LOAN NUMBER 11 BR
Guarantee Agreement
BETWEEN
THE UNITED STATES OF BRAZIL
AND
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
DATED JANUARY 27, 1949


Ouarantet gretement
AGREEMENT, dated January 27, 1949, between THE
UNITED STATES OF BRAziL (hereinafter called the Guaran-
tor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT (hereinafter called the Bank).
WHEREAs by an agreement between the Bank and Brazil-
ian Traction, Light and Power Company, Limited, (here-
inafter called the Borrower) which agreement and the
schedules therein referred to are hereinafter called the
Loan Agreement) executed and delivered simultaneously
with the execution and delivery of this agreement and bear-
ing even date herewith, the Bank has agreed to make to the
Borrower a loan in the aggregate principal amount of
seventy-five million dollars ($75,000,000), or the equiva-
lent thereof in other currencies, on the terms and
conditions set forth in the Loan Agreement, but only on
condition that the Guarantor agree to guarantee such loan
as herein provided; 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 THREFORE the parties hereto hereby agree as
follows:
ARTIOLE I
Wherever used in this Guarantee Agreement, unless the
context shall otherwise require, the respective terms which
are defined in Article I of the Loan Agreement shall have
the respective meanings therein set forth.
ARTIOLE II
Without limitation or restriction upon any of the other
covenants on its part in this Guarantee Agreement con-
tained, the Guarantor hereby unconditionally guarantees,


4
as primary obligor and not as surety merely, the due and
punctual payment of the principal of, and the interest,
commitment charge, service charge, if any, and commission
on, the Loan, the principal of, premium, if any, on the re-
demption of, and interest on the Bonds and the sinking
fund payments in connection therewith, all as set forth in
the Loan Agreement and the Bonds and the Indenture.
ARTICLE III
SECTIDN 1. 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,
asset,, 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 pay-
ment 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 cr priority, express provision shall be
made to that effect; provided, however, that this Section shall
not apply (1) to the creation of any mortgage, 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 maturing not more than
one year after its date and to be paid out of the proceeds
of sale of such commercial goods; or (3), if and when a
central bank shall be established by the Guarantor, to any
pledge by said central bank of any of its assets in the
ordinary course of its banking business to secure any in-
debtedness maturing not more than one year after its date.
SECTION 2. The Guarantor covenants that, so long as
any part of the Loan shall be outstanding and unpaid, if


5
the Guarantor, or any of its political subdivisions or any
of its agencies or any agency of any of its political sub-
divisions, shall propose to incur, assume or guarantee any
external debt or substantially to modify the terms of pay-
ment of any then existing external debt incurred, assumed
or guaranteed by any of them, the Guarantor will notify
the Bank promptly of the particular proposal and prior to
taking the proposed action will afford to the Bank all op-
portunity which' is reasonably practicable under the cir-
cumstances to exchange views with the Guarantor with
regard to such proposal; provided, however, that the fore-
going provisions shall not apply to either of the following:
(a) the incurring of additional external debt through
utilization, in accordance with the terms of any credit
established prior to the date of this Guarantee Agreement,
of any unused amounts available under such credit; or (b)
the entering into international payments or similar agree-
ments the term of which is not more than one year and
under which the transactions on each side are expected to
balance over the period of the agreement
SECTIoN 3. In order that the Bank and the Guarantor
may cooperate to the fullest extent in assuring that the
purposes of the Loan shall be accomplished, so long as any
part of the Loan shall be outstanding and unpaid, the
Guarantor covenants that it will afford to the Bank, from
time to time as the Bank shall reasonably request:
(a) all reasonable opportunity for exchanges of views
between accredited representatives of the Bank and
officials empowered to represent the Guarantor in
such exchanges of views with regard to matters
relating to the purposes of the Loan and the mainte-
nance of the service of the Loan and the Bonds and
other matters of mutual interest, it being understood
that both the Bank and the Guarantor will receive
from one another suggestions and observations in
regard to all such matters in a spirit of mutual co-
operation; and


6
(b) all reasonable opportunity for accredited repre-
sentatives of the Bank to visit freely any part of the
territories of the Guarantor for the purpose of per-
forming the functions set forth in clauses (b) and (c)
of Section 3 of Article VI of the Loan Agreement and
for the purpose of studying the financial and eco-
nomic conditions of the Guarantor and all other mat-
ters relating to the purposes of the Loan.
SECTioN 4. The Guarantor covenants that if at any time,
so long as any part of the Loan shall be outstanding and
unpaid, any condition shall arise which shall prevent, ob-
struct or interfere with, or threaten to prevent, obstruct
or interfere with, the accomplishment of the purposes of
the Loan or the maintenance of the service of the
Loan, the Guarantor will promptly inform the Bank of
such condition and will afford to the Bank a reasonable
opportunity to exchange views with the Guarantor with
regard thereto.
SEcTioN 5. The Guarantor covenants that, so long as
any part of the Loan shall be outstanding and unpaid, the
Guarantor will furnish to the Bank all such information,
at such times and in such detail, as the Bank shall reason-
ably request, relating to financial and economic conditions
in the territories of the Guarantor and the international
balance of payments position of the Guarantor.
SEcTION 6. The Guarantor covenants that the principal
of, sinking fund payments in connection with and interest
and other charges on the Loan and the Bonds shall be paid
without deduction for and free from any and all taxes,
duties, imposts and fees of any nature how or at any time
hereafter imposed by the Guarantor or by any taxing au-
thority thereof or therein, including income taxes, and shall
be paid free from all restrictions of the Guarantor, its
political subdivisions or its agencies; bnt this provision


7
shall not be applicable to the payments made under the pru-
visions of any Bond to the holder thereof when such Bond
is beneficially owned by an individual or corporate resident
of the Guarantor.
SECTION 7. The Guarantor covenants that this Guarantee
Agreement, the Loan Agreement, the Indenture, the Inden-
ture of Guarantee, the Bonds, the Subsidiary Indentures
and the Subsidiary Debentures shall be free of any issue,
stamp or other tax imposed by the Guarantor or any tax-
ing authority thereof or therein.
ARTICLE IV
SECTION 1. 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 substan-
tially 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 2. The Guarantor agrees to endorse its guar-
antee 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 1. At any time and from time to time the Bank
shall have the right to sell, pledge or otherwise dispose of
any of the Bonds (either with or without the guarantee of
the Bank). Except as shall otherwise be agreed in writing
between the Bank and the Guarantor, or as otherwise specifi-
cally provided in this Guarantee Agreement, the provisions
of this Guarantee Agreement shall continue in full force
and effect until the entire principal amount of the Loan
shall be cancelled as provided in Article V of the Loan
Agreement or shall be paid. No holder of any Bond


8
other than the Bank shall by virtue of being the
holder thereof be entitled to exercise any of the
rights conferred, or be subject to any of the conditions or
obligations imposed, upon the Bank under this Guarantee
Agreement except as shall be provided in such Bond or
in the guarantee of the Guarantor endorsed thereon or
in the Indenture or in the Indenture of Guarantee.
The Bank shall before selling, pledging or otherwise dis-
posing of any of the Bonds notify the Guarantor
of the intention of the Bank so to do and shall afford to
the Guarantor a reasonable opportunity to express its
views with regard thereto. If at any time the Bank shall
desire to make a public offering of all or any of the Bonds
without the guarantee of the Bank, the Bank shall so notify
the Guarantor at least four (4) months prior to making
such public offering. The failure of the Bank to comply
with any of the provisions of this Section shall not in any-
wise affect or impair the negotiability of the Bonds or the
title or rights of any transferee of any of the Bonds.
SECTION 2. The Guarantor agrees that if the Bank shall
at any time sell any of the Bonds and shall then or there-
after guarantee the payment in whole or in part of the prin-
cipal thereof, the interest thereon, the sinking fund pay-
ments in connection therewith and the premiums, if any,
on the redemption thereof in accordance with the terms
thereof, the Guarantor will indemnify the Bank against
liability arising out of such guarantee.
ARTICLE VI
SECTION 1. The respective rights and obligations of the par-
ties hereto under this Guarantee Agreement and under the
Bonds shall be valid and enforceable in accordance with
their terms anything in any statute, law or regulation of any
nation or state or political subdivision thereof to the con-
trary notwithstanding. Neither of such parties shall be
entitled in any proceeding under this Article to assert any
claim that any provision of this Guarantee Agreement, of


