World Bank Documentdocuments.worldbank.org/curated/en/220561468018002218/...New York 6. N. Y., U. S. A. PRINTED IN U. S. A. Public Disclosure Authorized Public Disclosure Authorized

BRAZILIAN TRACTION, LIGHT AND POWERCOMPANY, LIMITED

AND

NATIONAL TRUST COMPANY, LIMITEDas Trustee

(Collateral T-uot InbentureDated January 1, 1949

Collateral Trust Bonds

Pandick Proess, Inc., 22 Thames St.. New York 6. N. Y., U. S. A.

PRINTED IN U. S. A.

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COLLATERAL TRUST INDENTURE

DATED JANUARY 1, 1949

OF

BRAZILIAN TRACTION, LIGHT ANDPOWER COMPANY, LIMITED

TABLE OF CONTENTS

PAGEPARTICULARS OF REGISTRATIONS ....................... _......------------------------------------- la

PARTIES ----....-- -------.......----............------------------------------------------------- I

RECITA LS .....- ............................--- ..........------------------------------------------------------- 1Purpose of issue of Bonds......-.-- .............--------------------------------------- 1Corporate authority to issue Bonds and to secure the same.......--------------- IAuthorizations by Directors and shareholders.....................------------------------- 1Issue of Bonds in series...........-- - ..................------------------------------------------- 1Form of Coupon Bond----.......- ....---.------ --------------------------------- 2Form of Interest Coupon.-.............................- ----------------------------------------- 6Form of Registered Bond without Coupon.......-..........---------------------------- 6Form of Trustee's Certificate.-............................ ------------------------------------ 10Bonds of each series to state currency of payment, denominations and

place of payment or of regitration of interchange of Bonds.....------------ 10Redemption and sinking fund provisions to be stated in Bonds.....------------ 10Tax free covenants to be stated in Bonds..--- .................---------------------------- 10Forms of Bonds ma: 1e arranged to reflect provisions of each series.- 10

GRANTING CLAUSES - ....................---------------------------------------------------------- 10First fixed and specific mortgage, pledge and charge......... .-------------------- 11First floating charge. -- - ........-. __------------------------------------------- 11Company's right of possession-----------------------....-----------.-- 12Exception of last day of any term of years..........- .........--------------------------- 12

HABENDUM .............---...............------------------------------------------------------------------ 13

GRANT IN TRUST.......................................------------------------------------------------------------ 13

e

ARTICLE ONE.

AMOUNT OF ISSUE OF BONDS; FORM, EXECUTION AND REGISTRY OF BONDS.

PAGESECTION 1.01 Amount unlimited subject to provisions of Indenture ----.---..- 14

SECTION 1.02 Form and title of Bonds

Provisions of each series (except Series A) to be determined by Boardof Directors of Company ..-.........-..--..--.--.-------------------------------------- 14

Provisions of Series A Bonds.....................-..-..........------------------------------------ 15Requirements as to execution and Trustee's certificate....-.....---------------- 16Execution by officers who have ceased to be officers prior to authentica-

tion and delivery ---....-.--.-.-... ...- ....--.....-..-. ..-..-------------------------------------------- 16Execution of coupons.------ ..----.-.....-.--.-----.-..-.-....------------------------------------------ 17Detachment of matured coupons...........---------------.....--- --------------- 17Date of Registered Bonds without Coupons -----.-....-.-....-..------------------------ 17

SECTION 1.03 Interchangeability of Coupon Bonds and Registered Bondswithout Coupons ----------------------------------------------- 17

Authority for required iegends on Bonds--------- -------------------- 17

SECTION 1.04 Company's covenant to make exchanges and transfers ofBonds --------...... -.. ----.. --------..----.-.-.---....--.---- -- . . . . . ..----------------------------------------------- 18

Execution, authentication and delivery to Bonds issued in exchangeor transfer ------------------------------------------------ 18

Charges for exchange or transfer of Bonds-.-...--- ...-.....-.-.------------------------ 19Registration of Coupon Bonds ----------------..-....-.......---------------------------------- 19Exchanges and transfers permitted after events of default...... ..------------- 20

SECTION 1.05 Ownership of Coupon Bonds not registered as to principaland of interest coupons..-.- ....--- ......-..---....-----.........------------------------------------------ 20

Ownership of Registered Bonds.............---.-..............-------------------------------- 20

SECTION 1.06 Mutilated, lost, destroyed or stolen Bonds and coupons........ 20

SECTION 1.07 Temporary Bonds ........................-.-......------------------------------------ 21

SECTION 1.08 Cancellation of Bonds delivered to the Trustee.......-------------- 22

ARTICLE TWO.

ISSUE OF BONDS.

SECTION 2.01 Definitions .....-..........-.......................------------------------------------------ 22

(a) Subsidiary .--.- ..- ...-.--......---..........-......-....---------------------------------------------- 22(b) Voting stock ----.-..--..-.-.....-.-..-.--.-............-------------------------------------------- 22

PAGE

(c) Funded debt -----.-.-- ..----.............-.............-------------------------------------------- 22(d) Electric and telephone property-------....- ..- .......---.-.----------------------------- 22

(e) Net depreciated book value of electric and telephone property....... 23(f) Subordinated debt -............ ---- .....................----------------------------------------- 24(g) Unsubordinated debt .............- ....-.-.--.....-......-------------------------------------- 24(h) Eligible collateral ----.- .......-----.....--.--....-..-...----------------------------------------- 25

Money, etc., refers to United States of America currency.-.......--------------- 25Trustee to translate amounts in one currency into amounts in another

currency .--.---.-.-... .-------------------------------------------------- 25

SECTION 2.02 Bonds to be authenticated and delivered pursuant to provi-sions of Article Two if covenant contained in first paragraph of Section5.09 is complied with.---------------.. ----...-.--.--..........-.-.. ------------------------------------- 25

SECTION 2.03 Documents to be delivered upon request for authenticationof Bonds under Article Two....----.-.-.--.-..--.-.-....-......-------------------------------------- 25

(a) Resolution of the Board of Directors of the Company..- ....------------- 26(b) Opinion of counsel.------- ..-- ..--...-..--.-.-......-.-.-..---------------------------------------- 26(c) Copy of order or certificate of governmental authority specified in

opinion of counsel --.-...-.--- ...-.-.-.-....-....-.-.....--------------------------------------- 26(d) Certificate of no default by the Company........-.- .......---------------------- 26(e) Certificate similar to that required under Section 5.09....- ...------------ 26(f) Instruments of further assurance necessary in the opinion of

counsel or opinion of counsel that no instruments of furtherassurance are necessary, together with opinion of counsel ineither case as to validity of obligations of subsidiaries pledgedand conformity thereof with certain requirements..........-------------- 27

(g) Certificate of auditors as to determination of net depreciated bookvalue ------ ...-- ..------------.-.-.-..................------------------------------------------------- 27

(h) Certificate of independent engineer as to maintenance and depre-ciation -......-- ......--....-....----..........--.-.-------------------------------------------------- 28

ARTICLE THREE.

REDEMPTION OF BONDS.

SECTION 3.01 Reservation of right to redeem Bonds..........-.- ....------------------- 28Terms of redemption of Series A Bonds--------- ...-- ..-.........-------------------------- 29Requirements as to publication and mailing of notice of redemption...... 29Drawing by lot in case of partial redemption.---- .............----------------------- 30Assignment of arbitrary numbers to registered Bonds without coupons

for purpose of drawing-----------------..---..-.---..--.---.-------------------------------------- 31

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SECTION 3.02 When Bonds called for redemption become due and pay-able ----------.-.. -.. -.-.---.......-.-----.-.-- --.. ......... .. ....----------------------------------------------- 31

Resolution of Board of Directors to be furnished on redemption.---------- 31

SECTION 3.03 Deposit of redemption moneys in trust..--- .....--.-.-.------------------- 32

SECTION 3.04 Effect of redemption date on Sunday or legal holiday ------...-. 32

ARTICLE FOUR.

SINKING FUND FOR SERIES A BONDS.

SECTION 4.01 Amounts payable for sinking fund----- ------------------ 33Series A Bonds held in reserve fund not deemed acquired through

sinking fund -------.-.--------.- ......- .....- ..- ----------------------------------------------- 33Price and dates for redemption of Series A Bonds for sinking fund-.. 33Sinking fund payments may be made in cash or Series A Bonds ----------. 33

SECTION 4.02 Application of sinking fund moneys to purchase of Series ABonds ---------..... -... ----. --.-.. -.. ---.-----. ----.-......-..-.------------------------------------------------ 34

SECTION 4.03 Application of sinking fund moneys to redemption of SeriesA Bonds -.-.-------- ....-..-----..-.-...............-.---....-.----------------------------------------------------- 34

SECTION 4.04 Company to pay in addition to sinking fund installmentsexpenses of administering sinking fund and accrued interest------------------- 34

SECTION 4.05 When all Series A Bonds are paid or payment provided,any balance of sinking fund moneys to be returned to Company--- ...---------- 35

No purchase or redemption through sinking fund during event ofdefault ....----.-..--- .- ..-- .--- .-- .--- .- ..-- .......- .......--------------------------------------------------- 35

Sinking fund moneys in such case held as additional security for SeriesA Bonds --..- ....----.-- ...-............-.......------------------------------------------------- 35

ARTICLE FIVE.

PARTICULAR COVENANTS OF THE COMPANY.

SECTION 5.01 To pay principal, premium and interest of Bonds...-..--------------- 35Upon request will maintain office or agency where Bonds are payable,

registerable, etc .....-- ...............-------------------------------------------- 35If no such office or agency maintained, principal office of Trustee shall

take its place..........................---........-........---------------------------------------------- 35

SECTION 5.02 To give further assurances........----------------------------- 36

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ARTICLE SIX.

PLEDGED DEBENTURES AND CASH HELD BY TRUSTEE.PAGE

SECTION 6.01 Form in which pledged debentures shall be held.------------ 43Trustee may vote pledged debentures......------------.-.....-..------------------43

SECTION 6.02 Company entitled to receive interest on pledged debenturesuntil default ...-..-..-..--.-.-.....-..-..........--------------------------------------------------- 43

Covenant as to rights of Trustee and Company to receive principalpayments on pledged debentures -..------------.....------.-.---..-..------------------- 44

Company's right to pledge additional collateral.....--.-- .....---.--------------------- 44

SECTION 6.03 During event of default Trustee entitled to collect intereston pledged debentures --.....-.......--...-......-......--...- -------------------------------------------- 44

SECTION 6.04 Company's rights of withdrawal of or substitution for col-lateral specifically pledged or withdrawal of cash held by Trustee..----------- 45

Documents necessary to take advantage of such rights ---------------........--.... 46

SECTION 6.05 Securities ^and other property delivered to Trustee subjectto first charge of Indenture--------------------------------------- 46

ARTICLE SEVEN.

REMEDIES OF THE TRUSTEE AND BONDHOLDERS.

SECTION 7.01 Extended coupons or claims for interest subordinated unlesspursuant to plan open to all holders of series...-...-..------------------------------- 47

SECTION 7.02 Security enforceable on event of default as follows:

(a) Default in payment of principal or premium.......- ......----------------------- 47

(b) Default in interest or sinking fund continuing for sixty days ---.--... 47(c) Bankruptcy, winding-up or receivership.------------------------------- 48

(d) Execution against property of Company unsatisfied for certainperiods ---------- ...------..-....-.....-..---.--..--.----------------------------------------------- 48

(e) Default in any other covenant or condition of Indenture continuingfor ninety days after notice.....................---..------------------------------------ 49

SECTION 7.03 Acceleration of principal of Bonds upon default........------------- 49

SECTION 7.04 If defaults cured declaration of maturity of principal may berescinded .........-.-.- ..- .....--..-.....-.............----------------------------------------------------------- 50

V

PAGESECTION 5.03 Covenants with respect to declaration or payment of divi-

dends or acquisitions of own capital stock by the Company and subsidiaries 36Certificate as to compliance with dividend covenant---------.- ...------------------ 37

SECTION 5.04 To pay taxes, etc., the lien of which would be prior to thelien of the Indenture.-- --------------------------- ----------------------------- ------------- 37

Company may contest validity of taxes..........-................--------------------------- 37Certificate as to compliance with the foregoing ....--..-.....---------------------- 38

SECTION 5.05 Trustee's right to advance money for taxes, etc., and to havea prior lien therefor.-..- ..----- ----------------- ---------------------- ------------------ 38

Company will not issue Bonds contrary to the terms of Indenture orcontrary to law - - ------- ..--...---......-.---..-.....-------------------------------------------- 38

SECTION 5.07 Maintenance of corporate existence, etc., and that of sub-sidiaries .-- ..-----------------..-....-.--.---.-----.....---...------------------------------------------------------ 38

SECTION 5.08 Covenant against creation or assumption of liens other thansubordinate liens with certain exceptions...--.-.----- ...-..-...-..------------------------------ 39

SECTION 5.09 Covenant as to maintenance of collateral-.-.-....-..-.-.------------------ 39Certificate as to compliance with foregoing..---- ..--.-- ...-.-....------------------------- 40

SECTION 5.10 Covenant not to declare or pay dividends unless reserve fundfor interest and sinking fund on Series A Bonds is maintained........------------ 40

Covenants as to amounts, times and nature of deposit of reserve fund... 40Investment of reserve fund by Trustee.....-- ..-- .................---------------------------- 41Reserve fund may be used for payments of sinking fund and interest

but must be replenished before dividends can be paid ------- ....---------------- 41Excess reserve funds may be withdrawn by Company--------------------------- 41Failure by Company to maintain reserve fund shall not constitute a

default ---- - ----------------------------------------------------- ------------------- 41

SECTION 5.11 Covenant against permitting any subsidiary whose obliga-tions are pledged as eligible collateral to contract any unsubordinatedfunded debt in excess of 50% of net depreciated book value of electric andtelephone property of such subsidiary.-...-....-..-....-.--......------------------------------ 42

Exchange by Company of funded debt of subsidiary for shares of thesubsidiary not deemed payment------------------- ---------------------- 42

Subject to certain restrictions on rights of withdrawal or substitutionof collateral subordinated debt may be converted into unsubordinateddebt if 50% covenant complied with and unsubordinated debt may beconverted into subordinated debt if covenant in Section 5.09 com-plied with .....- --..--.-.--- ..---- ....-...-.......-.......------------------------------------------------- 42

SECTION 5.12 Covenant to record, register and file and to deliver annualopinion of counsel as to compliance with such covenant.....------------------- 42

SECTION 5.13 Covenant against disposal of assets as a whole or substan-tially as a w hole................................................................................................ 43

viiPAGE

SECTION 7.05 If security enforceable Trustee may or upon written requestand indemnification by holders of 25% in principal amount of the Bondsshall --.-.---.-..-......-- .- .....-- .-.--- .- .......----- ------- ------------------------------------------------- 50

(i) Enter upon and operate trust estate..-..--.--...-.--------------------------- 51

(ii) Apply to court for receiver .......-........-.......-.---..--------------------------------- 51

(iii) Sell all or part of trust estate.----- ..--- ..-.-.-.--.--..-.-.------------------------------- 51

(iv) Proceed to enforce payment by suit or to sell trust estate underdecree of court ..-..--.....-------..--........---------------------------------------- 52

SECTION 7.06 Notice of sale ---..-..-.-.--..-.....-..-...-..-......--------------------------------------- 52Trustee or bondholders may become purchasers --.----..-..-....-------------------- 52

SECTION 7.07 Application of moneys from carrying on business or sale oftrust estate applied first to Trustee's compensation and expenses.-..---------- 52

Residue applied to equal and ratable payment of principal, premiumand interest of Bonds and surplus, if any, to the Company.-..----------- 53

SECTION 7.08 Trustee making payment may demand production of Bondor coupon and endorse payment thereon...-.--- ..-- ...-...-.---..------------------------------ 53

SECTION 7.09 Purchasers may turn in Bonds at distributive value in pay-ment for trust estate - .------- ..--.-.-...-......------.......-.------------------------------------------------ 53

SECTION 7.10 Upon sale of trust estate, principal of Bonds accelerated... 54

SECTION 7.11 Company appoints Trustee attorney to execute deeds, etc. 54

SECTION 7.12 If security enforceable, Trustee may obtain judgment as

Trustee of express trust for amounts due and unpaid by Company.-....... 54

No such judgment shall affect lien of Indenture..-...........---------------------54

SECTION 7.13 Protection of persons dealing with Trustee --....----------------- 55

SECTION 7.14 No holders of Bonds or coupons to institute suits or pro-ceedings affecting the security unless Trustee has failed to act after re-

quest by holders of 25% in principal amount of Bonds outstanding andhas been indemnified ---.....-.----- ----------------------------------------------------------------- -55

SECTION 7.15 Remedies under Indenture cumulative.............--------------------56

SECTION 7.16 Covenants for sole and exclusive benefit of parties to Inden-

ture and holders of Bonds and coupons -------------------------------------------- 56

ARTICLE EIGHT.

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.

SECTION 8.01 Bonds are solely corporate obligations and incorporators,stockholders, officers and directors shall not be personally liable thereon 56

viii

ARTICLE NINE.

BONDHOLDERS' ACTS, HOLDINGS AND APPARENT AUTHORITY.

PAGESECTION 9.01 Execution of demands, requests or other instruments may

be proved by certificate of notary or affidavit of witness...........----------------- 57Proof of fact of holdings of Bonds or coupons transferable by delivery 57Proof of fact of holdings of Registered Bonds..-.......-....-..----------------------- 58Requests or consents of holders bind future holders ......................... --------- 58

ARTICLE TEN.

CONCERNING THE TRUSTEE.

SECTION 10.01 Trustee accepts trusts upon following conditions..-----------58(a) Trustee assumes no responsibility for correctness of recitals in

Indenture and Bonds and makes 1no representation as to validityof pledged Bonds or lien of Indenture or validity of Bondsissued thereunder--------------------------------------- 58

(b) Trustee under no obligation as to disposition of Bonds or proceeds 59

Taxes paid by Trustee constitute prior lien on trust estate...-------------59(c) Trustee not liable for acts of attorneys or agents selected with

reasonable care nor accountable except for its negligence orhad faith---------------------------------------------- 59

Trustee not obligated to act unless reasonably indemnified-----------59(d) Addresses to which notices must be sent................----------------------- 60(e) Trustee may require submission of Bonds for inspection.-----------60

(f) Trustee entitled to receive documents provided for as conclusiveevidence and full authority for taking action.............------------------- 60Facts may he certified by different officers of Company.----------60

Trustee justified in relying on genuineness of notices, etc., believedto be genuine ----.--........-.................--......------------------------------------------ 60

(g) Trustee may employ engineers, accountants or other experts andrely on their advice -----.....-....--..-....-..-..--..------------------------------------- 61

(h) Trustee may consult with counsel and act on counsel's opinion. 61Trustee under no responsibility for acts of experts selected with

reasonable care----------------------------------------- 61(i) Company to pay reasonable compensation to and expenses of

Trustee ........----.-.--..----.--..--........--.-------------------------------------------------- 61Company indemnifies Trustee for losses incurred without negli-

gence or bad faith including cost of defending claims of liability 61Company to pay interest on amounts advanced by Trustee------------ 61

580

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Trustee has prior lien on trust estate for all obligations of Com-pany under clause (i) ...-.-.---................--.----.------------------------------------ 62

(j) Trustee may rely on certificates of certain officers of the Company 62(k) Trustee under no duty to invest moneys and not liable for interest

on moneys except upon agreement with Company........-------------- 62(1) Trustee not required to take notice of default unless notified in

w riting -------- -- -. ----.. ---. ------------.-...... --------------------------------------- 62(m) Trustee, affiliates, officers, directors and stockholders of Trustee

and affiliates may acquire Bonds or other securities of the Com-pany or subsidiaries and act as depositary, transfer agent, pay-ing agent, registrar, etc., in respect of any Bonds or othersecurities ..............-----------------.------------- --------------- -------------- 62

SECTION 10.02 Moneys deposited under Indenture with Trustee held intrust but need not be segregated and may be redeposited in trust---..---------- 63

Provisions as to handling pledged collateral Trustee not obligated toenforce any collateral.--------------------------------------------------------------------------- 63

SECTION 10.03 Companies resulting from merger or consolidation of Trus-tee shall be successor under certain conditions-----....--------------------------- 63

SECTION 10.04 Trustee may resign upon notice---...--.----- ------------------ 64

SECTION 10.05 Appointment of successor trustee by Company.------....------- 64Right of holders of majority in principal amount of Bonds to appoint

successor trustee .....- .....- ..-...--...-.------------------------..... .--- ----- ---------------- 65Right of holder of Bonds for retiring Trustee to apply to court for

appointment of successor trustee.........------------.---------------------- 65Appointment by Company terminated upon appointment by holders of

Bonds or by court----------------------------------------------------------------------------------- 66Qualifications of successor trustee..........-------------..-....-.--.-..- ------------------- 66Instrument executed by successor trustee accepting appointment---------- 66Instruments of conveyance and further assurance by retiring Trustee

to successor trustee........-----------.----------------------------------------------- 66SECTION 10.06 Appointment of co-trustees...----------------------------------- 67

SECTION 10.07 Trustee appointed attorney in fact of bondholders to fileproofs of claim, etc... . ... ..------------.----------------------- ------------------------------ - 67

Trustee authorized to receive payment on behalf of bondholders --------.-- 68

x

ARTICLE ELEVEN.

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE.

PAGESECTION 11.01 Consolidation, merger, sale, conveyance or lease permitted

provided lien of Indenture not impaired and obligations of Companyassumed by successor corporation ----------- ....- .....-.........---------------------------------- 68

SECTION 11.02 Successor corporation to execute instrument assumingobligations of Company ....-...--- ..- .......--- --.. .. .....------------------------------------------ 69

SECTION 11.03 Terms "Company" and "Brazilian Traction, Light andPower Company, Limited" include successors----..-.-..-.-.--.-.-------------------------- 69

Board, officers, etc., of successor possess powers of board, officers, etc.,of Company ---------------------.......-...........----------------------------------------------- 69

ARTICLE TWELVE.

DISCHARGE OF INDENTURE.

SECTION 12.01 Defeasance clause ------------------------------- ------------------ 70

ARTICLE THIRTEEN.

