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January 09, 1988

DEFINITIONS

AGREEMENT ACCOUNT shall refer to the account opened in the name of the National Development Company (hereinafter "NDC") by Instituto de Credito Oficial (hereinafter ICO ) in the books of the latter with an initial balance for the amount of the "Loan Facility" granted to NDC for the purpose of said "Account" being to record the flow arising from the fulfilment of the financial commitments acquired by the parties to the "Agreement". Hereinafter, it shall be understood that the references made to the Account are references to the Agreement: Account .

BUSINESS DAY shall refer to the day on which commercial banks are open and operational in Madrid and New York.

CESCE shall refer to the Compania Espanola de Seguros de Credito a la Exportacion.

CODE shall refer to the secret number provided by "ICO". Said "Code" shall appear at the head of all applications, communications, notices and notifications made telex as Provided for under the "Agreement" .

COMMERCIAL CONTRACT shall refer to the contract signed by the Spanish exporter and the Philippines importer, whereby the transaction to be financed by the Loan Facility is established.

CURRENCY AGREED UPON AND US DOLLARS shall refer to the means of payment agreed upon by the parties to the Agreement" for the payment of the loan facility granted, said currency to be used by "NDC" both in the payment of interest and commitment fee and in the repayment of principal.

DESIGNATED SPANISH BANK shall refer; to the commercial bank whose head office shall be in Spain, appointed by "NDC" as the payer of payment orders or of "Documentry Credits" made available thereat.

DOCUMENTARY CREDIT shall refer to the credit made available at the "designated Spanish Bank" by the Philippines importer who shall instruct said bank to pay the Spanish exporter against the presentation of documents which constitute proof of the intended transaction, financed as provided for under the "Agreement".

ICO shall refer to Institute de Credito Oficiai, body appointed by the Government of the Kingdom of Spain act as financial agent thereof purposes of signing and enforcing/ the "Agreement" .

LOAN FACILITY shall refer' to the full amount granted by the Spanish Cabinet of Ministers to the Republic of the Philippines which may draw thereon, through "NDC in accordance with the terms laid down under the "Agreement".

LOAN FACILITY AGREEMENT shall refer to the agreement signed by Instituto de Credito Oficial of the Kingdom of Spain" and "NDC" of the Republic of the Philippines whereby a loan facility is established for the purpose of financing the commercial transactions or otherwise for the Republic of the Philippines. It shall be understood that the references made to the "Agreement" are references to the Loan Facility Agreement".

NDC shall refer to the National Development Company of the Republic of the Philippines, the body appointed by its Government to act as Financial Agent thereof for the purposes of signing and enforcing the "Loan Facility".

In Manila, on the one part Mr. Manuel Lorente Martinez, Chief, Aid Development Fund Department, acting in accordance with the powers, which he declares in force and sufficient,0 conferred by the President of Instituto de Credito Oficial of Spain, by virtue of Article 14 of the Law 13/1971 of June 19, and on the other part Mr.Antonio A. Henson, Director General, National Development Company, acting in accordance with the powers, which he declares in force and sufficient, conferred by Mrs. Corazon C. Aquino, President of the Republic of the Philippines,

DO HEREBY STATE

1. That the Government of the Kingdom of Spain by virtue of the spirit of friendship and cooperation reflected in its relations with the Government of the Republic of the Philippines, has, on July 10,1987, granted to the above mentioned Republic a "Loan Facility" for an. amount of up to US dollars 10,000,000 (TEN MILLION) to be charged to the Fondo de Ayuda al Desarrollo (Development Aid Fund).

2. That for the implementation of the aforementioned "Loan Facility" the Government of the Kingdom of Spain has appointed Instituto de Credito (hereinafter "ICO") as its Financial Agent and that the Government of the Republic of the Philippines has appointed the National Development Company (hereinafter "NDC' .) as its Financial Agent.

That this "Loan Facility" shall be a tied loan and shall be applied to finance the Spanish export for goods and services either as an individual transaction or as part of any investment projects to be determined pursuant to Clause Three of this agreement.

