LOAN NUMBER 249 FR

Loan Agreement(Iron Ore Projec)

BETWEEN

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

AND

SOCIETE ANONYME DES MINES DE FERDE MAURITANIE

DATED MARCH 17, 1960

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LOAN NUMBER 249 FR

Loan Agreement(Iron Ore Project)

BETWEEN

INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT

AND

SOCIETE ANONYME DES MINES DE FERDE MAURITANIE

DATED MARCH 17, 1960

Loan AgreementlAGREEMENT, dated March 17, 1960, between INTERNA-

TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here-inafter called the Bank) and SOCIETE ANONYME DES MINESDE FER DE MAURITANIE, "Miferma" (hereinafter called theBorrower), a company organized and existing under thelaws of the Islamic Republic of Mauritania.

WHEREAS (A) The Borrower is engaged in the carryingout of a Project for the exploitation of iron ore depositsnear Fort-Gouraud and the transportation of this ore toPort-Etienne and has requested the Bank to assist in thefinancing of such project;

(B) The Board of Directors of the Borrower has beenauthorized by a resolution adopted on December 16, 1959,at a general meeting of the shareholders of the Borrowerto increase the authorized capital of the Borrower to CFAfrancs 13.3 billion;

(C) By Agreement dated February 25, 1960, Caisse Cen-trale de Cooperation Economique (hereinafter called CaisseCentrale) has agreed to make a loan (hereinafter called theCaisse Centrale Loan) to the Borrower in an amount up toFrancs NF 50 million, such agreement being hereinaftercalled the Caisse Centrale Loan Agreement;

(D) The Minister of Finance of Republic of France has,under the terms of letters to the Borrower, dated July 22and October 5, 1959, agreed to make, or to guarantee, a loan(hereinafter called the Treasury Loan) to the Borrower inan amount of French francs 10.5 billion, such letters beinghereinafter called the Treasury Loan Agreement;

(E) By Agreement dated February 24, 1960, and a letterof interpretation of even date therewith, (hereinaftercollectively called the Financial Agreement) between theBorrower and its shareholders, the latter have agreed to

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make funds available to the Borrower, as and when re-quired, to complete the Project and to maintain the workingcapital of the Borrower at a level satisfactory to the Bank;

(F) The Loan provided for in this Loan Agreement isto be guaranteed as to payment of principal, interest andother charges by Republic of France and Islamic Republicof Mauritania upon the terms of Guarantee Agreements ofeven date herewith between each of said Republics and theBank;

WHEREAS the Bank has agreed to make a Loan to theBorrower upon the terms and conditions hereinafter setforth;

Now THEREFORE, it is hereby agreed as follows:

ARTICLE I

Loan Regulations; Special Definitions

SECTION 1.01. The parties to this Loan Agreement ac-cept all the provisions of Loan Regulations No. 4 of theBank dated June 15, 1956, subject, however, to the modifica-tions thereof set forth in Schedule 3 to this Agreement (saidLoan Regulations No. 4 as so modified being hereinaftercalled the Loan Regulations), with the same force and effectas if they were fully set forth herein.

SECTION 1.02. Except where the context otherwise re-quires, the following terms have the following meaningswherever used in this Agreement, or any Schedule to thisAgreement:

(a) The term "shareholders" shall mean collectively theshareholders of the Borrower and shall include any of theirsuccessors or assigns;

(b) The term "guarantor-shareholders" shall mean theshareholders of the Borrower which are parties to the Fi-nancial Agreement, as well as any other shareholder of the

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Borrower adhering to such Agreement, to the exclusion,however, of those guarantor-shareholders which shall havefreed themselves of their obligations under such Agreementpursuant to the provisions of article 4 or 6 of said Agree-inent;

(c) The term "founders shares" shall mean the foundersshares (pairts beneficiaires) issued or to be issued byMiferma; and the term "holders of founders shares" shallmean the holders of any such shares and shall include anyof their successors or assigns;

(d) The term "Community" shall mean the Communityset up by the French Constitution of October 4, 1958;

(e) The term "Republic of Mauritania" shall mean theIslamic Republic of Mauritania, formerly known as theTerritory of Mauritania;

(f) The term "Declaration of Public Utility" shall meanthe Ar1t6 dated December 5, 1957, issued by the Presidentof the Council of Government of the Territory of Mauri-tania;

(g) The term "Mining Concession" shall mean the con-cession dated October 20, 1958, granted to the Borrower bythe Chief of the Territory of Mauritania;

(h) The term "Tax Status" shall mean Law No. 59.060and Law No. 59.061 dated July 10, 1959, of Republic ofMauritania granting to the Borrower a tax status of longduration, and shall include either one or both of such laws,as the context shall require;

(i) The term "Establishment Convention" shall meanthe establishment convention of long duration dated October24, 1959, between Republic of Mauritania and the Borrower;

(j) The term "Port Convention" shall mean the con-vention annexed to the Establishment Convention;

(k) The term "Railway Convention" shall mean the con-vention annexed to the Establishment Convention;

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(1) The term "Installation and Operating Convention"shall mean the convention annexed to the EstablishmentConvention relating to loading and unloading facilities atPort-Etienne and to water and power supply at Port-Etienne and Fort-Gouraud;

(m) The term "Deposit Agreement" shall mean theagreement or agreements to be entered into by the Bankand a depository bank or banks providing for the depositof funds to be paid pursuant to the Financial Agreement;

(u) The term "Technical Assistance Agreement" shallmean the agreement to be entered into between SocieteMinibre et Metallurgique de Penarroya (hereinafter Penar-roya) and the Borrower;

(o) The term "Francs" and the letters "Frs" shallmean such coin or currency as before January 1, 1960, waslegal tender for the payment of public or private debts inthe territories of Republic of France; and the terms"Francs NF" and the letters "N Frs" shall mean suchcoin or currency as on or after January 1, 1960, is legaltender for the payment of public or private debts in theterritories of said Republic;

(p) The term "CFA Francs" and the letters "CFA Frs"shall mean francs in the currency of Republic of Mauri-tania;

(q) The term "subsidiary" shall mean any corporationof which at least a majority of the outstanding votingstock shall be owned, or which shall be effectively con-trolled, by the Borrower or by one or more subsidiaries ofthe Borrower or by the Borrower and one or more of itssubsidiaries;

(r) The term "date of the first shipment" shall meanthe date on which exports of ore by the Borrower shallaggregate one hundred thousand tons;

(s) The term "Commercial Agreements" shall meancontracts for the sale of ore by the Borrower to share-

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holders in a minimum aggregate amount of three milliontons of ore annually;

(t) The term "outside debt of the Borrower" shall meanthe Loan, the Caisse Centrale Loan, the Treasury Loan orany other loan which the Borrower might thereafter con-tract with the consent of the Bank other than advances madeunder the Financial Agreement;

(u) The term "tons" shall mean metric tons.

