Hon. Sisenando M. Barretto, Jr.

April 14, 1989 Hon. Sisenando M. Barretto, Jr. Acting Deputy Executive Director Philippine Overseas Construction Board 15th Floor, Trade and Industry Center Tordesillas St.,Salcedo Village Makati, Metro Manila RE : Engineering Equipment, Inc . Sir : This refers to your letter dated February 10, 1989, requesting for confirmation on the approval of the following transactions of Engineering Equipment, Inc. 1. Liability to Mohammad Al-Mojil Establishment (MME) to be converted into 136.4 million common shares at the price of P2.50 per share (P341,000,000.00); 2. Additional equity infusion by Benguet Corporation through the purchase of 44 million common shares at the price of per share (P110,000,000.00) 3. Increase in the stockholders equity by P17,970,849 thru the issuance of capital stock broken down into common (P9,113,498) and preferred (P8,857,351) shares. Relative to the first and second transactions, Section 62 of the Corporation Code provides: "SECTION 62. Consideration for stocks . ....Consideration for the issuance of stock may be any or combination of any two or more of the following: 1. Actual cash paid to the corporation ; xxx xxx xxx 4. Previously incurred indebtedness by the corporation ; xxx xxx xxx". Thus, pursuant to the aforecited provisions, the Commission on October 7, 1988 approved the company's application to increase its authorized capital stock from P500 Million to P700 Million payment of which was made by way of the said questioned transactions. Relative to the third transaction, corporate records on file with the Commission do not show that the company has issued P17,970,849 worth of shares (9,113,498 common and P8,857,351 preferred). However, the shares of stock of subject corporation are registered in accordance with the provisions of the Revised Securities Act. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman