EXHIBIT 10-b
TRANSLATION
Instrument Number Fifty-five (55) -- In the City Of Tegucigalpa,
Central District, on the twenty-second day of April, 1976. -- Before
me, Cesar Augusto Mendez, Notary Public of San Pedro Sula, in transit
in this city, incorporated under number seven hundred twenty-seven
(727) there appears on the one hand Wallace W. Booth, of age,
married, Corporate Executive, North American, domiciled in the City
of Los Angeles, State of California, United States of America, in
transit in this city, as special representative of the Tela Railroad
Company, a corporation organized and existing in accordance with the
laws of the State of Delaware, United States of America, located in
the City of Wilmington, of said State, which was recognized as a
juridic person and authorized to engage in commerce in the Republic
of Honduras pursuant to resolution issued by the Executive Powers
through the Ministry of Government, Justice and Sanitation, the 20th
of February, 1913, which certificate I, the Notary, acknowledge
having before me. Hereinafter Tela Railroad Company shall be called
"The Company". Mr. Wallace W. Booth proves his authority with a
Special Power which I, the Notary, acknowledge having before me and
which was issued in the City of Boston, United States of America at
11:30 of the morning of the fourteenth of April of this year before
Notary Public, Celia H. Dick, by the Tela Railroad Company and which
contains sufficient powers for the execution of this act and
signature of this document and is duly legalized by the Ministry of
Foreign Affairs, Ministry of Government and Justice and the Supreme
Court of Justice of Honduras; and on the other hand there appears
Doctor Herman Pasais Leiva, of age, married, Doctor of Medicine and
Surgery, Honduran, domiciled in San Pedro Sula, in transit in this
city, who appears as General Manager and as such administrative Legal
and Extrajudicial representative of the National Railroad of
Honduras, an autonomous entity of the State of Honduras, with legal
personality, own patrimony and of indefinite duration, created by
Decree Number forty eight issued by the National Congress the
thirtieth of April nineteen hundred and fifty-eight, which contains
in Article thirty-three the representation of said Institution in its
General Manager with sufficient power for this type of act, I the
Notary acknowledge of having before me the certification of the
minutes of the meeting of the Board of Directors of the said
autonomous entity setting forth the election of Doctor Herman Pasais
Leiva as General Manager of the National Railroad of Honduras for a
period of six years which expires the sixteenth of September of this
year; I also acknowledge having before me the original Minutes of the
meetings of the Board of Directors of the National Railroad of
Honduras which approved the bases of the present contract and
authorized the manager to sign. Hereinafter in this document the
National Railroad of Honduras shall be called the National Railroad.
Also present is Mr. George M. Skelly, Jr., of age, married, attorney,
of North American nationality, in transit in this city, who is
present as interpreter of Spanish to English and vice versa, because
Mr. Wallace W. Booth does not know Spanish. I the Notary acknowledge
that Mr. George M. Skelly, knows the Spanish and English languages
because I am personally aware thereof and I also acknowledge that he
undertook before me the under signed Notary to faithfully fulfill his
commitment, and being assured by Mr. Wallace W. Booth and Doctor
Herman Pasais Leiva to have full right and exercise of their civil
liberties they spontaneously state:
First: The Company declares: That it is the legal owner of the
railroad which unites and passes through the following places: From
the City of Port of Tela to the City of Progreso, a length of ONE
HUNDRED SIXTY-FOUR AND EIGHT HUNDRED SIXTY-SEVEN THOUSANDTHS
(164.867) kilometers including its branchlines, spurs and bridges;
from the Village of La Lima to Karaco, a length of ONE HUNDRED
FORTY-ONE AND FIVE HUNDRED AND ELEVEN THOUSANDTHS (141.511)
kilometers including the branchlines, spurs and bridges, for a total
of THREE HUNDRED SIX AND THREE HUNDRED SEVENTY-EIGHT THOUSANDTHS
kilometers (306.378 kms.), including the spurs in Puerto Cortes.