9
the Loan Agreement or of the Bonds is invalid or unen-
forceable because of any provision of the Articles of Agree-
ment of the Bank or for any other reason.
SECTION 2. The provisions of this Guarantee Agreement
shall be interpreted in accordance with the law of the State
of New York, United States, as at the time in effect.
SECTION 3. Any controversy between the parties to this
Guarantee Agreement and any claim by either party to
this Guarantee Agreement against the other party thereto
arising under this Guarantee Agreement or the Bonds which
shall not be determined by agreement of such parties shall
be submitted to and determined by arbitration by an Ar-
bitral Tribunal in accordance with the provisions of Loan
Regulations No. 1 of the Bank, dated May 9, 1947, a copy
of which has been furnished to the Guarantor. The par-
ties to this Guarantee Agreemcnt accept and agree to the
provisions of said Loan Regulations No. 1 with the same
force and effect as if fully set forth herein; provided, how-
ever,
(a) that Section 3 of Article III of said Loan Regula-
tions is hereby modified so as to provide that if the
Borrower and the Guarantor shall not agree on the
appointment of the second arbitrator the Arbitral
Tribunal shall consist of five arbitrators, one ap-
pointed by the Guarantor, two appointed by the Bank,
one appointed by the Borrower, and the fifth im-
partial arbitrator (sometimes referred to in said
Loan Regulations as the umpire) shall be appointed
in the manner provided in said Loan Regulations for
the appointment of the umpire; and
(b) that the Bank shall not be entitled to enter any judg-
ment against the Guarantor in any court for the en-
forcement of any award rendered pursuant to said
Loan Regulations No. 1, or to enforce by execution
against the Guarantor any judgment entered upon


10
any such award or any judicial mandate or order
made in any proceeding to enforce any such award,
except as any such remedy may be available to the
Bank against the Guarantor otherwise than by rea-
son of the provisions of said Loan Regulations No. 1.
ARTICLE VII.
If the Guarantor shall default in the performance of any
agreement on its part in this Guarantee Agreement con-
tained, the Bank, at its option, may by notice to the Guar-
antor require that the Guarantor pay the principal amount
of all the Bonds which shall then be outstanding and un-
paid, 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 imme-
diately due and payable by the Guarantor, anything in this
Guarantee Agreement, the Loan Agreement, 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 in-
terest 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 holder of such Bond thereunder
and under the Indenture; provided, however, that nothing
herein contained shall be deemed to confer upon the Guar-
antor 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 suc-
ceed to any right of any such holder under any guarantee


