Honduras - Second Industrial Credit Project : Loan 2075 - Loan Agreement - Conformed

DOM S LOAN NUMBER 2075 HO Loan Agreement (Second Industrial Credit Project) between REPUBLIC OF HONDURAS and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated / , 1982 LOAN NUMBER 2075 HO LOAN AGREEMENT AGREEMENT, dated , 1982, between REPUBLIC OF HONDURAS (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Banco Central de Honduras (hereinafter called BanLo Central) byiesoluci6n 356-12/78, dated Decem- ber 28, 1978 has established the Fondo Nacional de Desarrollo Industrial (hereinafter called FONDEI), a National Industrial Development Fund established to help meet the medium- and long- term financing requirements of the industrial and tourism sectors of Honduras; (B) by a loan agreement between the Borrower and the Bank, dated March 8, 1979 (hereinafter called the Prior Loan Agreement) the Bank has made a loan to the Borrower for the purpose of providing financial assistance for an industrial credit project carried out by FONDEI; (C) the Borrower has requested the Bank to assist in the financing of a second industrial credit project to be carried out by FONDEI; (D) the Borrower intends to obtain from the United Nations Development Programme (hereinafter called UNDP) a grant (herein- after called the UNDP Grant) in an amount of about $1,300,000 equivalent to assist in financing part of Part II of the Project described in Section 3.01 (a) of this Agreement; (E) by a Subsidiary Loan Agreement of even date herewith between the Borrower and Banco Central, the Borrower has under- taken to relend to Banco Central part of the proceeds of the Loan, on the condition that such proceeds will be part of the resources that FONDEI will lend to industrial enterprises in Honduras by means of participating intermediaries which meet FONDEI's technical and financial requirements; and (F) the Bank is willing to make the Loan to the Borrower on the terms and conditions set forth in the Loan Agreement; NOW THEREFORE the parties hereto hereby agree as follows: -2-) ARTICLE I General Conditions; Definitigns Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank dated October 27, 1980, with the same force and effect as if they were fully set forth herein, su5ject2, however, to the modifications thereof set forth in Schedule 2 to this Agreement (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank, as so modified, being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined, in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following adiLtional terms have the following meanings: (a) "CORDEFOR" means Corporaci6n Hondurefia de Desarrollo Forestal of the Borrower, and such term includes any succ'ssor thereto. (b) "CONA)I" means Corporaci6n Nacional de Inversiones of the Borrower, and such term includes any successor thereto. (c) "CDI" means Centro de Desarrollo Industrial of the Borrower, and such term includes any successor thereto. (d) "Participating Intermediary" means COHDEFOR, CONADI, CDI, or any commercial bank or financial institution in Honduras which meets FONDEI's technical and financial requirements under FONDEI's Statthient of Policies and Industrial Regulations and the requirements of this Agreement, and which has signed a Participation Agreement with FONDEI acceptable to the Bank. (e) "FONDEI's Loan" means any loan made or proposed to be made to a Participating Intermediary out of FONDEI's resources in accordance with Section 3.04 (a) of this Agreement. (f) "Participation Agreement" means the agreement to be entered into between FONDEI and each Participating Intermediary as provided for in Section 3.04 (b) of this Agreement. -3- (g) "Sub-loan" means a loan made or proposed to be made under a Sub-load Contract by a Participating Intermediary partly financed out of the proceeds of the Loan to an Investment Enter- prise f9r an Investment Project, and "free-limit sub-loan" means a Sub-loafi, as so defined, which qualifies as a free-limit sub-loan pursuant to the provisions of Section 2.02 (d) of this Agreement. (h) "Sub-loan Contract" means a contract providing for a Sub-loan. (i) "Investment Enterprise" means an enterprise to which a Participating Intermediary proposes to make or has made a Sub- loan. (j) "Small Investment Enterprise" means an Investment Enterprise whose fixed assets as of the date of the presentation to the Participating Intermediary of a proposed Investment Project are less than $150,000 equivalent, excluding land and buildings but including the fixed assets to be financed under such proposed Investment Project. (k) "'Investment Project" means a specific induistrial devel- opment project to be carried out by an Investment Enterprise, which complies with the requirements set forth in FONDEI's State- ment of Policies and Industrial Regulations. (1) "Lempira", "L" and "local currency" mean the currency of the Borrower. (m) "Foreign currency" means any currency other than the currency of the Borrower. (n) "'Subsidiary Loan Agreement" means the Agreement referred to in Section 3.01 (b) of this Agreement to be entered into between the Borrower and Banco Central, as such Agreement may be amended from time to time. (o) "Comitfi Ejecutivo" means 'the committee in charge of managing FONDEI as provided for in Section 3.01 (c) (ii) of this Agreement. (p) "FONDEI's Statement of Policies and Industrial Regula- tions" means the policies and procedures for the operation of -4- FONDEI, approved by Comite Ejecutivo, as amended to