SUPPLEMENTAL INDENTURES.

SECTION 13.01 Company and Trustee may enter into supplemental inden-tures for following purposes:

(a) To convey additional property in trust to Trustee.........----------------- 71

(b) To evidence succession of another corporation..-.- ......-------------------- 71(c) To add covenants for protection of bondholders.-........-------------------71

(d) To establish terms of a particular series of Bonds.......-----------------71(e) To cure ambiguities or defective or inconsistent provisions...----------- 71

SECTION 13.02 Trustee authorized to join in supplemental indentures-------- 72

ARTICLE FOURTEEN.

BONDHOLDERS' MEETINGS.

SECTION 14.01 Trustee may and shall on written request of holders of10% of principal amount of Bonds to be affected call a meeting ofbondholders -------------------------------------------------------------------------------------------- 72

Company or 10%o of bondholders may call meeting if Trustee failsto do so -------------------------------------------------- 72

xiPAGE

SECTION 14.02 Requirements for notice of meeting of bondholders bypublication and by mail...-.-.......-..............-............------------------------------------------ 73

SECTION 14.03 Provisions for proof of ownership of Bonds without theirproduction --.-- ..-- ...--..---........---..-....-..-..-..--.....---------------------------------------------------- 73

Similar provisions may be adopted by bondholders or Company ifthey call meeting.-....-.--.-----....--.-.-..---....-.........------------------------------------------- 74

Bondholders may vote by proxy---.-....-- ..---..-.....-........--------------------------------- 74

SECTION 14.04 Quorum required for meetingProvisions for organization of meeting..--.-......-..-.-.-.-...-..---------------------------- 75

SECTION 14.05 Representatives of Trustee and Company may attendmeetings .-..-.-.-- ..------.-..-...-...-......--.-...-.....-...------------------------------------------------------ 75

SECTION 14.06 Meeting shall have power with vote of 662 3 % of prin-cipal amount of Bonds of each series affected

(a) To make modifications in Indenture or rights of bondholders ifapproved by Board of Directors of the Company and if rightsof Trustee not affected without its consent...- ..-.........-------------------- 75

(b) To sanction compromises of rights of bondholders against Com-pany ------- ---------. ..............-..............------------------------------------------------- 76

(c) To sanction surrenders or releases-...-.-..-.-- ..-.....-...-.--------------------------- 76(d) To sanction plans for reorganization, etc., of Company........------------ 76(e) To authorize acceptance of securities upon sale of trust estate 76(f) To waive defaults other than non-payment of principal and interest 76(g) To authorize and direct Trustee under provisions of Article Seven

of Indenture ---.-..-.-.-------------------------------------------- 76Bondholders' meetings have no power to extend maturity or reduce

rate of interest............- ........................-....----------------------------------------- 76Series not affected by business to be submitted to meeting not

entitled to notice of or vote at meeting....................----------------------- 76

SECTION 14.07 Resolutions binding on all bondholders................................ 77

SECTION 14.08 Vote shall be by ballot.............................................................. 77Record of meeting shall be kept by Company and Trustee.........------------- 77

SECTION 14.09 Bonds may bear notation of action taken at meeting ofbondholders ......-- ......-.-.........-...........-..........--------------------------------------------------- 78

New Bonds may be issued giving effect to action at meeting.....------------ 78Provision for supplemental indentures setting forth action at meeting 78

xii

ARTICLE FIFTEEN.

MISCELLANEOUS PROVISIONS.

PAGESECTION 15.01 Covenants, etc., of Company bind successors..-.....--------------- 79

SECTION 15.02 Executive Committee may act in lieu of Board......------------- 79

SECTION 15.03 Unclaimed moneys held by Trustee for six years shall berepaid to Company ---------------------------------------------------------------- 79

Trustee may publish intention to repay such money-..-...........----------------- 79

SECTION 15.04 No person other than parties and holders of Bonds andcoupons shall have any rights under Indenture............................................ 79

SECTION 15.05 M iscellaneous definitions ........................................................ 80

SECTION 15.06 Indenture and Bonds governed by laws of Ontario...--------- 80

SECTION 15.07 Indenture may be executed in counterparts.......................... 81Indenture dated for convenience January 1, 1949 but effective fror-

date of execution and delivery by Trustee............................................ 81

TESTIMONIUM -- ...- ..-................... ... ........--------------------------------------------------------------- 81

SIGNATURES AND SEALS.................. .............. ...------------------------------------------------------ 81

ACKNOWLEDGMENTS .....- ...............................------------------------------------------------------ 82-83

FIRST SCHEDULE ....- ..- .... .........................------------------------------------------------------------- 85

The Table of Contents was not included in the Indenture as executed.

la

COAT OF ARMS

DEPARTMENT OF THE SECRETARY OF STATEOF CANADA

CERTIFICATE OF REGISTRATION OF A COLLATERALTRUST INDENTURE AND SERIES OF BONDS

Application having this day been made for the registration of a CollateralTrust Indenture dated as of the first day of January, one thousand nine hundredand forty-nine, and executed by BRAZILIAN TRACTION, LIGHT AND PowER COM-PANY, LIMITED in favour of National Trust Company, Limited, as Trustee, forthe purpose of securing a series of bonds and application having been also madethis day for the entry on the Register of the particulars required by Section 66of The Companies Act, 1934, and a copy of the said Collateral Trust Indenturetogether with the said particulars having been delivered for registration, I herebycertify that the total amount secured or intended to be secured is seventy-fivemillion dollars ($75,000,000.00) and that the said Collateral Trust Indenture hasthis day been registered pursuant to Section 66 of the said Act and that all theparticulars required by Section 66 of the said Act in relation to the said serieshave been entered on the Register.

GIVEN under my hand and seal of office at Ottawa, this eleventh day ofFebruary, one thousand nine hundred and forty-nine.

"C. $TIM"Under Secretary of State.

(SEAL)

PROVINCE OF ONTARIO

Duplicate hereof filed in pursuance of The Corporation Secu-rities Registration Act, in the office of The Provincial SecretaryOntario, on the Tenth day of Feb. A. D. 1949 at 4.05 o'clockp. m. as No. 1295. Certified this 11th day of Feb. 1949.

"R. J. CUDNEY "Deputy Provincial Secretary.

THIS INDENTURE, dated the first day of January, 1949, betweenBRAziLIAN TRACTION, LIGHT AND POWER COMPANY, LIMITED, a corpo-ration duly organized and existing under the laws of the Dominionof Canada (hereinafter called the "Company"), party of the first part,and NATIONAL TRUST COMPANY, LIMITED, a corporation duly organizedand existing under the laws of the Province of Ontario (hereinaftercalled the "Trustee"), party of the second part,

WITNESSETH: that

WHEREAS, the Company is desirous of borrowing money and forthat purpose of creating and issuing from time to time its CollateralTrust Bonds to be constituted and secured in the manner hereinafterappearing; and

WHEREAS, the Company under the laws relating thereto is dulyauthorized to create and issue the said Bonds to be issued as hereinprovided and to secure the same by this Indenture; and

WHEREAS, all necessary by-laws and resolutions of the directors andshareholders of the Company have been duly enacted and passed tomake the creation and issue of the Bonds intended to be issued here-under and secured hereby and this Indenture and the execution thereoflegal and valid and in accordance with the laws relating to the Com-pany; and

WHEREAS, the Bonds to be issued under this Indenture (hereinsometimes called the "Bonds") are to be issuable in series and, inthe case of each particular series (except the initial series, the termsof which are fixed by this Indenture), the designation of the series, thedate of the Bonds thereof, the date of maturity, the rate of interest,the interest payment dates, the place or places of payment, the denomi-nations, the prices at which such Bonds may be called for redemptionat the option of the Company or for any sinking fund, provisions forthe issuance of coupon Bonds or registered Bonds without coupons,and the right of interchange thereof, and any limitation upon the aggre-gate principal amount of the Bonds of such series, the currency orcurrencies in which the Bonds may be payable and the rate of exchangeat which payment thereof may be made, any right conferred on theholders of such Bonds to convert the same into other obligations or

2

capital stock of the Company or into other securities and the termsof any such conversion, as well as such additional provisions as arerequired or permitted by this Indenture, are to be determined by theBoard o Directors of the Company at the time of the authorizationof such series; and

WHEREAS, the texts of such coupon Bonds and of the coupons tobe appurtenant thereto and of the registered Bonds without coupons,and of the Trustee's certificate of authentication to be endorsed onsaid Bonds, are to be severally substantially as follows, with suchappropriate omissions, insertions and variations as are in this Inden-ture provided for:

[FoRM OF CouPoN BOND]

N o.................. ........................


COLLATERAL TRUST ...... BOND

Series --------.-...-.. D ue ...............................

BRAZILIAN TRACTION, LIGHT AND POWER COMPANY, LIMITED, a corpo-ration organized and existing under the laws of the Dominion ofCanada, hereinafter called the "Company", for value received, herebypromises to pay to the bearer, or, if this Bond be registered as to prin-cipal, then to the registered holder hereof, on fN day of ,

(unless this Bond shall be called for previous redemption andpayment thereof duly provided for), the principal sum of

, and to pay interest on said principal sum at therate of per cent. ( o) per annum from the datehereof, semi-annually on the day of and on the dayof in each year until payment of the said principal sum,but until the maturity of this Bond only upon presentation and sur-render of the appropriate coupons for such interest instalments, heretoattached, as they severally mature. The principal of, premium, if any,and interest on this Bond are payable at the office or agency of theCompany inin

3

This Bond is one of an authorized issue of Bonds of the Company(unlimited as to aggregate principal amount except as provided inthe Indenture hereinafter mentioned), issued and to be issued underand pursuant to, and all equally and ratably secured by, an indenture,hereinafter called the "Indenture", dated January 1, 1.949, executed bythe Company to National Trust Company, Limited, as Trustee, towhich Indenture reference is hereby made for a description of thesecurity pledged with the Trustee, the rights of the holders of theBonds and coupons and of the Trustee in respect of the security, and theterms and conditions upon which the Bonds are secured.

No reference herein to the Indenture and no provision of this Bondor of the Indenture shall alter or impair the obligation of the Company,which is absolute and unconditional, to pay the principal of and intereston this Bond at the time and place and in the amount or at the rateand in the currency herein prescribed.

The Bonds are issuable in series, and the Bonds of any series maybe for varying aggregate principal amounts, and the Bonds of anyone series may differ from the Bonds of any other series as to date,maturity, interest rate, currency in which payable and otherwise all asin the Indenture provided and set forth. The Bonds of the series inwhich this Bond is included are designated "Collateral Trust %oBonds, Series , Due ", limited to an aggregate principal amountof at any time outstanding except for Series Bonds issuedin lieu of lost, destroyed, stolen or mutilated Series Bonds.

If an event of default, as defined in the Indenture, shall occur, theprincipal of the Bonds may be declared or may become due and payable,in the manner and with the effect provided in the Indenture.

The Indenture contains provisions giving to the holders of sixty-six and two-thirds per cent. (66%o) in aggregate principal amount ofeach series of Bonds then outstanding affected by the particular modi-fication or addition acted upon, the power by resolution at a bondhold-ers meeting to take the various actions therein specified, including thepower to make any modification in or addition to the provisions of theIndenture or any supplement thereto, or to the rights and obligations ofthe Company or to the rights of the holders of the Bonds and appur-tenant coupons under the Indenture or any supplement thereto, pro-vided that no such modification or addition shall be effective untilapproved by the Board of Directors of the Company, and pro-

4

vided that no such modification or addition which in the opinionof the Trustee shall affect the rights, duties or immunities of theTrustee under the Indenture or any supplement thereto, may bemade without its written consent; and provided that the bondholdersshall have no power to (a) extend the maturity of any Bonds, or reducethe rate of interest thereon, or otherwise modify the terms of paymentof the principal (other than a modification of any sinking fund pro-visions) or interest, without the consent of the holder of each Bondso affected, or (b) effect a reduction of the percentage required forany action authorized to be taken by the bondholders.

This Bond is transferable by delivery unless registered as hereinprovided. This Bond may be registered as to the principal sum in thename of the holder at the office or agency to be maintained by theCompany in

, such registration being noted hereon, after which no transfershall be valid unless made at said office or agency by the registeredholder, in person or by duly authorized attorney, and similarly notedhereon; but this Bond may be discharged from registration by liketransfer to bearer similarly noted hereon, whereupon transferabilityby delivery shail be restored. This Bond shall continue to be subjectto successive registrations and transfers to bearer. No such registra-tion, however, shall affect the negotiability of the coupons for interesthereto attached, which shall always continue to be payable to bearerand to be transferable by delivery merely.

The Company may for all purposes whatsoever treat the bearerof any coupon, or the bearer of any coupon Bond which shall not atthe time be registered as to principal, or the person in whose nameany coupon Bond shall be registered as to principal, as the absoluteowner of such coupon or Bond notwithstanding any notice to thecontrary; and payment to such person shall to the extent of the sumspaid discharge the liability of the Company on that instrument, not-withstanding any such notice as aforesaid.

Coupon Bonds of Series are issuable in the denomination of. Registered Bonds without coupons of Series are

issuable in the denomination of and, with the consent of theCompany, may be issued in other denominations which are multiplesof . Such coupon Bonds and registered Bonds without couponsand the several denominations of such registered Bonds without cou-

5

pons are interchangeable in authorized denominations upon presenta-tion thereof for that purpose at the office or agency of the Companyin , and upon payment of' charges,all as provided in the Indenture.

No recourse shall be had for the principal of, premium, if any, orinterest on this Bond, or any part thereof, or for any claim basedhereon or otherwise in respect hereof or of the indebtedness repre-sented hereby, or based on or in respect of the Indenture, against anyincorporator, stockholder, officer or director, past, present or future,of the Company, as such, either directly or through the Company orany other person, whether by virtue of any constitution, statute orrule of law or by the enforcement of any assessment or penalty orotherwise, it being expressly understood and agreed that the Indentureand the obligations thereby secured are solely corporate obligationsand that no, personal liability whatever shall attach to or be incurredby any incorporator, stockholder, officer or director of the Company,as such, because of the incurring of the indebtedness thereby securedor under or by reason of any of the obligations, covenants or agree-ments contained in the Indenture or any of the Bonds or coupons, anyand all such personal liability, whether presently existing or hereafterarising, being hereby expressly waived and released as a part of theconsideration for the execution of the Indenture and the issue of theBonds.

Neither this Bond nor any of the coupons hereto attached shallbe valid or obligatory for any purpose unless and until the certificateof authentication hereon shall have been signed by or on behalf of theTrustee under the Indenture.

IN WITNESS WHEREOF, Brazilian Traction, Light and Power Com-pany, Limited, has caused this Bond to be executed by its Presidentor a Vice President either manually or by facsimile signature and by itsSecretary or an Assistant Secretary manually, and its corporate sealor a facsimile thereof to be affixed hereunto or imprinted hereonand coupons for interest, bearing the facsimile signature of its Treas-urer, to be attached hereto, and this Bond to be dated the dayof

BRAZILIAN TRACTION, LIGHT AND POWER COMPANY,LIMITED,

By..............................-------------------------- By..............................................Assistant Secretary. Vice President.

6

[FORM OF INTEREST COUPON]

No ............

On the day of unless the Bond hereinaftermentioned shall have been called for previous redemption and pay-ment thereof duly provided for, Brazilian Traction, Light and PowerCompany, Limited, will pay to bearer at the office or agency of theCompany inupon surrender of this coupon, in

, being six months' interest thendue on its Collateral Trust 7o Bond, Series , Due ,No -.--..------. Payment to the bearer shall discharge the liability of theCompany hereon to the extent of the sums paid, notwithstanding noticeto the Company of defects in the bearer's title.

Treasurer.

[FORM OF REGISTERED BOND WITHOUT COUPONS]

No ..-............


COLTATERAL TRUST 7o BOND

Series ................ Due ...........

Brazilian Traction, Light and Power Company, Limited, a cor-poration organized and existing under the laws of the Dominion ofCanada, hereinafter called the "Company", for value received, herebypromises to pay to 9or registered assigns, on the day of , (unlessthis Bond shall be called for previous redegnption and payment thereofduly provided for), the principal sum of

7

( ), and to pay interest on said principal sum at therate of per cent. ( %) per annum from thedate hereof, semi-annually on the day of and onthe day of in each year until payment of the saidprincipal sum. The principal of, premium, if any, and interest onthis Bond are payable at the office or agency of the Company in

im

This Bond is one of an authorized issue of Bonds of the Company(unlimited as to aggregate principal amount except as provided inthe Indenture hereinafter mentioned), issued and to be issued underand pursuant to, and all equally and ratably secured by, an inden-ture, hereinafter called the "Indenture", dated January 1, 1949, exe-cuted by the Company to National Trust Company, Limited, as Trustee,to which Indenture reference is hereby made for a description of thesecurity pledged with the Trustee, the rights of the holders of theBonds and coupons and of the Trustee in respect of the security, andthe terms and conditions upon which the Bonds are secured.

No reference herein to the Indenture and no provision of this Bondor of the Indenture shall alter or impair the obligation of the Com-pany, which is absolute and unconditional, to pay the principal of andinterest on this Bond at the time and place and in the amount or at therate and in the currency herein prescribed.

The Bonds are issuable in series, and the Bonds of any series maybe for varying aggregate principal amounts, and the Bonds of anyone series may differ from the Bonds of any other series as to date,maturity, interest rate, currency in which payable and otherwise allas in the Indenture provided and set forth. The Bonds of the seriesin which this Bond is included are designated "Collateral Trust 5Bonds, Series , Due ", limited to an aggregateprincipal amount of at any time outstanding except forSeries Bonds issued in lieu of lost, destroyed, stolen or mutilatedSeries Bonds.

If an event of default, as defined in the Indenture, shall occur, theprincipal of the Bonds may be declared or may become due and payable,in the manner and with the effect provided in the Indenture.

8

The Indenture contains provisions giving to the holders ofsixty-six and two-thirds per cent. (66% %) in aggregate principalamount of each series of Bonds then outstanding affected by the par-ticular modification or addition acted upon, the power by resolutionat a bondholders meeting to take the various actions therein specified,including the power to make any modification in or addition to theprovisions of the Indenture or any supplement thereto, or to therights and obligations of the Company or to the rights of theholders of the Bonds and appurtenant coupons under the Indenture orany supplement thereto, provided that no such modification or additionshall be effective until approved by the Board of Directors of theCompany, and provided that no such modification or addition whichin the opinion of the Trustee shall affect the rights, duties or immu-nities of the Trustee under the Indenture or any supplement thereto,may be made without its written consent; and provided that the bond-holders shall have no power to (a) extend the maturity of any Bonds,or reduce the rate of interest thereon, or otherwise modify the termsof payment of the principal (other than a modification of any sinkingfund provisions) or interest, without the consent of the holder of eachBond so affected, or (b) effect a reduction of the percentage requiredfor any action authorized to be taken by the bondholders.

This Bond. is transferable by the registered holder in person orby duly authorized attorney at the office or agency to be maintainedby the Company in

, upon surrender and cancellation of this Bond as providedin the Indenture and upon payment of the charges therein specified;and upon any such transfer a new registered Bond or Bonds withoutcoupons of the same series, for a like aggregate principal amount, willbe issued to the transferee.

The Company may for all purposes whatsoever treat the registeredholder of this Bond as the absolute owner thereof, notwithstanding anynotice to the contrary, and payment to such person shall dischargethe liability of the Company on this Bond to the extent of the sumspaid, notwithstanding any such notice as aforesaid.

Coupon Bonds of Series are issuable in the denomination of. Registered Bonds without coupons of Series are issuable

in the denomination of and, with the consent of the Company,may be issued in other denominations which are multiples of

9

Such coupon Bonds and registered Bonds without coupons and theseveral denominations of such registered Bonds without coupons areinterchangeable in authorized denominations upon presentation thereoffor that purpose at the office or agency of the Company in

, and upon payment ofcharges, all as provided in the Indenture.

No recourse shall be had for the principal of, premium, if any, orinterest on this Bond, or any part thereof, or for any claim based hereonor otherwise in respect hereof or of the indebtedness represented herebyor based on or in respect of the Indenture, against any incorporator,stockholder, officer or director, past, present or future, of the Company,as such, either directly or through the Company or any other person,whether by virtue of any constitution, statute or rule of law or bythe enforcement of any assessment or penalty or otherwise, it beingexpressly understood and agreed that the Indenture and the obliga-tions thereby secured are solely corporate obligations and that nopersonal liability whatever shall attach to or be incurred by anyincorporator, stockholder, officer or director of the Company, as such,because of the incurring of the indebtedness thereby secured or underor by reason of any of the obligations, covenants or agreements con-tained in the Indenture or any of the Bonds or coupons, any and allsuch personal liability, whether presently existing or hereafter arising,being hereby expressly waived and released as a part of the consider-ation for the execution of the Indenture and the issue of the Bonds.

This Bond shall not be valid or obligatory for any purpose unlessand until the certificate of authentication hereon shall have been signedby or on behalf of the Trustee under the Indenture.

IN WITNESS WHEREOF, Brazilian Traction, Light and Power Com-pany, Limited, has caused this Bond to be executed by its President ora Vice President either manually or by facsimile signature and by itsSecretary or an Assistant Secretary manually, and its corporate sealor a facsimile thereof to be affixed hereunto or imprinted hereon andthis Bond to be dated the day of , 19 .

BRAZILIAN TRACTION, LIGHT AND POWER COMPANY,LIMITED,

By.-- ..--.--- ....--.....-...-....--------------------------.. . By ..............-.--..........................- ..Assistant Secretary. Vice President.

10

[FORM OF TRUSTEE'S CERTIFICATE]

This Bond is one of the Collateral Trust -.... o Bonds, Series ......Due .....---------- , referred to in the within-mentioned Indenture.

NATIONAL TRUST COMPANY, LIMITED,

as Trustee,

By.................-..........................Certifying Officer.