11
by the Bank. The exercise by the Bank of its right here-
under 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 re-
spect 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 VIII.
The Guarantor agrees that its obligations under any
agreements on its part contained in this Guarantee Agree-
ment and the right of the Bank under Article VII hereof
to require payment of the principal of the Bonds and of the
interest thereon are not subject to any prior notice to,
demand upon or action against the Borrower or to any
prior notice to or demand upon the Guarantor with regard
to any default by the Borrower in respect of any obliga-
tions on its part contained in the Loan Agreement, the
Indenture or the Bonds and shall not be affected by any
enforcement of any mortgage, lien, priority or charge cre-
ated by the Indenture or by any exercise or enforcement of
any right or power thereby conferred. No extension of
time or forbearance given to the Borrower in respect of
the performance of any of its obligations under the Loan
Agreement, the Indenture or the Bonds, and no failure of
the Bank or of any holder of "he Bonds or of the Trustee
under the Indenture to give any notice or to make any de-
mand or protest whatsoever, or strictly to assert any right
or pursue any remedy against the Borrower in respect
of the Loan Agreement, the Indenture or the Bonds or to
enforce any mortgage, lien, priority or charge created by
the Indenture or otherwise, and no modification of the pro-
visions of the Loan Agreement or the Indenture permitted
by the terms thereof, and no failure of the Borrower
to comply with any requirement of any law, regulation or
order of the Guarantor or any of its political subdivisions


12
or agencies, shall in any way terminate, diminish or limit
the unconditional guarantee of the Guarantor hereunder,
or the right of the Bank under Article VII hereof to
require payment of the principal of, and interest on, the
Bonds, 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 per-
formance. No delay or omission of the Bank to exercise
its right under Article VII hereof to require payment of
the principal of, and interest on, the Bonds or to exercise
any other right under this Guarantee Agreement shall im-
pair any such right or be construed to be a waiver thereof
or a waiver of or acquiescence in any default by the Guar-
antor under this Guarantee Agreement; nor shall any action
by the Bank in respect of any such default or in respect
of the waiver of any such default affect or impair any such
right in respect of any other or subsequent default on the
part of the Guarantor.
ARTICLE IX.
SECTION 1. Any notice, demand or request required or
permitted to be given under this Guarantee Agreement shall
be in writing and shall be deemed to have been duly given
when it shall be delivered in writing or by telegram, cable
or radiogram to the party to which such notice, demand or
request is required or permitted to be given at its address
hereinafter specified, or at such other address as such
party shall have designated by notice in writing to the party
giving or making such notice, demand or request. The ad-
dresses so specified are:
(a) For the Guarantor:
Minist'rio da Fazenda, Avenida Presidente
Antonio Carlos 375, Esplanada do Castelo,
Rio de Janeiro, Brasil.


13
(b) For the Bank:
International Bank for Recoiistruction and De-
velopment, 1818 H1 Street, N. W., Washington
25, District of Columbia, United States of
America.
SECTION 2. This Guarantee Agreement may be executed
in several counterparts, each of which shall be an original
and all collectively but one instrument.
SECTION 3. Any action required or permitted to be taken,
and any documents required or permitted to be executed,
under this Guarantee Agreement on behalf of the Guar-
antor may be taken or executed by the Minister of Finance
of the Guarantor or any person thereunto authorized in
writing by him. Any modification or amplification of the
provisions of this Guarantee Agreement may be agreed to
on behalf of the Guarantor by written instrument executed
on behalf of the Guarantor by its Minister of Finance or
any person thereunto authorized in writing by him; pro-
vided, that in the opinion of such Minister of Finance, such
modification or amplification is reasonable in the circum-
stances and will not substantially increase the obligations
of the Guarantor hereunder. The Bank may accept the
execution by such Minister of Finance or other person of
any such instrument as conclusive evidence that, in the
opinion of such Minister of Finance, any modification or
amplification of the provisions of this Guarantee Agreement
effected by such instrument is reasonable in the circum-
stances and will not substantially increase the obligations
of the Guarantor hereunder.
SECTION 4. The Guarantor shall furnish to the Bank suf-
ficient evidence of the authority of the person or persons
who will, on behalf of the Guarantor, take any action or
execute any documents required or permitted to be taken
or executed by the Guarantor pursuant to any of the provi-
sions of this Guarantee Agreement and the authenticated
specimen signature of each such person.


14
ARTICLE X.
This Guarantee Agreement shall come into force and ef-
fect on the Effective Date. If, pursuant to Section 2 of
Article X of the Loan Agreement, the Bank shall terminate
the Loan Agreement, the Bank shall promptly notify the
Guarantor thereof and upon the giving of such notice, this
Agreement and all obligations of the parties hereunder shall
forthwith cease and determine.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be signed in their respective names by their
representatives thereunto duly authorized as of the day
and year first above written.
THE UiNITED STATES OF BRAZIL
By
M. NABUCO
Authorized Representative
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By
JOHN J. MCCLOY
President


15
ANNEX 1.
INDENTURE OF GUARANTEE BETWEEN THE
UNITED STATES OF BRAZIL AND...............
Indenture of Guarantee, dated ............., between
THE UNITED STATES OF BRAZIL (hereinafter caled
the Guarantor), party of the first part, and..........
..........., a corporation duly organized and
existing under the laws of ................, 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 the Dominion of Canada (hereinafter called
the Company) has executed with the Trustee its Collateral
Trust Indenture dated as of ................ herein-
after called the Indenture), 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 (hereinafter called
the Guarantee Agreement) dated.....................
between the Guarantor and International Bank for Recon-
struction and Development (hereinafter called the Bank),
a copy of which Guarantee Agreement 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 payments in connection with all
Collateral Trust Bonds issued and authenticated under the
Indenture and delivered to the Bank pursuant to an agree-
ment (hereinafter called the Loan Agreement) dated
.between the Bank and the Company,
a copy of which Loan Agreement has been lodged with the
Trustee; and
WHEREAS by said Guarantee Agreement between the Guar-
antor and the Bank, the Guarantor has further agreed,


16
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 fol-
lows:
FIRST: Whenever used in this Indenture of Guarantee,
unless the context shall otherwise require, the term Col-
lateral Trust Bonds or Collateral Trust Bond means Col-
lateral 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 Guar-
antee contained, the Guarantor hereby unconditionally
guarantees, as prinary 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 in-
terest accruing thereon, the sinking fund payments in con-
nection therewith, and the premium, if any, on the redemp-
tion thereof, as specified in the Guaranteed Bonds and the In-
denture, 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 hereafter imposed by the Guarantor or by any
taxing authority thereof or therein, including income taxes,
and shall be paid free from all restrictions of the Guaran-
tor, its political subdivisions or its agencies; but this pro-


17
vision 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 in-
dividual 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 au-
thority 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 no-
tice to the Guarantor as provided in the Guarantee Agree-
nient 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 unpaid there-
on to the date of payment thereof, then forthwith upon the
giving of such notice such principal and interest shall be-
come inunediately 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, to-
gether with all unpaid coupons (if any) appurtenant there-
to; all as, and with such effect as, more fully set forth in
the Guarantee Agreement.
FIFTH: 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-
fault by the Company in respect of any obligations on its
part contained in the Indenture or the Guaranteed Bonds
and shall not be affected by any enforcement of any mort-
gage, lien, priority or charge created by the Indenture or
by any exercise or enforcement of any right or power there-


18
by conferred. No extension of time or forbearance given
to the Company in respect of the performance of any of its
obligations under the Indenture or the Guaranteed Bonds,
and no failure 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 Indenture
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 re-
quirement of any law, regulation or order of the Guar-
antor or any of its political subdivisions or agencies,
shall in any way terminate, diminish or limit the uncondi-
tional guarantee of the Guarantor hereunder, or any other
obligation 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.
SrXTR: 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 exchange for, on transfer
of or (subject to the provisions of Article Seventh hereof) in
substitution for Collateral Trust Bonds specified in clause
(b) of this Article. Such endorsement of guarantee shall
be in substantially the following form:,
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-


19
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
Indenture of Guarantee dated............... between
the undersigned and  .........................
as Trustee, International Bank for Reconstruction and
Development may require the undersigned forth-
with to pay the principal of the within Bond, to-
gether with interest thereon accrued and unpaid to the
date of payment, at the place specified in the said In-
denture for the payment of principal thereof and in-
terest thereon, upon surrender of said Bond at said
place in negotiable form, together with all unpaid cou-
pons (if any) appurtenant thereto; all in the manner
and with the effect provided in said Indenture of Guar-
antee.
THE UNITED STATES OF BRAZIL
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
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 Fi-
nance of the Guarantor, or such successor, before such en-
dorsement 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


