SOP Exhibits

Title:

Corn Dev Fund Loan Agreement

SOP Number : TS-ES13

EXHIBIT II

LOAN AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This agreement, made and executed by and between:

NATIONAL FOOD AUTHORITY (NFA),

a government agency created by virtue of Presidential Decree No. 4 as amended by Presidential Decree No. 1480 and 1770 with principal office and place of business at Matimyas Bldg., 101 E. Rodriguez Sr. Avenue, Quezon City, represented herein by its Administrator and Chairman of the Corn Development Fund Committee

, EDUARDO NONATO N. JOSON II

, hereinafter referred to as CREDITOR.

And

PROPONENT, hereinafter referred to as DEBTOR

WITNESSETH: That -

WHEREAS, the Corn Development Fund Committee was created by the NFA Council by virtue of M.O. 468 and as amended, to evaluate, recommend and monitor projects for corn productivity enhancement/mechanization, research, training and pinpointing suitable areas for corn production;

WHEREAS, the NFA Administrator and Chairman of the Corn Development Fund Committee has the authority to approve all expenses and funding for projects related to the use of Corn Development Fund subject to recommendation by the members of the Committee;

WHEREAS, the DEBTOR has requested the CREDITOR to provide financial assistance in the form of a term loan in the amount of ___________, Philippine Currency which will be made available by the CREDITOR, with the proceeds of the funds to be procured by the CREDITOR from the Corn Development Fund subject to its guidelines, rules and regulations;

NOW, THEREFORE, for and in consideration of the foregoing premises and the covenants and stipulations set forth hereunder, the parties hereto have agreed, as they hereby agree as follows:

ARTICLE I
THE LOAN

Section 1. AMOUNT - CREDITOR agrees, to extend to the DEBTOR, a term loan in the principal amount of PESOS: Philippine Currency, (hereinafter called the "LOAN") ____________________.
Section 2 PURPOSE - the proceeds of the Loan shall be used exclusively for _____________________.

Section 3. SCHEDULE OF DRAWDOWN/S - Upon the effectivity of this Agreement, the DEBTOR may avail of the LOAN in staggered drawdowns within the commitment period stated in Schedule 1 hereof. The proceeds of the LOAN shall be released by CREDITOR through _______________________ to or for the DEBTOR in such sums and at such times as are specified in said Schedule 1 upon compliance with all the conditions of lending set forth in Article III hereof. The DEBTOR shall give the CREDITOR notice of any availment at least three days in advance. Such notice shall contain the DEBTOR's certification that as of such date, he has not defaulted under Article V of this Agreement. Provided that the full amount of the loan shall be availed of by the DEBTOR not later than _____________.

Section 4. TERM - The LOAN shall be for a term of _______ years from and after the initial drawdown date inclusive of a _______ -year grace period on principal repayment, depending on cash flow and shall be payable in accordance with the schedule of payment stated in Schedule 2 hereof, and attached to or stated in the promissory note to be executed pursuant to Section 7 of this Article.

Section 5. INTEREST - Interest rate fixed at 2% per annum and paid semi-annualy on diminishing balance.

Section 6: PROMISSORY NOTES - On the date of each drawdown, the DEBTOR shall execute in favor of the CREDITOR negotiable promissory note (the "NOTE"). It shall be jointly and severally signed by officers of the cooperative (DEBTOR) in their personal capacity/ties and shall contain a more particular schedule of payment of the principal and interest of the LOAN based on the provisions of Section 3 and 4 above. The provision of the NOTE, shall be complimented by the terms and conditions of this Agreement.

ARTICLE II
SECURITY

Section 1. COLLATERAL - The prompt and full payment and proper performance by the DEBTOR of all its obligations under this Agreement and the note/s shall be secured by Real Estate Mortgage (for Infrastructure Loan) and Deed of Assignment with provision a for Voluntary Surrender (for Equipment Loan):

(List of Collateral and Equities)

ARTICLE III
CONDITIONS PRECEDENT TO LOAN DRAWDOWN

Section 1. CONDITIONS - The obligation of the CREDITOR are subject to the following conditions:

a. Prior to the initial drawdown, the CREDITOR shall have received, in form and substance satisfactorily to the CREDITOR, on or before the date hereof, the following:

1. All authenticated board resolutions and authorizations to make this agreement and all documents or instruments related thereto valid and binding on the DEBTOR and/or any other party executing such documents or instruments.
2. A signed and notarized copy of a certificate of the board secretary of the DEBTOR certifying to the name/s of its officer/s authorized to sign this Agreement and such other documents or instruments related to this agreement.
3. Copies of duly executed notarized and registered mortgage that are in force in effect and/or other security arrangements mentioned in Section 1, Article II.

ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 4. REPRESENTATIONS AND WARRANTIES - The DEBTOR represents and warrants as follows:

a. The DEBTOR has the capacity and necessary authorization to engage in business in the Philippines under existing laws of the Republic of the Philippines, and has the power and authority to own and operate its property and conduct its business as presently being conducted.

b. The execution and performance of the terms and provisions of this Agreement and the other documents and instruments relevant hereto which are not violation of any provision of law or of any applicable regulation, order or decree of any court or government instrumentality nor conflict or be inconsistent with, nor result in any breach of any of the terms, covenants, conditions or provisions of, nor constitute a default under any indenture, mortgage, deed of trust or other instrument to which it is a party or by which may be bound or to which it may be subject.

c. There are no actions, suits or proceedings, pending or will be filed, against or affecting it before any court or administrative body or agency which might result in any material adverse change in the business operations, properties or assets, or financial condition, of the DEBTOR.

d. The DEBTOR has duly paid and discharged all taxes, assessments and such other governmental charges levied upon it, its properties and assets, unless and to the extent only that the same are being contested in good faith and by appropriate proceedings.

e. This Agreement and the other documents and instruments related hereto, shall be valid and binding upon the DEBTOR and enforceable in accordance with their respective terms.

f. All orders, consents, approvals or authorizations of any public body, agency, commission or board, necessary for the execution of this Agreement and the other documents and instruments relevant and/or to be delivered pursuant hereto, have been complied with by the DEBTOR.

ARTICLE IV
COVENANTS OF THE DEBTOR

Section 4.0: POSITIVE COVENANTS - During the effectivity of this Agreement and the other documents and instruments relevant and/or delivered pursuant hereto, and so long as the note/s and any interests and/or charges thereon and any obligation of the DEBTOR to the CREDITOR is outstanding, the DEBTOR shall:

a. Conduct its operations in accordance with sound business practice; reduce its operating expenses to the lowest minimum possible without adversely affecting

its efficiency and productivity, or the profit potential of their business; take all necessary precautions to prevent or minimize business losses; employ necessary improvements on the properties used in its business to increase efficiency; faithfully and properly keep and maintain all cost accounting records pertinent to its business, particularly the documents or papers evidencing receipts, expenditures of its operations, as well as financial statements reflecting the DEBTOR's true and correct financial position, in accordance with sound and accepted accounting principles and furnish the CREDITOR with copies thereof upon the CREDITOR's request.

b. Take all necessary steps to carry on its operations.

c. Impose adequate cash control and security measures subject to review by the CREDITOR and to implement the recommendations of the CREDITOR regarding the same immediately upon advised thereof.

d. Furnish the CREDITOR:

i. within 60 days from end of each fiscal year, a copy of its annual audited financial statements;

ii. within 30 days after the end of each calendar quarter, a copy of its unaudited financial statements prepared and certified by its accountant; and

iii. such other financial information as the CREDITOR may reasonably request.

e. The borrower agrees to be subjected to periodic assessment by NFA-CDF and to comply with reportorial requirement of the project.

f. Furnish the CREDITOR together with the financial reports/statements specified in Section 4.0 (d) hereof, a certification stating:

i. that a review by the NFA-CDF-Technical Working Group of the activities of the DEBTOR during such period has been made with a view of determining whether or not the DEBTOR has observed, performed and fulfilled all its obligations under this Agreement, the other document, and instruments, relevant hereto; and

ii. that there exists no event of default as herein defined, and that no event which might mature into such an event of default has occurred; if any such event exists or has occurred, specifying the nature and, the period of existence thereof; and what action the DEBTOR has taken or proposes to take with respect thereto.