That both lines, their branches and spurs are on their respective
ties, roadbeds and bridges which also belong to the Company and for
their use are serviced by telephone lines. That the said railroad
lines, their branchlines and spurs are described on a map marked #1,
a signed copy of which will be kept by the parties and which forms
part of the present contract, as does the inventory hereinafter to be
mentioned.
Second: The Company further states that it transfers its property
and dominion in the said railroad lines, to the National Railroad for
L.l.00 which it acknowledges receiving to its entire satisfaction,
which transfer includes everything mentioned in the previous clause.
That with the said railroad it transfers as "right of way" a strip of
land twenty meters wide on both sides of the main railroad lines for
their entire length; a strip of land ten meters wide on both sides of
the branch lines, and a strip of land five meters wide on both sides
of the spurs. Notwithstanding the foregoing, if in the future any of
the railroad spurs is lifted, the strip of land containing the "right
of way" shall cease to belong to the National Railroad and its rights
thereto shall revert to the Company. The width of the right of way
previously specified is applicable in rural areas in which the
Company is owner of the respective lands. It also hereby transfers to
the National Railroad, on urban lands belonging to the Company, the
strips of land which now constitute the right of way for normal
railroad operations. In order to precisely determine the last right
of way herein in this clause mentioned, the parties within a period
not greater than TWO (2) years from this date shall jointly prepare a
map which will identify and quantify the aforementioned right of way.
Third: The National Railroad states that it accepts the
transfer hereby made to it and acknowledges receipt of the aforesaid
railroad lines, of the right of way, and everything included in the
foregoing clauses under the terms and conditions stated.
Fourth: The National Railroad, taking into consideration that the
railroad lines acquired by this document have been used up to the
present time by the Company in its railroad transportation, by this
means and by this document leases to the Company for its use under
the following conditions:
A) The Company shall use in all its railroad
transportation operations, the lines
acquired by the National Railroad under this
document and the branchlines Lima-Bufalo and
La Mesa, and the stretch of railroad lines
Baracoa-Puerto Cortes owned by the National
Railroad. Wherever mention is made herein
of railroad lines there shall be included
therein everything described in the FIRST
and SECOND clauses of this document, which
has been transferred to the National
Railroad, and the branchlines and the
stretch of railroad lines mentioned in this
Section A which are also property of the
National Railroad. It shall mean the same
when used in the plural.
B) The Company shall pay the National Railroad
as rental for the lease set forth in this
clause and for the use of the branchlines
Lima-Bufalo and La Mesa and the stretch of
railroad line Baracoa-Puerto Cortes, the
annual sum of FIVE HUNDRED THOUSAND LEMPIRAS
(L.500,000.00) which shall be paid monthly
in advance at the offices of the National
Railroad in the City of San Pedro Sula
without the need to make demand or
collection.
C) This lease is for a period of EIGHT (8) years
commencing January 1, 1976 and can be extended by
agreement of both parties. Notwithstanding the
foregoing this lease shall be extended automatically
if one of the parties does not notify the other in
writing of its desire not to extend the lease at
least two years prior to the date of expiration. In
this case the lease shall continue in effect but
either of the parties during the years subsequent to
January 1, 1982 can notify the other in writing of
its desire to terminate in which case the lease
shall terminate two years after the subsequent
anniversary of the contract.
D) There shall be no right to request nor obtain a decrease
in the rental agreed on, because of temporary or
permanent non use of all or part of the railroad,
whether or not the non use is the result of the sole
decision of the Company, of causes imputable to it, or
of agreements of the Company with the National Railroad
or with third persons, or because of force majeure or
caso fortuito due to nature;
E) During the term of the agreed lease, the Company shall
carry out for its account the maintenance of the
railroad leased and the branchlines, spurs, and stretch
of railroad lines, the use of which has been given to
it, so that they shall be kept in a normal state of
service; similarly, it shall carry out the
rehabilitation and reconstruction of the railroad, its
branchlines and the stretch of railroad mentioned, in
case of their destruction or if they suffer damages
which places them fully or partially out of normal
service. The National Railroad can present proposals
for improving such maintenance, rehabilitation and
reconstruction and the Company shall adhere to such
proposals if they are, technically and economically
reasonable;
F) At the end of the period of the lease or any extensions
as provided for in FOURTH (4) clause of this instrument,
the Company must return to the National Railroad the
railway lines, branchlines and stretch of railway in
good condition or be it in a state of normal service.