20
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 guarantee is to be ex-
ecuted or countersigned as aforesaid, together with the
authenticated specimen signature of each such person.
SEVENTH: Whenever the Company shall execute a new Col-
lateral Trust Bond in substitution for a mutilated, lost,
destroyed or stolen Guaranteed Bond and its coupons, the
Guarantor shall not be obligated to endorse its guarantee
thereon unless and until the Guarantor shall be indemni-
fied to its satisfaction.
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:
.........................
As Trustee,
By
Authoried Officer


21
provided, however, that the aggregate principal amount of
such Collateral Trust Bonds so authenticated outstanding
at any time shall not exceed $75,000,000 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 Boids. 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.
NiNr: 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.
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.


22
IN WITNESS 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.
THE UNITED STATES OF BRAZIL
By
Authorized Representative
By
President
Attest:
Secretary


LOAN NUMBER 11 BR
SUPPLEMENT No. 1
7t
SUPPLEMENT NO. 1, DATED JANUARY 18, 1951
TO THE
Guarantee Agreement
BETWEEN
THE UNITED STATES OF BRAZIL
AND
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
DATED JANUARY 27, 1949
Press of Byron S. Adam


,1 4LOAN NUMBER 11 BR
SUPPLEMENT No. 1
SUPPLEMENT NO. 1, DATED JANUARY 18, 1951
TO THE
Guarantee Agreement
BETWEEN
THE UNITED STATES OF BRAZIL
AND
INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT
DATED JANUARY 27, 1949
Pres of Byron S. Adams


SUPPLEMENTAL AGREEMENT, dated January 18,
1951, between THE UNITED STATES OF BRAZIL (hereinafter
called the Guarantor) and INTERNATIONAL BANK FOR RECON-
STRUCTION AND DEVELOPMENT (hereinafter called the Bank).
WHEEREAs by an agreement dated January 27, 1949 (here-
inafter called the Loan Agreement), between the Bank and
Brazilian Traction, Light and Power Company, Limited
(hereinafter called the Borrower) the Bank agreed to lend
the Borrower the aggregate principal amount of seventy-
five million dollars ($75,000,000), or the equivalent thereof
in other currencies on the terms and conditions set forth
in the Loan Agreement, but only on condition that the Guar-
antor agree to guarantee the loan provided for in the Loan
Agreement;
WHEREAS by virtue of law No. 487 of November 15, 1948,
of the Guarantor and in consideration of the Bank entering
into the Loan Agreement with the Borrower, the Guarantor
executed with the Baik and delivered, simultaneously with
the execution and delivery of the Loan Agreement, a guar-
antee agreement (hereinafter called the Guarantee Agree-
ment) dated January 27, 1949;
WHEREAS the Guarantee Agreement was duly registered
in the Tribunal of Accounts of the Guarantor and came into
force and effect on May 9, 1949;
WHEREAS the Bank has agreed to increase the amount of
the loan provided for in the Loan Agreement from seventy-
five million dollars ($75,000,000) or the equivalent thereof
in other currencies to ninety million dollars ($90,000,000)
or the equivalent thereof in other currencies and for that
purpose, amongst others has agreed to amend the Loan
Agreement by entering into a supplemental agreement
(hereinafter called Supplement No. I to the Loan Agree-