g. Duly pay and discharge:

i. all taxes, assessments and governmental charges upon or against it, its properties and assets as and when the same shall become due and payable unless and to the extent only that the same are being contested in good faith and by appropriate proceedings.

ii. All lawful claims whether for labor, materials, supplies, services or otherwise which might or could, if unpaid, become a lien or charge upon the properties or assets of the DEBTOR unless and to the extent only that the same are being contested in good faith and by appropriate proceedings.

h. Maintain adequate insurance on all the insurable properties and assets with the CREDITOR's designated insurance company and keep itself adequately insured against liability on account of injury or damage to persons or property.

i. Maintain all governmental approvals and consents, in connection with its business, or necessary for the performance of its obligations hereunder, in full force and effect.

j. Maintain its properties in good working order and condition and, make all necessary repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, so that its business may be carried on and conducted in accordance with sound, prudent business management.

k. Allow any representative of the CREDITOR to visit and inspect any of its properties; to examine its books of accounts and to discuss its finances and accounts.

l. Execute and deliver such other papers and documents as may be reasonably requested by the CREDITOR.

Section 4.1: NEGATIVE COVENANTS - The DEBTOR, hereby covenants that so long as the DEBTOR has not fully paid the note/s and performed all its obligations herein and in the documents and instruments relevant hereto, the DEBTOR shall not, without prior written consent of the CREDITOR:

a. Sell, alienate, incur, assume, cause or allow to exist any other mortgage, lien, pledge or other charge or encumbrance upon or with respect to any or all of the DEBTOR's present or future fixed assets, machineries and equipment.

b. Assume, guaranty, endorse or otherwise become directly or contingently liable in connection with any obligation of any person, firm or corporation.

c. Enter into any merger or consolidation with any other corporation, firm, trusts or association; sell, lease, transfer or otherwise dispose of all or substantially all of its assets; or voluntarily suspend its business operations or dissolve the same.

d. Make any investment of its funds in:

i. stocks and bonds and similar securities;

ii. any company, enterprise or undertakings not related to its operations; or,

iii. any related company, enterprise or undertaking; if the amount of its investment is substantial in the sole determination of the CREDITOR.

e. Undertake or incur any capital expenditure or purchase any additional capital equipment or other fixed assets, if the amount of such expenditure, equipment or fixed assets is substantial in the sole determination of the CREDITOR.

f. Enter into management contracts and/or make any major policy change. The term "major policy change" shall include any change in the operations of the business of the DEBTOR which, in the sole opinion of the CREDITOR, shall prejudice or have a highly significant bearing, directly or indirectly, on the financial, technical, or marketing capability and/or responsibility of the DEBTOR.

g. Enter into any contract of a substantial and/or long-term nature, such as but not limited to marketing agency agreements, construction agreements and such other commitments or undertakings connected with the business of the DEBTOR.

h. Incur any additional obligation and/or indebtedness with maturity of more than one year.

I. Allow the total debt-to-equity ratio of its business, computed in accordance with the generally accepted accounting principles consistently applied to exceed 1.5x.

j. Allow the current ratio of its business, computed in accordance with generally accepted accounting principles consistently applied, to be less than 1.0x.

k. Extend or grant, directly or indirectly, loans and/or advances to its officers and employees.

l. Permit any internal change in the ownership of the DEBTOR during the duration of this Agreement, except when such change is required by law or regulation.

ARTICLE V
DEFAULT, REMEDIES AND PENALTIES

Section 5.0: EVENTS OF DEFAULT - The DEBTOR, shall be considered in default without need of any other or further act or deed in case any of the following events shall occur:

a. The DEBTOR fails to pay two (2) consecutive installments or fails to pay, when due, any of the note/s and/or any accrued interest thereon and other charges herein stipulated to be for the account of the DEBTOR and/or fails to properly perform any of the obligations arising from this Agreement, the documents and instruments relevant, executed or delivered pursuant hereto.

b. Any representation or warranty made by the DEBTOR in this Agreement and in the documents and instruments relevant, executed or delivered pursuant hereto, or any paper or document submitted by it in connection with this Agreement, shall prove to be untrue or false in any material respect.