AND WHEREAS, there shall be inserted in the form of Bonds andcoupons hereinbefore recited appropriate words and figures to indicateas to each series the currency or currencies in which payable, thedenomination or denominations, the place or places of payment or ofregistration or of interchange of Bonds; and

WHEREAS, in case any series of Bonds issued hereunder shall bemade redeemable before maturity either at the option of the Companyor for the purpose of any sinking fund provided for such series, abrief statement as to the nature of any such sinking fund and of thereserved right of redemption is to be inserted in such Bonds; and

WHEREAS, in case the Company covenants that the Bonds of anyseries shall be paid free of any tax, duty, impost or fee, a statement tothat effect is to be inserted in such Bonds; and

WHEREAS, the form of the Bonds of any series may differ from theform of the Bonds and the coupons hereinbefore recited as permittedby the Indenture; and in such respects the form of the Bonds and ofthe coupons here*nbefore recited shall be changed so as appropriately toexpress the several provisions applicable to the Bonds of each series.

Now, THEREFORE, THIS INDENTURE WITNESSETH:

In consideration of the premises and of One Dollar ($1.00) to it inhand paid by the Trustee (receipt whereof is hereby acknowledged)and to secure the due payment of all principal of, premium, if any, andinterest on the Bonds from time to time authenticated and deliveredhereunder and all other moneys for the time being and from time to

11

time owing on or charged or chargeable on the security of this Indentureand of the Bonds and the performance of the obligations of the Companyherein contained and in pursuance of each and every power andauthority it thereunto enabling, the Company doth hereby grant, con-vey, assign, transfer, hypothecate, mortgage, pledge and charge asand by way of a first fixed and specific mortgage, pledge and charge toand in favour of the Trustee the securities listed or referred to inthe First Schedule hereto annexed and any other securities and otherproperty, assets and rights of whatsoever kind, nature or description(subject to the exception as to leaseholds hereinafter contained) whichmay hereafter from time to time be mortgaged, pledged or charged orrequired to be mortgaged, pledged or charged by way of a fixed andspecific charge in favour of the Trustee under any of the provisions ofthis Indenture (all of which securities are hereinafter collectivelyreferred to as the "Pledged Debentures").

And for the consideration aforesaid and for the purposes afore-said and in pursuance of the powers aforesaid the Company alsocharges (subject to the exception as to leaseholds hereinafter contained)as and by way of a first floating charge to and in favour of the Trusteefor and with the payment of all principal moneys, interest, premium,if any, and other moneys for the time being owing on the security ofthis Indenture and of the Bonds, its undertaking and all its property,assets and rights for the time being, both present and future (other thanthe property, assets and rights from time to time and for the time beingmortgaged, pledged and charged by way of a fixed and specific securityfor the payment of the moneys intended to be hereby secured),including but not so as to limit the generality of the foregoingall its present and future goodwill, rents, revenues, incomes andsources of money, moneys, rights, powers, privileges and franchises,contracts, agreements, book debts, accounts, negotiable and non-negoti-able instruments, judgments, shares of capital stock, bonds, debenturesand other securities, choses in action and all other property and thingsof value of every kind and nature, tangible or intangible, legal orequitable, which the Company may be possessed of or entitled to orwhich may be hereafter acquired by the Company; provided that suchfloating charge shall in no way hinder or prevent the Company, subjectto the provisions of this Indenture, (until the security hereby consti-tuted shall have 1 ome enforceable and the Trustee shall have deter-

12

mined or become bound to enforce the same) from paying dividends orfrom selling, alienating, assigning or other-'se disposing of or dealingwith the subject matters of such floating charge in the ordinary courseof its business and for the purpose of carrying on the same, or fromselling or otherwise disposing of any property which, in the opinionof the Board of Directors of the Company, may be advantageouslysold or otherwise disposed of or is no longer useful or of productivevalue to the business, and provided further that such floating chargeshall in no way hinder or prevent the Company from pledging, assign-ing or giving security or securities (whether by way of floating chargeor otherwise) from time to time on its revenues, moneys, securities(other than shares of subsidiaries), book debts, accounts receivable,contracts or mercantile documents to any bank or banks for presentor future debts, liabilities or obligations 'of the Company to such bankor banks maturing by their terms not more than twelve months aftertheir date (including without limiting the generality of the foregoingthe giving of any security permitted by the Bank Act of Canada otherthan security on shares of subsidiaries but excluding always the givingof security on fixed physical assets) and any such pledge, assignment,security or securities shall rank in priority over the floating chargehereby created.

PRovIDED ALWAYS that until the security hereby constituted shallhave become enforceable and the Trustee shall have determined orbecome bound to enforce the same pursuant to the provisions of thisIndenture the Company shall, subject, however, to the express termshereof, be suffered and permitted to possess, manage, administer, useand enjoy the trust estate and freely to control the conduct of its busi-ness and to take and use any incomes, interest, dividends, rents, issuesand profits thereof in the ordinary course of its business and for thepurpose of carrying on the same.

PROVIDED FURTHER and it is hereby declared that the last day ofany term of years reserved by any lease, verbal or written, or anyagreement therefor, now held or hereafter acquired by the Company,and whether falling within the general or particular description of thetrust estate hereunder is hereby and shall be excepted out of the mort-gage, pledge and charge hereby or by any other instrument created anddoes not and shall not form any part of the trust estate, but the Com-pany shall stand possessed of the reversion remaining in the Company

S13

of any leasehold premises, for the time being demised, as aforesaid,upon trust to assign and dispose thereof as the Trustee shall direct;and upon any sale or sales of the leasehold premises or any part thereof,the Trustee, for the purpose of vesting the aforesaid residue of anysuch term or any renewal thereof in any purchaser or purchasersthereof, shall be entitled by deed or writing to appoint such purchaseror purchasers or any other person or persons a new trustee or trusteesof the aforesaid residue of any such term or renewal thereof in theplace of the Company and to vest the same accordingly in the newtrustee or trustees so appointed free and discharged from any obliga-tion respecting the same.

To HAVE AND TO HoLD the Pledged Debentures and the undertakingof the Company and all other property and assets of the Company,present or future, hereby in this Trust Indenture or in any indenture orother instrument supplemental or ancillary hereto mortgaged, pledgedand charged or intended so to be to secure payment of the moneysintended to be secured hereby, whether by fixed or floating charge(herein generally referred to as the "trust estate") unto the Trustee,its successors and assigns forever.

IN TRuST, nevertheless, for the equal and ratable use and benefitof all present and future holders of the Bonds and coupons issued andto be issued under and secured by this Indenture, and for the enforce-ment of the payment of said Bonds and coupons when payable, andthe performance of and compliance with the covenants and conditionsof this Indenture, without preference, priority or distinction as to lienor otherwise of one Bond over any other Bond of the same or of anyother series by reason of priority in the issue, sale or negotiationthereof or otherwise, so that, except as in this Indenture otherwiseprovided, each and every Bond issued and to be issued and authenti-cated as aforesaid shall have the same right, lien and privilege underthis Indenture, and so that, subject to the terms hereof, the principalof, premium, if any, and interest upon every such Bond shall bo equallyand ratably secured hereby as if all such Bonds at any time outstandinghad been made, executed, delivered and negotiated simultaneously withthe execution and delivery of this Indenture. The mortgages, pledgesand charges hereby created shall be and be deemed to be effective andshall have effect whether or not the moneys hereby secured shall be

14

advanced before or after or at the same time as the issue of any of theBonds intended to be hereby secured or whether the advance of themoneys hereby secured, or any part thereof, be before or after or uponthe date of the execution of this Indenture.

AND IT IS HEREBY COVENANTED AND DECLARED that all such Bonds,with the coupons for interest thereon, are to be issued, authenticatedand delivered, and that the trust estate is to be held by the Trus-tee, upon and subject to the following covenants, conditions, uses andtrusts; and it is agreed and covenanted by the Company with theTrustee and the respective holders from time to time of Bonds herebysecured, as follows, namely:

ARTICLE ONE.

Amount of Issue of Bonds; Form, Executionand Registry of Bonds.

SECTION 1.01. The authorized aggregate principal amount ofBonds which may be outstanding at any one time hereunder is unlim-ited, except that Bonds may be authenticated and delivered by theTrustee only in accordance with the provisions of this Indenture here-inafter set forth.

SECTION 1.02. The Bonds to be issued under this Indenture,together with the interest coupons appertaining thereto, shall be sub-stantially of the tenor and purport set forth in the preambles of thisIndenture, with appropriate insertions, omissions, substitutions andvariations in all respects as required or permitted by the terms of thisIndenture. Said Bonds shall be designated, generally, as the Com-pany's "Collateral Trust Bonds" and shall be issuable in seriesas from time to time shall be authorized by the Board of Directors ofthe Company.

In authorizing the issue of any series (except the initial series, theterms of which are hereinafter fixed by the succeeding paragraph) theBoard of Directors of the Company shall determine and specify in re-spect to the Bonds of such series the designation of the series, the date,the maturity, the rate of interest, the interest payment dates, the placeor places of payment, the denominations, the redemption provisions, if

15

any, the sinking fund provisions, if any, any provisions as to tax exemp-tions or tax payments by the Company, any limitation of the aggregateprincipal amount of the series, the currency or currencies in which theBonds may be payable and the rate of exchange at which paymentthereof may be made, any right conferred on the holder of such Bondsto convert the same into other obligations or capital stock of the Com-pany or into other securities and the terms of any such conversion, anyright conferred on any holder of such Bonds or other person to declarethe principal of all or any of the Bonds of such series to be immediatelydue and payable upon the happening of any specified event, anyprovisions as to the right of interchange of coupon Bonds or registeredBonds without coupons and of the several denominations of either form,and any variations from the above specified provisions of the couponBonds or the registered Bonds without coupons or both which may bepermitted by this Indenture.

The initial series (hereinafter called "Series A Bonds"): (a)shAll be designated as " Collateral Trust 31/2,% Bonds, Series A, dueJanuary 1, 1974"; (b) shall be dated January 1, 1949 (except thatregistered Bonds without coupons shall be dated as elsewhere providedin this Section 1.02); (c) shall mature January 1, 1974; (d) shallbear interest at the rate of three and one-half per cent. (3/21%)per annum, payable semi-annually on January 1 and July 1 in eachyear until payment of the principal sum; (e) shall be payable bothas to principal and interest at the office or agency of the Companyin the Borough of Manhattan, The City of New York, New York, insuch coin or currency of the United States of America as at thetime of payment shall be legal tender for the payment of public andprivate debts; (f) shall be issuable in the form of coupon Bonds inthe denomination of $1,000 and of registered Bonds without couponsin the denomination of $1,000 and, with the authorization of the Com-pany, in other denominations which are multiples of $1,000, and thecoupon Bonds and the registered Bonds without coupons and theseveral denominations of the registered Bonds without coupons shall,upon payment of charges as hereinafter in Section 1.04 of this Articleprovided, be interchangeable in authorized denominations, and thecoupon Bonds shall be registerable as to principal at the office oragency of the Company in the Borough of Manhattan, The City ofNew York, New York, as provided in Section 1.04 of this Article; (g)shall be redeemable before maturity at the option of the Company as

16

a whole or in part by lot, at any time or from time to time, as providedin Article Three hereof; (h) shall be entitled to the benefits of, andshall be redeemable for, the sinking fund provided in Article Fourhereof; (i) shall be payable as to principal, premium, if any, sinkingfund and interest without deduction for and free from any and alltaxes, duties, imposts and fees imposed by the United States of Brazilor by any taxing authority thereof or therein except when such Bondsare beneficially owned by an individual or corporation resident in theUnited States of Brazil; (j) shall provide that the principal of suchBonds, at the option of the International Bank for Reconstruction andDevelopment, may be declared and become due and payable upon theoccurrence of an event of default under, and in the manner and withthe effect provided in, a Loan Agreement dated January 27, 1949between said International Bank for Reconstruction and Developmentand the Company, a copy of which has been lodged with the Companyat its principal office in Toronto, Ontario, and is there available for theinspection of any bondholder; (k) shall be in substantially the formset forth in the preambles of this Indenture with such additions andchanges as are necessary to give effect to the foregoing terms; and(1) shall be limited to an aggregate principal amount of $75,000,000 atany time outstanding, except for Bonds issued in lieu of lost, destroyed,stolen or mutilated Bonds.

The Bonds shall be executed in the name and on behalf of theCompany by its President or a Vice President either manually or byfacsimile signature and by its Secretary or an Assistant Secretarymanually, and its corporate seal (which may be in facsimile form withthe same effect as if the official seal had been affixed or impressed)affixed thereto. Only such Bonds as shall bear thereon a certificatesubstantially in the form hereinbefore recited, executed by the Trus-tee, shall be entitled to the benefit of this Indenture. No bond or anycoupon thereunto appertaining shall be valid for any purpose untilsuch certificate shall have been duly executed on the Bond by theTrustee; and such certificate of the Trustee upon any Bond executedby the Company shall be conclusive evidence that the Bond so authen-ticated was duly authenticated and delivered hereunder, and that theholder is entitled to the benefit of this Indenture.

In case any of the officers of the Company who shall have executedany of the Bonds shall cease to be such officers of the Company before

17

the Bonds so executed shall have been authenticated and delivered bythe Trustee, such Bonds may be authenticated and delivered anddisposed of as though the persons who executed the Bonds had notceased to be such officers of the Company; and also any Bond may beexecuted in behalf of the Company by such persons as, at the actual dateof the execution of the Bond, shall be the proper officers of the Company,although on the date of such Bond, any such person was not such officer.

The coupons attached to the Bonds shall bear the facsimile signa-ture of the present Treasurer or of any future Treasurer of theCompany, and for that purpose the Company may adopt and use thefacsimile signature of any person who shall have been such Treasurer,notwithstanding the fact that at the time when such Bonds shall beauthenticated and delivered or disposed of he shall have ceased to bethe Treasurer of the Company.

The Trustee shall not authenticate or deliver any coupon Bondsunless all coupons appurtenant thereto then matured, except couponsrepresenting interest accrued thereon the payment of which has notbeen duly provided for, shall have been detached and cancelled, exceptas hereinafter in Section 1.06 of this Article otherwise provided.

Registered Bonds without coupons shall be dated the semi-annualinterest payment date to which interest has been paid on Bonds of suchseries next preceding the date of authentication thereof, unless the dateof authentication be an interest payment date to which interest has beenpaid, in which case the Bonds shall be dated the date of authentication,provided that registered Bonds without coupons authenticated priorto the first interest payment date of any series shall be dated six monthsprior to such first interest payment date. Every registered Bond with-out coupons shall bear interest from its date.

SECTION 1.03. Bonds may be issued originally either as couponBonds or as registered Bonds without coupons and, with respect toSeries A Bonds and Bonds of other series to the extent authorized, thecoupon Bonds and the registered Bonds without coupons, and the sev-eral denominations of registered Bonds without coupons, shall be inter-changeable as hereinafter provided. Any of the Bonds may haveimprinted thereon any legend or legends required in order to com-ply with any law or with any rules or regulations of any govern-mental body or agency made pursuant thereto, or with the rules

18

and regulations of any stock exchange or to conform to general usage,and the Board of Directors, by resolution, may amend any legend onBonds then outstanding so as to comply with any such law, rule orregulation, or so as to conform to such usage.

SECTION 1.04. The Company covenants to make in the mannerhereinafter provided in this Section, at the office or agency of theCompany to be maintained for that purpose in accordance with theprovisions of Section 5.01 of Article Five of this Indenture, exchangesand transfers of Bonds to which the right of.such exchange or transferattaches under the provisions of this Indenture. The Company shallnot be required to make transfers or exchanges (a) of Bonds of anyseries for a period of ten days next preceding any interest payment datethereof or next preceding any selection by lot of Bonds of such series tobe redeemed, or (b) of any Bonds called or being called for redemption.

Whenever any Bond or Bonds, whether coupon or registered with-out coupons, shall be surrendered for exchange or, in the case ofregistered Bonds without coupons, for transfer, the Company shallexecute, and the Trustee shall authenticate and deliver in exchangetherefor, as may be requested, a coupon Bond or Bonds or a registeredBond or Bonds without coupons of the same series in the same aggre-gate principal amount and of the authorized denominations which maybe requested, provided that any registered Bond or Bonds so surrend-ered shall be accompanied by a written instrument of transfer in formapproved by the Company, executed by the registered holder in personor by duly authorized attorney.

The coupon Bonds surrendered for exchange as above providedin this Section, and the coupon Bonds issued upon such exchange,shall each bear all unmatured coupons and all matured coupons notfully paid, if any.

Each Bond delivered pursuant to the exercise of any privilege oftransfer or exchange or in substitution for the whole or any part ofone or more other Bonds shall carry all of the rights to interest ac-crued and unpaid, and to accrue, which were carried by the whole orsuch part of such one or more other Bonds, and such Bond, if a regis-tered Bond without coupons, shall be so dated, or, if a coupon Bond,shall have attached thereto such coupons, that neither gain norloss in interest shall result from such transfer or exchange or sub-stitution.

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For any exchange or any transfer of Bonds, the Company, at itsoption, may require the payment of a sum sufficient to reimburse itfor any stamp tax or other tax or governmental charge, and, for anyexchange of Bonds, but not for any transfer, a further sum in addi-tion thereto in the amount of Two Dollars ($2.00) for each new Bondissued. Except as above provided, no charge shall be made to theholder of any Bond for any registration, transfer or discharge fromregistration of such Bond.

Upon presentation of any coupon Bond and request therefor, theCompany shall register such Bond as to the principal thereof, inthe name of the holder, on registry books to be provided for suchpurpose at the office or agency of the Company to be maintained forthat purpose and such registration shall be noted on the Bond. Aftersuch registration no transfer of any Bond so registered shall be validunless made on said books by the registered holder, in person or byduly authorized attorney, and similarly noted on the Bond. Uponpresentation to the Company, at such office or agency, of any suchcoupon Bond registered as to principal, accompanied by a written in-strument of transfer in form approved by the Company, executedby the registered holder in person or by duly authorized attorney,such Bond shall be transferred upon such registry books and suchtransfer shall be noted upon such Bond. The registered holder ofany such coupon Bond registered as to principal also shall h ave theright to cause the same to be registered as payable to bearer, in whichcase transferability of the Bond by delivery shall be restored andthereafter the principal of such Bond when due shall be payable tothe person presenting the Bond; but any such Bond registered as pay-able to bearer may be registered again in the name of the holder asaforesaid with the same effect as on the first registration thereof, andsuccessive registrations and transfers as aforesaid may be made fromtime to time as desired. Each registration of a coupon Bond, andeach transfer of a coupon Bond so registered, shall be recorded on theregistry books and shall be noted on the Bond by the Bond registrarof the Company. Registration of any of the coupon Bonds as toprincipal shall not affect the negotiability of the coupons appertain-ing to such Bond, but every such coupon shall always continue to betransferable by delivery merely and shall remain payable to bearer.

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If one or more of the events of default enumerated in Section 7.02of Article Seven of this Indenture shall have happened and be con-tinuing, the Trustee, in its discretion, may nevertheless authenticateand deliver Bonds for the purpose of making the exchanges and trans-fers provided for in this Section.

SECTION 1.05. The Company and the Trustee may deem and treatthe bearer of any coupon or the bearer of any coupon Bond which shallnot at the time be registered as to principal as the absolute owner ofsuch coupon or Bond for all purposes whatsoever and the rights of theCompany and the Trustee in this respect shall not be affected by anynotice to the contrary.

As to all registered Bonds and all coupon Bonds registered as toprincipal, the person in whose name they shall be registered shall forall purposes of this Indenture be deemed and treated as the ownerthereof and payment on account of the principal of, or premium, if any,on such Bond if it be a coupon Bond registered as to principal, or ofthe principal of, or premium, if any, or interest on such Bond, if itbe a registered Bond without coupons, shall be made only to or uponthe order of such registered holder. All such payments so made shallbe valid and effectual to satisfy and discharge the liability of the Com-pany upon such Bonds to the extent of the sum or sums so paid, andno claim of any kind for the payment of the interest, or premium, if any,on or principal of any such Bond by any person other than the registeredholder thereof shall affect the right to n.:ie the payments to the regis-tered holder as above provided.

SECTION 1.06. In case any coupon Bond issued hereunder, withthe coupons thereto appertaining, or any registered Bond without cou-pons, shall become mutilated or be lost or destroyed or stolen, theCompany, in the case of a mutilated Bond shall, and in the case of alost or destroyed or stolen Bond may in its discretion, issue, and there-upon the Trustee shall authenticate and deliver, a new Bond with orwithout coupons as the case may be, of like tenor and date and of thesame series, bearing the same or different serial number or numbers,and bearing the same rights with respect to interest, in exchange andsubstitution for and upon cancellation of the mutilated Bond and its cou-pons, or the mutilated registered Bond without coupons, or in lieu of and

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in substitution for the Bond and its coupons, or the registered Bondwithout coupons, so lost or destroyed or stolen, or if any Bond, somutilated, lost, destroyed or stolen, or any coupon thereto appertaining,shall have matured or shall be about to mature, instead of issuing asubstitute Bond or coupon the Company may pay the same and, exceptas to a mutilated Bond or coupon, may waive surrender thereof. Theapplicant for such substitute Bond or for such payment shall produceevidence satisfactory to the Company and the Trustee of the loss ordestruction or theft of such Bond and its coupons, or of such registeredBonds without coupons, or that the mutilated Bond was one of theBonds issued hereunder, as the case may be, and shall give the Com-pany and the Trustee, respectively, such indemnity as in their discre-tion they may require. The applicant for such substituted Bond shallpay all expenses, including counsel fees, in connection with the prepara-tion and issue thereof.

SECTION 1.07. Pending the preparation of the definitive engravedBonds to be issued hereunder, the Company may execute, and theTrustee upon the written request of the Company shall authenticateand deliver in lieu of such definitive engraved Bonds, and subject tothe same provisions and limitations, temporary Bonds in any denom-ination, either in bearer form without coupons, or with one or morecoupons attached, or in registered form without coupons, substan-tially of the tenor of the definitive engraved Bonds in lieu of whichthey are to be issued, and with or without registration provisions, andwith appropriate omissions, insertions and variations. Such tempo-rary Bonds shall be exchangeable, without charge to the holder, forthe definitive engraved Bonds in lieu of which they are issued, and uponsurrender and cancellation of such temporary Bonds, the Companyshall execute and the Trustee upon the written request of the Companyshall authenticate and deliver in exchange therefor definitive engravedBonds for the same aggregate principal amount. Until so exchanged,the temporary Bonds in all respects shall be entitled to the same lienand security of this Indenture as definitive engraved Bonds issued andauthenticated hereunder. In lieu of temporary Bonds the Companymay deliver definitive Bonds, either in coupon or registered form,printed on steel engraved borders, and in such event the holders ofsuch printed definitive Bonds shall have the same rights of exchangefor definitive engraved Bonds as above set forth with respect to theholders of temporary Bonds.