The signatories hereto, on behalf of their respective Institutions and in pursuance of the instructions handed down by their respective Governments .

HAVE HEREBY AGREED AS FOLLOWS:

CLAUSE ONE.- Conditions Precedent and Effectiveness of this Agreement.

1. The coming into force of this Agreement is contingent upon the receipt by "ICO" of the documents stated below, in the form and. of the content it shall deem satisfactory:

A) One copy of the Resolution of the Government of the Republic of the Philippines appointing NDC as the financial agent who shall act on its behalf for the purpose of signing and enforcing this "Agreement".

B) Specimen signatures of the persons authorised to sign and to enforce this "Agreement" or whatsoever other documents pertinent hereto.

C) Evidence of whatsoever other authorisations, consents or permissions required by the authorities of the of the Philippines for for the fulfilment or enforcement hereof.

D) Certification from the Department of Justice of the Republic of the Philippines as proof of fulfillment of all the authorisations concerning the signing and enforcement hereof' as required' by its internal legal regulations.

E) Agreement of "ICO" and "NDC" of the specific eligible capital goods exports and/or investment projects to be financed by this ".Loan'Facility".

"ICO" shall, in the form laid down under Clause Eighteen below, notify "NDC" both of the receipt of all the documents stated above and of the resultant coming into force of this "Agreement" .

This "Agreement" shall remain in force until all the commitments arising herefrom shall have been concluded for both parties.

CLAUSE TWO.- Amount of the Loan Facility.

1. "ICO" acting in the name and on behalf of the Government of the Kingdom of Spain makes available a "Loan Facility" amounting to a maximum of US dollars 10,000,000 (TEN MILLION UNITED STATES DOLLARS) in favour of "NDC" which is acting in the name and on behalf of the Government of the Philiipines.

2. For the purposes of paragraph 1) above, ICO shall open in its books a special account entitled Agreement Account 9/1/1983 (hereinirter the "Account") with an initial maximum balance of US dollars 10,000,000 (TEN MILLION UNITED STATES.DOLLARS). "NDC" shall open in its books the pertinent equivalent account.

CLAUSE THREE.- Allocation of Goods.

The specific capital goods exports and/or investment projects to be financed by this Loan Facility, including reallocations from the unutilized portion of cancelled transactions shall be approved by the mutual agreement of "ICO" and "NDC" upon the request of the latter.

The above mentioned request shall be made within a period of 12 months as of the coming into force of this Loan Facility Agreement .

"ICO" shall notify "NDC" of the approval of the transactions by the Spanish Ministry of Economy and Finance (Ministerio de Economia y Hacienda), upon presentation of the commercial contract or in the absence thereof, whatsoever other document in substitution of same.

CLAUSE FOUR.- Drawdown Period.

1. The maximum period during which Loan Facility drawdowns may be applied for shall be twelve (12) months as from the date of approval of the capital goods for exports a'nd/or investment projects as stated under Clause Three above.

However, the parties hereto may, by mutual agreement, extend the above mentioned period provided that the application shall have been made to ICO thirty (30) days before the expiry date of the drawdown period in the form set forth under Clause Eighteen below and in accordance with the specimen application set forth undsr Annex I hereto attached.

2. Notwithstanding the provision made in the foregoing paragraph, the drawdown. period shall be automatically extended to the date provided for under the "Commercial Contract" or, in the absence thereof, under whatsoe'ver other documents that may substitute same.

3. That portion of the "Loan Facility" which undrawn after the drawdown period or, if applicable, the extension thereof, shall be automatically deemed as cancelled.

CLAUSE FIVE.- Drawdown Arrangements

1. Concerning the supply of goods.

"NDC" shall issue payment orders or shall open documentary credits in favour of the Spanish exporter at the designated Spanish Bank appointed by the former.

In addition, it shall authorize "ICO", in the way laid down under Clause Eighteen below and in accordance with the specimen, sat forth under Annex II hereto attached, to repay the "Designated Spanish ' Bank", the payer of the "Documentary Credit" or payment order, the amounts paid by the latter to the Spanish exporters under the documents stated above.

