7,1980s Public Disclosure Authorized MEMORANDUM OF AGREEMENT. between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT. and

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1 Public Disclosure Authorized LOAN NUMBER 1878 PAN MEMORANDUM OF AGREEMENT Public Disclosure Authorized (Colon Urban Development Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized and THE INDUSTRIAL BANK OF JAPAN, LIMITED Dated 7,1980s Public Disclosure Authorized

2 LOAN NUMBER 1878 PAN MEMORANDUM OF AGREEMENT A. Recitals 1. International Bank for Reconstruction and Development (hereinafter called the World Bank) has agreed to lend to the Republic of Panama (hereinafter called the "Borrower") an amount in various currencies equivalent to US$35,000,000 (hereinafter called the "World Bank Loan") on the terms and conditions set forth in the Loan Agreement dated August 7, 1980 (hereinafter called the "World Bank Loan Agreement"), to assist in financing an urban development project in the city of Colon as more fully described in the World Bank Loan Agreement (hereinafter called the "Project"). 2. Certain private financial institutions including The Industrial Bank of Japan, Limited (hereinafter called the "Private Lenders"), have agreed to lend to Zona Libre de Colon (hereinafter called "Zona Libre") fifteen million United States dollars (US$15,000,000) (hereinafter called the "Private Lenders Loans"),for the portion of the Project for which Zona Libre is primarily responsible, on the terms and conditions set forth in the Loan Agreement dated as of July 7, 1980, (hereinafter called the "Private Lenders Loan Agreement"), such terms and conditions including inter alia a guarantee given by the Borrower. The Industrial Bank of Japan, Limited has agreed to act as agent for the Private Lenders under the Private Lenders Loan Agreement (hereinafter in such capacity called the "Agent"). 3. The World Bank and the Agent, on its own behalf and on behalf of the Private Lenders, hereby acknowledge that no party, in making its loan to the Borrower or Zona Libre, has relied on information or judgments concerning the Borrower, Zona Libre or the Project provided by or obtained from another party and that each party has made its loan in the exercise of its own independent judgment in accordance with its normal standards and practices. 4. The World Bank and the Agent, on behalf of itself and the Private Lenders, have deemed it convenient to make arrangements, with the consent of the Borrower and Zona Libre, for the exchange of information and views on matters of comon interest and for the provision by the World Bank of certain services related to the servicing of the Private Lenders Loans. It is, however, agreed that (i) neither the World Bank on the one hand, nor the Agent and the Private Lenders on the other, will rely on the other party to inquire into or verify the accuracy of any information provided by the Borrower or Zona Libre or to review or evaluate the condition of the Borrower, Zona Libre or the Project; and (ii) each party will take, or refrain from taking, any decision or action under the World Bank Loan Agreement or the Private Lenders Loan Agreement, as the case may be, on the basis only of its own independent judgment, without reliance on the information provided by, or expected from, the other party or the views expressed by such party.

3 Whenever used in this memorandum the terms defined in the World Bank Loan Agreement and the Private Lenders Loan Agreement have the meanings therein given to them. B. Service Payments of the Private Lenders Loan 6. The World Bank and the Agent hereby agree to act as follows in respect of payments to be made by Zona Libre to the Private Lenders pursuant to the Private Lenders Loan Agreement: (a) The Agent may, not more than 90 days nor less than 60 days before each Interest Payment Date (as defined in the Private Lenders Loan Agreement), give notice to the World Bank of: (i) the date of such Interest Payment Date; (ii) the principal loan amount, if any, of the Private Lenders Loans to be due and payable on such Interest Payment Date; and (iii) the amount of interest to be due and payable under the Private Lenders Loan Agreement on such Interest Payment Date. Mb) Within 30 days of its receipt of any such notice, the World Bank shall, on behalf of the Agent and on the basis only of the information received on time from the Agent pursuant to the preceding paragraph, bill Zona Libre for payment to the account referred to in paragraph (c) below of the amounts of principal and interest to be paid by Zona Libre under the Private Lenders Loan Agreement, with the same advance notice and using substantially the same procedures ae it applies to similar billings for the World Bank's own loans, and shall promptly send a copy of such bills to the Agent. (c) The Agent shall open and maintain on its books, at its New York Agency at 1 Wall Street, New York, New York, or at such other agency of the Agent as the Agent may, from time to time and in its sole discretion, designate by notice telexed to the World Bank, and without cost to the World Bank a special account in the Agent's name entitled "Zona Libre de Colon Loan Account" (herein called the Special Account) to which there shall be credited all amounts received by the Agent on account of payment of principal and interest for which the World Bank will have billed Zona Libre pursuant to the preceding paragraphs. (d) The amounts irrevocably received by the Agent in the funds and by the time and date specified in the Private Lenders Loan Agreement for credit to the Special Account shall pro tanto satisfy Zona Libre's obligations under the Private Lenders Loan Agreement. (e) If any such payment of principal or interest from Zona Libre is not received when due, the Agent shall give written notice thereof to the World Bank and the Agent may give any notice contemplated in the Private Lenders Loan Agreement to Zona Libre, and the World Bank shall, on behalf of the Agent, promptly request Zona Libre, by cable or telex, that such payment