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SECTION 1.08. All Bonds -J coupons delivered to or acquired bythe Trustee under the provisioll of this Indenture, unless previouslycanceled, shall be canceled by the Trustee, except Bonds and couponsdelivered to the Trustee for authentication or delivered to or purchasedby the Trustee for the reserve fund provided in Section 5.10 of ArticleFive hereof. Canceled coupon Bonds and coupons shall be crematedby the Trustee and certificates of cremation delivered by the Trusteeto the Company. Canceled registered Bonds shall be returned to theBond registrar.

ARTICLE TWO.

Issue of Bonds.

SECTION 2.01. Whenever used in this Indenture, unless the con-text otherwise requires, the following terms shall have the followingmeanings:

(a) The term "subsidiary" means a corporation at least amajority of the shares of voting stock of which is owned directlyby the Company or by any such corporation.

(b) The term "voting stock" means shares of capital stock ofany class having ordinary voting power for the election of a major-ity of directors, other than stock having such power only by reasonof the happening of a contingency.

(c) The term "funded debt" means debt maturing by itsterms more than 12 months after its date, except debt to suppliersincurred for the purchase of supplies and equipment for use in con-struction or installation.

(d) The term "electric and telephone property" means thefixed physical property of a subsidiary in service in Canada orBrazil in the electric or telephone business or the electric andtelephone business of such subsidiary, adequately maintainedunder the circumstances and conditions of its use, and chargedand of such a nature as to be properly chargeable in accordancewith sound and generally accepted accounting procedures appli-cable in the circumstances to the fixed property accounts of such

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subsidiary. Electric and telephone property shall not includeintangible property, inventories or property in the course ofconstruction or installation.

(e) The term "net depreciated book value of electric andtelephone property" means the net depreciated book value thereofas of December 31, 1947 adjusted in respect of subsequent additionsat cost (excluding any intercompany profit), retirements, write-offsand provisions for depreciation, obsolescence and retirement, assuch additions, retirements, write-offs and provisions for deprecia-tion, obsolescence and retirement are recorded on the books of suchsubsidiary in accordance with sound and generally acceptedaccounting procedures applicable in the circumstances, with costsincurred in any currency other than currency of the United Statesof America translated into currency of the United States ofAmerica at the rate or rates of exchange prevailing at the timesuch costs were incurred.

(f) The term "subordinated debt" means funded debt owingby a subsidiary the terms of which provide that no payment onaccount of principal or sinking fund shall be made thereon as longas any secured unsubordinated debt of such subsidiary is outstand-ing and the terms of which further provide that no payment onaccount of interest shall be made thereon until full payment hasbeen made of amounts then due for principal, sinking fund andinterest on all secured unsubordinated debt of such subsidiary.

(g) The term "unsubordinated debt" means all funded debtof a subsidiary other than subordinated debt, plus past due intereston unsubordinated debt unless and until such past due interest isconverted into unsecured open account indebtedness.

(h) The term "Eligible Collateral" means unsubordinateddebt of a subsidiary which at the time referred to complies withall the following requirements:

(1) such debt is unconditionally payable as to principal onor before a specified date and bears fixed interest payable reg-ularly;

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(2) such debt is debt of a subsidiary whose total unsub-ordinated debt does not exceed 50o of the net depreciated bookvalue of the electric and telephone property of such subsidiary;

(3) such debt is issued pursuant to an indenture by theterms of which all the property and assets of such subsidiaryare charged by way of a floating charge (or at the option of theCompany by way of a specific mortgage on certain propertyand assets and a floating charge on all other property and assetsof such subsidiary) to secure such debt and which creates validand effective charges according to its terms on all property andassets of such subsidiary situate in Canada and Brazil;

(4) such debt is debt of a subsidiary on the property andassets of which there exist no mortgages, pledges or chargessecuring indebtedness of such subsidiary other than (a) themortgages and charges referred to in subdivision (3) hereof;(b) existing or purchase money mortgages, liens or charges onproperty acquired by purcbase, consolidation or merger, andextensions or renewals thereof (for refunding purposes only)with the same mortgagee or with any other person; (c) securityfor bank loans of the kind permitted to the Company by thisIndenture; (d) mortgages, pledges or charges securing obliga-tions of the following subsidiaries or any successors in principalamounts at any one time outstanding not in excess of the follow-ing respective amounts: (i) The Rio de Janeiro Tramway, Lightand Power Company, Limited, $12,000,000; (ii) The Sao PauloTramway, Light and Power Company, Limited, $4,000,000;and (iii) Sao Paulo Electric Company, Limited, $4,500,000;(e) liens arising by operation of law in the ordinary course ofbusiness or in the expansion or construction of the operatingfacilities of such subsidiary; and (f) mortgages, pledges orcharges expressed as ranking subsequent to the charges referredto in subdivision (3) hereof;

(5) such debt is debt of a subs;Iiary against which noreceivership, insolvency, bankruptcy, liq,: dation, winding-up orreorganization proceedings are pending in any court of com-petent jurisdiction, and which is not in default in payment ofprincipal, premium, if any, or interest on any of its unsubor-

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dinated debt. Past-due interest which is or has been convertedinto unsecured open account indebtedness shall not be consideredto be in default for the purposes of this subparagraph; and

(6) the term "floating charge" as used in this paragraph(h) of Section 2.01 of this Article shall include a charge existingoutside the Province of Ontario, the characteristics of whichare substantially equivalent to the characteristics of a floatingcharge created in such Province.

Except as otherwise specifically provided or as otherwise requiredby the context in particular cases, all references in this Indenture tomoney, cash or dollars, or to amounts, shall be deemed to refer to coinor currency of the United States of America or amounts expressedtherein; and in the application of any provisions of this Indenturewhere it is necessary to translate amounts in one currency into amountsin another currency such translation shall be made by the Trustee atsuch rate or rates of exchange as the Trustee may deem equitable.

SECTION 2.02. Unless and until any of the events of default enu-merated in Section 7.02 of Article Seven hereof shall have happenedand be continuing, Bonds shall be authenticated and delivered by theTrustee pursuant to the provisions of this Article, but only if, aftersuch action, the covenant contained in the first paragraph of Section5.09 of Article Five of this Indenture shall be complied with.

Subject to the foregoing provisions of this Section, and withinthe limitations and upon the conditions hereinafter in this Articleprovided, and only within such limitations and upon such conditions,the Company may from time to time execute Bonds and the Trusteeshall thereupon authenticate such Bonds and deliver the same to orupon the order of the Company.

SECTION 2.03. Bonds other than Bonds to be issued under the pro-visions of Article One of this Indenture in exchange for or in lieu ofand in substitution for Bonds issued hereunder and then outstanding,may from time to time be executed by the Company and delivered tothe Trustee for authentication, and the Trustee shall thereupon authen-ticate and deliver such Bonds, upon the written application of the Com-

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pany, signed by its President or a Vice President and by its Treasureror an Assistant Treasurer, provided that the Trustee has received thefollowing documents:

(a) A certified copy of the resolution of the Board of Direc-tors of the Company authorizing the proposed issue and settingforth the amount thereof, and stating that such Bonds are of adesignated series previously authorized, or specifying, as pro-vided in Section 1.02 of Article One of this Indenture, the par-ticular provisions of the Bonds of the proposed series, whichprovisions (except for Series A Bonds) shall be set forth in asupplemental indenture between the Company and the Trustee;

(b) An opinion of counsel to the effect that no authorizationof the issue of such Bonds is required by law to be given by anycommission or other governmental authority except as thereinshall be specified, and that in all other respects the Companyis authorized by law to issue the Bonds proposed to be issued;

(c) A copy, authenticated in such manner as may be satis-factory to the Trustee, of the order or orders or certificate orcertificates authorizing such issue of Bonds made or given by thegovernmental authority or authorities specified in said opinionof counsel;

(d) A certificate of the Company, dated the date the appli-cation is presented to the Trustee, signed by the President or aVice President and by the Secretary or an Assistant Secretaryof the Company to the effect that none of the events of defaultenumerated in Section 7.02 of Article Seven of this Indenturehave happened and are continuing;

(e) A certificate or certificates of the Company, dated thedate the application is presented to the Trustee, substantiallyin the form and substance of the annual certificate required underSection 5.09 of Article Five of this Indenture, but setting forthsuch additional facts as are necessary to show that after theaction requested is taken, the covenant contained in Section 5.09of Article Five hereof will be complied with, provided that forthis purpose and for the purpose of Section 2.02 of this Article

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the amount of the net depreciated book value of the electric andtelephone property of any subsidiary whose obligations are thenpledged hereunder as Eligible Collateral may be stated as at theclose of the latest fiscal year as to which it is practicable to statesuch amount, adjusted, however, to give effect to any net adversechange of more than ten per cent (10o) of such net depreciatedbook value up to the date of the certificate. The Trustee shall beentitled to accept any such certificate as conclusive proof of suchnet depreciated book value as of the date of such certificate;

(f) Such conveyances, declarations or instruments of fur-ther assurance, executed and acknowledged by the Company orotherwise, as in the opinion of counsel may be necessary for thepurpose of subjecting to the lien and operation of this Indentureas a first fixed and specific mortgage, pledge and charge anyobligations of subsidiaries upon the basis of which the actionrequested by the Company is to be taken, together with an opin-ion of counsel to the effect that such declarations, conveyancesor other instruments are sufficient for that purpose; or, in lieu ofsuch instruments, an opinion of such counsel that no declaration,conveyance or instrument of further assurance is necessary forthe purpose aforesaid; and in either case an opinion of counselto the effect that obligations of subsidiaries upon the basis ofwhich the action requested by the Company is to be taken arelegal and valid obligations of such subsidiaries and conform withthe requirements of subdivisions (1) and (3) of paragraph (h)of Section 2.01 of this Article and that no mortgages, pledges,charges or liens have been registered in the United States ofBrazil up to a date not earlier than fourteen days prior to thedate of the application or are registered in the Province ofOntario against the property and assets of any such subsidiaryexcept those referred to in clauses (a) to (f) inclusive of sub-division (4) of paragraph (h) of Section 2.01 of this Article;

(g) A certificate of independent auditors satisfactory to theTrustee, who may be the auditors regularly employed to auditthe books of the Company or of any subsidiary, to the effect that,as of the close of the latest fiscal year as to which it is prac-

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ticable to give such certificate, the net depreciated book value ofelectric and telephone property of any subsidiary whose obliga-tions are used or are to be used as a basis for qualification of thedebt of such subsidiary as Eligible Collateral has been deter-mined as provided by paragraph (e) of Section 2.01 of thisArticle;

(h) A certificate of an independent Canadian or UnitedStates engineer, or engineering firm, of recognized standingsatisfactory to the Trustee, who may have been previouslyemployed or retained by the Company, setting forth that in theopinion of such engineer or firm, during the period from the endof the period covered by the last such certificate previously fur-nished to the Trustee, or from December 31, 1947 if no suchcertificate has previously been furnished, to a date not morethan six months before the date the application is presented tothe Trustee, the electric and telephone property of such subsid-iary has been adequatly maintained under the circumstancesand conditions of its use, and that after making an independ-ent review of the depreciation policy followed by such sub-sidiary in its accounts, such policy and the provisions there-under recorded on the books of such subsidiary in respect ofdepreciation, obsolescence and retirement of electric and tele-phone property of such subsidiary represent in the opinion ofsuch engineer or firm reasonable and adequate provision for suchpurposes, all in accordance with sound engineering standards;provided, however, that no such certificate shall be requiredprior to December 31, 1951 or thereafter covering any period ofless than three years.

ARTICLE THREE.Redemption of Bonds.

SECTION 3.01. In the creation of any particular series of Bondshereunder the Company may reserve the right to redeem, beforematurity, all or any part of the Bonds of that series at such time ortimes and on such terms as the Board of Directors of the Companymay determine and as shall be appropriately specified in each of the

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Bonds of that series. Except as otherwise determined by the Boardof Directors of the Company prior to the issue under this Indentureof Bonds in respect of which the Company is reserving a right ofredemption before maturity, the procedure for redemption shall beas set forth in this Article.

The Company hereby reserves the right to redeem the Series ABonds before maturity as a whole at any time, or in part from timeto time, all upon the notice and in the manner provided in this Articleat redemption prices which shall be the following percentages of theirprincipal amount: to and including January 1, 1953, at 103%; there-after, to and including January 1, 1957, at 1029%o; thereafter, to andincluding January 1, 1961, at 102%; thereafter, to and including Jan-uary 1, 1965, at 101/,9%; thereafter, to and including January 1, 1969,at 101%; thereafter, to and including January 1, 1973, at 100%; andthereafter at 100%; in each case together with accrued interest on theprincipal amount thereof to the date fixed for redemption.

In case the Company shall desire to exercise such right to redeemand pay off all or any part of the Bonds of a particular series on anydate in accordance with the right reserved so to do, notice of redemp-tion, either of all or any part of the Bonds of such series, shall begiven by the Company by publication in one newspaper printed in theEnglish language and customarily published on each business dayand of general circulation in the Borough of Manhattan, The City ofNew York, New York, and in one newspaper printed in the Englishlanguage and customarily published on each business day and ofgeneral circulation in the City of Toronto, Province of Ontario, at leastfour times prior to the date fixed for such redemption; the first publica-tion to be not less than forty-five (45) days nor more than sixty (60)days prior to the date fixed for such redemption; provided, however,that if at the time all of the Bonds outstanding shall be registeredBonds without coupons or coupon Bonds registered as to principal,then no notice of redemption need be given except a notice by mailingto the holders of the Bonds designated for redemption as hereinafterprovided. A copy of the notice of redemption shall be mailed by theCompany at least forty-five (45) and not more than sixty (60) daysbefore the date fixed for such redemption to the registered holders ofBonds (including coupon Bonds registered as to principal) called for

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redemption, at their last address appearing upon the Bond registrybooks, but if notice by publication shall have been given as above pro-vided where publication is required, failure to give such notice bymailing shall not affect the validity of such proceedings for the redemp-tion of Bonds.

In case the Company shall elect to redeem less than all of the Bondsof any series then outstanding, it shall give the Trustee adequatewritten notice of the aggregate principal amount of Bonds of suchseries to be redeemed, and thereupon the Trustee shall, not more thantwenty (20) days before the date of first publication of notice of redemp-tion, draw by lot, in such manner as the Trustee may elect, from thenumbers of coupon Bonds of the said series outstanding and the numbersassigned as hereinafter provided to registered Bonds without couponsof the said series outstanding, the distinguishing numbers of a principalamount of Bonds equal to such aggregate principal amount of Bondsto be redeemed, and shall thereafter notify the Company in writing ofthe numbers of Bonds so drawn. The notice of redemption shall specifythe numbers of the coupon Bonds so drawn and if any numbers sodrawn shall be numbers assigned as hereinafter provided to outstand-ing registered Bonds without coupons, the notice of redemption shallspecify the respective numbers of such registered Bonds; and in thecase of any registered Bonds without coupons which are to be redeemedin part only (by reason of the fact that all the numbers assigned ashereinafter provided to such registered Bonds shall not have beendrawn), such notice shall specify the respective portions of the principalamount thereof to be redeemed and shall state that on and after theredemption date upon surrender of such registered Bonds for redemp-tion new Bonds of the same series of an aggregate principal amountequal to the unredeemed portions of such registered Bonds will be issuedin lieu thereof. In case there shall have been drawn for redemption asaforesaid one or more but less than all of the numbers assigned to anyregistered Bond without coupons the Company shall execute and theTrustee shall authenticate and deliver to the registered holder thereofor upon his order and at the expense of the Company a new Bond orBonds of the same series for the unredeemed portion of the surrenderedBond, or at the option of the registered holder of such Bond the Trusteeor its authorized agent shall, upon presentation of such Bond for such

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purpose, make a notation thereon of the payment of the portion of theprincipal amount of such Bond so called for redemption.

In case any Bonds are to be called for redemption the Trusteeshall arbitrarily assign, for the purpose of the drawing, to each regis-tered Bond without coupons of the lowest denomination of such seriesa number, and in case any registered Bond without coupons shall beof a denomination greater than the lowest denomination the Trusteeshall assign to such Bond a number for each multiple thereof.

SECTION 3.02. After the publication of the notice of redemptionhas been duly completed, or notice duly mailed if no publication isrequired, the Bonds so called for redemption (including the designatedportion of any registered Bonds without coupons, if any) shall becomedue and payable on the date and at the place or places in such noticespecified, at the applicable redemption price, together with interestaccrued to the date fixed for redemption, and on and after such dateof redemption (unless the Company shall make default in the paymentof said Bonds at the redemption price or prices aforesaid, togetherwith interest accrued to the date fixed for redemption) interest onthe Bonds or portions of Bonds so called for redemption shall ceaseto accrue, and on presentation and surrender thereof at the place orplaces of payment and redemption in said notice specified with allunmatured coupons, if any, thereto appertaining, they shall be paidand redeemed by the Company at the applicable redemption price afore-said, together with interest accrued to the date fixed for redemption.In case there shall not be presented with any coupon Bond called forredemption on an interest payment date the coupon for the interestmaturing on such date, such Bond shall nevertheless be paid at theredemption price, and such interest shall be paid to the bearer of suchcoupon on presentation for payment. If Bonds called for redemptionare not so paid and redeemed on presentation thereof, they shall con-tinue to bear interest at the rate expressed therein until paid.

Whenever exercising its right of redemption, as provided for inthis Article, the Company shall furnish to the Trustee a duly certifiedcopy of a resolution of its Board of Directors providing for suchredemption, specifying the particular series and the principal amountof Bonds to be called for redemption from such series.

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SECTION 3.03. If the Company shall deposit in trust with theTrustee an amount in cash equal to the redemption price of all of theBonds called or to be called for redemption, and interest accrued to thedate fixed for redemption, and shall furnish to the Trustee proof satis-factory to the Trustee that notice of redemption of such Bonds has beenduly published, or that arrangements have been made insuring to thesatisfaction of the Trustee that all such publications of such notice willbe made, or that notice has been duly mailed. if no publication is required,then the Bonds so called or to be called for redemption shall no longerbe deemed to be outstanding hereunder for any purpose, except for thepurpose of entitling the holders thereof to receive payment of theredemption price thereof, and accrued interest to the redemption date,and shall cease to be entitled to the security hereof, and such Bonds shallcease to bear interest after the redemption date and the coupons forinterest appurtenant to such Bonds maturing subsequent to theredemption date shall be void. The Trustee shall hold the redemptionmoneys in trust for the holders of the Bonds called for redemption andshall pay the same to such holders respectively upon presentation andsurrender of such Bonds, with all coupons thereto attached maturingafter the redemption date.

In any case where the redemption date shall be an interest pay-ment date, the coupons maturing on the redemption date shall bedetached by the holders and presented for payment, and the Trusteeshall apply the cash received by it for the payment of the accruedinterest on the Bonds called for redemption to the payment of suchcoupons.

SECTION 3.04. In any case where the redemption date shall bea Sunday or a legal holiday, generally or for banks or trust companiesat the place of payment, payment of the redemption price and interestpayable upon redemption may be made on the next succeeding day nota Sunday or a legal holiday with the same force and effect as if madeon the nominal redemption date.

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ARTICLE FOUR.Sinking Fund for Series A Bonds.

SECTION 4.01. The Company covenants and agrees that so long asany Series A Bonds are outstanding it will pay to the Trustee, asand for a sinking fund for such Bonds, (a) on or before April 15,1953, and semi-annually thereafter on or before each fifteenth day ofApril and October, to and including October 15, 1956, a sum equal to 2/3of 1% of the aggregate principal amount of Series A Bonds authenti-cated and delivered prior to the date of each such payment, and (b)thereafter semi-annually on or before each fifteenth day of Apriland October, (i) a sum to the nearest thousand dollars equal to 2.1775%of the aggregate principal amount of Series A Bonds theretoforeauthenticated and delivered after deducting from such aggregate prin-cipal amount the aggregate principal amount of Series A Bondsacquired before April 15, 1957, through the operation of the sink-ing fund, whether by purchase, redemption or otherwise, plus (ii) asum to the nearest thousand dollars equal to 1.75% of the aggregateprincipal amount of all Series A Bonds theretofore acquired on orafter April 15, 1957, through the operation of the sinking fund, whetherby purchase, redemption or otherwise.

Series A Bonds while held in the reserve fund provided for inSection 5.10 of Article Five of this Indenture shall not be deemed tohave been acquired through the operation of the sinking fund.

The Series A Bonds shall be redeemable for sinking fund purposes,on any interest payment date beginning with July 1, 1953, at 100% oftheir principal amount, together with accrued interest to the date fixedfor redemption.

At the option of' the Company, sinking fund payments pursuant tothis Article may be made in cash, or in Series A Bonds theretoforepurchased or redeemed by the Company otherwise than through theoperation of the sinking fund, with all unmatured coupons and maturedcoupons not fully paid attached (except that with respect to redeemedBonds a certificate or certificates of cremation may be delivered in lieuof the coupon Bonds and coupons), at the principal amount thereof(exclusive of accrued interest), or partly in cash and partly in SeriesA Bonds.

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SECTION 4.02. At any time after the receipt of any sinking fundmoneys and until a date sixty (60) days prior to the next interest pay-ment date for Series A Bonds, the Trustee, in such manner and fromtime to time in such amounts as it-may deem advisable in its discretion(or in such manner as may be requested by the Company and approvedby the Trustee), shall apply such moneys, so far as the same shall beadequate, to the purchase (including purchases from the Company)for the sinking fund of Series A Bonds at a price (exclusive of accruedinterest and brokerage commissions) not exceeding the principalamount thereof.