ARTICLE II

The Loan

SECTION 2.01. The Bank agrees to lend to the Borrower,oin the terms and conditions in this Agreement set forthor referred to, an amount in various currencies equivalentto sixty-six million dollars ($66,000,000).

SeCTio 2.02. The Bank shall open a Loan Account onits books in the name of the Borrower and shall credit tosuch Account the amount of the Loan. The Borrower shallbe entitled, subject to the provisions of the Loan Regula-lions and of this Agreement, to withdraw from the LoanAccount such amounts as shall have been expended forthe reasonable cost of goods to be financed under thisAgreement and, if the Bank shall so agree, such amountsas shall be required to meet the reasonable cost of suchgoods; provided, however, that, except as shall bc otherwiseagreed between the Bank and the Borrower: (i) no with-drawal shall be made unless the Borrower shall furnish tothe Bank in respect of each withdrawal evidence satisfac-tory to the Bank that the Borrower has received (a) byway of payments in cash on its outstanding shares of capi-tal stock, and (b) by means of drawings on the TreasuryLoan, amounts in the aggregate at least equal to such with-drawal together with withdrawals theretofore made fromthe Loan Account; (ii) withdrawals from the Loan Accountshall not exceed the equivalent of sixty five million dollars

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($65,000,000) until the Borrower shall have drawn the fullamount of the Treasury Loan; and (iii) no withdrawalsshall be made on account of (a) expenditures prior to thedate of this Agreement, or (b) expenditures in the cur-rency of Republic of Mauritania or for goods produced in(including services supplied from) the territories of saidRepublic or (c) expenditures in the territories of anycountry (other than Switzerland) which is not a memberof the Bank, or for goods produced in (including servicessupplied from) such territories. For the purposes of thisSection, the term "withdrawal" shall mean actual disburse-ments from the Loan Account and undisbursed amountscommitted by the Bank at the request of the Borrower toreimburse commercial banks for payments made underletters of credit.

SECTION 2.03. The Borrower shall pay to the Bank acommitment charge 0,t the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of theLoan not so withdrawn from time to time. Such commit-ment charge shall accrue from a date sixty days after thedate of this Agreement to the respective dates on whichamounts shall be withdrawn by the Borrower from theLoan Account as provided in Article IV of the Loan Regu-lations or shall be cancelled pursuant to Article V of theLoan Regulations.

SECTION 2.04. The Borrower shall pay interest at therate of six and one fourth per cent (61,4%) per annum onthe principal amount of the Loan so withdrawn and out-standing from time to time.

SECTION 2.05. Except as the Bank and the Borrower shallotherwise agree, the charge payable for special commit-ments entered into by the Bank at the request of the Bor-rower pursuant to Section 4.02 of the Loan Regulationsshall be at the rate of one-half of one per cent ( of 1%)per annum on the principal amount of any such specialcommitments outstanding from time to time.

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SECTION 2.06. Interest and other charges shall be pay-able semi-annually on January 1 and July 1 in each year.

SECTION 2.07. The Borrower shall repay the principal ofthe Loan in accordance with the amortization schedule setforth in Schedule 1 to this Agreement.

ARTICLE III

Use of Proceeds of the Loan

6E'li 3.01. The Borrower shall apply the proceeds oftWe Loan exclusively to financing the cost of goods requiredLo carry out the Project described in Schedule 2 to this\kgreenienl, The specific goods to be financed out of the

proceeds of the Loan and the methods and procedures forprocurement of such goods shall be determined by agree-ient between the Bank and the Borrower, subject to modi-

licatiun by further agreement between them.

SECTION 3.02. The Borrower shall cause all goodsiiianed out of the proceeds of the Loan to be importedilato the territories of Republic of Mauritania and there to

be used exclusively in the carrying out of the Project.

ARTICLE IV

Bonds

bEcuoN 4.01. The Borrower shall execute a-d deliverHondb representing the principal amount of the Loan asprovided in the Loan Regulations.

SECTION 4.02. The President of the Borrower, or suchperson or persons as may be authorized for the purpose bythe Board of Directors of the Borrower, are designated asauthorized representatives of the Borrower for the pur-poses of Section 6.12 (a) of the Loan Regulationk.

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ARTICLE V

Particular Covenants

SECTION 5.01. (a) The Borrower shall carry out theProject, or cause the Project to be carried out, with duediligence and efficiency and in conformity with sound busi-ness, technical and financial practices.

(b) The Borrower shall furnish, or cause to be furnished,to the Bank, promptly upon their preparation, the plans,specifications and construction schedules for the Projectand any material modifications subsequently made therein,in such detail as the Bank shall from time to time request.

(c) The Borrower shall maintain records adequate toidentify the goods financed out of the proceeds of the Loan,to disclose the use thereof in the Project, to record theprogress of the Project (including the cost thereof) and toreflect in accordance with consistently maintained soundaccounting practices the operations and financial conditionof the Borrower; shall enable the Bank's representativesto inspect the Project, the goods and any relevant recordsand documents; and shall furnish to the Bank all such in-formation as the Bank shall reasonably request concerningthe expenditure of the proceeds of the Loan, the Project,the goods, and the operations and financial condition ofthe Borrower.

SECTION 5.02. (a) The Bank and the Borrower shall co-operate fully to assure that the purposes of the Loan willbe accomplished. To that end, each of them shall furnishto the other all such information as it shall reasonablyrequest with regard to the general status of the Loan.

(b) The Bank and the Borrower shall from time to timeexchange views through their representatives with regardto matters relating to the purposes of the Loan and themaintenance of the service thereof. The Borrower shallpromptly inform the Bank of the occurrence of the eventreferred to in Article 6 (b) of the Financial Agreement

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and of any condition which interferes with, or threatensto interfere with, the accomplishment of the purposes ofthe Loan or the maintenance of the services thereof.

