CONFORMED COPY LOAN NUMBER 1257 BR PROJECT AGREEMENT (COPEL Power Distribution Project) between STATE OF PARANA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated May 19, 1976 PROJECT AGREEMENT AGREEMENT, dated May 19, 1976, between STATE OF PARANA (here- inafter called the State) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Companhia Paranaense de Energia Eletrica - COPEL (hereinafter called the Borrower), the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to fifty-two million dollars ($52,000,000), on the terms and condi- tions set forth in the Loan Agreement and in a Guarantee Agreement of even date herewith between the Federative Republic of Brazil (hereinafter called the Guarantor) and the Bank, but only on condi- As, tion that the State agree to undertake certain obligations toward New the Bank as hereinafter provided; WHEREAS the State warrants and represents that it is author- ized under the laws of the State to undertake the obligations con- tained in this Agreement; and WHEREAS the State, in consideration of the Bank's entering into the Loan Agreement with the Borrower and into the Guarantee Agreement with the Guarantor, has agreed to undertake the obliga- tions hereinafter provided; NOW THEREFORE the parties hereto hereby agree as follows: -2- Section 1. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement and the General Conditions (as so defined) have the res- pective meanings therein set forth. Section 2. The State shall (i) take all such reasonable action as shall be necessary to enable the Borrower to carry out the Project with due diligence and efficiency, including the provision of funds as are required on the State's part therefor; and (ii) not take or cause or permit any of its agencies to take any action which would prevent or interfere with the performance by the Borrower of its covenants, agreements and obligations contained in the Loan Agree- ment. Section 3. Without limitation or restriction upon the provi- sions of Section 2 of this Agreement, the State specifically un- dertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. Section 4. The State shall provide the Borrower or cause the Borrower to be provided, promptly as needed, with such funds as are required on the State's part to ensure the timely operation (estimated on the date of this Agreement to be by December 31, 1980) of the Foz do Areia hydroelectric power station. -3- Section 5. Except as the Bank shall otherwise agree, the State shall reinvest in capital stock of the Borrower all cash dividends paid to the State by the Borrower until at least the Closing Date. Section 6. The State shall cause its agencies in charge of urban development to render the necessary assistance to the Bor- rover, when requested by it, as provided for in Section 3.06 (ii) of the Loan Agreement. Section 7. (a) The State shall, at the request of the Bank, exchange views with the Bank with regard to the performance of its obligations under this Agreement, the progress of the Project and other matters relating to the purposes of the Loan. (b) The State shall promptly inform the Bank of any condition which interferes, or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by the State of its obligations under this Agree- ment. Section 8. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 9. This Agreement and all obligations of the Bank and of the State thereunder shall terminate when the Loan Agreement shall terminate in accordance with its terms and the Bank shall notify the State thereof. -4- Section 10. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or K made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have desig- nated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT), Washington, D.C. 248423 (RCA) or 64145 (WUI) For the State: Governo do Estado do Parana Secretaria de Estado das Financas Rua Dr. Murici, 915 80.000 - Curitiba - Parana Brazil Cable address: Secretaria das Finanjas Curitiba, Brazil -5- Section 11. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of the State may be taken or executed by the Secretary of Finance or such other person or persons as he shall designate in writing. Section 12. The State shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of the State, take any action or execute any documents required or permitted to be taken or executed by the State pursuant to any of the provisions of this Agreement. Section 13. This Agreement may be executed in several counter- parts, each of which shall be an original, and all collectively but one instrument. -6- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. STATE OF PARANA By /s/ Arturo Andreoli Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Gunter K. Wiese Acting Regional Vice President Latin America and the Caribbean