Otherwise, it will pay the National Railroad the value
of the repairs which may be necessary so that the
railway will be in a state of normal service. The
determination of the good condition of the railway lines
returned to the National Railroad and its cost of repair
shall be made by the National Railroad and in case of a
dispute, it will be decided by two experts one named by
each of the parties, and in case of a disagreement, it
will be resolved by a third expert named by the two
experts and if they do not agree on naming the third,
the parties shall be free to resort to competent
judicial authorities to enforce their rights. Between
the start of the disagreement and the final opinion of
the experts not more than sixty (60) days shall pass.
G) If the Company desires in the future, while the lease is
in effect, to change the present system of railroad
transportation of bananas, it must act jointly with the
National Railroad. It is understood and agreed that the
present system of banana transportation in Honduras
consists of the transportation of bananas by railroad
cars and containers on platforms hauled on the railroad;
H) The employer-employee relations now existing between the
Company and its workers cannot be lessened as a result
of or because of the present contract; specifically,
there shall be no direct or indirect discharge of
railroad workers except in those cases provided for by
law.
I) It is agreed and accepted that the Company will ship
through the Port of Tela during the next FIVE (5) years
not less than one-third of its export of bananas. All
of the obligations of the Company agreed to in this
contract shall continue in effect even after the
aforementioned FIVE years, including payment of the
rental, the maintenance, rehabilitation and
reconstruction, as the case may be, including that of
the Progreso-Tela stretch of railroad;
J) The National Railroad as owner of the railroad line
acquired through this document, of the branchlines
Lima-Bufalo and La Mesa, and the stretch of railroad
Baracoa-Puerto Cortes shall have free transit
thereon for its equipment; so that no interruptions
shall occur in the railroad operations; the parties
within THIRTY (30) days from this date shall prepare
a traffic schedule and shall establish the bases for
operating and any revision thereof, which bases
shall provide for preferential right of use of the
railroad, branchlines, spurs and stretches to banana
trains, as at present.
Fifth: The Company states that it accepts the lease of the
railroad and the use of the branchlines, spurs, and the stretch of
railroad granted by the National Railroad under the terms and
conditions set forth in the foregoing clauses.
Sixth: The National Railroad further states: that it grants
the Company the right to easements so that it can maintain on and use
by crossing or paralleling and in the right of way of the railroad,
which is the subject matter of thin contract, with roads, canals,
drains, telephone and electric lines, water or petroleum pipelines,
drainage and irrigation systems, cable systems for transportation of
bananas to the packing stations and similar works, and the Company
shall do everything necessary so that the aforesaid works do not
damage the lines crossed and do not block the service thereon. The
National Railroad acknowledges that the Company has constructed and
presently maintains at various locations on the right of way which
the Company by this document has transferred together with the
railroad to the National Railroad, installations such as telephone
and electric lines, packing stations, irrigation pumps, roads,
cultivations, canals, drains, water or petroleum pipe systems,
irrigation and drainage and fruit transportation by cable systems,
buildings and other similar works relating to its agricultural and
cattle activities. Therefore, it grants the right for so long as the
installations and cultivations are maintained in service to continue
occupying the right of way in the same area which up to now they have
used. These cultivations and works shall be marked and specified
jointly by the National Railroad and the Company on a map which they
will prepare within ONE (1) year from this date; both parties shall
have a signed copy of this map. The Company, subject to prior
agreement with the National Railroad, can make new cultivations and
installations of that type, related to its agricultural and cattle
activities within the already mentioned right of way. Similarly, the
National Railroad grants the Company the right to continue the use,
by land vehicles, for so long as they are maintained in service, the
following bridges which presently have a wooden roadbed, Tacamiche,
Copen, Mico, Corozal, Ceibita, Tibombo, Ticamaya, Ulua and Puente,
Kilometer 48, Boqueron de Mezapa, Boqueron de El Progreso, two on
Farm Three. The maintenance or, if required, the rehabilitation and
reconstruction of the wooden roadbeds shall be for the account of the
Company. All of the easements and rights granted by the National
Railroad to the Company in this SIXTH clause are without cost and at
the end of the lease or its extension will renew them under the same
conditions contained in this SIXTH clause provided they directly
serve the banana and African Palm industry and other agricultural and
cattle activities operated by the Company.