SECTION 5,03. (a) The Borrower shall duly perform itsobligations under the Technical Assistance Agreement, theCommercial Agreements, the Mining Concession, the Estab-lishment Convention, the Port Convention, the RailwayConvention, the Installation and Operating Convention andthe Tax Status. Except as the Bank and the Borrower shallotherwise agree, the Borrower shall not take or concur inany action which would have the effect of amending, abro-gating, assigning or waiving any provision of any one ofsuch inst rimients.

(b) If, as permitted by articles 5, 11 and 21 of the Instal-lation and Operating vention, the Borrower shall, be-fore the date of the first shipment, propose to substitutefor itself any person or entity to carry out any portion ofthe Project, the Bank shall first have to be satisfied thatsuch substitution would not be prejudicial to the carryingout of the Project.

SECTIoN 5.04. Except as the Bank and the Borrowershall otherwise agree:

(a) The Borrower shall not amend its statutes;

(b) The Borrower shall not take or concur in any actionwhich would have the effect of amending, abrogating,assigning or waiving any provision of the Financial Agree-ment.

SECTION 5.05. (a) The Borrower shall promptly call forthe payment of unpaid portions of its outstanding sharesof capital stock as and when funds are needed to carryout the Project.

(b) If the completion of the Project or its successfuloperation is hindered or delayed, or is threatened with

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hindrance or delay, because the funds available to the Bor-rower are inadequate to ensure its completion and the pro-vision of initial working capital satisfactory to the Bank,or if the net working capital falls below, or threatens tofall below, a level satisfactory to the Bank, the Borrowershall promptly request its guarantor-shareholders to pro-vide the Borrower, or cause the Borrower to be provided,promptly, by means of payments in cash for additionalshares of capital stock issued by the Borrower, or of ad-vances, or of credits or guarantees, or otherwise, as con-templated in the Financial Agreement, with the necessaryfunds as and when required.

SECTION 5.06. (a) If circumstances shall have arisenwhich shall require the guarantor-shareholders under Ar-ticli 6 (b) of the Financial Agreement to make the paymentsprovided therein, the Borrower shall promptly call uponeach of the guarantor-shareholders to make promptly thepayments required to be paid under said Article 6 (b) cor-responding to their respective shares of the amounts dueand payable by the Borrower pursuant to Section 6.02 here-of and shall instruct the guarantor-shareholders to makesuch payments into an account or accounts to be opened byand in the name of the Bank pursuant to the Deposit Agree-ment.

(b) As soon as practicable, and to the extent necessaryto obtain the currency or currencies due and pa-able underthe Loan and the Bonds, the amounts credited to suchaccount or accounts shall be converted into such currencyor currencies and applied by the Bank as follows:

(A) To the ratable payment of interest that may be dueon the Loan and the Bonds and remains unpaid;

(B) Thereafter to the ratable payment of, or on accountof the unpaid principal (including premiums, if any)of the Loan and the Bonds.

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Payments made under (A) and (B) above shall be maderatably as between the Bonds and the portion of the Loannot represented by Bonds.

(c) Pending such application under (b) above the Bankmay at its discretion invest or otherwise hold such fundsfor the purpose for which they were received in such man-ner as it shall determine. Any amounts received by theBank in connection herewith shall be added to the accountor accounts. After all amounts due and payable under theLoan and the Bonds shall have been so paid, the Bank shallpay any balance remaining in the account or accounts to theBorrower or to whosoever shall be entitled thereto.

(d) The Bank shall not be liable to the Borrower or toany Bondholder for any action taken or omitted to be takenby it in good faith in its administration of the account oraccounts.

(e) The Borrower's obligations under the Loan or theBons shall not be impaired or deemed to be satisfied byany payment made under the provisions of this Section,except to the extent and at the time that such payment shallresult in the effective payment of the Loan and the Bonds inthe currency or currencies payable thereunder.

SECTIN 5.07. The Borrower, except insofar as shall beniecessary to make payments due in the ordinary course ofbuisiniess for the supply of goods and services, shall makeno payment to aiv of its shareholders which would reduceor threaten to re(Iduce its net working capital below a levelsatisfactory to the Bank.

SECTr1N 5.08. (a) The Borrower shall not make any pay-ment in any year to its shareholders or holders of foundersshares if as a result of such payment funds available to theBorrower in that year, or expected to become available inthat year, would be insufficient to meet expenditures re-quired in the same year to carry out the Project; provided,

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however, that the foregoing shall not apply to payments duein the ordinary course of business for the supply of goodsor services;

(b) The Borrower shall not declare or pay any dividends,or make any distribution, on any shares of its capital stockor on any founders shares (other than a dividend payablesolely in shares of its capital stock) before the date of thefirst shipment. Thereafter, the Borrower may declare orpay dividends, or make any cash distribution, on shares ofits capital stock or on founders shares, but only to theextent that: (i) the aggregate amount expended or requiredfor such purposes since that date shall not exceed theaccumulated earned surplus of the Borrower; and (ii) theaggregate amount expended or required for such purposessince that date shall not exceed the aggregate amount whichwould be required to pay a dividend in each fiscal year of10% of the aggregate amount paid up of its shares of itscapital stock outstanding at the end of the preceding fiscalyear, provided, however, that the Borrower may declareor pay dividends, or make a cash distribution, on shares ofits capital stock or on founders shares in excess of thislimit if the Borrower makes simultaneously provision forthe prepayment of an amount, at least. equivalent to suchexcess, of the Loan and the Bonds;

(c) Before the date of the first shipment, the Borrowershall pay no interest on advances made under the FinancialAgreement. Thereafter, such interest shall be payable inany year out of the amount which would constitute netearnings in that year before taxes if no such interest weredue or paid;

(d) The Borrower shall not repay advances made underthe Financial Agreement to provide the Borrower withfunds necessary for the completion of the Project and theprovision of initial working capital satisfactory to the Bank,as contemplated in Section 5.05 (b) hereof, so long as anypart of the Loan or the Bonds shall remain outstan4ingand unpaid;

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(e) The Borrower may repay advances made under theFinancial Agreement after the completion of the Projectand the provision of initial working capital satisfactory tothe Bank to provide the Borrower with funds necessary tomaintain the net working capital of the Borrower at a levelsatisfactory to the Bank, as contemplated in section 5.05 (b)hereof;

(f) For the purposes of this Section and of Sections 5.05and 5.07 hereof: (i) the term "net working capital" shallmean the excess of current assets over current liabilities;(ii) the term "current assets" shall mean cash and assetsreadily convertible into cash and all other assets whichwould in the ordinary course of the Borrower's husiness beconverted within one year into cash or assets readily con-vertible into cash; (iii) the term "current liabilities" shallnean liabilities due and payable and all other liabilitieswhich would become payable or could be called for paymentwithin onle year, but not including provision for meetingfUtuIre S01n% i( Of hIe Loan an 1d Ie Caisse Centrale Loan;(iv) the term '"accumulated earned surplus" shall meanthe accumulated not earnings of the Borrower accruingfrom and after the (late of the first shipment, down to theend of the preceding fiscal year; and (v) the term "netearnings" shall mean not earnings of the Borrower asdeternined in ac erdince with generally accepted soundncconntirig practices, after paying or making provision for:

(1) operating expenses;

(2) depreciation. The depreciation charge for any itemof equipment, fixed plant and other installations shallbe calculated on the basis either of its economic lifeor of the life of the ore deposits whichever shall bethe shorter. For the purposes of this subparagraph,and except as the Bank shall otherwise agree, thelife of the ore deposits shall be based on 94 milliontons of ore;

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(3) interest on the outside debt of the Borrower, andon any other debt of the Borrower maturing by itsterms within one year after the date on which it isoriginally incurred;

(4) taxes, if any.

(g) So long as any part of the Loan or the Bond shallremain outstanding and unpaid, any advances under theFinancial Agreement shall be subordinated and subject inright of payment to the prior payment in full of the prin-cipal and other amounts payable on the Loan, or the Bonds,upon any dissolution, winding-up, liquidation, any bank-ruptcy proceedings or upon any other marshalling of theassets and liabilities of the Borrower.

SECTION 5.09. Except as the Bank shall otherwise agree,the Borrower shall riot incur, guarantee or assume any in-debtedness and shall not permit any subsidiary to incur,guarantee or assume any indebtedness, (other than ad-vances made under the Financial Agreement) maturing byits terms more than one year after the date on which it isoriginally incurred.

SECTION 5.10. The Borrower undertakes that, except asthe Bank shall otherwise agree: (a) if the Borrower shallcreate any lien on any of its assets as security for any debt,such lien will equally and ratably secure the payment of theprincipal of, and interest and other charges on, the Loanand the Bonds, and that in the creation of any such lienexpress provision will be made to that effect; and (b) ifany lien shall be created on any assets of the Borrower,other than under (a) above, as security for any debt, theBorrower shall grant to the Bank an equivalent lien satis-factory to the Bank; provided, however, that the foregoingprovisions of this Sect..n shall not apply to: (i) any liencreated on property, at the time of purchase thereof, solelyas security for the payment of the purchase price of such

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property; (ii) any lien on commercial goods to secure adebt maturing not more than one year after the date onwhich it is originally incurred and to be paid out of theproceeds of sale of such commercial goods; or (iii) anylien arising in the ordinary course of banking transactionsand securing a debt maturing not more than one year afterits date.

SECTION 5.11. Subject to such exemption as shall be con-ferred by the provisions of Section 3.03 and Section 3.04of the Guarantee Agreements, the Borrower shall pay orcause to be paid all taxes or fees, if any, imposed under thelaws of the Guarantors or laws in effect in the respectiveterritories of the Guarantors on or in connection with theexecution, issue, delivery or registration of this Agreement,the Guarantee Agreements or the Bonds, or the payment ofprincipal, interest or other charges thereunder; provided,however, that the provisions of this Section shall not applyto taxation of, or fees upon, payments under any Bond toa holder thereof other than the Bank, when such bond isbeneficially owned by an individual or corporate residentof either of the Guarantors.

SECTION 5.12. The Borrower shall pay or cause to bepaid all taxes and fees, if any, imposed under the laws ofthe country or countries in whose currency the Loan and theBonds are payable or laws in effect in the territories ofsuch country or countries on or in connection with the exe-cution, issue, delivery or registration of this Agreement,the Guarantee Agreements or the Bonds.

SECTION 5.13. Except as shall be otherwise agreed be-tween the Bank and the Borrower:

(a) The Borrower shall insure or cause t. be insuredwith responsible insurers all goods financed with the pro-ceeds of the Loan. Such insurance shall cover such marine,transit and other hazards incident to purchase and impor-

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tation of the goods into the territories of Republic ofMauritania and to delivery thereof to the site of the Project,and shall be for such amounts as shall be consistent withsound commercial practice. Such insurance shall be payablein dollars or in the currency in which the cost of the goodsinsured thereunder shall be payable.

(b) The Borrower shall, in addition to the insurance pro-vided for in subparagraph (a) of this Section, take out orcause to be taken out and maintain or cause to be main-tained, with responsible insurers, insurance against suchrisks and in such amounts as shall be consistent with soundindustrial and business practices.

SECTION 5.14. Except as the Bank shall otherwise agree,the Borrower shall not sell, lease, transfer or otherwisedispose of its property and assets or of the property in-cluded in the Project or any plant included therein, exceptin the ordinary course of business; provided, however, thatfor the purposes of this Section any transfer of assets bythe Borrower to Republic of Mauritania or to such personor persons, entity or entities, as Republic of Mauritaniamay designate pursuant to Articles 9, 16 and 25 of theInstallation and Operating Convention shall not be con-sidered as a transfer of assets occurring in the ordinarycourse of business.

SECTION 5.15. Except as the Bank shall otherrwise agree,before the Borrower shall undertake or execute, for its ownaccount or for the account of any of its shareholders or ofany third party or parties, any major project or develop-ment other than the Project, or make any investment notrelated to the Project, it shall first have satisfied the Bankthat such action would not prejudice the interests of theBank under this Agreement, the Guarantee Agreements orthe Bonds; provided, however, that the Borrower may in-vest idle funds in securities readily convertible into cash.

SECTION 5.16. (a) The Borrower shall at all times takeall steps necessary to maintain its corporate existence and

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right to carry on operations and shct,, except as the Bankmay otherwise agree, take all steps necessary to acquire, orto make effective arrangements satisfactory to the Bankto acquire, and to retain such land, interests in land andproperties and to acquire, or to make effective arrange-ments satisfactory to the Bank to acquire, and to maintainand to renew such licenses, consents, or other rights, as maybe necessary or proper for the construction and operationof the Project and the conduct of its business.

(b) The Borrower shall operate its undertaking and con-duct its affairs in accordance with sound business and finan-cial practices and shall operate, maintain, renew and repairits plants, machinery, equipment and property as requiredin accordance with sound engineering, railway and miningpractices.