the Effec- tive Date, and such term includes the regulations in respect of such Statement of Policies and Industrial Regulations. (q) "Guarantee Fund" means the fund established by Banco Central, under Resoluci6n No. 322-9/81, dated September 10, 1981, for the promotion of the small scale industry in Honduras. (r) "Appraisal Guidelines and Supervision Procedures" means the guidelines and procedures approved by Comitf Ejecutivo, as amended to the Effective Date, and to be used by FONDEI and Par- ticipating Intermediaries in the appraisal aiid supervision of Investment Projects. (s) "FONDEI" includes the technical, financial and adminis- trative organization, resources, staff and facilities used or to be used by Banco Central to operte FONDEI. Whenever reference in this Agreement shall be made to action by FONDEI, it shall be deemed to mean action by Banco Central by means of FONDEI. (t) "Project Agreement" means the Project Agreement of even date herewith entered into between the Bank and Banco Central. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to thirty million dollars ($30,000,000). Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account for amounts paid (or, if the Bank shall so agree for amounts to be paid) by FONDEI: (i) on account of withdrawals made by a Small Invest- ment Enterprise under a Sub-loan to finance 75% of expenditures in respect of goods and services for the Investment Project for which such withdrawal from the Loan Account is requested; or -5- (ii) on account of withdrawals made by an Investment Enterprise, other than a Small Investment Enter- prise, under a Sub-loan to finance 100% of foreign expenditures for imported goods and services or 70% of local expendituies for imported goods locally procuted, 50% of the ex-factory price of locally manufactured goods, and 35% of expenditures for civil works required for the Investment Project in respect of which the withdrawal from the Loan Account is requested; or (iii) on account of withdrawals made for the pu6nses of financing 100% of foreign expenditures do in respect of the reasonable cost of consultaaVs and other services required for the carrying out of the technical assithce programs specified in Part II of the Project described in Section 3.01 (a) of this Agreement. (b) (i) no withdrawal shall be made from the Loan Account in respect of any Sub-loan unless (1) the Sub-loan shall have been approved by the Bank; or (2) the Sub-loan shall be a free-limit sub-loan for which the Bank shall have authorized withdrawals from the Loan Account; (ii) no Participating Intermediary shall commit more than the equivalent of $7,500,000 in Bank resources as Sub-loans to Investment Enterprises; provided, however, that this limitation shall not be applicable to Sub-loans made to Small Investment Enterprises; and (iii) no Participating Intermediary shall present to the Bank for commitment from the proceeds of the Loan any request in an amount which if, when added to outstatiding Sub-loans made to an Investment Enterprise under this Agreement or the Prior Loan Agreement, the aggregate shall exdeed the equivalent of one million, two hundred and fifty thousand dollars ($1,250,000). (c) The amount of the Loan shall be allocated as follows: (i) no less than the equivalent of $4,000,000 shall be used for sublending to Small Investment Enter- prises; (ii) the equivalent of $350,000, $700,000 and $250,000 shall be used for the purpose of financing the technical assistance programs referred to in paragraphs (i), (ii) and (iii) of Part II of the -6- Project described in Section 3.01 (a) of this Agreement, respectively; and (iii) the foregoing allocation of the amount of the Loan shall be subject to review and revision by the Bank, in consultation with the Borrower and Banco Central, within 18 months from the date of this Agreement. (d) A free-limit sub-loan shall be a Sub-loan for an Invest- ment Project in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $400,000 equivalent, when added to any other outstanding amounts financed or proposed-, to be financed out of the proceeds of the Loan for such Investment' Project. (e) Except as the Bank shall otherwise,agree, no with- drawals shall be made on account of (i) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not to exceed the equivalent of $1,500,000 may be made on account of payment made for such expenditures before that date but after September 1, 1981; (ii) expenditures by an Investment Enterprise in respect of a Sub-loan subject to the Bank's approval, if such expenditures shall have" been made more than one hundred and eighty days prior to the date on which the Bank shall have received in respect of such Sub-loan the application and information required by Section 2.03 (a) of this Agreement or, in respect of a free-limit sub-loan, more than one hundred and eighty days prior to the date on which the Bank shall have received in respect of such free-limit sub-loan the request and informatio required by Section 2.03 (b) of this Agreement; or (iii) expenditures made by CONADI for the purpose of carrying out the technical assistance program referred to in Part II (iii) of the Project described in Section 3.01 (a) of this Agreement (hereinafter called the CONADI's Program), until: (A) the Bank has been furnished with a plan of action, satisfactory to the Bank, for purposes of the carrying out of the CONADI's Pro- gram, taking into account the UNDP's study on CONADI's operational and financial condition and its