The following are the applicable periods and rates to be adopted in all countertrade agreements (whether for offset, counterpurchase or a combination thereof) to be signed in compliance with the ITB for the supply of MRF's and OPV's to the Philippine Air Force and Philippine Navy, respectively.

I
Period Performance for Countertrade Obligations

Value of CT

      Obligation In

    US Primary Period Grace Period Total 1 M-50 3 years 2 years 5 years over 50M-100 M 4 years 2 years 6 years over 100 M-150 M 5 years 2 years 7 years over 150 M-200 M 6 years 2 years 8 years over 200 M-400 M 7 years 2 years 9 years over 400 M 8 years 2 years 10 years

II
PITC Monitoring/Management Fees

Value of CT FEES Obligation in US$ (% of CT Obligations) 1M-50M 1.5% over 50 M-100 M 1.25% over 100 M-150 M 1.00% over 150 M-200 M 0.75% over 200 M-400 M 0.50% over 400 M 0.25%

III
Penalty for Non-Performance and Guarantees

A.        PENALTY: Penalty shall be 10% of the unfulfilled CT obligations.

B.        GUARANTEE: The guarantee shall secure the payment of penalty for non-performance. The following guarantees shall be provided:

50% of the penalty - to be secured by Bank Guarantee

50% of the penalty - to be secured by Corporate Guarantee

(not comfort letter)   

The terms/conditions of the aforementioned bank and guarantee and Corporate Guarantee shall be approved by PITC.

Adopted: 27 May 1998
(SGD.) ISMAEL B. CRUZ
President