SECTION 5.17. (a) Except as the Bank shall otherwiseagree, before the Borrower shall take any action to createany subsidiary, the Borrower shall first have satisfied theBank that such action would not prejudice the interest ofthe Bank under this Agreement, the Guarantee Agreementsor the Bonds.

(b) The obligations of the Borrower expressed in thisArticle shall be applicable to any subsidiary of the Bor-rower as though such obligations were binding on any suchsubsidiary, and the Borrower shall cause any such subsidi-ary to carry out such obligations.

ARTICLE VI

Remedies of the Bank

SECTION 6.01. (i) If any event specified in paragraph(a), paragraph (b), paragraph (e), paragraph (f), para-graph (g), paragraph (j), paragraph (k), paragraph (1) orparagraph (m) of Section 5.02 of the Loan Regulationsshall occur and shall continue for a period of thirty days,or (ii) if any event specified in paragraph (c) of Section

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5.02 of the Loan Regulations shall occur and shall continuefor a period of sixty days after notice thereof shall havebeen given by the Bank to the Borrower, then at any subse-quent time during the continuance thereof, the Bank, at itsoption, may declare the principal of the Loan and of allthe Bonds then outstanding to be due and payable immedi-ately, and upon any such declaration such principal shallbecome due and payable immediately, anything in thisAgreement or in the Bonds to the contrary notwithstanding.

SECTION 6.02. If circumstances shall have arisen whichshall require the guarantor-shareholders under Article 6 (b)of the Financial Agreement to make the payments providedtherein, the Bank shall declare the principal of the Loanand of all the Bonds then outstanding to be due and payableimmediately, and upon such declaration such principal to-gether with interest accrued and unpaid thereon and suchadditional amounts (by way of charges and premiums, ifany) that would have been due and payable if the Borrowerhad elected to repay the Loan and the Bonds in advance ofmaturity, shall become due and payable immediately, any-thing in this Agreement or in the Bonds to the contrarynotwithstanding.

ARTICLE VII

Effective Date; Termination

SECTION 7.01. The following events are specified as addi-tional conditions of effectiveness of this Agreement withinthe meaning of Section 9.01 (a) (ii) and Section 9.01 (b) (ii)of the Loan Regulations, namely:

(a) That all such action, governmental, corporate orother, shall have been taken and all such governmental con-sents shall have been obtained as may be required to enablethe Borrower to acquire such lands, interests in land andproperties and such franchises or other rights needed atFort-Gouraud and Port-Etienne for starting constructionon the Project;

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(b) That the increase of the authorized capital of theBorrower up to CFA francs 13.3 billion shall have beenfully subscribed by the shareholders of the Borrower;

(c) That the Financial Agreement shall have becomeeffective in accordance with its terms;

(d) That the Technical Assistance Agreement shall havebecome effective in accordance with its terms;

(e) That the Caisse Centrale Loan Agreement shall havebecome effective in accordance with its terms.

SECTION 7.02. The following are specified as additionalmatters within the meaning of Section 9.02 (e) of the LoanRegulations, to be included in the opinion or opinions tobe furnished to the Bank:

(a) That the Borrower is duly organized and existingunder the laws of Republic of Mauritania and has full powerto own the properties and to carry on the business whichit owns and carries on and proposes to own and carry onfor the purpose of the Project;

(b) That the increase of the authorized capital of theBorrower referred to in Section 7.01 (b) hereof has beenduly authorized or ratified by all corporate or other actionand that such increase of capital has been validly and effec-tively subscribed in full by the shareholders of the Bor-rower;

(c) That the governmental, corporate or other actionsand consents referred to in Section 7.01 hereof or necessaryto make the Mining Concession, the Establishment Conven-tion, the Port Convention, the Railway Convention, theInstallation and Operating Convention and the Tax Status,valid and enforceable in accordance with their respectiveterms, have been validly taken or given, as the case maybe, and that they have been duly authorized or ratified bythe Borrower and by the appropriate authority or authori-ties and constitute valid and binding obligations of the

22

Borrower and of such authority or authorities in accordancewith their respective terms;

(d) That the Financial Agreement has been duly author-ized or ratified by, and executed and delivered on behalfof, the Borrower and each of the guarantor-shareholdersrespectively and that the Financial Agreement constitutesa valid and binding obligation of each of the parties theretoin accordance with its terms, and that all governmentalconsents regarding payments to be made thereunder havebeen duly obtained;

(e) That each of the Commercial Agreements has beenduly authorized or ratified by, and executed and deliveredon behalf of, the Borrower and each of the shareholdersparty thereto and that each of the Commercial Agreementsconstitutes a valid and binding obligation of each of theparties thereto in accordance with its terms;

(f) That the Technical Assistance Agreement has beenduly authorized or ratified by, and executed and deliveredon behalf of, the Borrower and Penarroya respectively andthat the Technical Assistance Agreement constitutes a validand binding obligation of each of the parties thereto inaccordance with its terms;

(g) That the Caisse Centrale Loan Agreement has beenduly authorized or ratified by, and executed and deliveredon behalf of, Caisse Centrale and the Borrower and consti-tutes a valid and binding obligation of each of the partiesthereto in accordance with its terms;

(h) That the Treasury Loan Agreement constitutes avalid and binding obligation of the Minister of Finance ofRepublic of France in accordance with its terms.

SECTION 7.03. A date 60 days after the date of thisAgreement is hereby specified for the purposes of Section9.04 of the Loan Regulations.

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ARTICLE VIII

Miscellaneous

SECTION 8.01. The Closing Date shall be November 15,1964.

SECTION 8.02. The following addresses are specified forthe purposes of Section 8.01 of the Loan Regulations:

For the Borrower:

Societe Anonyme des Mines de Fer de Mauritanie11 Boulevard LannesParis (16e), France

Alternative address for cablegrams and radiograms:

MifermasaParis

For the Bank:

International Bank forReconstruction and Development

1818 H Street, N.W.Washington 25, D. C.United States of America

Alternative address for cablegrams and radiograms:

IntbafradWashington, D. C.

IN WITNESS WHEREOF, the parties hereto, acting throughtheir representatives thereunto duly authorized, havecaused this Loan Agreement to be signed in their respective

24

names and delivered in the District of Columbia, UnitedStates of America, as of the day and year first abovewritten.

INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT

by J. BURKE KNAPP

Vice President

SOCIETE ANONYME DES MINES DE PPR DE

MAURITANIE

by PAUL LEROY-BEAULIEU

Authorized Representative

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SCHEDULE 1

Amortization Schedule

Payment of PrincipalDate Payment Due (Expressed in dollars)*

January 1, 1966 $1,212,000July 1, 1966 1,250,000January 1, 1967 1,289,000July 1, 1967 2,830,000January 1, 1968 2,919,000July 1, 1968 3,010,000January 1, 1969 3,104,000July 1, 1969 3,201,000January 1, 1970 3,301,000July 1, 1970 3,404,000January 1, 1971 3,511,000July 1, 1971 3,620,000January 1, 1972 3,734,000July 1, 1972 3,850,000January 1, 1973 3,971,000July 1, 1973 4,095,000January 1, 1974 4,222,000July 1, 1974 4,355,000January 1, 1975 4,491,000July 1, 1975 4,631,000

* To the extent that any part of the Loan is repayable in a currency otherthan dollars (see Loan Regulations, Section 3.02), the figures in thiscolumn represent dollar equivalents determined as for 1 urposes ofwithdrawal.

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Premiums or Prepayment and Redemption

The following percentages are specified as the premiumspayable on repayment in advance of maturity of any partof the principal amount of the Loan pursuant to Section2.05 (b) of the Loan Regulations or on the redemption ofany Bond prior to its maturity pursuant to Section 6.16 ofthe Loan Regulations:

Time of Prepayment or Redemption Premium

Not more than 3 years before maturity.... 1/2%

More than 3 years but not more than 6years before maturity ............... 21/4%

More than 6 years but not more than 11years before maturity . 33/4%

More than 11 years but not more than 13years before maturity. .. 5%

More than 13 years before maturity ...... 61/4%

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SCHEDULE 2

Description of ProjectThe Project consists of the opening, equipping and oper-

ation by the Borrower of new mines near Fort-Gouraud inthe Republic of Mauritania with a minimum capacity of6,000,000 tons of iron ore annually including a railway totransport the ore to Port-Etienne where stocking andloading facilities are to be provided.

The capacity of the mine and related installations andservices should allow shipments at the rate of 4.0 milliontons of ore annually early in 1964 and at the rate of 6.0million tons of ore annually early in 1968. The latter rateshall in any event be attained by October 24, 1969.

The Project includes the following works and installa-tions:

1) The Mines

The mines near Fort-Gouraud will be developed andequipped for open pit mining for the extraction of sufficientcrude ore to insure minimum annual shipments of 6,000,000tons iron ore with an Fe content of about 63%. Crushingplants, conveyor systems and stockpiling,and loading facili-ties will be provided as required.

2) The Railway

A railway will be constructed through Mauritanian terri-tory to connect the mines with an ore port near Port-Etienne. The track will be standard gauge designed foraxle loadings of at least 25 tons. Marshalling yards, sidingsand other facilities as required for efficient operation willbe provided. Sufficient rolling stock and locomotives willbe provided to move the minimum specified tonnages of oreplus all operating supplies.

3) The Port

The Borrower will construct near Port-Etienne a mineralquay capable of accommodating modern ore carriers and

28

equipped with a ship loader with a capacity of at least3,000 tons of ore per hour. Stockpiling facilities for at least650,000 tons of ore, including a stocking and destockingconveyor system, and necessary harbor installations willbe provided.

4) General Services

Necessary roads, housing and community facilities, watersupply, power generation, repair shops and other facilitieswill be provided as and when required at the mines, alongthe route of the railway and at the port.

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SCHEDULE 3

Modifications of Loan Regulations No. 4For the purposes of this Agreement the provisions of

Loan Regulations No. 4 of the Bank, dated June 15, 1956,shall be deemed to be modified as follows:

(a) By the deletion (except in Schedules 1 and 2) of:(i) the words "Guarantor" and "Guarantee Agreement"wherever the same shall occur and the substitution thereforrespectively of the words "Guarantors" and "GuaranteeAgreements." Whenever the context shall require thereshall be made all such grammatical changes as shall beconsequential upon the aforesaid deletions and substitu-tions; and (ii) paragraph 5 of Section 10.01 and the substi-tution therefor of the following new paragraph, namely:"5. The term "Republic of France Guarantee Agreement"means the agreement between Republic of France and theBank providing for the guarantee of the Loan.

The term "Republic of Mauritania Guarantee Agree-ment" means the agreement between Republic of Mauri-tania and the Bank providing for the guarantee of the Loan.0 The term "Guarantee Agreements" means the Republicof France Guarantee Agreement and the Republic of Mauri-tania Guarantee Agreement and includes either one or bothof such agreements, as the context may require, and includesall agreements supplemental, and all schedulei, thereto,respectively.

The term "Guarantors" means Republic of France andRepublic of Mauritania and includes either one or both ofthem, as the context may require."

(b) By the deletion of Sections 2.02 and 4.01.(c) By the deletion of subparagraphs (b), (c), (d), (e),(f), (g), (h), (i) and (j) of Section 5.02 and the substitution

therefor and the addition thereto of the following new sub-paragraphs, namely:

30

"(b) A default shall have occurred in the payment ofprincipal or interest or any other payment requiredunder any other loan agreement between the Bankand the Borrower or under any loan agreement orunder any guarantee agreement between the Bankand, respectively, Republic of France or Republic ofMauritania;

(c) A default shall have occurred in the performanceof any other covenant or agreement on the part ofthe Borrower or of either of the Guarantors underthe Loan Agreement, the Guarantee Agreements orthe Bonds;

(d) An extraordinary situation shall have arisen whichshall make it improbable that the Borrower or eitherof the Guarantors will be able to perform their re-spective obligations under the Loan Agreement orthe Guarantee Agreements;

(e) The Borrower shall have taken or permitted to betaken any action or proceeding whereby any of itsproperty shall or may be assigned or in any mannertransferred or delivered to any receiver, assignee,liquidator or other person, whether appointed bythe Borrower or by a court or by Republic of Mauri-tania or by authority of any law, whereby suchproperty shall or may be distributed among thecreditors of the Borrower;

(f) Republic of Mauritania shall have taken any actionfor the dissolution or disestablishment of the Bor-rower or for the suspension of its operations, or asubstantial part thereof ;

(g) Republic of Mauritania shall have, during the oper-ation of the Project and in pursuance of the Instal-lation and Operating Convention, granted one orseveral concessions to persons or entities other thanthe Borrower (or any other persons or entities sub-stituted for the Borrower in accordance with the

