Securities & Exchange Commission

March 17, 1998 PSE CIRCULAR FOR BROKERS NO. 388-98 March 16, 1998 Securities & Exchange Commission Director Linda A. Daoang Money Market Department S.E.C. Building, EDSA Mandaluyong City Philippine Stock Exchange Head, Listing Department PSE Center, Exchange Road Ortigas Center, Pasig City Gentlemen : We are pleased to inform you that Ayala Corporation and Microsoft Corporation will sign a memorandum of understanding to explore several areas of partnership in the field of information technology (IT). The signing will be one of the highlights of the one-day visit to the Philippines on March 20 by Bill Gates, Chairman and Chief Executive Officer of Microsoft Corporation, the world's leading software producer. cdlex In a six-point memorandum of understanding, Ayala will collaborate with Microsoft to venture into electronic commerce, initiatives in digital entertainment as well as plans to establish a technology zone, among other projects. Plant to engage in the full range of electronic commerce which allows companies to transact business with clients and partners using the Internet, Electronic Data Interchange and other digital formats is perhaps what will be appreciated soonest by the general public. It may become possible, for instance, for a client to make insurance payments and house amortization payments, as well as to make reservations with the electronic commerce system that Ayala will implement in collaboration with Microsoft. Overall, the investment of the Ayala Group in IT initiatives amount to nearly P7 billion. Aside from being committed users of IT, the Ayala Group is a major provider of IT products and services through subsidiaries such as Integrated Microelectronics, Inc., Ayala Systems Technology, Inc. (ASTI), EDINet Philippines (EDINet), Inc., and Globe Telecom. The technology zone envisioned by Ayala Corporation with the assistance of Microsoft is a community dedicated to cyber industries engaged in research and software development. The zone is projected to cater to a global market. Other Internet-based services that Ayala and Microsoft will look into are web-casting or sending out information to users via the World Wide Web, Internet telephony and video-conferencing, as well as value-added services such as home banking, and other financial transaction servicing. The six-point memorandum will also provide for stronger ties between Microsoft and two Ayala corporate vehicles in IT: ASTI, an accredited Microsoft Product Support Center, and EDINet. ASTI and EDINet personnel will be trained by Microsoft for the successful implementation of the Ayala Group's various IT initiatives. Apart from creating business solutions, Ayala and Microsoft will also collaborate in establishing a system to make historical data from the Filipinas Heritage Library available via the Internet-based Connected Learning Communities, particular the virtual linking of the Filipinas Heritage Library to local and overseas libraries through the Internet. Ayala and Microsoft will likewise cooperate in designing an enterprise-wide information system for the Ayala Group of Companies. The system, using groupware and workflow technologies, will facilitate improved communication and collaboration within and among the Ayala Group subsidiaries and affiliates which include leading names in Philippine business such as Ayala Land, Inc., Bank of the Philippine Islands, Integrated Microelectronics, Globe Telecom, Pure Foods Corporation, Ayala Life Assurance, Inc., FGU Insurance Corp., Universal Reinsurance Corporation, and automotive ventures Honda and Isuzu. The above information is being made in compliance with the disclosure requirements of the Securities & Exchange Commission and the Philippine Stock Exchange. Thank you. Very truly yours, (SGD.) RENATO O. MARZAN Managing Director