Such repayments shall be carried out only after a solemn binding statement shall have been made by the Designated Spanish Bank" that each and all of the terms of the "Documentary Credit" or "Payment Order" have been fulfilled.

2. Concerning the supply of services.

"NDC" shall directly issue paymerorders to "ICO" in the form laid down under Clause Eighteen below and in accordance with the specimen set forth under Annex III hereto attached, in favour of the Spanish companies that supply the services. Such payment orders shall be accompanied by documentary proof which shall consist of an assessed, certified list stating the services rendered and the "Commercial Contract" or whatsoever other documents as my substitute same. The payment orders shall be numbered consecutively and shall bear the amount, the name and address of the Spanish exporter, the account number and the bank at which the payment is to be carried out, the payment item and other particulars, as may be required. One payment order shall be issued for each payee.

3. Concerning advanced payment.

Advanced payments shall be made by payment orders directly to "ICO" issued by "NDC" as laid down under Clause Eighteen below and in accordance with the specimen set forth under Annex IV hereto attached, in favour of those Spanish exporters that shall have export the goods or performed the services.

The payment orders shall specify the amount of the advanced payment in strict accordance with that established under the "Commercial Contract" or under whatsoever other document as may substitute same. In addition thereto, the payment orders shall specify the address of the Spanish exporter, the account number and the bank accepting such payments on behalf of the Spanish exporter.

4. "NDC" shall expressly authorize "ICO" to debit the Account in US dollars for the amounts arising from the payment orders indicated under paragraphs 1, 2 and 3 above.

5. With the sole requirement to the effect that "ICO" shall account for the payment to the Spanish exporters, "NDC" expressly relieves "ICO" of any liability whatsoever as regards the [transactions and/or projects/ commercial or otherwise, underlying the payment orders, "NDC" further undertakes to repay such amounts in the period established in Clause Eight below, regardless of the purpose of the commercial transactions or the circumstances arising therefrom.

6. In any case, for the purposes of making drawdowns, it shall be an indispensable requirement that"NDC" shall have ho payments due and outstanding on its part, whether principal, interest, commitment fee or whatsoever other item arising from this or any other Agreement entered by "ICO" and NDC".

CLAUSE SIX.- Interest

The amounts drawn under this "Loan Facility" shall accrue interest in favour of "ICO" as follows:

In the case of a commercial transaction to be totally financed by this "Loan Facility" at a rate of 2% per annum/ falling due every 6 months from the date of payment to the date of repayment thereof.

In the case of a commercial transaction to be partially financed by this "Loan Facility", the interest rate shall be determined: on a case by case basis in accordance with the OECD consensus.

CLAUSE SEVEN.- Commitment Fee.

The amounts undrawn during the drawdown period shall carry an annual commitment fee of 0,25% per cent per annum during a period commencing 3 months after the effectiveness of this "Agreement" up to the close of uhe period established under Clause Four hereof. The commitrr.ent fee shall be reckoned considering the number of days actually elapsed and shall be based on a year of 360 days.

CLAUSE EIGHT.- Repayment.

In the case of a commercial transaction to be totally financed by this "Loan Facility", the total amount drawn from the "Account" shall be repaid in 25 years inclusive of a 5 year grace period by 41 half yearly equal instalments, the first instalment shall fall due 60 months after the weighted mean of drawdown dates.

In the case of a commercial transaction to be partially financied by this "Loan Facility", the repayment shall be determined on a case by case basis in accordance with the OECD consensus.

At the close of the drawdown period, "ICO" shall draw up the appropriate repayment chart which it shall submit to "NDC" for approval. "NDC" shall convey its remarks to "ICO" within a period of thirty days. Should there be no reply once the abovementioned period shall have elapsed, the repayment chart shall be deemed final. "NDC" shall transfer to "ICO" the amounts represented by the repayment installments in US dollars at the value date of maturity thereof.

CLAUSE NINE.- Prepayment.