31

provisions of Article V, Section 5.03 (b) of the LoanAgreement) and the grantee of any such concessionor concessions shall not be satisfactory to the Bank;

(h) Republic of France shall have been suspended frommembership in or ceased to be a member of theBank;

(i) Republic of France shall have ceased to be a mem-ber of the International Monetary Fund or shallhave become ineligible to use the resources of saidFund under Section 6 of Article IV of the Articlesof Agreement of said Fund or shall have been de-clared ineligible to use said resources under Section5 of Article V, Section 1 of Article VI or Section2 (a) of Article XV of the Articles of Agreementof said Fund;

(j) The Community shall have taken any action whichwould prevent, or materially interfere with, thesuccessful construction or operation of the Projector with the performance by the Borrower of itsobligations contained in the Loan Agreement orwith the performance by either of the Guarantorsof their respective obligations under the GuaranteeAgreements;

(k) Any creditor shall demand payment from the Bor-rower of moneys lent to the Borrower prior to theagreed maturity, and in accordance with the termsof, any loan having an original maturity of oneyear or more;

(1) A default shall have occurred in any payment re-quired under Article 2 of the Financial Agreementon the part of any guarantor-shareholder and suchdefault shall have not been cured within thirty days,or the guarantor-shareholders shall have been re-lieved from their obligations under the FinancialAgreement as contemplated in Article 5 of saidAgreement;

32

(m) Any action for the amendment, suspension or termi-nation of the Mining Concession, the Tax Status,the Establishment Convention, the Port Convention,the Railway Convention, the Installation and Oper-ating Convention, the Technical Assistance Agree-ment, the Commercial Agreements and the Finan-cial Agreement, shall have been taken by one of theparties thereto;

(n) After the date of the Loan Agreement and priorto the Effective Date any action shall have beentaken which would have constituted a violation ofany covenant contained in the Loan Agreement orGuarantee Agreements if the Loan Agreement andGuarantee Agreements had been effective on thedate such action was taken."

(d) By the deletion of Section 6.01 and the substitutiontherefor of the following new Section, namely:

"Section 6.01. Delivery of Bonds. The Borrower shallexecute and deliver Bonds representing the principalamount of the Loan and each of the Guarantors shall en-dorse its guarantee thereon, all as hereinafter in thisArticle provided."

(e) By the deletion of the fifth sentence of Section 6.07and the substitution therefor of the following new sentence,namely:

"All Bonds shall have the separate guarantee of each ofthe Guarantors endorsed thereon substantially in theform set forth in Schedule 3 to the Loan Regulations."

(f) By the deletion of Section 6.12 (b) and the substi-tution therefor of the following new subsection, namely:

"(b) The guarantees on the Bonds shall be signed in thename and on behalf of Republic of France and ofRepublic of Mauritania by their respective author-ized representative or representatives designatedin the Guarantee Agreements for the purposes ofthis Section. The signature of any such representa-tive may be a facsimile signature if such guarantees

33

are also countersigned manually by an authorizedrepresentative of Republic of France or of Republicof Mauritania (as the case may be). If any author-ized representative of Republic of France or ofRepublic of Mauritania whose manual or facsimilesignature shall be affixed to any such guaranteeshall cease to be such authorized representative,the Bond on which such guarantee is endorsed maynevertheless be delivered under the Loan Agreementand such guarantee shall be valid and binding onRepublic of France or Republic of Mauritania (asthe case may be), as though the person whose man-ual or facsimile signature shall have been affixed tosuch guarantee had not ceased to be such authorizedrepresentative."

(g) By the deletion of Section 7.02 and the substitutiontherefor of the following new Section, namely:

"Section 7.02. Obligations of Guarantors. The obliga-tions of Republic of France under the Republic of FranceGuarantee Agreement and of Republic of Mauritaniaunder the Republic of Mauritania Guarantee Agreementshall be independent of one another and shall not bedischarged except by performance and then only to theextent of such performance. The obligations of each ofthe Guarantors shall not be subject to any prior noticeto, demand upon or action against the Borrower or theother of them or to any prior notice to or denand uponeither of the Guarantors with regard to any default bythe other of them or by the Borrower, and shall not beimpaired by any of the following: any extension of time,forbearance or concession given to the other of them orto the Borrower; any assertion of, or failure to assert,any right or remedy against the other of them or theBorrower or in respect of any security for the Loan;any modification or amplification of the provisions of theLoan Agreement or either of the Guarantee Agreements

34

contemplated by the terms thereof respectively; any fail-ure of the Borrower to comply with any requirement ofany law, regulation or order of Republic of France or ofRepublic of Mauritania or of any political subdivisionor agency of either of them."

(h) By the deletion of subparagraph (c) of Section 7.04and the substitution therefor of the following new sub-paragraph, namely:

"(c) The Arbitral Tribunal shall consist of three arbitra-tors appointed as follows: one arbitrator shall beappointed by the Bank; a second arbitrator shallbe appointed by the Borrower and the Guarantorsor, if they shall not agree, by the President of theCourt of Arbitration of the Community; and thethird arbitrator (hereinafter sometimes called theUmpire) shall be appointed by agreement of theparties or, if they shall not agree, by the Presidentof the International Court of Justice or, failing ap-appointment by him, by the Secretary-General of theUnited Nations. If either side shall fail to appointan arbitrator, such arbitrator shall be appointed bythe Umpire. In case any arbitrator appointed inaccordance with this Section shall resign, die orbecome unable to act, a successor arbitrator shallbe appointed in the same manner as herein pre-scribed for the appointment of the original arbitra-tor and such successor shall have all the powersand duties of such original arbitrator."