recommendations; and (B) an executing agency acceptable to the Bank has been appointed for the carrying out of the CONADI's Program. Section 2.03. (a) When presenting a Sub-loan (other than a free-limit sub-loan) to the Bank for approval, FONDEI shall furnish to the Bank an application, in form satisfactory to the -7- Bank, together with: (i) a description of the Investment Enter- prise and an appraisal of the Investment Project to be financed thereunder, including a description of the expenditures for such Investment Project proposed to be financed out of the proceeds of the Loan and, its financial and economic internal rates of return; (ii) the proposed terms and conditions of the Sub-loan including its schedule of amortization and the procurement procedures to be used by the Investment Enterprise; and (iii) such other informa- tion as the Bank shall reasonably request. (b) Each request by FONDEI for authorization to make with- drawals from the Loan Account in respect of a free-limit sub-loan shall contain: (i) a summary description of the Investment Enterprise and the Investment Project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan and its financial and economic internal rates of return; (ii) the terms and conditions of the free-limit sub-loan, includ- ing the procedures for the procurement of goods and services to be used by the Investment Enterprise; and (iii) such other information as the Bank shall reasonebly request; provided, however, that the economic internal rates of return shall be only calculated for those Investment Projects which have more than the equivalent of $250,000 financed by FONDEI. (c) Except as the Bank shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (a) and (b) of this Section shall be presented to the Bank on or before December 31, 1984. Section 2.04. The Closing Date shall be June 30, 1986 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and Banco Central of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eleven and three-fifths per cent (11-3/5%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. -8- Section 2.07. Interest and other charges shall be payable semiannually on January 1 and July 1 in each year. Section 2.08. (a) The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule l to this Agreement. (b) The amortiza,ion schedule applicable to each Sub-loan shall provide for a period opf grace of not more than three (3) years, and shall not extendWn4 fifteen (15) years from the date of approval by the Bank of :;fch Sub-loan, or in the case of a free-limit sub-loan, fr6m re date of the authorization by the Bank to make withdrawals from the Loan Account in respect thereof. Section 2.09. Banco Central is designated as representative of the Borrower for purposes of taking any action required or permitted to be taken under Section 2.02 of this Agreement and Article V of the General Conditions., ARTICLE III The Project; Other Covenants Section 3.01. (a) The purpose of the Project is to assist the Borrower in financing such productive facilities in Honduras as will contribute to the economic and social development of the country. The Project consists of the fdilowing parts: Part I: Financing specific investment projects through loans to industrial enterprises in Honduras, in furtherance of the purposes set forth in FONDEI's Statement of Policies and Industrial Regulations. Part II: Consultants services and training programs as follows: (i) to assist FONDEI in: (A) elaborating material on the preparation, appraisal and supervision of Investment Projects; (B) carrying out a training program for the staff of FONDEI and Participating Intermediaries; (C) strengthening the financial planning, information and control systems, loan administration and operating and disbursement procedures of FONDEI; (D) analyzing technical and -9- marketing aspects related to the appraisal of Investment Projects; (E) carrying out market and subsectoral studies related to the appraisal of Investment Projects; and (F) strengthening of the services offered by the industrial department of Banco Central, through its Laboratorio de Anlisis Qufmico; (ii) to assist CDI in: (A), strengthening the finaicial planning, information system, loan administration and control and operating procedures of CDI; (B) designing and establishing a system to provide technical assistance to Small Investment Enter- prises; (C) providing administrative, technical and marketing assistance to approved subsectors and to groups of Small Investment Enterprises and artisans; and (D) carrying out a training program for the staff of CDI; and (iii) to assist CONADI in the carrying out of a program to strengthen CONADI's financial and operational capabilities. (b) The Borrower shall: (i) make part of the proceeds of the Loan available to Banco Central pursuant to a Subsidiary Loan Agreement containing terms and conditions satisfactory to the Bank, such proceeds to form part of FONDEI's resources and to be applied exclusively to expenditures in respect of goods and services for the Project; and (ii) not change, waive or terminate such Subsidiary Loan Agreement or any provisions thereof without the Bank's prior consent. (c) The Borrower shall cause Banco Central to: (i) carry out Parts I and II (i) of the Project by means of FONDEI, and to conduct the operations and affairs of FONDEI in accordance with sound financial standards and practices and in accordance with the Subsidiary Loan Agreement and FONDEI's Statement of Policies and