Seventh: The Company declares that it accepts the easements and
rights granted to it by the National Railroad in the foregoing SIXTH
clause.
Eighth: The Company further states that at the end of the
EIGHTH (8) year previously mentioned, or if extended as provided in
FOURTH (4) clause of this instrument, the National Railroad can
acquire without cost, in whole or in part, the fixed and rolling
equipment, shops, stations, warehouses, and other property related to
the railroad operations, the betterments made thereto and new
equipment, as well as existing spare parts and accessories shall be
acquired at the value on the books of the Company in Honduras. For
purposes of this clause, it is understood that the rules governing
depreciation of the equipment to be acquired shall be those set forth
in letters Numbers AB-99/76-D and AB-l37/76-D attached of the 12 and
21 April 1976, respectively.
By separate document the parties have prepared an inventory of
the present assets of the Company which are directly and indirectly
related to the railroad complex, such inventory forms part of this
contract and is signed in duplicate by the Company and the National
Railroad, who will keep their respective copies for purposes agreed
on. It is understood and agreed that the present fixed and rolling
equipment is sufficient for the normal operations of the Company in
Honduras, therefore, it shall only make new investments for its
improvements when they are reasonably necessary. Similarly, the
Company must abstain from decreasing the railroad equipment shown on
the aforementioned inventory with the exception of decreases due to
normal wear and tear and railroad accidents. Notwithstanding, if the
National Railroad decides, during the term of this contract, to
purchase fixed or rolling equipment from the Company, the latter if
it can make the sale, shall make it at the value on the books in
Honduras. If the Company decides to increase its equipment it can do
so provided the National Railroad is unable to supply for sale at
book value, or lease the equipment required or is unable to supply
the respective service. For these purposes, the parties must advise
three (3) months in advance.
Ninth: The National Railroad states that it accepts the option
granted in the foregoing clause as well as the other stipulations
contained therein.
Tenth: Finally, both parties make known:
A) That the present terms and conditions presently
governing the commercial relations between the
National Railroad and the Company, especially with
respect to the lease of equipment rates shall
continue without change. Similarly, continuing
unchanged shall be the terms and conditions in
effect for the supply of reciprocal services between
the parties. Not later than SIXTY (60) days after
the date of this document, both parties will sign a
document embodying the customs, verbal and written
agreements and all contractual, legal and regulatory
dispositions presently existing with respect to
these relations and the interchange of services.
Notwithstanding the foregoing, commencing on this
date, the rental which the Company has been paying
for the use of the so-called nationalized railroad
lines and the Baracoa-Puerto Cortes stretch shall no
longer be in effect since payments for such is
included in the FIVE HUNDRED THOUSAND LEMPIRAS
(L.500,000.00) agreed to in this document;
B) This contract shall be governed by the laws of Honduras
and the competent tribunals with jurisdiction thereof
over compliance or noncompliance therewith shall be the
authorities of the judicial section of San Pedro Sula as
Courts of First Instance;
C) This contract obligates the Company even though it
changes its present corporate name or its capital or
commercial purposes or merges or transforms itself and
its successors; in any of these cases the new commercial
company or companies shall be jointly and severally
liable for the obligations undertaken by the Company
with the National Railroad through this document;
D) Noncompliance of any of the clauses of this contract by
one of the parties shall make it liable for the payment
of damages caused to the other, without prejudicing such
other actions as might exist at law for the
non-compliance; and
E) The parties can agree to amendments, extensions or
clarifications to this contract. If agreement to do so
is made it shall not be necessary to make them by public
document, but the extension, amendment or clarification
can be accomplished by a simple exchange of notes.