4
ment) with the Borrower, dated January 18, 1951, but
only on condition that the Guarantor agree to guarantee the
loan provided for in Supplement No. 1 to thn Loan Agree-
ment as herein provided; and
WHEREASthe Guarantor by virtue of the said law No. 487
of November 15, 1948, and in consideration of the Bank
entering into Supplement No. 1 to the Loan Agreement with
the Borrower, has agreed to guarantee the loan provided
for in Supplement No. 1 to the Loan Agreement by amend-
ing the Guarantee Agreement as herein provided;
Now THEREFOBR the parties hereto hereby agree as
follows:
CHAPTER I-EFFECTIVE DATE
This Supplemental Agreement shall come into force and
effect on the date on which Supplement No. 1 to the Loan
Agreement shall come into force and effect as provided in
Chapter I of Supplement No. 1 to the Loan Agreement.
If pursuant to Section 2 of Chapter I of Supplement No. 1
to the Loan Agreement the Bank shall terminate Supple-
ment No. 1 to the Loan Agreement, the Bank shall promptly
notify the -Guarantor thereof and upon the giving of such
ntice, this Supplemental Agreement and all obligations
of the parties hereunder shall forthwith cease and deter-
mine; provided, however that, if the Bank shall exercise
its option to terminate Supplement No. 1 to the Loan Agree-
ment pursuant to Section 2 of Chapter I thereof, the Loan
Agreement dated January 27, 1949 as in force and effect
between the Bank and the Borrower on the date of such
termination and the Guarantee Agreement dated January
27, 1949 as in force and effect between the Guarantor and
the Bank on the date of such termination shall continue in
full force and effect as if this Supplemental Agreement had
not been executed.


5
CHAPTER II-THE GUARANTEE
SECTION 1. It is the intention of the Guarantor and the
Bank that all the provisions of the Guarantee Agreement
shall be applicable to the loan provided for in Supplement
No. 1 to the Loan Agreement. Accordingly, the Guarantee
Agreement is hereby amended so that the term Loan Agree-
ment shall mean Supplement No. 1 to the Loan Agreement
and the term Indenture of Guarantee shall mean the In-
denture of Guarantee to be executed pursuant to Section 2
of this Chapter II.
SECTION 2. 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, sub-
stantially in the form annexed hereto and marked "An-
nex A".
SECTION 3. The Guarantor agrees to endorse its guar-
antee under the Guarantee Agreement on the Bonds as
more fully set forth in the form of Indenture of Guarantee
annexed hereto and marked "Annex A".
CHAPTER III-GENERAL PROVISIONS
SECTION 1. This Supplemental Agreement may be exe-
cuted in several counterparts, each of which shall be an
original and all collectively but one instrument.
SECTION 2. Except as hereby amended, the Guarantee
Agreement dated January 27, 1949 shall remain in full force
and effect. This Agreement shall not affect any right,
privilege, obligation or liability acquired or incurred by the
a                       Bank or the Guarantor on account of any act done or any
omission to act under such Guarantee Agreement.
IN WITNESS WHEREOF the parties hereto have caused this
Supplemental Agreement to be signed in their respective


6
names by their representatives thereunto duly authorized
as of the day and year first above written.
THE UNITED STATES OF BRAZIL
By M. NABuco
Authorized Representative
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
By EUGENE R. BLACK
President


7
ANNEX A.
INDENTURE OF GUARANTEE BETWEEN THE
UNITED STATES OF BRAZIL AND ..................
Indenture of Guarantee, dated ........., 1951, between
THE UNITED STATES OF BRAZIL (hereinafter called
the Guarantor), party of the first part, and ...........
... ...................., a corporation duly organized and
existing under the laws of ................, 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 the Dominion of Canada (hereinafter called
the Company) has executed with the Trustee its Collateral
Trust Indenture dated as of January 1, 1949 (herein-
after called the Indenture), 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 January 27,
1949 between the Guarantor and International Bank for
Reconstruction and Development (hereinafter called the
Bank) and Supplement No. 1 to such Guarantee Agreement
dated .............. .....between the Guarantor and
the Bank (such Guarantee Agreement and such Supple-
ment being herein collectively called the Guarantee Agree-
ment) a copy of which Guarantee Agreement 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 payments in connection
with all Collateral Trust Bonds issued and authenticated
a                      under the Indenture and delivered to the Bank pursuant to
an agreement (hereinafter called the Loan Agreement)
dated January , 1951, between the Bank and the Com-