(i) By the deletion of Section 8.03 and the substitutiontherefor of the following new Section, namely:

"Section 8.03. Action on Behalf of Guarantors. (a) Anyaction required or permitted to be taken, and any docu-ments required or permitted to be executed, under theRepublic of France Guarantee Agreement on behalf ofRepublic of France may be taken or executed by therepresentative of Republic of France designated in the

35

Republic of France Guarantee Agreement for the pur-poses of this Section or any person thereunto authorizedin writing by him. Any modification or amplification ofthe provisions of the Republic of France GuaranteeAgreement may be agreed to on behalf of Republic ofFrance by written instrument executed on behalf ofRepublic of France by the representative so designatedor any person thereunto authorized in writing by him;provided that, in the opinion of such representative, suchmodification or amplification is reasonable in the circum-stances and will not substantially increase the obligationsof Republic of France under the Republic of FranceGuarantee Agreement. The Bank may accept the execu-tion by such representative or other person of any suchinstrument as conclusive evidence that in the opinion ofsuch representative any modification or amplification ofthe provisions of the Republic of France GuaranteeAgreement effected by such instrument is reasonable inthe circumstances and will not substantially increase theobligations of Republic of France thereunder.(b) Any action required or permitted to be taken, andany documents required or permitted to be executed,under the Republic of Mauritania Guarantee Agreementon behalf of Republic of Mauritania may be taken orexecuted by the representative of Republic of Mauritaniadesignated in the Republic of Mauritania GuaranteeAgreement for the purposes of this Section or any personthereunto authorized in writing by him. Any modifica-tion or amplification of the provisions of the Republic ofMauritania Guarantee Agreement may be agreed to onbehalf of Republic of Mauritania by written instrumentexecuted on behalf of Republic of Mauritania by the rep-resentative so designated or any person thereunto author-ized in writing by him; provided that, in the opinionof such representative, such modification or amplificationis reasonable in the circumstances and will not substan-tially increase the obligations of Republic of Mauritaniaunder the Republic of Mauritania Guarantee Agreement.

36

The Bank may accept the execution by such representa-tive or other person of any such instrument as conclusiveevidence that in the opinion of such representative anymodification or amplification of the provisions of theRepublic of Mauritania Guarantee Agreement effectedby such instrument is reasonable in the circumstances andwill not substantially increase the obligations of Republicof Mauritania thereunder."

(j) By the deletion of Section 9.03 and the substitutiontherefor of the following new Section, namely:

"Section 9.03. Effective Date. Notwithstanding the pro-visions of Section 8.01, except as shall be otherwiseagreed by the Bank and the Borrower, the Loan Agree-ment and Guarantee Agreements shall come into forceand effect on the date when the Bank shall have dis-patched to the Borrower and the Guarantors notice of itsacceptance of the evidence required by Section 9.01.'

(k) By the deletion of the second part of paragraph 6,starting after the semi-colon, and the second sentence ofparagraph 8 of Section 10.01.

(1) By the deletion in paragraph 13 of Section 10.01 ofthe word "Guarantor" and the substitution therefor of thewords "Republic of Mauritania."

(m) By the deletion of paragraph 14 of Section 10.01and the substitution therefor of the following new para-graph, namely:

"14. The term "external debt", as applied to debts ofeach Guarantor respectively, means any debt payable inany medium other than currency of that Guarantor,whether such debt is or may become payable absolutelyor at the option of the creditor in such other medium,including currency of the other Guarantor."

(n) By the deletion of the first sentence of the secondparagraph of Schedule 1 and of Schedule 2 and the substi-tution therefor in each case of the following new sentence,namely:

37

"This Bond is one of an authorized issue of bonds invarious currencies equivalent to an aggregate principalamount of $ , known as the Guaranteed SerialBonds of [the Borrower] (hereinafter called the Bonds),issued or to be issued under a Loan Agreement dated

between International Bank for Recon-struction and Development (hereinafter called the Bank)and [the Borrower], and guaranteed by Republic ofFrance in accordance with the terms of a GuaranteeAgreement dated between Republic ofFrance and the Bank and by Republic of Mauritania inaccordance with the terms of a Guarantee Agreementdated between Republic of Mauri-tania and the Bank."

(o) By the insirtion in Schedule 1 after the seventhparagraph of that Schedule of the following paragraphs,namely:

"There shall be kept at said office or agency of [the Bor-rower] in the Borough of Manhattan, a register for theregistration of ownership and transfer of Bonds. ThisBond is transferable by the registered holder hereof, orby his attorney duly authorized in writing, at said officeor agency of the Borrower] in the Borough of Manhat-tan, upon payment, if Ithe Borrower] shall so require, ofa charge calculated to reimburse [the Borrower] for thecost of the transfer and upon surrender of this Bond forcancellation, duly endorsed or accompanied oy a properinstrument or instruments of assignment and transfer.Upon any such transfer a new fully registered Bond orBonds without coupons, of authorized denominations, ofthe same maturity and in the same aggregate principalamount and having the guarantee of each of the Guar-aniors endorsed thereon will be issued to the transfereein exchange for this Bond. [The Borrower] and theBank may deem and treat the person in whose name theBond is registered on the books of [the Borrower] asthe absolute owner hereof for all purposes whatsoever.

38

notwithstanding any notice to the contrary, and any pay-ment of moneys to or on the order of such person shalldischarge the liability of [the Borrower] or the Bank tothe extent of the payment so made.

Any notice given by [the Borrower] or by the Bankto any holder of Bonds shall be given to such holder athis address registered on the books of [the Borrower]or at such other address as such holder shall designatein writing to [the Borrower]. The giving of notice tothe holder of Bonds whose addresses are of record with[the Borrower] as herein provided shall fully dischargethe Bank and [the Borrower] from any obligation ontheir part to give such notice to anyone."

(p) By the deletion of the eighth paragraph of Sched-ule 1 and of the seventh paragraph of Schedule 2 and thesubstitution therefor of the following new paragraph,namely:

"The principal of the Bonds, the interest accruing there-on and the premium, if any, on the redemption thereofshall be paid without deduction for and free from anytaxes, imposts, levies or duties of any nature or any Wrestrictions now or at any time hereafter imposed underthe laws of Republic of France, or of Republic of Mauri-tania, or laws in effect in the respective territories of saidRepublics; provided, however, that the provisions of thisparagraph shall not apply to the taxation of paymentsmade under the provisions of any Bond to a holder there-of other than the Bank when such Bond is beneficiallyowned by an individual or corporate resident of Republicof France or Republic of Mauritania, respectivly."

(q) By the deletion of Schedule 3 and the substitutiontherefor of the following new Schedule, namely:

"SCHEDULE 3Form of Guarantee

[NAME OF GUARANTOR], for value received, as a primaryobligor and not as surety merely, hereby absolutely and

39

unconditionally guarantees, and pledges its full faithand credit for, the due and punctual payment of theprincipal and redemption price of the within Bond andthe interest thereon, free from taxes and restrictions astherein provided, prior notice to, demand upon or actionagainst the obligor on said Bond or the other Guarantoror the undersigned being waived.

[NAME OF GUARANTOR]

byDated Authorized Representative