SECTION 4.03. If upon the date limited as aforesaid for said pur-chases the Trustee as above stated shall not have purchased Series ABonds in an amount sufficient to exhaust the sinking fund moneysavailable therefor, the amount of such moneys remaining unexpended,if $25,000 or more (or any amount less than $25,000, if so requestedby the Company), shall be applied by the Trustee on the next interestpayment date to the redemption of outstanding Series A Bonds, inthe manner and with the same effect hereinbefore in Article Threeprovided, at the principal amount thereof (exclusive of accruedinterest).

Any such amount of less than $25,000 not so to be applied maycontinue to be applied by the Trustee to the purchase for the sinkingfund of Series A Bonds upon the terms set forth in Section 4.02 ofthis Article, and any part thereof not so applied prior to the nextsinking fund payment date shall be added to the next sinking fundinstalment and together with said instalment applied in accordancewith the provisions of this Article.

SECTION 4.04. The Company will pay in addition to the sinkingfund instalments the expenses of administering the said sinking fundas provided herein, including the cost of advertisement of redemptionnotices and any other advertisements, and any customary brokerageor other commission upon the purchase of any Series A Bonds and anyaccrued interest payable with respect to any such Bonds purchased orredeemed.

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SECTION 4.05. When the Company shall pay or cause to be paidthe principal of all the Series A Bonds with interest and premium, ifany, according to their terms, or shall deposit with the Trustee, intrust for the holders thereof, an amount or amounts sufficient to paythe principal of all of said Series A Bonds with interest and premium,if any, according to their terms, all moneys then held by the Trustee inthe sinking fund for Series A Bonds shall, upon demand of the Com-pany, be repaid to it.

No such sinking fund moneys shall be applied to the purchase orredemption of Series A Bonds or, except as provided in the nextpreceding paragraph, be paid over to the Company during the con-tinuance of an event of default under this Indenture of which theTrustee shall have notice, and any moneys in such sinking fund atthe time when such notice shall have been received by the Trustee shallbe held, unless all such defaults are remedied, as additional security forthe payment of the Series A Bonds then outstanding.

ARTICLE FIVE.Particular Covenants of the Company.

The Company covenants as follows:

SECTION 5.01. It will duly and punctually pay, or cause to be paid,the principal of, premium, if any, and interest on the Bonds, at thedates and place or places, and in the manner prescribed in the Bonds,or in the coupons thereto belonging.

Upon request in writing by any holder of one or more Bonds, theCompany will maintain an office or agency in the place or places wheresuch Bond or Bonds are expressed to be payable, at which office oragency such of said Bonds and coupons as are there payable may bepresented for payment and where such of said Bonds as are register-able, transferable or exchangeable may be presented for registration,transfer or exchange and where notices or demands in respect of anyand all of the Bonds and coupons may be served. From time to time,the Company will give notice to the Trustee of the location of any suchoffice or agency and of any change of location thereof, and in case theCompany shall not maintain any such office or agency or shall fail to

36

give such notice of any change thereof, presentation and demand maybe made and notices may be served at the principal office of the Trustee.

SECTION 5.02. Whenever required by the Trustee, the Companywill do, execute, acknowledge and deliver or it will cause to be done,executed, acknowledged and delivered, all and every such further acts,deeds, transfers and assurances as shall in the judgment of the Trus-tee be necessary or advisable for giving the Trustee a valid fixed andspecific mortgage, pledge and charge of the nature herein specifiedupon the Pledged Debentures, a valid floating charge of the natureherein specified upon the residue of the trust estate situated in theProvince of Ontario, and if in the judgment of the Trustee the chargingof other property and assets of the Company situated in other jurisdic-tions would be of substantial advantage to the security constitutedhereby (taking into account the value of such other property and assetsin relation to the aggregate value of all of the property and assets ofthe Company) and to the extent such charging may be practicable underthe local laws of such other jurisdictions, a valid floating charge of thenature herein specified upon such other property and assets, for and tosecure the payment of all principal moneys and interest for the timebeing and from time to time owing on the security of these presents andthe Bonds, and all other moneys intended to be secured by these presentsand for conferring upon the Trustee such power of sale and otherpowers over the trust estate as are hereby expressed to be conferred.

SECTION 5.03. The Company will not declare or pay any dividendon any of its shares of capital stock of any class or permit any sub-sidiary to declare or pay any dividend on the shares of capital stockof any class of such subsidiary, nor will the Company make any dis-tribution on any of its shares of capital stock of any class other thana dividend payable in shares of capital stock of the Company, or permitany subsidiary to make any distribution on the shares of capital stockof any class of such subsidiary other than a dividend payable in theshares of capital stock of such subsidiary, nor will the Company acquireany shares of any of its capital stock of any class for a consideration,or permit any subsidiary to acquire any shares of the capital stock ofany class of such subsidiary for a consideration if, after giving effect

37

to any such dividend or distribution (other than those payable in sharesof capital stock) or such acquisition of shares of capital stock, theaggregate payments by the Company and such subsidiaries on a con-solidated basis, excluding intercompany dividends, distributions andacquisitions, for all such purposes subsequent to December 31, 1946,would exceed the consolidated net income of the Company and all sub-sidiaries (determined in accordance with sound accounting practice)available for shares of capital stock earned subsequent to December31, 1946, provided, however, that payments by the Company and sub-sidiaries for acquisitions of shares of their capital stock shall be dis-regarded to the extent that such payments (excluding payments forintercompany acquisitions) do not exceed the net proceeds receivedafter December 31, 1946 by the Company and subsidiaries (excludingintercompany sales) from the sale of shares of capital stock.

The Company will deliver to the Trustee annually on or beforethe last day of May in each year, a certificate signed by its Presidentor a Vice President and by its Secretary or an Assistant Secretary,setting forth in reasonable detail the facts necessary to show com-pliance for the preceding calendar year with the covenant containedin this Section, supported by the certificate or certificates of inde-pendent auditors satisfactory to the Trustee, who may be the auditorsregularly employed to audit the books of the Company or of anysubsidiary.

SECTION 5.04. The Company, from time to time, will pay and dis-charge all taxes, assessments and governmental charges, the lien ofwhich would be prior to the lien hereof, lawfully imposed upon thetrust estate, or upon any part thereof, or upon the income and profitsthereof, so that the lien and priority of this Indenture thereon shall befully preserved at the cost of the Company without expense to theTrustee or to the bondholders in respect of such properties; and willalso pay and discharge all taxes, assessments and governmental chargeslawfully imposed upon the interest of the Trustee in the trust estate.

Nothing contained in this Section shall require the Company topay any such tax, assessment or charge so long as the Company ingood faith shall contest the validity or amount thereof, unless in theopinion of the Trustee such action might jeopardize the interests ofthe bondholders.

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The Company will deliver to the Trustee annually on or before thelast day of May in each year a certificate signed by its President or aVice President and by its Secretary or an Assistant Secretary settingforth in reasonable detail a description of all such unpaid taxes, assess-ments or charges existing on January 1 of such year.

SECTION 5.05. If default shall be made in paying any sum whichin Section 5.04 of this Article the Company has covenanted to payor discharge, the Trustee, without affecting any of its rights hereunder,from time to time in its discretion may pay any sum so in default,and thereupon shall have and forthwith may assert a lien for suchadvances upon the trust estate and the proceeds thereof prior to thelien of the Bonds issued hereunder. In case the sums so advanced shallamount at any one time to as much as $300,000, the Trustee shall givenotice of such advances and the purposes and amounts thereof bypublication in one newspaper printed in the English language andcustomarily published on each business day and of general circulationin the Borough of Manhattan, The City of New York, New York, andin one newspaper printed in the English language and customarilypublished on each business day and of general circulation in the Cityof Toronto, Province of Ontario, at least once. A copy of such noticeshall also be mailed by the Trustee on or before the date of suchpublication to the registered holders of Bonds (including coupon Bondsregistered as to principal) at their last addresses appearing uponthe registry books.

SECTION 5.06. The Company will not issue Bonds hereunder con-trary to the limitations herein provided or in excess of such amountsas shall from time to time be lawful under the provisions of the lawsand statutes legally applicable to and affecting the issue of Bonds underthis Indenture and the aggregate amount thereof.

SECTION 5.07. Subject to the provisions of Article Eleven of thisIndenture the Company will, at all times, maintain its corporate exist-ence and right to carry on its business, and use its best efforts toprocure all renewals and extensions thereof, if and when any shall benecessary, and, subject to the provisions of this Indenture, will causeits subsidiaries to use their best efforts to maintain, preserve and renew

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all the rights, powers, privileges and franchises owned by them; pro-vided, however, that nothing herein contained shall be construed toprevent any subsidiary from ceasing or omitting to exercise rights,powers, privileges or franchises which, in the judgment of such sub-sidiary, can no longer be profitably exercised or availed of.

SECTION 5.08. The Company will not create or assume any mort-gage, pledge or charge on any of its property or assets (other than (a)existing or purchase money mortgages or floating charges on propertyacquired by purchase, consolidation or merger, and extensions or re-newals thereof (for refunding purposes only) with the same mortgageeor with any other person, and (b) security for bank loans as permittedby this Indenture) unless such mortgage, pledge or charge shall be in allrespects subordinated to the lien of this Indenture and the instrumentor instruments creating such mortgage, pledge or charge shall ex-pressly so provide; provided, however, that nothing contained in theforegoing covenant shall prevent any consolidation, merger, sale, con-veyance or lease as permitted in Article Eleven of this Indenture ifthe lien of this Indenture upon the property of the Company imme-diately before such consolidation, merger, sale, conveyance or leaseis not impaired thereby.

SECTION 5.09. The Company will at all times maintain EligibleCollateral pledged hereunder in a principal amount at least equal toone hundred twenty per cent (120%) of the principal amount of theBonds outstanding hereunder. For the purposes of this Section thereshall be excluded from the principal amount of the Bonds outstand-ing hereunder a principal amount of Bonds equal to the amount ofany cash then held by the Trustee (to the extent that such cash isin the same currency in which such Bonds are payable), except forcash held by the Trustee for interest, in trust for redemption or as areserve under Section 5.10 of this Article. Such Eligible Collateral shallbear fixed interest at a Ate or rates which will be sufficient to producean amount annually at least equal to the current annual interest andamortization requirements (including sinking fund payments, if any)of the Bonds then outstanding and the Company will cause such amountto be paid annually as interest on pledged Eligible Collateral; providedthat the foregoing covenant shall not prevent the Company from mak-

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ing available to its subsidiaries or any of them, by way of unsecuredopen account advance, the whole or any part of the amount of suchinterest. Such Eligible Collateral shall be payable in currency of theUnited States of America except that, if any Bonds outstanding arepayable in any other currency, such Eligible Collateral to the extent of120o of the principal amount of such Bonds may be payable in suchother currency in whole or in part.

The Company will deliver to the Trustee, annually in the monthof June in each year, a certificate signed by its President or aVice President and by its Treasurer or an Assistant Treasurer, settingforth in reasonable detail (a) a statement as to the principal amountof Bonds outstanding hereunder determined as above provided, and(b) a statement as to the Eligible Collateral pledged and cash held bythe Trustee under this Indenture, together with the facts required tobe stated to show that such collateral is Eligible Collateral as definedin Section 2.01 of Article Two of this Indenture and that it is payablein the currency or currencies required by the foregoing covenant. Eachsuch statement shall be made as of the date of the respective certificate,except that the amount of the net depreciated book value of the electricand telephone property of any subsidiary whose obligations are thenpledged hereunder may be stated as of a date not earlier than theend of the last preceding fiscal year of such subsidiary, adjusted, how-ever, to give effect to any net adverse change of more than ten per cent.(10o) of such net depreciated book value up to the date of thecertificate. The Trustee shall be entitled to accept any such certificateas conclusive proof of such net depreciated book value as of the date ofsuch certificate.

SECTION 5.10. The Company will not declare or pay any dividendson any class of its capital stock unless it shall maintain with the Trusteea reserve fund for the payment of interest and sinking fund on theSeries A Bonds outstanding in sums, in the manner and at the timeshereafter provided:

The original interest component of this reserve fund will be depos-ited upon the original authentication and delivery of each Series ABond in an amount at least equal to the interest on each such Bond fora period of one year, and the original sinking fund component of this

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reserve fund will be deposited on or before January 15, 1953 in anamount at least equal to the sinking fund requirements for a period ofsix months for the Series A Bonds. The Company will maintainthis reserve fund by depositing with the Trustee on or before the fif-teenth day of each January and July after the original deposits, sumssufficient to keep the reserve fund at least equal to the interest require-ments on the Series A Bonds then outstanding for a period of one yearand sinking fund requirements on such Bonds for a period of six months.The sinking fund component of the reserve fund may be depositedeither in cash or Series A Bonds, or both, as provided for sinking fundpayments in Section 4.01 of Article Four of this Indenture. Theinterest component of the reserve fund shall be deposited in cash.The Trustee may invest (a) any part of the reserve fund depositedin cash in obligations of the United States of America maturing notmore than three years from the date of such investment, and (b) anypart of the sinking fund component of the reserve fund deposited incash in Series A Bonds at a price not in excess of their principalamount. For the purpose of determining the sufficiency of the reservefund, Series A Bonds in which any part of the reserve fund has beeninvested shall be valued at their principal amount and obligations ofthe United States of America in which any part of the reserve fund hasbeen invested shall be valued at their principal amount or at cost,whichever shall be the lower.

The Company may satisfy its obligations to make semi-annual pay-ments for the sinking fund under Section 4.01 of Article Four of thisIndenture, and to make semi-annual payments for interest, from thereserve fund to the extent it is sufficient for such purposes, but in thatcase the foregoing covenant against declaration or payment of divi-dends shall become effective and remain in effect until the reserve fundhas been completely replenished and all semi-annual payments thendue for interest and sinking fund shall have been duly made.

The Company may withdraw from the reserve fund at any timeamounts in excess of interest or sinking fund reserve fund requirementsfor Series A Bonds, provided that all semi-annual interest and sinkingfund payments then due for Series A Bonds have been duly made.

No failure by the Company to maintain the aforesaid reserve fundfor interest and sinking fund shall constitute a default for the purposesof Section 7.02 of Article Seven hereof.

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SECTION 5.11. The Company will not permit any subsidiary whoseobligations are specifically pledged as Eligible Collateral hereunderto contract any funded debt in excess of fifty per cent. (50%) of the netdepreciated book value of the electric and telephone property of suchsubsidiary unless the instrument or instruments evidencing the fundeddebt contracted in excess of such percentage shall provide that neitherprincipal nor sinking fund with respect to such funded debt shall be paidas long as any secured unsubordinated debt of such subsidiary is out-standing and that no interest on such subordinated debt shall be paiduntil full payment of amounts then due for principal, sinking fundand interest has been made on all secured unsubordinated debt of suchsubsidiary, and the Company will not permit any such subsidiary tomake any payments with respect to such subordinated debt inconsistentwith the foregoing provisions, provided, however, that the exchangeby the Company with a subsidiary of funded debt of such subsidiaryfor shares of such subsidiary shall not be deemed to be a payment withrespect to funded debt within the meaning of this Section. Subject tothe restrictions on rights of withdrawal or substitution of collateralspecifically pledged hereunder contained in Section 6.04 of Article Sixhereof, subordinated debt of any subsidiary may at any time and fromtime to time be converted into an equal principal amount of unsubordi-nated debt of such subsidiary if thereafter the foregoing covenantshall be complied with, and unsubordinated debt of any subsidiary mayat any time and from time to time be converted into an equal prin-cipal amount of subordinated debt of such subsidiary if thereafter thecovenant contained in Section 5.09 of this Article shall be compliedwith.

SECTION 5.12. The Company with all convenient speed will dulyrecord, register and file, and re-record, re-register and refile this Inden-ture and every indenture supplemental hereto in the Province of Ontarioand in every other jurisdiction where the registration or record thereofmay be in the judgment of the Trustee of substantial advantage to thesecurity created hereby or pursuant hereto, and will pay any recording,registration or filing tax or fee legally due upon the recording of thisIndenture or of any indenture supplemental hereto or due at any timeupon or in connection with the issuance of the Bonds hereunder, and

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will make such statements and do such acts now or hereafter as areor shall be required by it to be made or done under any law affectingthe recording hereof or of any supplemental indenture, and will furnishto the Trustee annually in the month of April an opinion of counselthat the covenants contained in this Section have been complied withas of a date or dates not more than four months prior to the date ofsuch opinion.

SECTION 5.13. Except as permitted by Article Eleven hereof, theCompany will not sell or dispose of its assets as a whole or substantiallyas a whole.

ARTICLE SIX.

Pledged Debentures and Cash Held by Trustee.

SECTION 6.01. The Pledged Debentures shall be in bearer form orin registered form in the name of the Trustee as registered owner.The Pledged Debentures shall be held by and in the custody of theTrustee under the terms and provisions of this Indenture. The Trus-tee is hereby authorized in its discretion to cause Pledged Debenturesin registered form without coupons to be exchanged into bearer form,and the Trustee may cause all such Pledged Debentures in bearer formto be transferred into its name as such Trustee, or into the name of itsnominee; and it may make such other transfers and arrangements asmay be required from time to time to protect the lien intended to becreated hereby upon such Pledged Debentures.

The voting power with respect to the Pledged Debentures shall bevested in the Trustee and exercised by it for the benefit of the trustestate in such manner as the Trustee in its discretion shall see fit.

SECTION 6.02. Unless and until any of the events of defaultenumerated in Section 7.02 of Article Seven hereof shall have happenedand be continuing, the Company shall be entitled to receive for its ownuse all interest paid on the Pledged Debentures and if the Trustee shallreceive any such interest it shall forthwith deliver and pay such interestover to the Company; and the Trustee from time to time shall executeand deliver upon the written request of the Company suitable assign-

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ments and orders for the payment of such interest in favour of theCompany and shall deliver to the Company upon a like request any andall coupons representing such interest, as they mature.

Irrespective of whether any such event of default shall have hap-pened or be continuing, (1) except as permitted by Section 6.04 of thisArticle, the Company shall not be entitled to receive, and the Trusteeshall not pay over or deliver to the Company, any moneys or propertypaid or received in respect of any of the Pledged Debentures as a resultof any condemnation of the property of any subsidiary or the enforce-ment of any mortgage or other security for any of such Pledged Deben-tures; (2) except as permitted by Section 6.04 of this Article, the Com-pany shall not be entitled to receive, and the Trustee shall not pay overor deliver to the Company, any moneys or property paid or receivedon account of the principal of any Pledged Debentures; and (3) untilactually paid, released or discharged, every coupon or right to interestappertaining to the Pledged Debentures shall remain subject to thisIndenture.

In case (1) any moneys or property shall be paid or received inrespect of the Pledged Debentures as a result of any condemnation ofthe property of any subsidiary, or as a result of the enforcement of anymortgage or other security for such Pledged Debentures, or in case (2)any moneys or property shall be paid or received on account of the prin-cipal of the Pledged Debentures,-then and in every such case all suchmoneys or property shall be collectible and received by the Trustee;and any and all moneys and property so received by the T'rustee shallbe held as part of the trust estate hereunder until paid out in conformitywith the provisions of this Indenture. The Company shall have theright at any time or from time to time to pledge additional collateralhereunder or to deliver cash to the Trustee to be held as part of thetrust estate hereunder until withdrawn or paid out in conformity withthe provisions of this Indenture.

SECTION 6.03. Upon the happening and during the continuance ofany of the events of default enumerated in Section 7.02 of Article Sevenhereof, the Trustee shall be entitled to collect and receive all interest onthe Pledged Debentures.

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SECTION 6.04. Unless and until any of the events of defaultenumerated in Section 7.02 of Article Seven hereof shall have happenedand be continuing, the Company shall have the following rights of with-drawal of or substitution for collateral specifically pledged hereunder orwithdrawal of cash held by the Trustee subject to the condition thatafter the exercise of any such right the covenant contained in Section5.09 of Article Five hereof shall be complied with:

(a) Eligible Collateral may be withdrawn or other EligibleCollateral or cash or both substituted for Eligible Collateral onor after January 1, 1953 if thereafter (i) at least 831/3% of theamount of Eligible Collateral required to be pledged hereunderby reason of the covenant contained in Section 5.09 of ArticleFive hereof shall consist of obligations of subsidiaries whosecombined average annual income from electric and telephonebusiness available for fixed charges for the three preceding fioodyears shall have equalled at least 80% of the combined averageannual income from electric and telephone business availablefor fixed charges for the same period of all corporations whichare subsidiaries at the time of the proposed withdrawal or substi-tution and (ii) the principal amount of obligations of each subsid-iary included in the.aforesaid 83%o shall be in substantially thesame proportion to the total principal amount of all obligations soincluded as the average annual income of each such subsidiaryfrom electric and telephone business available for fixed chargesfor the period mentioned in said clause (i) bears to the combinedaverage annual income of all such subsidiaries from electric andtelephone business available for fixed charges for the same period;

(b) Eligible Collateral may be withdrawn on or after Janu-ary 1, 1953, without regard to the limitations of paragraph (a)of this Section, against deposit of cash in an amount equal to831/3% of the principal amount of such Eligible Collateral intrust with the Trustee for the redemption of Bonds, togetherwith accrued interest and premium, if any, payable in connectionwith such redemption and upon compliance by the Company withthe provisions of Section 3.03 of Article Three hereof as tonotice of redemption;

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(c) Collateral which is not Eligible Co"lateral may be with-drawn at any time;

(d) Cash received and held by the Trustee under any provi-sions of this Article other than paragraph (b) of this Sectionmay be withdrawn at any time without any conditions as to itsuse by the Company;

(e) Collateral consisting of unsubordinated debt of any sub-sidiary may be substituted at any time, without regard to thelimitations of paragraph (a) of this Section, for collateral con-sisting of subordinated debt of such subsidiary in an equal aggre-gate principal amount.

In case the Company desires to avail itself of any of the rights ofwithdrawal or substitution of collateral or cash as provided in this Sec-tion it shall make a request in writing to the Trustee, accompanied,except for substitutions under paragraph (e) of this Section, by thecertificates specified in paragraphs (d), (e), (g) and, when required,(h) of Section 2.03 of Article Two of this In(1nture, and in case ofwithdrawal or substitution of Eligible Collater,- ( or substitution of cashfor Eligible Collateral pursuant to paragraph (a) of this Section acertificate setting forth in reasonable detail the facts necessary to showcompliance with the limitations contained in clauses (i) and (ii) of para-graph (a) of this Section, supported by the certificate or certificatesof independent auditors satisfactory to the Trustee, who may be theauditors regularly employed to audit the books of the Company or ofany subsidiary, as to the income available for fixed charges fromelectric and telephone business of each subsidiary and combined incomeavailable for fixed charges from electric and telephone business of anygroup of subsidiaries required to show such compliance.