Industrial Regulations; (ii) maintain at all times a Comit6 Elecutivo satisfactory to the Bank to be in charge of the overall responsibility for revising FONDEI's Statement of Policies and Industrial Regulations, approving FONDEI's budget and staffing plans, approving FONDEI's loans and overseeing FONDEI's activi- ties; and (iii) maintain a unit, with an adequate number of qualified and experienced personnel, to administer FONDEI and tb carry out its operations. - 10 - (d) The Borrower and all its agencies shall take all action which shall be necessary on their part to enable Banco Central to perform all of its obligations under the Project Agreement, the Subsidiary Loan Agreement and the Participation Agreements and shallc not take any action which might interfere with such performance. Section 3.02. The Borrower shall, through Banco Central, enter into contractual arrangements with CDI and CONADI, respec- tively, satisfactory to the Bank, to ensure that: (a) CDI and CONADI are provided by the Borrower, through Banco Central, promptly as needed, with sufficient funds to carry out the technical assistance programs referred to-in paragraphs (ii) and (iii) of Part II of the Project, respectively; -(b) CDI employs the qualified staff required to assist Small Investment Enterprises in preparing and carrying out Investment Projects; (c) CDI establishes appropriate mechanisms and procedures to provide technical assistance to Small Investment Enterprises in the preparation and carrying out of Investment Projects; and (d) CDI charges a fee of not more than two per cent (2%) of the total amount of each Sub-loan for the technical assistance rendered under it. Section 3.03. The Borrower shall cause FONDEI and CONADI to employ such consultants as shall be required for the carrying out of the technical assistance program included under Part II (i) and (iii) of the Project, the qualifications, experience and terms and conditions of employment of such consultants to be satisfactory to the Bank and their selection to be-made in accor- dance with principles and procedures described in the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 3.04. (a) The Borrower shall cause Banco Central to make, out of FONDEI resources, FONDEI Loans to Participating Intermediaries in accordance with the provisions of this Agree- ment, the Project Agreement, the Subsidiary Loan Agreement, FONDEI's Statement of Policies and Industrial Regulations, and - 11 - Participation Agreements between FONDEI and the Participating Intermediaries. (b) The Borrower shall cause Banco Central to enter into a Participation Agreement satisfactory to the Bank with each Participating Intermediary, such Participating Agreement to govern the terms and conditions of lending by the Participating Intermediary to Investment Enterprises and to contain, inter alia, procedures related to the withdrawal and repayment of FONDEI Loans, the appraisal and supervision of Investment Projects and the procurement of goods and services for Investment Projects. Section 3.05. For the purposes of capitalizing FONDEI, the Borrower shall cause Banco Central to make available to FONDEI, not 1ater than December 31, 1983, capital contributions in an amount equivalent to not less than $2,500,000. Section 3.06. The Borrower shall ensure that CONADI does not make any loans or investments cnd does not guarantee any debt until the plan referred to in Section 2.02 (e) (iii) (A) of this Agreement has been furnished to, and accepted by, the Bank. Section 3.07. The Borrower shall provide CDI, promptly as needed, with the funds necessary for the timely and efficient carrying out by CDI of its operations under Part I of the Project described in Section 3.01 (a) of this Agreement and of its tech- nical assistance operations. Section 3.08. Before taking any action concerning incentives for the promotion of exports, the Borrower shall give the Bank all reasonable opportunity for exchanging views on the proposed incentives. ARTICLE IV Financial and Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public - 12 - assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or adminis- trative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative sub- division thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall cause Banco Central to ensure that FONDEI maintains procedures and records adequate to record the progress of the Project and of each Investment Project (including its cost and the benefits derived from it) and to reflect in accordance with consistently maintained sound account- ing practices the operations and financial condition of FONDEI. Section 4.03. The Bank and the Borrower shall from time to time, at the request of either party, exchange views through their representatives with regard to the administration, operations and financial condition of FONDEI, and the Borrower shall furnish to the Bank all such information as the Bank shall reasonably request - 13 - concerning the administration, operatiots and f-iancial condition of FONDEI. Section 4.04. The Borrower shall enable the Bank's repre- sentatives to inspect the records referred to in Section 4.02 of this Agreement and any relevant documents. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (k) thereof: (a) a change shall have been made in the Subsidiary Loan Agreement or in the Resolution that established FONDEI which would materially and adversely affect the operations or the financial condition of FONDEI; (b) a change shall have been made in FONDEI's Statement of Policies and Industrial Regulations or in the regulations for the operation of the Guarantee Fund; (c) a change shall have been made in the Participation Agreement entered into by FONDEI and any Participating Inter- mediary without the Bank's consent; provided, however, that the remedies provided for in Section 6.02 of the General Condi- tions shall only apply to an amount of the Loan which corres- ponds to the total of FONDEI Loans made to such Participating Intermediary; (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of FONDEI, or for the suspension of the operations of FONDEI; and (e) (i) Subject to subparagraph (ii) of this paragraph the right of the Borrower to withdraw the proceeds of the UNDP Grant shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreements providing therefor. - 14 - (ii) Subparagraph (i) of this paragraph shall not apply ift (A) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other resources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions the following additional event is specified pursuant to paragraph (d) thereof, namely, that any event specified in paragraph (a), (b), (c) or (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that revised Appraisal Guidelines and Supervision Procedures, satisfactory to the Bank, have been approved by the Comitg Ejecutivo; (b) that revised FONDEI's Statement of Policies and Industrial Regulations, satisfactory to the Bank, have been approved by the ComitS Ejecutivo, and that the Resoluci6n of the Comitg Ejecutivo which approved such Regulations, dated March 22, 1979, has been amended accordingly in a manner satis- factory to the Bank; and (c) that FONDEI has entered into Participation Agreements with at least three Participating Intermediaries. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Banco - 15 - Central and constitutes a legally binding obligation of Banco Central in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the parties thereto and constitutes a legally binding obliga- tion of the Borrower and Banco Central. Section 6.03. The date/A1f4 t f//.2, is hereby specified for the purposes of Section 2.04 of'the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Except as provided in Section 2.09 of this Agreement, the Secretario de Estado en el Despacho de Hacienda 7 Cr6dito PGblico of the Borrower i, designated as representa- tive of the Borrower for the purp6ses of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Secretarlia de Estado en el Despacho de Hacienda y Credito Piblico Tegucigalpa, D.C. Honduras Cable address: HACIENDA Tegucigalpa, Honduras With copies to: Banco Central de Honduras Tegucigalpa, D.C. Honduras Cable address: Telex: BANTRAL 1121-HTBANTRAL Tegucigalpa -16- For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 24423 (RCA) or 89658 (WUI) IN WITNESS WHEREOF the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF HONDURAS By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Regional Vice President Lati America and the Caribbean - 17 - SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each January I and July 1 a2ginning July 1, 1987 through January 1, 2002 1,9o,ooo * To the eltent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 18 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions or to Section 2.08 of the Loan Agreement: Time of Prepayment Premium Not more than three years 1.75% before maturity More than three years but not 3.50% more than six years before maturity More than six years but not 6.40% more than eleven years before maturity More than eleven years but not 9.30% more than sixteen years before maturity More than sixteen years but not 10.45% more than eighteen years before maturity More than eighteen years 11.60% before maturity - 19 - SCHEDULE 2 Modifications of the General Conditions For the purposes of the Loan Agreement, the provisions of the General Conditions are modified as follows: (1) The following subparagraph (d) is added to Section ~3.05: "(d) The Bank and the Borrower may from time to time agree upon arrangements for prepayment of the Loan and the application of such prepayment in addition to, or in substitution for, those set forth in paragraph (b) of Section 3.05." (2) The words "and Investment Projects" are added after the words "the Project" at the end of Section 5.03. (3) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Bank. If (a) the right of the Borrower to make withdrawals from the Loan Account shall have been suspended with respect to any amount of the Loan for a continuous period of thirty days, or (b) by the date specified in paragraph (c) of S6ction 2.03 of the Loan Agreement no applications or requests permitted under paragraph (a) or paragraph (b) of such Section shall have been received by the Bank in respect of any portion of the Loan, or having been so received, shall have been denied, or (c) after the Closing Date an amount of the Loan shall remain unwithdrawn from the Loan Account, or (d) the Bank shall have received notice from the Borrower pursuant to Section 6.07 with respect to an amount of the Loan, the Bank may by notice to the Borrower terminate the right of the Borrower to submit such applications or requests or to make withdrawals from the Loan Account, as the case may be, with respect to such amount or portion of the Loan. Upon the giving of such notice such amount or portion of the Loan shall be cancelled." INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this day of lA 198 . FOR SECRETARY