of an express trust for the several holders from time to time of the Guaranteed Bonds, and for the benefit of such holders. Such covenants and agree- ments shall inure to the benefit of any successor of the Trustee. All covenants and agreements on the part of the Trustee herein contained shall be binding upon any suc- cessor of the Trustee. Any successor trustee duly acting as such under the terms of the Indenture shall be deemed to be a successor of the Trustee under the provisions of this Indenture of Guarantee. IN WITNSs WHEREOF, the Guarantor has caused this In- denture of Guarantee to be signed by its representative thereunto duly authorized, and the Trustee has caused this Indenture of Guarantee to be executed by its corporate officers thereunto duly authorized and its corporate seal to be thereunto affixed and attested, as of the day and year first above written. TE UNITED STATES OF BRAziL By Authorized Representative NATIONAL TRUST COMPANY, IdMITED By