In addition, in case of substitution of collateral there shall befurnished to the Trustee the documents specified in paragraph (f) ofSection 2.03 of Article Two of this Indenture, and in case of with-drawal of collateral such documents shall be furnished with respectto any Eligible Collateral required to remain pledged as to which nosuch documents previously have been furnished.

SECTION 6.05. All securities and other property or assets at anytime received by. delivered to or deposited with the Trustee hereunder

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shall until delivered, applied or paid out by the Trustee pursuant tothe provisions of this Indenture, be subject to the first, fixed and specificmortgage, pledge and charge hereunder.

ARTICLE SEVEN.

Remedies of the Trustee and Bondholders.

SECTION 7.01. The Company will not, directly or indirectly, extendor assent to the extension of the time for payment of any coupon orclaim for interest on any of the Bonds hereby secured, and it will not,directly or indirectly, be a party to or approve any such arrangementby purchasing or funding said coupons or claims for interest or inany other manner. If the time for payment of any such coupon orclaim for interest shall be so extended by or with the consent of theComppany, such coupon or claim for interest shall not be entitled, incase of default hereunder, to the benefit of the security of this Inden-ture, except subject to the prior payment in full of the principal ofall Bonds hereby secured and then outstanding and all coupons andinterest on such Bonds the payment of which shall not have been ex-tended; provided, however, that the foregoing provisions of this Sec-tion shall not be applicable to any coupon or claim for interest thetime for the payment of which shall have been extended, if suchextension be pursuant to a plan or offer proposed by the* Company toall holders of Bonds then outstanding of the series to which suchcoupon or claim for interest appertains.

SECTION 7.02. The security hereby constituted shall become en-forceable, subject to the terms hereinafter contained, if and when oneor more of the following events (herein sometimes called "events ofdefault") shall happen, that is to say:

(a) If default shall be made in the payment of the principalof or premium, if any, on any of the Bonds when the same be-comes due and payable, either by the terms thereof or other-wise; or

(b) If default shall be made in the payment of any interestdue on any of the Bonds issued hereunder or in the due payment

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of any sinking fund instalment and such default shall have con-tinued for a period of sixty (60) days; or

. (c) If the Company shall be judicially declared insolvent orbankrupt; or a judgment or final decree appointing a receiveror an order of a court having jurisdiction in the premises forwinding-up or liquidating the business and affairs of the Companyshall have been entered and shall have continued in force undis-charged and unstayed for a period of ten (10) days; or the Com-pany shall institute proceedings to be adjudicated a voluntarybankrupt or for the reorganization of the Company under theBankruptcy Act or the Winding Up Act or any other bankruptcyor analogous laws, or shall make an assignment for the benefitof its creditors, or shall consent to the appointment of a receiverof all or any substantial part of its property or shall admit inwriting its inability to pay its debts generally as they become due,or otherwise acknowledge its insolvency; or a petition in proceed-ings in bankruptcy or for the winding up or reorganization ofthe Company under bankruptcy or analogous laws shall be filedagainst the Company and it shall admit the material allegationsthereof, or such petition shall not be dismissed or dischargedwithin sixty (60) days after such filing (provided, however, thata resolution, judgment, decree or order for winding-up the Com-pany with a view to its consolidation, amalgamation or mergerwith another company or the transfer of its assets as a whole, orsubstantially as a whole, to such other company, as provided inArticle Eleven hereof shall not constitute a default or makethe security enforceable under this subsection (c) if such last-mentioned company shall, as a part of such consolidation, amal-gamation, merger or transfer, and within ninety (90) days fromthe passing of the resolution or the date of the order, complywith the conditions to that end stated in said Article Elevenhereof); or

(d) If any process of execution shall be enforced or leviedupon any of the property of the Company and remain unsatis-fied for a period of two (2) weeks, as to movable or personalproperty, or three (3) weeks, as to immovable or real property,unless, in any such case, (i) such process is in good faith dis-

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puted by the Company, and (ii) non-payment will not in thejudgment of the Trustee jeopardize or impair the security herebycreated, and (iii) the Company shall give security which, in theopinion of the Trustee, is sufficient to pay in full the amountclaimed in the event that it shall be held to be a valid claim; or

(e) If default shall be made in the due observance or per-formance of any other covenant or condition in this Indenturerequired to be observed or performed by the Company and anysuch default shall continue for a period of ninety (90) days afternotice received by the Company from the Trustee specifyingsuch default and requiring the Company to remedy such default.Any notice as aforesaid may be given by the Trustee on its owninitiative and shall be given at the written request of the holdersof not less than twenty-five per cent. (25%) in principal amountof the Bonds at the time outstanding hereunder.

SECTION 7.03. In case the security hereby constituted shall becomeenforceable as hereinabove provided, the Trustee may in its discretion,and if so directed by a writing signed by the holders of not less thantwenty-five per cent. (25%) in principal amount of the Bonds then out-standing hereunder, the Trustee shall, by written notice to the Com-pany, declare the principal of all the Bonds then outstanding here-under, together with all other moneys secured hereby, to be forthwithdue and payable, and the same shall become forthwith due and payable,anything therein or herein to the contrary notwithstanding, and theCompany shall and will pay forthwith to the Trustee the amount of theprincipal of, premium, if any, and interest then accrued and unpaid onall of the Bonds then outstading and all other moneys secured hereby,together with interest at the rate of interest specified in the respectiveBonds on any overdue principal, premium and interest and at the rateof five per cent. (5%) per annum on such other moneys, from the datewhen said amounts respectively became due and payable until pay-ment is received by the Trustee, and payment on account of any ofsaid amounts shall be applied by the Trustee in the same manner asproceeds of a sale or realization of the trust estate.

SECTION 7.04. If at any time prior to the date of maturity of theBonds as stated therein and before any sale of the trust estate shall

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have been made (whether or not after the principal of the Bonds shallhave been declared due and payable as provided in Section 7.03 nextabove) all arrears of interest upon the Bonds, with interest on over-due instalments of interest at the rate of interest specified in therespective Bonds, together with the expenses of the Trustee and allother amounts then due and payable hereunder by the Company (ex-cept on account of principal so declared due and payable), shall bepaid by the Company or be collected and paid out of the trust estate,and if all defaults known to the Trustee (other than in the paymentof the principal so declared due and payable) shall have been madegood or provision to that end satisfactory to the Trustee shall havebeen made, then and in every such case the Trustee, if so directedby a writing signed by the holders of not less than a majority inprincipal amount of the Bonds then outstanding hereunder, shall bywritten notice to the Company waive any such existing default andreseind and annul any such declaration of maturity upon such termsand conditions as the bondholders making any such request shall directand, in the absence of such direction, upon such terms and condi-tions as the Trustee may deem advisable. After any such waiver ofdefault, and subject to the terms and conditions thereof, the securityhereby constituted shall no longer be deemed to have become enforce-able by reason of the default which has been waived; pi ovided aloays,that no act or omission either of the Trustee or of the bondholders inthe premises shall extend to, or be taken in any manner whatsoever toaffect, any other or subsequent default or the rights resulting therefrom.

SECTION 7.05. In case the security hereby constituted shall havebecome enforceable and the Company shall have failed to pay to theTrustee, on demand, such amounts as are due from the Company andunpaid on the Bonds and coupons then outstanding, together with anyother amounts due hereunder, and if bondholders have not directedotherwise pursuant to any of the provisions of this Indenture, theTrustee may, in its discretion or, in compliance with the written requestof the holders of not less than twenty-five per cent. (25o) in principalamount of the outstanding Bonds and upon receiving reasonableindemnity, as provided in Article Ten hereof, against all costs, expensesand liabilities to be incurred, the Trustee shall

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(i) by its officers, agents or attorneys take possession of allor any part or parts of the trust estate with power to excludethe Company, its agents and servants therefrom; carry on, man-age, and conduct the business operations of the Company;preserve and maintain the trust estate and make such replace-ments and additions thereto as it shall deem judicious; receivethe rents, incomes and profits thereof of any kind whatsoeverand pay them out in accordance with the provisions of Section7.07 of this Article; and enjoy and exercise all powers necessaryto the performance of all functions provided for in this sub-section, including, but not in limitation thereof, the power topurchase on credit, borrow money in the Company's or its ownname, and advance its own moneys at such rates of interest asit may deem reasonable (the debts representing all of which pur-chases, borrowings, and advances shall, while unpaid, be entitledto the security hereof in priority to the Bonds); provided thatthe Trustee shall, upon all defaults being made good, or waivedas herein provided, restore the said property to the Companysubject to the floating charge created by this Indenture as if nodefault had occurred; or

(ii) without regard to the adequacy of the security consti-tuted hereby or the solvency of the Company, apply to a court ofcompetent jurisdiction for the appointment of a receiver totake possession of all or such part or parts of the trust estateas the Trustee in his petition shall designate, with the duties,powers and obligations set forth in the subsection immediatelypreceding and with such additional powers as the court makingthe appointment shall confer; and the Company hereby consentsto the appointment of such receiver; or

(iii) after giving the notice specified in Section 7.06 of thisArticle, and with or without taking possession, sell all or part ofthe trust estate, either as a whole or in separate parcels, atpublic auction or by public tender, at such times and places,subject to adjournment from time to time by the Trustee, andon such terms and conditions as to upset or reserve bid or priceand as to payment as the Trustee shall appoint; and if there isno purchaser at such sale or tender, then upon written consent

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of no less than a majority in principal amount of the outstand-ing bonds, sell at private sale without further notice; or

(iv) proceed by suit or suits in equity or law to enforcepayment of the Bonds or performance of any other covenantcontained herein, or to enforce the security hereby constitutedand to bring to sale the trust estate or any part or parts thereofunder a judgment or decree of a court or courts of competentjurisdiction or by the enforcement of any other legal remedywhich the Trustee, being advised by counsel, shall deem mosteffectual to protect and enforce any of its rights or any of therights of the bondholders.

SECTION 7.06. In any sale of the whole or any part or parts of thetrust estate, whether made under the power of sale herein containedor in pursuance of judicial proceedings,

(i) notice thereof shall state the time and place when andwhere the same is to be made and shall contain a brief generaldescription of the property to be sold, and, except as otherwiseprovided herein, shall be sufficiently given if published once ineach of six (6) consecutive calendar weeks in each of two news-papers printed in the English language, customarily publishedon each business day and of general circulation one in the Cityof Toronto, Province of Ontario, the other in the Borough ofManhattan, The City of New York, New York; and

(ii) the Trustee or any one or more of the bondholders orany agent or representative thereof may become purchasers.

SECTION 7.07. Except as herein otherwise expressly provided, themoneys arising from the carrying on of the business under the provi-sions of Section 7.05 of this Article or from any sale or realization ofthe whole or any part of the trust estate pursuant to any proceedingsbased upon default hereunder or received from any custodian or trusteein bankruptcy or liquidator of the Company, shall be applied, togetherwith any other moneys then in the hands of the Trustee available forsuch purposes, in the first place to pay or reimburse to the Trustee itscompensation, costs, charges, expenses, borrowings, advances or anyother moneys furnished or provided by or at the instance of the Trustee

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in or about the execution of its trust or otherwise in relation to thesepresents, with interest thereon as herein provided, and to pay all othercharges against the property ranking in priority to the Bonds; and theresidue of the said moneys shall be applied:

(i) First, to the payment equally and ratably of the wholeamount then owing and unpaid for principal of and premium, ifany, and interest upon the Bonds hereby secured, together withinterest on any overdue instalment of interest, and in case suchproceeds shall be insufficient to pay in full the amount so due andunpaid then to the payment of such principal and premium, if any,and interest without preference or priority of the Bonds of oneserie5 over those of another series, ratably to the aggregate of suchprincipal and premium, if any, and interest owing by the Companyto each bondholder; subject, however, to the provisions of Section7.01 of this Article; and

(ii) Second, to the payment of the surplus, if any, to the Com-pany or its assigns.

SECTION 7.08. The Trustee shall have the right, at the time itmakes any payment of principal, interest or premium required by thisArticle, to demand of the person claiming such payment the productionof the Bond or interest coupon under which he claims such payment,and may cause to be endorsed on the same a memorandum of the amountso paid and the date of payment, but the Trustee may, in its discretion,dispense with such production and endorsement in any special case,upon such indemnity, if aipy, as it shall deem sufficient being given to itand to the Company.

SECTION 7.09. Upon any sale of the trust estate, or any partthereof pursuant to any proceedings based upon default hereunder,any purchaser may in paying purchase money turn in any of theoutstanding Bonds hereby secured in place of cash to the amountwhich would upon distribution of the net proceeds of such sale bepayable thereon and, in case the amount so payable thereon shall beless than the amount due thereon, the Bonds shall be returned afterbeing properly stamped to show such partial payment.

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SECTION 7.10. Upon any such sale of the trust estate, or any partthereof pursuant to any proceedings based upon default hereunder, theprincipal of all the Bonds issued hereunder and then outstanding, ifnot previously declared due, shall immediately become due and payable,anything in the Bonds or in this Indenture to the contrary notwith,standing.

SECTION 7.11. The Company hereby irrevocably appoints the Trus-tee to be the attorney of the Company for and in the name and onbehalf of the Company to execute and deliver any deeds, documents,transfers, conveyances, assignments, assurances and consents which theCompany ought to execute and deliver hereunder and generally to usethe name of the Company in the exercise of all or any of the powershereby conferred on the Trustee, with full powers of substitution andrevocation.

SECTION 7.12. In case the security hereby constituted shall havebecome enforceable and the Company shall have failed to pay to theTrustee, on demand, such amounts as are due from the Company andunpaid on Bonds and coupons then outstanding, together with all otheramounts due hereunder, and if bondholders have not directed other-wise pursuant to any of the provisions of this Indenture, the Trusteemay in its discretion, and shall, upon the request in writing of theholders of at least twenty-five per cent (25%) in principal amount ofthe outstanding Bonds and upon receiving reasonable indemnity, asprovided in Article Ten hereof, against all costs, expenses and liabili-ties to be incurred, proceed to obtain judgment in its own name and astrustee of an express trust for the whole amount so due and unpaid.The Trustee shall be entitled to obtain judgment as aforesaid, eitherbefore or after or during the pendency of any proceedings for the en-forcement of the security hereby constituted. No obtaining of any suchjudgment by the Trustee and no proceeding in execution of any suchjudgment upon the trust estate or any part or parts thereof shall -.n anymanner or to any extent affect the lien or charge of this Indenture uponthe trust estate or any part thereof, or any rights, powers or remediesof the Trustee hereunder, or any rights, powers, remedies or securityof the holders of the Bonds, but such rights, powers and remedies ofthe Trustee and such rights, powers, remedies and security of tbP

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holders of the Bonds, shall continue unimpaired as before. All moneyscollected by the Trustee under this Section shall be applied by theTrustee as provided in Section 7.07 of this Article.

The Company covenants and agrees with the Trustee that, in caseof any proceedings to enforce the security hereby created, judgmentmay be rendered against it in favour of the bondholders hereunder orin favour of the Trustee, as Trustee of an express trust for the bond-holders hereunder, for any amount which may remain due in respectof the Bonds and premium, if any, and interest thereon after the appli-cation to the payment thereof of the proceeds of any sale of the trustestate, or any part thereof.

SECTION 7.13. No person dealing with the Trustee or its agentsshall be concerned to inquire whether the security hereby constitutedhas become enforceable or whether the powers which the Trustee ispurporting to exercise have become exercisable or whether any moneyremains due upon the security of these presents or the Bonds or as tothe necessity or expediency of the stipulations and conditions subjectto which any sale shall be made or otherwise as to the propriety orregularity of any sale or of any other dealing by the Trustee withthe trust estate or to see to the application of any money paid to theTrustee; and, in the absence of fraud on the part of such person, suchdealing shall be deemed, so far as regards the safety and protection ofsuch person, to be within the powers hereby conferred and to be validand effectual accordingly.

SECTION 7.14. No holder of any Bond or coupon hereby securedshall have any right to institute or maintain any suit, action or pro-ceeding for the purpose of bringing the trust estate or any part thereofto sale, or for the execution of any trust or power hereunder, or forthe appointment of a liquidator or receiver or to have the Companywound up or for any other remedy for the enforcement of the securityhereunder, unless such holder shall previously have given to the Trusteewritten notice of the happening of an event of default which has ren-dered enforceable the security hereby created and of the continuancethereof for one month, nor unless the holders of at least twenty-fiveper cent (257) in principal amount of the then outstanding Bondsshall have made written request to the Trustee and shall have afforded

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to it reasonable opportunity either itself to proceed to exercise thepowers hereinbefore granted or to institute an action, suit or proceed-ing in its own name for such purpose, nor unless also such bondholderor holders shall have afforded to the Trustee, when requested by theTrustee, sufficient funds, security and indemnity satisfactory to it, andthe Trustee shall have failed to act within a reasonable time after suchnotification, request and offer of indemnity.

SECTION 7.15. No remedy herein conferred upon or reserved to theTrustee or upon or to the holders of the Bonds is intended to be exclu-sive of any other remedy, but each and every such remedy shall becumulative and shall be in addition to every other remedy given here-under or from time to time existing by law or by statute.

SECTION 7.16. All the covenants, stipulations and agreementsherein contained, by or on behalf of the Company to be kept, observed,fulfilled or performed, are and shall be for the sole and exclusive benefitof the parties hereto and of the respective holders of the Bonds andcoupons hereby secured. All provisions hereof, so far as they refer orare applicable to the Trustee, are subject in all respects to the provi-sions, conditions, rights and immunities set forth in Article Ten hereof.

ARTICLE EIGHT.

Immunity of Incorporators, Stockholders, Officers and Directors.

SECTION 8.01. No recourse shall be had for the principal of, pre-mium, if any, or interest on any Bond, or any part thereof, or for anyclaim based thereon or otherwise in respect thereof or of the indebted-ness represented thereby, or based on or in respect of this Indenture,against any incorporator, stockholder, officer or director, past, present,or future, of the Company or of any successor corporation, as such,either directly or through the Company or any successor corporationor any other person, whether by virtue of any constitution, statute orrule of law or by the enforcement of any assessment or penalty or other-wise, it being expressly understood and agreed that this Indenture andthe obligations hereby secured are solely corporate obligations and thatno personal liability whatever shall attach to or be incurred by any

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incorporator, stockholder, officer or director of the Company or of anysuccessor corporation, as such, because of the incurring of the indebted-ness hereby secured or under or by reason of any of the obligations,covenants or agreements contained in this Indenture or any supple-mental indenture or any of the Bonds or coupons, any and all such per-sonal liability, whether presently existing or hereafter arising, beinghereby expressly waived and released as a part of the consideration for rthe execution of this Indenture and the issue of the Bonds.

ARTICLE NINE.

Bondholders Acts, Holdings and Apparent Authority.

SECTION 9.01. Any demand, request or other instrument, providedby this Indenture to be signed and executed by bondholders, may be inany number of concurrent writings of similar tenor and may be signedor executed by such bondholders in person or by agent appointed inwriting. Proof of the execution of any such demand, request or otherinstrument, or of a writing appointing any such agent, and of the hold-ing by any person of Bonds transferable by delivery, shall be sufficientfor any purpose of this Indenture, and may be received by the Trusteeas conclusive, if made in accordance with the provisions of this Article.

The fact and date of the execution by any person of any suchdemand, request or other instrument or writing, may be proved by thecertificate of any notary public or other officer authorized to takeacknowledgments of deeds to be recorded in the place in which suchdocument was acknowledged that the person signing such documentacknowledged to him the execution thereof, or may be proved by anaffidavit of a witness to such execution sworn to before any such notaryor other such officer.

The fact of the holding by any person of Bonds or coupons trans-ferable by delivery, and the principal amount and distinctive numbersof such Bonds or coupons, and the date of his holding the same (whichholding the Trustee may deem to continue until the Trustee shall havereceived notice in writing to the contrary), may be proved (a) by theproduction of the Bonds or coupons, or (b) by a certificate executedby any trust company, bank, banker or other depositary, whereversituated, satisfactory to the Trustee, showing that on the date therein

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mentioned, such pe7son had on deposit with such depositary orexhibited to it the Bonds or coupons described in such certificate; orsuch facts may be proved by the certificate or affidavit of the personholding such Bonds or coupons, if such proof shall be satisfactory tothe Trustee.

The fact of the holding of registered Bonds without coupons andof coupon Bonds registered as to principal shall be proved by theregistry books of such Bonds, or by a certificate of the Bond registrar.

The fact and date of the execution of such demand, request orother instrument, and the amount and numbers of Bonds held by theperson by or for whom such request or other instrument is executed,may also be proved in any other manner which the Trustee may deemsufficient.

Any request or consent of the holder of any Bond shall bind allfuture holders of the same Bond and of Bonds issued in exchangetherefor or in place thereof, in respect of anything done, omitted orsuffered by the Trustee in pursuance of such request or consent.

ARTICLE TEN.

Concerning the Trustee.

SECTION 10.01. The Trustee accepts the trusts hereby createdupon the following terms and conditions, to all of which the Companyand the holders of the Bonds and coupons at any time outstanding, bytheir acceptance thereof, agree:

(a) The recitals herein and in the Bonds contained shallbe taken as the statements of the Company, and the Trusteeassumes no responsibility for the correctness of the same. TheTrustee makes no representation as to the value or validity ofthe Pledged Bonds or as to the security afforded thereby andhereby, or as to the vali.' ty of the lien of this Indenture or asto the validity of the Bonds issued hereunder, and the Trusteeshall incur no responsibility in respect of any such matters;provided, however, that nothing herein contained shall relievethe Trustee of its duty to authenticate Bonds only as authorizedby this Indenture.

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(b) The Trustee shall be under no responsibility or dutywith respect to the disposition of the Bonds authenticated anddelivered under any of the provisions hereof or the applicationof the proceeds thereof or of any moneys paid to the Companyunder any of the provisions hereof.