c. There is:

i. any violation of any term or condition of any contract executed by the DEBTOR with any party for the payment of any obligation incurred prior to or after the date hereof;

ii. in general, any default under this contract, wherein the DEBTOR is a party which shall result in the acceleration or declaration of the whole obligation thereunder to be due and payable prior to the stated normal date of maturity, or which results in the substantial impairment of any of the rights of the CREDITOR under this Agreement and the documents and instruments relevant, executed or delivered pursuant hereto.

d. The DEBTOR initiates any act which leads to, or in any event will lead to, a dissolution of its business.

e. The DEBTOR shall become insolvent or bankrupt or cease paying its debts as they mature; or makes an assignment for the benefit of the creditor; or a trustee; receiver or liquidator shall be appointed by or for the DEBTOR for any substantial portion of its properties; or bankruptcy, reorganization, arrangement, insolvency, suspension of payments or similar proceedings shall be instituted by or against the DEBTOR.

f. Any of the concessions, permits, rights, options, franchises, leases or privileges presently or hereafter employed, utilized or required in the conduct of the entire business or operations of the DEBTOR shall be revoked, cancelled or otherwise terminated, or the free and continued use and exercise thereof shall be curtailed or prevented, in such manner as to materially and adversely affect the financial condition or operations of the DEBTOR as determined by the CREDITOR.

g. The DEBTOR shall fail to pay, reimburse an/or indemnify immediately the CREDITOR, upon receipt of demand on it, any amount, liability, damage, cost, loss, penalty, charge or expense herein stipulated to be for the account of the DEBTOR, suffered or incurred or paid by the CREDITOR for any cause whatsoever arising out of or connected with the Loan.

Section 5.1: REMEDIES IN CASE OF DEFAULT - If any event of default specified in the preceding section occurs: (a) the CREDITOR may, at its sole discretion, treat the whole obligation, its principal and accrued interest and other charges, as immediately due and demandable, without the necessity of any demand, presentment or notice by the CREDITOR to the DEBTOR, all of which are hereby expressly waived by the DEBTOR and its guarantor/s, if any; (b) the CREDITOR, may enforce separately, successively, or cumulatively, at its sole discretion, any or all of its rights under this Agreement, the note/s and the Deed of Assignment and Voluntary Surrender Agreement relevant, executed or delivered pursuant hereto. Repossession of equipment is to implement provisions of the Volunatry Surrender Agreement.

Section 5.2: PENALTY - Upon the occurrence of any of events defaulted as defined hereinabove, the DEBTOR, in addition to the total amount of its outstanding obligation herein shall be liable to the CREDITOR for a penalty equivalent to twelve percent (12%) per annum of the total amount due and unpaid as the date of default.

ARTICLE VI
MISCELLANEOUS

Section 6.0: TERMS OF THE LOAN AND OTHER INSTRUMENTS - The terms and conditions of the note/s, instrument and documents, relevant, executed or delivered pursuant to this Agreement, shall to all intents and purposes, be considered as part of the terms and conditions of this Agreement, and a breach or violation or non-performance of the said terms and conditions shall constitute a material breach of the Agreement.

Section 6.1: THE DEBTOR TO BEAR COST - the DEBTOR shall pay all costs, fees, charges, and other expenses in connection with the preparation, execution, delivery, registration and enforcement of this Agreement, the note/s, instruments and documents relevant, executed or delivered pursuant hereto including but not limited to, all stamps, and other taxes. The DEBTOR shall render the CREDITOR free from any liability whatsoever with respect to or resulting from any delay or omission to pay such amounts. The DEBTOR hereby binds itself to deliver to the CREDITOR the amounts required therefore not less than two (2) days before its respective due dates. Should the DEBTOR fail to do so, the CREDITOR may advance the same, including any interest or penalties accrued on said taxes and governmental fees. In any such case, the DEBTOR shall, on demand, immediately reimburse the CREDITOR said amounts with interest thereon at the highest rate allowed by law, from the date the advance is made until full payment thereof without prejudice to the right of the CREDITOR to declare the DEBTOR in default pursuant to Section 5.0 hereof.