8
pany, a copy of which Loan Agreement has been lodged
with the Trustee; and
WHEREAs by said Guarantee Agreement between the Guar-
antor 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:
FMT: Whenever used in this Indenture of Guarantee,
unless the context shall otherwise require, the term Col-
lateral Trust Bonds or Collateral Trust Bond means Col-
lateral 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 Guar-
antee 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.
TimD: The Guarantor hereby covenants as follows:
Section 1. The principal of the Guaranteed Bonds, the in-
terest accruing thereon, the sinking fund payments in con-
nection therewith, and the premium, if any, on the redemp-
tion 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


9
or at any time hereafter imposed by the Guarantor or by any
taxing authority thereof or therein, including income taxes,
and shall be paid free from all restrictions of the Guaran-
tor, its political subdivisions or its agencies; but this pro-
vision shall not be applicable to the payments made under
the provisions of any Guaranteed Bond to the holder there-
of 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 au-
thority 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 no-
tice 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 unpaid 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, to-
gether with all unpaid coupons (if any) appurtenant there-
to; all as, and with such effect as, more fully set forth in
the Guarantee Agreement.
FIFTH: 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-
fault by the Company in respect of any obligations on its


10
part contained in the Indenture or the Guaranteed Bonds
and shall not be affected by any enforcement of any mort-
gage, lien, priority or charge created by the Indenture or
by any exercise or enforcement of any right or power there-
by conferred. No extension of time or forbearance given
to the Company in respect of the performance of any of its
obligations under the Indenture or the Guaranteed Bonds,
and no failure 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-
ment of any law, regulation or order of the 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.
Srxn: 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 exchange for, on transfer
of or (subject to the provisions of Article Seventh hereof)
in substitution for Collateral Trust Bonds specified in
clause (b) of this Article. Such endorsement of guarantee
shall be in substantially the following form:


11
The United States of Brazil, for value received, as
primary obligor and not as surety merely, hereby ab-
Js                        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
Indenture of Guarantee dated ............. . 1951 be-
tween the undersigned and....................
as Trustee, International Bank for Reconstruction and
Development may require the undersigned forth-
with to pay the principal of the within Bond, to-
gether with interest thereon accrued and unpaid to the
date of payment, at the place specified in the said In-
denture for the payment of principal thereof and in-
terest thereon, upon surrender of said Bond at said
place in negotiable form, together with all unpaid cou-
pons (if any) appurtenant thereto; all in the manner
and with the effect provided in said Indenture of Guar-
antee.
THE UNITED STATES OP BRAZI
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 sig-
nature of its Minister of Finance or any successor to
any such Minister of Finance and shall be countersigned
by its authorized representative. In case any Minister of
Finance of the Guarantor, or any such successor, whose


12
facsimile signature shall be affixed to any such endorse-
ment of guarantee shall cease to be such Minister of Fi-
nance of the Guarantor, or such successor, before such en-
dorsement 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, whDse 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 err A person by whose signature or fac-
simile signature such endorsement of guarantee is to be ex-
ecuted or countersigned as aforesaid, together with the
authenticated specimen signature of each such person.
SEVENTH: Whenever the Company shall execute a new
Collateral Trust Bond in substitution for a mutilated, lost,
destroyed or stolen Guaranteed Bond and its coupons, the
Guarantor shall not be obligated to endorse its guarantee
thereon unless and until the Guarantor shall be indemni-
fied to its satisfaction.


13
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:
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 $90,000,000 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.


14
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 frotr -me to time of the Guaranteed Bonds, land
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 WITNESS 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.
THE UNITED STATES OF BRAZIL
By
Authorized Representative
By
President
Attest:
Secretary