Should any taxes or other governmental charges be imposedupon the Trustee, in its capacity as Trustee hereunder, whichit may be required to pay under any present or future law of theDominion of Canada or the United States of America or of anyother authority therein having jurisdiction, the Trustee shall bereimbursed and indemnified therefor by the Company, and anyliability incurred or amounts paid by the Trustee in respect ofany such taxes or other governmental charges, until paid, shallconstitute a lien upon the trust estate prior to any claim of theholders of Bonds.

(c) The Trustee may execute any of the trusts under thisIndenture or exercise any of the powers hereby vested in it orperform any duty hereunder either itself or by or through itsattorneys or agents and the Trustee shall not be answerable oraccountable for any act, default, neglect or misconduct of anysuch attorneys or agents, provided reasonable care has beenexercised in the selection thereof and in the continued employ-ment of any such attorney or agent, _ror shall the Trustee beotherwise answerable or accountable under any circumstanceswhatsoever, except for its negligence or bad faith. The Trusteeshall not be under any obligation or duty to institute, appearin or defend any suit in respect hereof, unless first reasonablyindemnified against its costs, expenses and liabilities, and theTrustee shall not be under obligation to take any action in respectof any default or otherwise or toward the execution or enforce-ment of any of the trusts hereby created or to institute, appearin or defend any suit or other proceeding in connection there-with, unless one or more of the holders of the Bonds shall, asoften as required by the Trustee, furnish it with reasonablesecurity and indemnity against the costs, expenses and liabilitiesof said proceeding, but this provision shall not affect any discre-tionary power herein given to the Trustee to determine whetheror not it shall take action in respect of such default or otherwise.

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(d) Except as herein otherwise provided, any notice ordemand which by any provision of this Indenture is requiredor permitted to be given or served by the Trustee or any otherperson on the Company, shall be deemed to have been sufficientlygiven and served for all purposes if deposited, postage prepaid,in a Post Office letter box or mail chute, addressed (until anotheraddress is filed by the Company with the Trustee and thereafterif addressed to such other address) as follows: Brazilian Trac-tion, Light and Power Company, Limited, 25 King Street West,Toronto 1, Canada. Any notice, request or demand by anyholder of a Bond or Bonds to or upon the Trustee shall bedeemed to have been sufficiently given or made, for all purposes,if given or made at the principal office of the Trustee.

(e) The Trustee shall not be bound to recognize any personas the holder of a Bond outstanding hereunder unless and untilthr Bond is submitted to the Trustee for inspection if requested,and the title thereto established to the satisfaction of the Trustee.

(f) The Trustee shall be entitled to receive the resolutions,certificates, orders, opinions of counsel, and other writings, in thisIndenture provided for, as conclusive evidence of the truth ofthe statements therein contained, respectively, and as full author-ity for the taking of any action in accordance therewith underthis Indenture, and they shall constitute full authority and pro-tection to the Trustee for its authentication and delivery of Bondsand the payment of deposited cash and the withdrawal of PledgedDebentures under the provisions of this Indenture.

The same officer or officers of the Company need not certifyto all the facts required to be certified under the provisions ofthis Indenture, but different officers may certify to separate factsrespectively.

The Trustee shall be justified in relying upon the genuine-ness of any notice, resolution, request, waiver, consent, order,certificate, statement, affidavit, indemnity bond, report, appraisal,opinion, telegram, cablegram, radiogram, letter, bond or otherpaper, document or instrument believed by it in the exercise ofreasonable care to be genuine and to have been signed, sent orpresented by the proper party or parties.

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(g) In any instance or instances in which the Trustee isrequired or permitted, by any provision of this Indenture or inthe execution of the trusts hereunder, to exercise judgment, theTrustee may employ an independent engineer, accountant, orother expert or adviser and the Trustee shall be entitled to relyupon any statement of fact or opinion of such engineer, account-ant, expert or adviser; but nothing in this paragraph shall beconstrued to require the employment of any such engineer,accountant, expert or adviser.

(h) The Trustee may consult with counsel, who may becounsel for the Company, and the opinion of said counsel shallbe full and complete authority and protection in respect of anyaction taken, suffered or omitted by it hereunder in good faithand in accordance with the opinion of said counsel. The Trusteeshall not be under any responsibility for the acts or omissionsof any counsel, engineer, accountant, expert, appraiser, adviseror other person or persons employed for any of the purposes ofthis Indenture, provided that the Trustee shall have exercisedreasonable care in the selection and continued employment ofsuch counsel, engineer, accountant, appraiser, adviser or otherperson or persons.

(i) The Company covenants and agrees to pay to the Trus-tee from time to time on demand of the Trustee, reasonable com-pensation (which shall not be limited by any provision of law withrespect to the compensation of fiduciaries or of the trustee of anexpress trust) for all services rendered by it hereunder and alsoits reasonable expenses and counsel fees and other disbursements,and those of its attorneys, agents and employees, incurred in andby the administration and execution of the trusts hereby createdand the exercise of its powers and the performance of its dutieshereunder.

The Company also covenants to indemnify the Trustee for,and to hold t harmless against, any loss, liability or expenseincurred without negligence or bad faith on the part of theTrustee, arising out of or in connection with the acceptance oradministration of this trust, including the costs and expenses ofdefending against any claim of liability in the premises. The

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Company further covenants and agrees to pay interest to theTrustee upon all amounts paid, advanced or disbursed by theTrustee for which it is entitled to reimbursement or indemnityas herein provided.

The Trustee shall have a lien on the trust estate and theproceeds thereof, prior to the lien of the Bonds, for all amountsagreed to be paid by, and for all obligations of, the Companyunder this clause (i).

(j) Whenever in the administration of the trusts created bythis Indenture the Trustee shall deem it necessary or desirablethat a matter be proved or established prior to taking, sufferingor omitting any action hereunder, said matter (unless otherevidence in respect thereof be herein specifically prescribed) maybe deemed to be proved and established by a certificate signedby the President or a Vice President and by the Treasurer oran Assistant Treasurer of the Company and delivered to theTrustee, but in its discretion the Trustee may require suchfurther or additional evidence as to it may seem reasonable.

(k) The Trustee shall be under no duty to invest any moneyspaid to or deposited with it or to its credit pursuant to any ofthe provisions of this Indenture, and -shall not be liable forinterest on any moneys during the period such moneys remainon deposit with it, except such interest as the Trustee may agreewith the Company to pay.

(1) The Trustee shall not be required to take notice of anydefault hereunder unless and until notified in writing of suchdefault, which notice shall distinctly specify the default desiredto be brought to the attention of the Trustee, and in the absenceof any such notice, the Trustee may, for all purposes of thisIndenture, conclusively assume that the Company is not in defaulthereunder, provided, however, that nothing herein containedshall relieve the Trustee of its duty to authenticate Bonds and topermit the withdrawal of cash or collateral or substitution ofcollateral only as authorized by this Indenture.

(m) The Trustee, or any company in or with which theTrustee may be interested or affiliated, or any officer or director

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or trustee or stockholder of the Trustee or of any such company,may acquire and hold Bonds or other securities of the Companyor obligations or other securities of subsidiaries of the Company,and the Trustee may act as depositary, transfer agent, payingagent, registrar, trustee, custodian, escrow agent or fiscal agentfor the Company or for any committee or other body, firm orcorporation in respect of any bonds, notes or other securities,whether or not issued pursuant hereto.

SECTION 10.02. Any moneys which at any time shall be depositedunder this Indenture with the Trustee by or for the account of the Com-pany shall be held in trust by the Trustee for the holders of the Bondsand coupons issued hereunder until disposed of conformably with theprovisions of this Indenture but need not be segregated and may beheld as part of the general funds of the Trustee, and when depositedin funds constituting Canadian currency may be redeposited in trustin any chartered bank of Canada and when deposited in funds con-stituting other than Canadian currency may be redeposited in trust witha bank or trust company satisfactory to the Trustee in the country whosecurrency is involved.

The Trustee may place all pledged collateral in any safe or recep-tacle selected by the Trustee, or with any chartered bank or otherdepositary satisfactory to the Trustee, and the Trustee shall not beresponsible for any greater measure of protection or safety for suchcollateral than is afforded by the premises in which they are located.The Company covenants with the Trustee that the Trustee may, butshall not be bound to, enforce or realize upon any collateral, and theTrustee shall not be responsible to the Company for any loss occasionedby any sale or by the retention of or the neglect or refusal to enforceor sell any collateral or to take any steps for the protection of the rightsconferred thereby, or to collect or see to the payment of interest ordividends on any collateral.

SECTION 10.03. Any company into which the Trustee or any suc-cessor to it in the trusts created by this Indenture may be merged orconverted, or with which it or any such successor may be consolidated,or any company resulting from any merger, conversion, or consolida-tion to which the Trustee or any successor shall be a party, provided

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such company shall be a trust company or a banking corporation ingood standing organized under the laws of the Dominion of Canada orof any province thereof or the United States of America or of anystate thereof and shall have an office in the City of Toronto, Provinceof Ontario, or the Borough of Manhattan, The City of New York, NewYork, and shall have a capital and surplus aggregating at least$5,000,000, shall be the successor trustee under this Indenture withoutthe execution or filing of any paper or the performance of any furtheract on the part of the parties hereto. In case any of the Bonds shallhave been authenticated but not delivered, any such successor trusteemay adopt the certificate of authentication of National Trust Company,Limited, or of any successor to it, as Trustee hereunder, and deliversuch Bonds so authenticated; and in case any of the Bonds shall nothave been authenticated, any successor trustee may authenticate suchBonds in the name of such successor trustee, and in all such cases suchcertificate shall have the full force which it is anywhere in the Bondsor this Indenture provided that the certificate of the Trustee shall have.

SECTION 10.04. The Trustee or any successor trustee may at anytime resign and be discharged as herein provided from the trusts herebycreated by giving to the Company written notice of such resignationspecifying a date when such resignation shall take effect. Notice ofsuch resignation shall be published once in each calendar week for twosuccessive weeks, on days not more than sixty (60) days nor less thanthirty (30) days prior to the date so specified, in one newspaper printedin the English language and customarily published on each businessday and of general circulation in the City of Toronto, Province ofOntario, and in one newspaper printed in the English language andcustomarily published on each business day and of general circulationin the Borough of Manhattan, The City of New York, New York, andsuch resignation shall take effect on the date specified in said noticeor on the date of the appointment of a successor trustee as hereinafterprovided, whichever shall be later.

SECTION 10.05. In case at any time the Trustee or any successortrustee shall submit to the Company a notice of resignation or shall beremoved or shall become incapable of acting or shall be adjudged bank-rupt or insolvent, or if a receiver of the Trustee or any successor, or of

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its property, snall be appointed, or if any public officer in the exercise ofhis official powers shall take charge or control of the Trustee or anysuccessor, or of its property or affairs, or if a vacancy shall arise inthe trusteeship under this Indenture from any other cause, the Com-pany, by an instrument duly executed and acknowledged by its properofficers, by authority of its Board of Directors, may appoint a successortrustee to fill the vacancy, but such appointment shall be automaticallyterminated upon the appointment of a new trustee by the holders ofBonds or by a court as hereinafter provided. The Company shallpublish notice of any such appointment made by it once in each calendarweek for two successive weeks in one newspaper printed in the Englishlanguage and customarily published on each business day and of generalcirculation in the City of Toronto, Province of Ontario, and in onenewspaper printed in the English language and customarily publishedon each business day and of general circulation in the Borough ofManhattan, The City of New York, New York.

In any instance in which the Company may be authorized to appointa successor trustee to fill a vacancy, a successor trustee or successortrustees may be appointed by the holders of a majority in. principalamount of the Bonds outstanding by an instrument or concurrentinstruments in writing signed and acknowledged by such holders ortheir attorneys-in-fact duly authorized, and delivered to such successortrustee hereunder, notificaLion being given to the Company and thepredecessor trustee; provided, however, that no such appointment maybe made (1) more than one year after the first publication of a noticeof the appointment by the Company of a successor trustee to fill suchvacancy, or (2) after the appointment of a successor trustee by a courtas hereinafter provided. If no appointment of a successor trustee shallbe made by the Company pursuant to the foregoing provision of thisSection within one month after the happening of any of the events setforth in the first paragraph of this Section, or if no such appointmentshall be made by the bondholders pursuant to the foregoing provisionsof this Section within three months after the happening of any of saidevents set forth in the first paragraph of this Section (although theCompany may have duly appointed a successor trustee as hereinaboveprovided for), then the holder of any Bond or any retiring trustee here-under may apply to any court of competent jurisdiction to appoint a

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successor trustee. Said court may thereupon, after such notice, if any,as said court may deem proper and prescribe, appoint a successortrustee at any time not more than eighteen months after the happeningof such event or the first publication of a notice of the appointment bythe Company of a successor trustee to fill such vacancy, whichever islater.

Upon the appointment of a successor trustee by the holders ofBonds or by a court, as hereinabove provided, any successor trusteetheretofore appointed by the Company to fill a vacancy shall, immedi-ately and without further act, be superseded by the successor trusteeso appointed.

Every successor trustee appointed under any of the provisions ofthis Article shall be a trust company or a banking corporation in goodstanding organized under the laws of the "Dominion of Canada or ofany province thereof or of the United States of America or of anystate thereof, having an office in the City of Toronto, Province ofOntario, or the Borough of Manhattan, The City of New York, NewYork, and a capital and surplus aggregating at least $5,000,000, ifthere be such a trust company or banking corporation able and willingto act.

Any successor trustee appointed hereunder shall execute, acknowl-edge and deliver to the predecessor trustee hereunder and to the Com-pany an instrument in writing accepting such appointment hereunder,and thereupon said successor trustee, without any further act, deed orconveyance, shall become fully vested with all the estates, properties,rights, powers, trusts, duties and obligations of its predecessor intrust hereunder, with like effect as if originally named as Trusteeherein; but the retiring trustee, nevertheless, on the written requestof the Company or of the successor trustee, and upon payment of itsunpaid compensation and expenses, if any, shall execute, acknowledgeand deliver such instruments of conveyance and further assuranceand do such other things as may reasonably be required for morefully and certainly vesting and confirming in said successor trusteeall the right, title and interest of the retiring trustee in and to thetrust estate and said rights, powers, trusts, duties and obligations;and the retiring trustee shall also, upon like request and upon pay-ment of its unpaid compensation and expenses as aforesaid, pay over,

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assign and deliver to the successor trustee any money and other prop-erty subject to the lien of this Indenture then held by it, and deliverany and all records, or copies thereof, in respect of the trusts here-under which it may have; and upon request of any such successortrustee the Company shall execute, acknowledge and deliver any andall instruments in writing for more fully and certainly vesting in andconfirming to such successor trustee said estates, properties, rights,powers and duties.

SECTION 10.06. If at any time or times, in order to conform to anylegal requirements, the Trustee shall so request, the Company and theTrustee shall unite in the execution and performance of all instru-ments and agreements necessary or proper to appoint another bankor trust company or one or more persons approved by the Trustee,either to act as co-trustee or co-trustees of all or any part of the trustestate, jointly with the Trustee originally named herein or its succes-sor, or to act as separate trustee or trustees of any such property,with such power and authority as may be necessary to the effectualoperation of the trusts herein set forth and specified in the instrumentof appointment.

SECTION 10.07. The Trustee is hereby appointed (and the succes-sive holders of the Bonds issued hereunder, by taking and holding thesame, shall conclusively be deemed to have so appointed the Trustee)the true and lawful attorney-in-fact of te respective holders of theBonds issued hereunder, with authority to make or file, irrespectiveof whether the Bonds or any of them are in default as to paymentof principal or interest, in the respective names of the holders of theBonds and coupons or in behalf of all holders of the Bonds and cou-pons as a class, any proof of debt, amendment to any proof of debt,petition or other document, and to execute any and all other papersand documents and do and perform any and all other acts and things forand in behalf of the respective holders of the Bonds and coupons, orin behalf of all holders of the Bonds and coupons as a class, as maybe necessary or advisable in the judgment of the Trustee in orderto have the claims of the holders of the Bonds and coupons againstthe Company, or any successor, or any other person or corporation,allowed and paid in any equity receivership, insolvency, liquidation,

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bankruptcy, reorganization, winding-up, or other proceedings whichshall involve the trust estate or any part thereof, and to receive paymentof or on account of any such claim or claims; and any receiver, assigneeor trustee in any such proceeding is hereby authorized by each holderof a Bond or Bonds to make such payments to the Trustee, or in theevent the Trustee shall consent to the making of such payments, directlyto the holders of the Bonds, and to pay to the Trustee any amount due itfor compensation and expeises, including counsel fees, incurred by itup to the date of such distributiun. The Trustee shall have full powerof substitution and delegation in respect of any such power.

ARTICLE ELEVEN.

Consolidation, Merger, Sale, Conveyance and Lease.

SECTION 11.01. Nothing contained in this Indenture or in any ofthe Bonds shall prevent any consolidation or merger of the Companywith or into any other corporation or corporations, or successiveconsolidations or mergers in which the Company or its successor orsuccessors shall be a party or parties, or shall prevent any sale, con-veyance or lease of the property of the Company as an entirety orsubstantially as an entirety to any other corporation authorized toacquire the same; provided, however, that no such consolidation,merger, sale, conveyance or lease shall impair the obligations underthis Indenture or any of the rights or powers hereunder of the Trusteeor of the holders of the Bonds, or shall impair any lien or charge createdby this Indenture, and provided further that upon any such consolida-tion, Tqerger, sale, conveyance or lease the due and punctual paymentof the principal of, premium, if any, and interest on all of the Bonds,according to their tenor, and the due and punctual performance of allof the covenants and conditions of this Indenture, shall be expresslyassumed by the successor corporation or the lessee corporation, as thecase may be.

For the purposes of this Article the term "successor corporation"shall mean any corporation resmi ,ng from any such consolidation ormerger or any corporation to which any such conveyance shall bemade, and the term "lessee corporation" shall mean any corporationto which any such lease shall be made.

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SECTION 11.02. In case of any such consolidation, merger, sale,conveyance or lease, and in case the successor corporation shall haveassumed, by instrument in writing delivered to the Trustee, satisfactoryin form to the Trustee, the due and punctual payment of the principalof and interest on all of the Bonds and the due and punctual perform-ance of all of the covenants and conditions of this Indenture, such sue-cessor corporation shall succeed to and be substituted for the Companywith the same effect as if it had been named herein as the party of thefirst part; and upon the order of such successor corporation, insteadof the Company, and subject to all the terms, conditions and limita-tions of this Indenture, the Trustee shall authenticate and deliver anyof such Bonds as previously shall have been signed and delivered bythe Company to the Trustee for authentication and any of such Bondsas thereafter shall be signed and delivered to the Trustee for thatpurpose. Any such successor corporation may cause to be signed andissued, either in its own name or in the name of the Company, any andall Bonds thereafter to be issued hereunder which theretofore shall nothave been signed by the Company and delivered to the Trustee. All ofthe Bonds so issued shall have in all respects the same benefit of thisIndenture as Bonds theretofore or thereafter issued in accordance withthe terms of this Indenture, as though all of said Bonds had been issuedat the date of the execution hereof.

The Trustee shall be protected in acting hereunder upon an opinionof counsel that any such consolidation, merger, sale, conveyance orlease complies with the provisions of this Article.

SECTION 11.03. For every purpose of this Indenture, including theexecution, issue, authentication and delivery and use of any and allBonds issuable hereunder, the terms "Company" and "Brazilian Trac-tion, Light and Power Company, Limited" include and mean not onlythe party of the first part hereto, but also any successor corporationformed by consolidation or otherwise, which shall execute an instru-ment with the Trustee as provided in Section 11.02 of this Article.Every successor corporation shall possess, and from time to time mayexercise, each and every right and power hereunder of Brazilian Trac-tion, Light and Power Company, Limited, in its name or otherwise.

Any act or proceeding by any provision of this Indenture author-ized or required to be done or performed by any board, conimittee or

70

officer of the Company, shall and may be done and performed with likeforce and effect by the like board, committee or officer of any corpora-tion that shall at the time be such lawful successor of the Company.

ARTICLE TWELVE.

Discharge of Indenture.

SECTION 12.01. If the Company shall provide for the discharge ofall of the Bonds then outstanding in any one or more of the followingways-(a) by paying or causing to be paid the whole amount of theprincipal and premium, if any, and interest due on Bonds which havebecome due and payable at maturity, upon call for redemption, bydeclaration or otherwise, or by providing for the payment of such Bondsby depositing with the Trustee as trust funds the entire amount so due,(b) by depositing with the Trustee as trust funds an amount equal tothe aggregate of the principal of Bonds which have not become due andpayable and unpaid interest thereon to the date or dates when the samewill become due and payable, or (c) by delivering to the Trustee forcancelation all Bonds outstanding, whether or not due, ir negotiableform-and if the Company shall pay to the Trustee all its costs, chargesand expenses hereunder, then, and in that case, upon the written requestof the Company, all of the Pledged Debentures and any other propertythen subject to this Indenture shall revert to the Company, and theestate, right, title and interest of the Trustee shall thereupon cease,determine and become void; and in such case the Trustee on demand ofthe Company, and at its cost and expense, shall execute proper instru-ments acknowledging satisfaction of and discharging this Indenture,and shall redeliver to the Company all of the Pledged Debentures andany other property then held hereunder, accompanied, as to PledgedDebentures registered in the name of the Trustee or its nominee, byproper instruments of assignment and transfer; otherwise this In-denture shall be, continue and remain in full force and effect.

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ARTICLE THIRTEEN.

Supplemental Indentures.