Section 6.2: REPORTING, DOCUMENTATION AND REGISTRATION EXPENSES - All statements, reports, certifications, opinions and other documents or information to be furnished to the CREDITOR under this Agreement shall be supplied without cost to the latter. Further, the DEBTOR hereby agrees to reimburse the CREDITOR all reasonable expenses including legal fees incurred in connection with the preparation, execution, delivery and registration of this Agreement, the note/s and the other documents and instrument relevant hereto.

Section 6.3: WAIVERS - No delay or omission on the part of the CREDITOR in the exercise of any power or right shall impair any such power or right or shall operate as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any such power or right preclude other or further exercise thereof or the exercise of any other power or right. All rights, powers and remedies of the CREDITOR under this Agreement, the note/s and other documents, and instruments relevant, executed or delivered pursuant thereto shall be deemed cumulative, concurrent and non-exclusive with each other and with any and other rights, powers and remedies now or hereinafter available to the CREDITOR under Philippine laws, other contracts or elsewhere.

No modification or waiver of any provision of this Agreement, the note/s the other documents and instrument relevant, executed or delivered pursuant hereto and no consent to any departure by the DEBTOR therefrom shall in any event be effective unless the same shall be in writing by the CREDITOR.

Section 6.4: SURVIVAL OF REPRESENTATIONS - All representations and warranties of the DEBTOR made herein shall survive the execution and delivery of this Agreement, and no investigation made by the CREDITOR shall affect such representations and warranties or the right of the CREDITOR to rely thereon and enforce the same.

Section 6.5: VENUE - Any legal action against the DEBTOR arising under or by virtue of this Agreement, the note/s and the documents and instruments relevant, executed or delivered pursuant hereto shall be brought in the proper courts of Quezon City, Metro Manila, and by the execution and delivery of this Agreement, the DEBTOR hereby irrevocably submits to such venue.

Section 6.6: BINDING ON SUCCESSORS AND ASSIGNS - This Agreement, the note/s, the documents and instruments relevant, executed or delivered pursuant hereto shall be binding upon and inure to the benefit of the parties and the signatories herein and their respective successors, and assigns, except that the DEBTOR may not assign or transfer its rights hereunder without the prior written consent of the CREDITOR.

Section 6.7: SEPARABILITY OF PROVISION - If any provision of this Agreement or any document or instrument relevant, executed or delivered pursuant hereto shall be held invalid, the remainder thereof shall not be affected thereby.

Section 6.8: ADDRESS OF PARTIES - The parties hereby agree that their respective addresses as set forth in page one (1) of this Agreement shall be their respective addresses for purposes of notice and demand, if any be required under this Agreement, the documents and instruments relevant, executed or delivered pursuant hereto, until and unless another address shall be formally communicated to the other party.

Section 6.9: ATTORNEY'S FEES - The DEBTOR shall be liable to the CREDITOR for any and/or all fees and expenses incurred by the CREDITOR in any legal proceeding and arising out of, or from any breach of, any or all of the stipulations of this Agreement, the note/s, the documents and instruments relevant, executed or delivered, pursuant hereto including reasonable amount for attorney's fees.

Section 6.10: RIGHT OF AMENDMENT - The CREDITOR reserves the right of amendment and the DEBTOR hereby agrees to any addition to any/or all of the terms and conditions herein contained upon consent of both parties.

IN WITNESS WHEREOF, the parties have set their hands on the _____ day of _________, 1999 at Quezon City, Metro Manila.

CREDITOR:

________________________________ ________________________________

DEBTOR:

________________________________ ________________________________

Signed in the presence of:

________________________________ ________________________________

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)
QUEZON CITY ) S.S.

BEFORE ME, Notary Public for and in the abovenamed locality, personally appeared the following with their respective Community Tax Certificates, to wit:

Name Comm. Tax Cert. No. Date/Place of Issue

Known to me and to me known to be the same persons who executed the foregoing instrument and acknowledged to me that the same is their free and voluntary act and deed and those of the corporations herein represented.

I FURTHER CERTIFY that this instrument refers to a Loan Agreement consisting _____ (no. of pages) including this page wherein the acknowledgement is written and signed by the herein parties and their instrumental witnesses on all pages.

WITNESS MY HAND AND SEAL on this _____day of ______ 1999 at Quezon City, Metro Manila, Philippines.

NOTARY PUBLIC

Doc. No. ____
Page No. ____
Book No. ____
Series of 1999