Subject to prior approval, of the Central Bank of the Philippines, "NDC" may pay in advance, either in full or in .part, any of the installments stipulated under Clause Eight above and at any time prior to the respective due dates, provided that the payment involves a minimum amount of US dollars 1,000,000 (ONE MILLION UNITED STATES DOLLARS) and increments are in multiples of US dollars 100,000 (ONE HUNDRED THOUSAND UNITED STATES DOLLARS). Such repayments shall be applied, first and foremost, to the payment of overdue interest, if any, and afterwards, to the principal in inverse order of maturity "ICO" shall be given ,30 days' notice prior to any prepayment.

CLAUSE TEN.- Payment of Interest and Commitment Fee.

1. Interest. The payment of interest and late interest referred to under Clause Eleven below shall be made on the basis of half-yearly expired periods until the Loan Facility shall have been wholly repaid.

Notwithstanding the foregoing, the dates of the payments of interest shall be made to fall on the dates for repayments established under Clause Eight above as of the settlement of the first repayment instalment. "NDC shall transfer to "ICO" the amounts represented by the above mentioned settlements in US dollars at the value date of maturity thereof.

2. Commitment Fee.- The Commitment Fee referred to under Clause Seven above shall be paid on the same dates as the interest referred to in the foregoing paragraph.

CLAUSE ELEVEN.- Late Interest.

1. If, on the maturity date of the principal or of the interest, the amount represented thereby shall not have been made available to "ICO" , the said amounts due shall be deemed as overdue and, notwithstanding their liability to be demanded, shall accrue late interest in favour of ICO at the rate at which Banco de Espana (Bank of Spain) is offered 3 months deposits on the London Interbank Market (LIBOR) as communicated by the Banco de Espana (Bank of Spain) plus a margin of one per cent per annum from the dlie date for payment until that of their actual payment.

2. The default period shall not exceed 12 months. The provisions established under Clause Fifteen hereinbelow being applicable thereafter.

CLAUSE TWELVE.- Place and Date of Payment.

1. The payments referred to under Clause Seven, Ten and Eleven above shall be paid into the account number 544-7-70783 of the Banco de. Espana (Bank of Spain) at Manufacturer's Trust, New York, in "US dollars" to be credited to Account 904 'De Organismos" at the Banco de Espana (Bank of Spain), Madrid, in favour of INSTITUTO DE CREDITO OFICIAL.-FONDO DE AYLJDA AL DESARKOLLO.

2. Prior to the agreement of the repayment chart under Clause Eight, the payment of interest referred to under Clause Ten above shall be made on the first day of March and en the first day of September of each year and the first payment shall fall due on the first day of March, 1988. Interest payments after the repayment chart has been determined shall coincide with principal repayment dates.

3. If the due date for the payments indicated in the foregoing paragraph falls on a holiday, such payment shall be made on the immediately following business day.

CLAUSE THIRTEEN.- Allocation of Payments.

The amounts received by "ICO" as payments arising herefrom, whatsoever the nature thereof, shall, when their application is not determined by "NDC", be allocated as follows:

1) To late interest, if any,

2) To commitment Fee overdue and outstanding,

3) To interest in order of maturity.

4) To the principal.

CLAUSE FOURTEEN.- Events of Default.

The ocurrence of one or more of the followxng ances shall be'deemed as events of default:

1. If, once the period referred to under Clause Hleven, 2, above shall have elapsed, "NDC" snail not have liade the repayment, of, capital or the payment of interest or co.it.ent fee on the maturity thereof in accordance with the terms laid down hereunder.

2. If, once the period referred to under Clause Eleven, 2, above shall have elapsed, "NDC" shall not have paid any amount owed as principal, interest or commitment fee in accordance with the terms stipulated and on the date established under whatsoever other agreement signed by "ICO" and "NDC".

3. If the "NDC" shall fail to assign the "Loan Facility" to the purpose laid down hereunder.

4. If, for any reason unattributable to "ICO" any of the commercial transactions to be financed by this "Loan Facility" in compliance wiht Clause Three above were to be wholly or partly cancelled, consistent however with the stipulation of Clause Fifteen (a) hereunder.