SECTION 13.01. The Company, when authorized by a resolution ofits Board of Directors, and the Trustee, from time to time and at anytime, may enter into an indenture or indentures supplemental heretoand which thereafter shall form a part hereof, for one or more of thefollowing purposes:

(a) to convey, transfer and assign to the Trustee and tosubject to the lien of this Indenture with the same force andeffect as though included in the granting clauses hereof, addi-tional cash or other property, and to set forth any terms andprovisions, other than or additional to those contained herein,upon which any such additional cash, securities or property shallbe held by the Trustee;

(b) to evidence the succession of another corporation tothe Company or successive successions and assumptions by asuccessor corporation of the covenants and obligations of theCompany under this Indenture;

(c) to add to the covenants of the Company such furthercovenants as its Board of Directors and the Trustee shall con-sider to be for the protection of the trust estate and of the bond-holders, and to make the occurrence and continuance of a defaultin any of such additional covenants an event of default permit-ting the enforcement of all or any of the several remediesprovided in this Indenture as hereinbefore set forth;

(d) to establish the terms, provisions and conditions of aparticular series of Bonds, as determined by the Board of Direc-tors of the Company and within the limitations herein expressed;

(e) for any other purpose not inconsistent with the termsof this Indenture, or for the purpose of curing any ambiguityor of curing, correcting or supplementing any defective or in-consistent provision contained herein or in any supplementalindenture.

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SECTION 13.02. The Trustee is hereby authorized to join with theCompany in the execution of any such supplemental indenture, to makeany further appropriate agreements and stipulations which may betherein contained, and to accept the conveyance, transfer and assign-ment of any property thereunder.

ARTICLE FOURTEEN.

Bondholders Meetings.

SECTION 14.01. The Trustee may at any time call a meeting of thebondholders to be affected by the business to be submitted to the meet-ing and shall from time to time call a meeting of such bondholders onthe written request of the Company, made pursuant to a resolution ofthe Board of Directors of the Company, or on the written request signedby bondholders representing at least ten per cent (10o) of the princi-pal amount of the Bonds to be affected by the business to be submittedto the meeting outstanding at the time of the request, provided that itshall be furnished at the time of any such request with an amount suffi-cient to defray the cost of publishing notice of and of holding suchmeeting. Every such written request shall set forth the purposes ofsuch meeting in reasonable detail. In the event of the failure of theTrustee for twenty (20) days to call a meeting after being thereuntorequested and after having been furnished with the funds as above setforth, the Company pursuant to a resolution of the Board of Directorsof the Company, or the holders of outstanding Bonds to the amountabove specified in this Section, may call the meeting. In determining thepercentage of the principal amount of the Bonds outstanding (or cFBonds of a particular series outstanding) entitling the holders thereiOto take any action under this Article, Bonds owned or held by or forthe account of the Company or any corporation, company or persondirectly or indirectly controlling, or controlled by, or under direct orindirect common control with, the Company shall be disregarded, exceptthat for the purpose of determining whether the Trustee shall beprotected in relying on any such action, only Bonds which the Trusteeknows are so owned shall be disregarded. Bonds so owned which havebeen pledged shall be regarded as outstanding if the pledgee shallestablish to the satisfaction of the Trustee the pledgee's right to vote

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such Bonds and that the pledgee does not directly or indirectly control,and is not controlled by or under direct or indirect common controlwith, the Company. In case of a dispute as to such right, any decisionby the Trustee taken upon the advice of counsel shall be full protectionto the Trustee. Every such meeting of bondholders shall be held atsuch place as the Trustee may determine.

SECTION 14.02. Notice of every meeting of bondholders, settingforth the purpose of such meeting in reasonable detail, shall be given bypublishing the same at least four times in one newspaper printed in theEnglish language and customarily published on each business day andof general circulation in the City of Toronto, Province of Ontario, andin one newspaper printed in the English language and customarilypublished on each business day and of general circulation in the Bor-ough of Manhattan, The City of New York, New York, and by suchother publication as the Trustee may determine, the first publication tobe not less than twenty (20) and not more than sixty (60) days priorto the date fixed for the meeting.

A copy of such notice shall also be mailed at least twenty (20) andnot more than sixty (60) days prior to the date fixed for the meetingto the registered holders of Bonds of each series affected by the busi-ness to be submitted to the meeting, (including coupon bonds registeredas to principal), at their last address appearing upon the Bond registrybooks, but if notice by publication shall have been given as above pro-vided, failure to give such notice by mailing shall not affect the validityof the proceedings at such meeting.

SECTION 14.03. The Trustee may (for the purpose of enabling thebondholders to be present and vote at any meeting without producingtheir Bonds, and of enabling them to be present and vote at any suchmeeting by proxy), make and may from time to time vary, such regula-tions as it shah think fit for the deposit of unregistered Bonds with orthe exhibition thereof to any bank, banker or trust company or corpora-tion, firm or person, approved by the Trustee, and for the issue to thepersons so depositing or exhibiting the same of certificates by suchbank, trust company or corporation, firm or person entitling the personsdepositing or exhibiting the same to be present and vote or to appointproxies to represent them and vote for them at any such meeting and

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at any adjournment thereof in the same way as if the persons so presentand voting either personally or by proxy were the actual bearers of theBonds in respect of which such certificates shall have been issued not-withstanding any transfer of such Bonds subsequent to the issuance ofsuch certificates, and any regulations so made shall be binding andeffective and the votes given in accordance therewith shall be valid andshall be counted. Each such certificate shall state the date on which theBond or Bonds in respect of which it is issued was or were so depositedor exhibited and the series and serial numbers thereof. Any s.chcertificate which does not require such Bond or Bonds to be depositedand remain on deposit until after the meeting or until surrender of suchcertificate shall entitle the holder thereof to vote at any meeting onlyif such Bond or Bonds (or another coupon Bond or Bonds issued inexchange therefor) are not produced at the meeting and at the timeof the meeting shall not have been registered as to principal or sur-rendered in exchange for a registered Bond without coupons. As be-tween two such certificates issued in respect of the same Bond or anyBond issued in exchange therefor the certificate bearing the later dateshall prevail.

If any such meeting shall have been called by bondholders or bythe Company as aforesaid, upon failure of the Trustee to call the sameafter having been so requested to do under the provisions of Section,14.01 of this Article, regulations to like effect for such deposit of Bondswith, or exhibition thereof to, and issue of certificates by, any bank,banker or trust company having a capital of not less than $50,000, shallbe similarly binding and effective for all purposes hereof, if adopted orapproved by the bondholders calling such meeting or by the Board ofDirectors of the Company, if such meeting shall have been called bythe Company, provided that in either such case copies of such regula-tions shall be filed with the Trustee. Owners of fully registered Bondsand coupon Bonds registered as to principal to be affected by thebusiness to be submitted to the meeting may, by proxy duly constitutedin writing, appoint any person to vote at any meeting for them. Eachsuch writing shall state the aggregate principal amount of Bonds inrespect of which the person authorized thereby is entitled to vote. Theonly persons who shall be recognized at any meeting as entitled to votein respect of Bonds outstanding hereunder or to be present at themeeting shall be (a) the persons who produce either certificates issued

75

pursuant to regulations made as hereinabove provided or unregisteredBonds, and (b) the registered holders of Bonds (whether the same befully registered or registered only as to principal) or the proxies ofany of the foregoing appointed as herein or in such regulations pro-vided.

SECTION 14.04. A quorum at any such meeting shall be personsholding or representing by proxy at least sixty-six and two-thirds percent. (662/3%) of the aggregate principal amount of Bonds then out-standing to be affected by the business to be submitted to the meeting;but less than a quorum may adjourn the meeting from time to timeand the meeting may be held as adjourned without further notice,whether such adjournment shall have been had by a quorum or by lessthan a quorum. The meeting shall be organized by the election of apermanent chairman and a secretary. At any meeting, each bondholdershall be entitled to one vote for every $1,000 principal amount of Bonds(or the equivalent in any other currency) upon which he shall be entitledto vote, as aforesaid. The chairman of the meeting shall have no rightto vote other than by virtue of Bonds held by him or instruments inwriting as aforesaid duly designating him as the person to vote onbehalf of other bondholders.

SECTION 14.05. Any representative of the Trustee, and its counsel,and any representative of the Company, and its counsel, may attendand speak at any such meeting.

SECTION 14.06. A meeting of the bondholders shall have the power,by resolution affirmatively voted for by sixty-six and two-thirds percent. (66%%) of the principal amount of Bonds of each series thenoutstanding to be affected by the business to be submitted to themeeting:

(a) to make any modification in or addition to any provisionof this Indenture or any supplement hereto or the rights andobligations of the Company or the rights of the holders of theBonds and appurtenant coupons under this Indenture or anysupplement hereto, provided that no modification of or additionto the provisions of this Indenture or any supplement heretoshall be effective until approved by resolution of the Board of

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Directors of the Company, and provided further that no modi-fication of or addition to the provisions of this Indenture or anysupplement hereto which, in the opinion of the Trustee, shallaffect the rights, duties or immunities of the Trustee under thisIndenture or any supplement hereto may be made without itswritten consent;

(b) to sanction any compromise of the rights of the bond-holders against the Company or against its property whethersuch rights shall arise under the provisions of this Indenture orotherwise;

(c) to sanction the surrender or release of the trust estateor any part thereof;

(d) to sanction any plan for the reorganization, readjust-ment, winding-up or liquidation of the Company;

(e) to authorize the Trustee to accept in satisfaction or partsatisfaction for the sale or transfer of all or any part of the trustestate any securities of any corporation formed or to be formed;

(f) to waive any default on the part of the Company, otherthan the non-payment of any principal of the Bonds issued underthis Indenture at maturity or any interest thereon when due,either unconditionally or upon such terms as may be approvedat said meeting; and

(g) to give any authorization or direction to the Trusteeunder the provisions of Article Seven of this Indenture;

provided, however, that the bondholders shall have no power to extendthe maturity of any Bonds or reduce the rate of interest thereon orotherwise modify the terms of payment of principal (other than amodification of the provisions of any sinking fund established in respectof any Bonds issued under this Indenture) or interest, without the con-sent of the holder of each Bond so affected or to effect a reduction ofthe percentage required by this Section for any action authorized to betaken by the bondholders pursuant to this Section.

In case more than one series of Bonds shall be outstanding underthis Indenture and any business to be submitted to such meeting shall

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affect the rights of the holders of the Bonds of one or more series andshall not affect the rights of the holders of the Bonds of one or moreof the other series, then the holders of the Bonds of the one or moreseries whose rights are not affected shall not be entitled to notice of, orto attend or vote at, any such meeting or to be counted for the purposeof a quorum. In case the rights appertaining to a particular series areto be affected, the affirmative vote of sixty-six and two-thirds per cent.(66% %) of the principal amount of the Bonds of such series shall berequired. Any adverse modification of the provisions of any sinkingfund established in respect of a particular series shall be deemed toaffect only the Bonds of that series.

The determination of the Trustee as to which series of Bonds areto be affected shall be conclusive. The Trustee shall not incur anyliability to anyone for any such determination made in good faith.

SECTION 14.07. Any such resolution so passed at a meeting of thebondholders duly convened and held shall be effective to bind all bond-holders, whether or not voting in person or by proxy at such meeting,and all Bonds issued under this Indenture are to be owned and heldon the condition, as part of the consideration for the issuance thereof,that any resolution so adopted at a meeting of the bondholders shall befinal and conclusive upon all holders of Bonds and upon their successorsand assigns.

SECTION 14.08. The vote upon any resolution shall be by ballot andthe chairman of the meeting shall appoint two inspectors of votes whoshall count all votes cast at the meeting for or against any resolutionand who shall make and file with the secretary of the meeting their veri-fied written reports in duplicate of all votes co st at the meeting. Arecord in duplicate of the proceedings of each meeting of the bond-holders shall be prepared by the secretary of the meeting and there shallbe attached to said record the original reports of the inspectors of voteson any vote by ballot taken thereat and affidavits by one or more personshaving knowledge of the facts setting forth a copy of the notice of themeeting and showing that said notice was published as provided inSection 14.02 of this Article. The record shall be signed and verifiedby the affidavits of the permanent chairman and secretary of the meet-ing and one of the duplicates shall be delivered to the Company and the

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other to the Trustee to be preserved by the Trustee. Any record sosigned and verified shall be proof of the matters therein stated untilthe contrary is proved, and if the record shall also be signed and verifiedby the affidavit of a duly authorized representative of the Trustee, themeeting shall be deemed conclusively to have been duly convened andheld, and any resolution or proceeding stated in the record to have beenadopted or taken shall be deemed conclusively to have been duly adoptedor taken at the meeting.

SECTION 14.09. Bonds authenticated and delivered after the dateof any bondholders meeting may bear a notation in form approved bythe Trustee as to any action taken at meetings of bondholders there-tofore held, and upon the demand of the holder of any Bond outstand-ing at the date of any bondholders meeting and presentation of hisBond for the purpose, the Company shall cause suitable notation to bemade on the Bond by endorsement or otherwise as to any action takenat any meeting of bondholders theretofore held. If the Company or theTrustee shall so determine, new Bonds so modified as to conform, inthe opinion of the Trustee and the Board of Directors of the Company,to any bondholders resolution shall be prepared by the Company,authenticated by the Trustee and delivered without cost to the holdersof Bonds of the same series then outstanding hereunder upon surrenderof such Bonds with all unmatured coupons and all matured couponsnot fully paid in equal aggregate principal amounts. The Companyor the Trustee may require the Bonds outstanding to be presented fornotation or exchange as aforesaid if it shall see fit to do so. Indenturessupplemental to this Indenture embodying any modification of or addi-tion to the provisions of this Indenture or in the rights and obligationsof the Company or in the rights of the holders or registered owners ofthe Bonds and appurtenant coupons made at any bondholders meetingand approved by resolution of the Board of Directors of the Companyas aforesaid may be executed by the Trustee and the Company, andupon demand of the Trustee, or if so specified in any resolution adoptedat any bondholders meeting, shall be executed by the Company andthe Trustee.

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ARTICLE FIFTEEN.

Miscellaneous Provisions.

SECTION 15.01. All the covenants, stipulations, promises and agree-ments in this Indenture contained by or on behalf of the Company, shallbind its successors and assigns, whether so expressed or not.

SECTION 15.02. Wherever in this Indenture any action is requiredor may be taken by resolution or otherwise of the Board of Directorsof the Company, such action may be taken by the Executive Committeeof such Board with the same force and effect as though taken by theBoard of Directors.

SECTION 15.03. Upon the request of the Company any moneysheld by the Trustee remaining unclaimed by the holders of the Bondsand coupons for six years after the date when such moneys were pay-able shall be paid over by the Trustee to the Company and any liabilityof the Trustee with respect to such moneys shall thereupon cease andthe holders of said Bonds or coupons shall thereafter be entitled to lookonly to the Company, as the holders of general claims, for paymentthereof; provided, however, that the Trustee, before being required tomake any such repayment, may, at the expense of the Company, causenotice that said moneys have not been claimed and that after a datespecified therein any unclaimed balance of such moneys then remainingwill be repaid to the Company, to be published once each calendar weekfor four successive weeks in one daily newspaper printed in the Englishlanguage and customarily published on each business day and of gen-eral circulation in the City of Toronto, Province of Ontario, and in onedaily newspaper printed in the English language and customarily pub-lished on each business day and of general circulation in the Boroughof Manhattan, The City of New York, New York. In no event shall theholders of such Bonds or coupons appertaining thereto be entitled tointerest upon such money, whether remaining with the Trustee or sorepaid to the Company.

SECTIoN 15.04. Nothing in this Indenture expressed or implied Isintended or shall be construed to give to any person, firm or corporation

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other than the parties hereto and the holders of the Bonds and couponssecured by this indenture, any legal or equitable right, remedy or claimunder or in respect of this Indenture, or any covenant, condition orprovision herein contained, all the covenants, conditions and provisionshereof being, and being intended to be, for the sole and exclusive benefitof the parties hereto, their successors and assigns, and of the holdersof the Bonds and coupons hereby secured.

SECTION 15.05. As used in this Indenture, except when otherwiseindicated:

the terms "this Indenture" or "Indenture" shall mean this Inden-ture either as originally executed or as the same may from time totime be supplemented, modified or amended by any supplemental in-denture entered into pursuant to any of the provisions hereof;

the term "Board of Directors" shall mean the Board of Directorsof the Company, as from time to time constituted, or, in the event of theappointment of a receiver or trustee, such receiver or trustee;

the words "Bond", "bondholder", "holder", "bearer" or "owner"shall include the plural as well as the singular number and the pluralshall include the singular;

the term "Bond registrar" or other equivalent term shall meanthe corporation or other person maintaining the office or offices oragency or agencies selected by the Company, as provided in Section5.01 of Article Five of this Indenture, where Bonds may be registeredor the Trustee with respect to any series of Bond as to which no suchoffice or agency is maintained;

the term "registry books" or other equivalent term shall meanthe books kept by the Bond registrar; and

the term "opinion of counsel" shall mean a written opinion ofcounsel, who may be counsel for the Company but who shall be satis-factory to the Trustee.

SECTION 15.06. This Indenture and each Bond issued hereundershall be deemed to be a contract made under the laws of the Province of

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Ontario, and for all purposes shall be construed in accordance with thelaws of said Province.

SECTION 15.07. This Indenture may be simultaneously executed inany number of counterparts, each of which so executed shall be deemedto be an original.

This Indenture is dated, for convenience, January 1, 1949, althoughexecuted and delivered on the date of the acknowledgment hereof bythe Trustee; and the same shall be effective from the date on which itis so executed and delivered.

IN WITNESS WHEREOF, BRAZILIAN TRACTION, LIGHT AND POWER COM-PANY, LIMITED, the party of the first part, has caused this Indenture tobe executed by its President or a Vice President and by its Secretary oran Assistant Secretary, and its corporate seal to be affixed hereunto; andNational Trust Company, Limited, the party of the second part, hascaused this Indenture to be executed by President and by Secretary, andits corporate seal to be affixed hereunto. Executed and delivered inToronto, Ontario, the 8th day of February, 1949.

BRAZILIAN TRACTION, LIGHT AND POWER COMPANY, LIMITED,

By HENRY BORDEN

President.(CORPORATE SEAL)

By KENNETH BOTTOMS

Asst. Secretary.

NATIONAL TRUST COMPANY, LIMITED,

By W. M. O'CONNOR

President.(CORPORATE SEAL)

By W. N. SimpsoNSecretary.

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IN THE MATTER OF The Corporation SecuritiesRegistration Act, being Chapter 264 of theRevised Statutes of Ontario, 1937;

PROVINCE OF ONTARIO AND IN THE MATTER OF the registration under thesaid Act of an indenture dated the 1st day ofJanuary, 1949, and made between Brazilian

To WIT: Traction, Light and Power Company, Limited,and National Trust Company, Limited, asTrustee, for the purpose of securing an issue ofBonds of Brazilian Traction, Light and PowerCompany, Limited.

I, G. R. F. TnooP, of the City of Toronto, in the County of Yorkand Province of Ontario, Treasurer,MAKE OATH AND SAY THAT:

1. I am an officer holding the office of Treasurer of Brazilian Traction,Light and Power Company, Limited, the mortgagor or assignor namedin the annexed instrument containing a mortgage, charge or assign-ment made by said Brazilian Traction, Light and Power Company,Limited (hereinafter called "the Company") to National Trust Com-pany, Limited, and I am aware of the circumstances connected withthe transaction and have a personal knowledge of the facts deposed to.

2. HENRY BORDEN, whose signature is affixed to the said instrument,is the President of the Company, and KENNETH BOTTOMS, whose signa-ture is also affixed thereto, is the Asst. Secretary thereof, and the sealaffixed thereto, is the Corporate Seal of the Company.

3. Under the by-laws of the Company, the President and the Asst.Secretary of the 0/ompany are empowered to execute oii behalf of theCompany all deeds and other instruments requiring the seal of theCompany.

4. I am well acquainted with the said HENRY BORDEN and KENNEThBOTTOAs and saw them execute the said instrument and saw the cor-porate seal of the Company thereto affixed and I am a subscribingwitness to the execution of the said instrument.

5. The said instrument was executed by the Company at the City ofToronto, in the Province of Ontario, on the 8th day of February, 1949.

SWORN before me at the City of Toronto,]in the County of York, and Province ofOntario this 8th day of February, 1949.

JAMES ALEXANDER RENWICK

A Notary Public in and for the Province of Ontario.

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IN THE MiLTTER OF The- Corporation SecuritiesRegistration Act, being Chapter 264 of theRevised Statutes of Ontario, 1937;

PROVINCE OF ONTARIO AND IN THE MATTER OF the registration under thesaid Act of an indenture dated the 1st day of

COUNTY OF YORK January, 1949, and made between BrazilianTo WIT: Traction, Light and Power Company, Limited,

and National Trust Company, Limited, asTrustee, for the purpose of securing an issue ofBonds of Brazilian Traction, Light and PowerCompany, Limited.

I, CUTHBERT WOODIIOUSE, of the City of Toronto, in the County ofYork aid Province of Ontario,

MAKE OATH AND SAY THAT:

1. I am an officer holding the office of Corporate Trust Officer ofNational Trust Company, Limited, the mortgagee, trustee or granteenamed in the annexed indenture made by Brazilian Traction, Light andPower Company, Limited, to the said National Trust Company, Limited,and am aware of the circumstances connected with the transaction andhave a personal knowledge of the facts herein deposed to.

2. The said indenture, being the instrument containing the mortgage,charge or assignment, was executed in good faith and for the purpose ofsecuring payment of the bonds referred to therein and not for themere purpose of protecting the chattels or book debts therein men-tioned against the creditors of the mortgagor or assignor or preventingsuch creditors from obtaining payment of any claim against the mort-gagor or assignor.

SWORN before me at the City of Toronto, ]in the County of York, and Province of - C. WOODHOUSEOntario this 8th day of February, 1949. J

JAMES ALEXANDER RENWICK

A Notary Public in and for the Province of Ontario.

(SEAL)

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FIRST SCHEDULE

Unsubordinated Subordinated

8o Series A Debentures due October 1, 1974:*The Rio de Janeiro Tramway, Light and

Power Company, Limited..-..-....--....--..--.. $16,500,000 $19,238,000Brazilian Hydro Electric Company,

Limited ------------- ------------- 4,000,000 8,401,000Sao Paulo Electric Company, Limited.--- 2,868,000 ............The Sao Paulo Tramway, Light and

Power Company, Limited..--..----------- 39,500,000 21,306,000Brazilian Telephone Company-...---------.. 30,000,000 23,121,000 -

$92,868,000 $72,066,000

* The debentures of each company ar3 issued under an indenture from such company toNational Trust Company, Limited, dated October 1, 1948.

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