4 -3- be made. A copy of such cable or telex shall be promptly sent by the World Bank to the Agent. (f) The World Bank does not undertake any responsibility with respect to the billing or payment of amounts owed by Zona Libre to the Agent or the Private Lenders other than as specified above: C. Information and Consultation 7. The World Bank and the Agent shall use their best efforts to make available as soon as practicable to each other all information received from the Borrower or Zona Libre that may be of ccon interest with respect to the service, or the accomplishment of the purpose, of their respective loans, except information received by the World Bank or the Agent or any Private Lender which the recipient, in its sole judgment, considers to be of a confidential nature; but neither the World Bank nor the Agent nor any Private Lender shall have any liability to the other for the inaccuracy or the incompleteness of any information made available by it in good faith or for any failure in good faith to make available any information. 8. The World Bank and the Agent, on its own behalf and on behalf of the Private Lenders, shall: (al to the extent practicable, afford each other a reasonable opportunity to exchange views before taking any action which may lead to: i) the suspension, cancellation, or acceleration of their respective loans; or (ii) a substantial amendment of the Project; and (bj at the request of either party, exchange views on any substantial and adverse change in the financial condition of the Borrower or Zona Libre or in the progress or cost of the Project; provided, however, that nothing in this paragraph 8 shall in any way limit or impair the independent right of decision and action of the World Bank or of the Agent and the Private Lenders under the World Bank Loan Agreement or the Private Lenders Loan Agreement, respectively. D. Miscellaneous 9. The rights or obligations of the World Bank or the Agent under this Memorandum shall "no be assigned ot otherwise transferred to any third party vithout the wr n nt of the other party. 10. The parties hereto agree that any notice or request given or made pursuant to this Memorandum shall be deemed to have been duly given or made when it shall be delivered to the following addresses:

5 -4- For the World Bank: For the Ment: International Bank for The Industrial Bank Reconstruction and Development of Japan, Limited 1818 B Street, N.W. 1 Wall Street Washington, D.C New York, N.Y United States of America United States of America Cable Address: INTRAFRAD Washington, D.C. Telex Addresses: Cable Address: KOGYOGINKO, NEW YORK Telex Address: (NU) (USA and Canada only) (WU) (USA and (U) (USA and Canada only) Canada only) (RCA) (ITT) This Memorandum will come into force and effect upon signature by the World Bank and the Agent and acceptance by the Borrower and Zona Libre. INTERNATIONAL BANK FOR THE INDUSTRIA BANK OF RECONSTRUCTION AND DEVELOPMENT JAPAN, LIMITED Date: 1 ( I Pd > C Date: (/NV d1v?? ACCEPTED: REPUBLIC OF PANAMA By: / L -2A -) Date: 01 OLj ZONA LIBRE DE COLON By: Date: Li

6 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development. In witness whereof I have signed this Certificate and affixed the Seal of the Bank thereunto this 2 day of FOR SECRETARY