5. If the Government on whose behalf the "NDC" is acting declares a moratorium on the payment of whatsoever other external debt related to the Spanish public sector and/or underwritten by CESCE.

6. If the authorities representing the Government on whose behalf "NDC" is acting substantially and adversely modifies or declares null and void any of the authorisations, consents or permissions referred to under Clause One, C) hereinabove.

CLAUSE FIFTEEN.- Demand Repayment.

In the cases established in the foregoing clause "ICO" may after 30 days shall have elapsed as of the date on which it shall have required "NDC" to redress its situation, without "NDC" being able to correct the event of default sought to be redressed:

A) Demand advanced repayment of the principal of the "Loan Facility" in addition to the payment of all interest accrued thereon and whatsoever other amounts as may be demanded under this Agreement. Nonetheless, should the circumstance indicated under Clause Fourteen, 4, hereinabove arise, "ICO" nay demand the advanced repayment of only the amounts used in relation to the cancelled transaction and such amounts may be assigned to the funding of other transactions commercial or otherwise, always providing that "NDC" submits a formal application to "ICO" to that effect in accordance with the terms laid down under Clause Three above.

B) Declare the commitments hereunder acquired by "ICO" null and void through notification to "NDC" .

CLAUSE SIXTEEN.- Undertakings.

"NDC" ensures that the commitments acquired by it hereunder rank equal to and "pari passu" with whatsoever others of its external debts of the same nature.

Accordingly, whatsoever preference or priority granted by "NDC' to another external debt of the same nature shall be automatically applicable hereto without any prior demand in that regard on the part of "ICO" except foreign debts secured by:

a) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property and,

b) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than 1 year after its effectivity.

CLAUSE SEVENTEEN.- Taxes and Expenses.

"NDC" shall make all payments arising herefrom with no deduction whatsoever for taxes, rates and other expenses of whatsoever nature outstanding in its own country and shall defray whatsoever transfer or conversion costs incurred in the enforcement hereof.

CLAUSE EIGHTEEN.- Correspondence between the parties.

All applications, notifications, notices and communications in general which shall be sent to the parties by virtue hereof shall be considered.as duly submitted when effected in the form of a letter signed by a person appropriately empowered so to do in accordance with Clause One, B, or in the form of a telegram or telex, in which case the "ICO" "Code" number shall be used.

Telegraphic notifications or communications or those sent by cablegram or telex shall be binding for the parties hereto and deemed as received by the addressee at the addresses or telex codes stated below.

Whatsoever change in the address of either of the parties hereto shall take no effect unless it shall have been conveyed to the other as established under this clause and the latter shall have acknowledged receipt thereof.

CLAUSE NINETEEN.- Laws applicable.

This "Agreement"' shall be governed and interpreted in accordance with Spanish law. Moreover, the parties hereto expressly relinquish whatsoever other laws that may apply to them and shall abide by the.code of laws and the jurisdiction of the law courts and tribunals of Madrid for the setttlement of whatsoever. discrepancy may arise in relation to the application and interpretation hereof.

CLAUSE TWENTY.- Covenants.

As of the date on which this "Agreement" shall come into force and for as long as any commitment arising herefrom remains unfulfilled "NDC" undertakes to submit to "ICO" the documents stated below:

1. A yearly statement showing the audited financial statements of "KDC" drawn up in accordance with the directives and the format of the financial statements of "NDC".

2. A copy of whatsoever internal regulative provisions that entail a modification of the name, structure and/or the legal system of "NDC".

3. The notification, given in compliance with Clause Eighteen hereinabove, of whatsoever change arising with regard to the persons who, in accordance with Clause One, B, hereof, may be authorised to sign and to enforce this Agreement .

4. A yearly list of the credits granted by any other countries to the Government of the Philippines.

This "Agreement" is hereby set forth and signed on two originals in the Spanish and English language. In the case of conflict, the Spanish version shall prevail.

Manila, January 9, 1988

ANNEX I

Application for an extension of the drawdown period.

Pursuant to Clause Four of the "Loan Facility Agreement" entered into by Instituto de Credito Oficial of the Kingdom of Spain and the National Development Company of the Republic of the Philippines , on the 9th day of January 1938 we hereby submit a formal application for an extension of the drawdown period of the "Loan Facility up to ---------. We would be grateful to receive notice from ICO as to the granting of the above mentioned extension and the date on which it shall come into force.

ANNEX II

Authorization of Repayment

Pursuant to the provisaons established under Clause Flve 1) of the "Loan Facility Agreement" entered into by Instituto de Credito Oficial of the Kingdom of. Spain and the National Development Company of the Republic of the Philippines on the 9th day of January 1988, we hereby authorize you to repay to --- ----- ------- --- bank, whose address is --- ---- ---- ---- Spain, the sum of US dollars --- --- ---- ---- as covered by documentary credit number --- --- ---- --- (or payment order number) available at the above mentioned in favour of the Spanish Company --- ---- ---- ---- ---, whose address is --- ---- ---- ----- --- against a solemn binding statement on the part of the above mentioned bank that all the terms of the documentary credit (or payment order) have been fulfilled.

In addition thereto, we hereby authorize you to debit the aforementioned sum in US dollars to the account which you hold in our name under the title "Agreement Account 9/1/1988".

Fulfillment by "ICO" of the instructions contained in the authorization of payment herein attached does not imply any liability on the part of "ICO" either in the fulfillment or in the unfuifillment of the commercial contrct (or of whatsoever other document that may substitute said contract), or in the control thereo and for the purposes, "ICO" shall be considered to be in no wa.y bound hereby. Accordingly, we hereby undertke to repay to ICO in US dollars1 the sums paid on our instruction in accordance with the terms laid down in the above mentioned agreement, irrespective of the circumstances arising during the enforcement of the commercial contract, either prior to or after payment.

ANNEX III

Payment order number ----------

Pursuant to the provisions established under Clause Five 2) of the "Loan Facility Agreement" entered into by Institute de Credito Oficial of the Kingdom of Spain and the National Development Company of the Republic of the Philippines, on the 9th day of January,1988, we hereby authorise you to pay to the Spanish Company ------------------ , whose address is ------------------, the sum of UD dollars --------------- at the bank, account number ---------------

In addition thereto, we hereby authorize you to debit the above mentioned sum in US dollars to the "Account in your books under the title "Agreement Account 9/1/1988" .

Fulfilment by "ICO" of the instructions contained in the paymentorder herein attached does not imply any bility on the part of "ICO" either in the fulfilment or the unfulfilment of the "Commercial Contract or of tsoever other document that may substitute said contract, or in the control thereof and for all purposes, "ICO" shall be considered to be in no way bound thereby. Accordingly, we hereby undertake to repay to "ICO" in US dollars the sums paid on our instruction in accordance with the terms laid down in the aforementioned "Agreement", irrespective of the circumstances arising during the enforcement of the "Commercial Contract" , either prior to or after payment.

ANNEX IV

Payment order number ----------.

Pursuant to the provisions contained under Clause Five, 3) of the "Loan Facility Agreement" entered into by Instituto de Credito Oficial of the' Kingdom of Spain and the National Development Company of the Republic of the Philippines, on the 9th day of January 1988, we hereby instruct you to pay to the Spanish Company -------------- the sums of US dollars---------- at the ----------bank, account number ------- as advanced payment in compliance with Commercial Contract ---- -----------.

In addition thereto, we hereby expressly authorise you to debit the above mentioned sum to the "Account" opened in US dollars in your books under the title of "Agreement Account 9/1/1988".

Fulfilment by "ICO" of the instructions contained in the payment order herein attached does not imply any lability on the part of "ICO" either in the fulfilment or the unfulfilment of the "Commercial Contrac"or of TSaitsoever other document that may subswttfe said contract of in the control thereof, and for all purposes ICO shall be considered to be in no way bound thereby. Accordingly, we hereby undertake to repay to "ICO" in US dollars the sums .paid on our instruction in accordance with the terms laid down in the aforementioned "Agreement" irrespective of the circumstances arising during the enforcement of the "Commercial Contract", either prior to or after payment.