Philippines - Piso Project : Loan 1555 - Subsidiary Loan Agreement - Conformed

CONFORMED COPY Subsidiary Loan Agreement (PISO Project) between PHILIPPINE NATIONAL BANK and PHILIPPINE INVESTMENTS SYSTEMS ORGANIZATION Dated May 8, 1978 SUBSIDIARY LOAN AGREEMENT AGREEMENT, dated May 8, 1978 between PHILIPPINE NATIONAL BANK (hereinafter referred to as PNB) and PHILIPPINE INVESTMENTS SYSTEMS ORGANIZATION (hereinafter referred to as PISO). WHEREAS by an agreement of even date herewith (hereinafter referred to as the Loan Agreement) the International Bank for Reconstruction and Development (hereinafter referred to as the Bank) and PNB, the Bank has agreed to make available to PNB a loan in an amount in various currencies equivalent to fifteen million United States dollars ($15,000,000) on the terms and conditions set forth therein (hereinafter referred to as the "Loan"); WHEREAS under the terms of the Loan Agreement PNB has agreed to enter into a subsidiary loan agreement with PISO whereby PNB will relend to PISO the amounts made available to PNB under the Loan Agreement for the purposes set forth therein; WHEREAS by an agreement of even date herewith (hereinafter referred to as the Project Agreement) between the Bank and PISO, PISO has undertaken certain obligations to the Bank in connection with the use of the proceeds of the Loan; and WHEREAS by an agreement of even date herewith (hereinafter referred to as the Guarantee Agreement) between the Republic of the Philippine (hereinafter referred to as the Guarantor) and the Bank, the Guarantor, in consideration of the Bank entering into the Loan Agreement with PNB, has agreed to guarantee the obligations of PNB under the said Loan Agreement; NOW THEREFORE it is hereby agreed by the parties hereto as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement and in the General Conditions (as so defined in Section 1.02 of the Loan Agreement) have the respective meanings therein set forth, and the loan provided for in this Agreement shall be called the "Subsidiary Loan". -2- ARTICLE II Subsidiary Loan Section 2.01. PNB agrees to lend to PISO, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies not to exceed in the aggregate the equiva- lent of $15,000,000, corresponding to the amount from time to time withdrawn from the Loan Account under the Loan Agreement. Section 2.02. Applications for withdrawals from the Loan Account pursuant to Section 2.03 of the Loan Agreement and Section 2.02 of the Project Agreement and any request for special commit- ments shall be prepared, signed and presented directly by PISO to the Bank, on behalf of PNB, prior to the Closing Date, together with all such documents and other evidence in support of the application as shall be requested by the Bank in connection with such withdrawals and requests. Section 2.03. PISO shall promptly advise PNB of all actions taken pursuant to Section 2.02 of this Agreement and shall furnish to PNB copies of all documents and communications exchanged between the Bank and PISO. Section 2.04. The principal amount of the Subsidiary Loan shall be the equivalent of the value of the currency or currencies withdrawn from the Loan Account. Section 2.05. Each amount of the Subsidiary Loan shall be deemed to be relent to PISO on the date, and in the currency or currencies, of the corresponding withdrawal by PISO from the Loan Account. Section 2.06. PISO shall repay to PNB the principal amount of the Subsidiary Loan as follows: (a) Repayment shall be made in accordance with the Amortiza- tion Schedule set forth in Schedule 1 to the Loan Agreement as such Schedule shall be amended from time to time pursuant to Section 2.08 of the Loan Agreement. (b) PISO shall repay to PNB such amount as shall be equiva- lent to the amount in foreign currency or currencies payable by PNB to the Bank, such equivalent to be determined on the basis of the effective market rate in the Philippines prevailing at the time of such repayment. -3- Section 2.07. (a) PISO shall pay to PNB: (i) interest at the rate of 7.50% per year on the principal amount of the Subsidiary Loan outstanding from time to time; and (ii) an amount equivalent to the commitment charge which PNB has to pay to the Bank, determined on the basis of the effective exchange rate in the Philippines prevailing at the time such commitment charge is payable. (b) Interest shall accrue from the respective dates on which amounts shall be withdrawn from the Loan Account and shall be computed on the basis of a 360-day year of twelve 30-day months. Section 2.08. PISO shall further pay to PNB: (a) 0.443% per year on the principal amount of the Sub- sidiary Loan outstanding from time to time, or such other charge as shall be agreed between the Bank, PNB and PISO; (b) all other amounts which PNB shall be required to pay to the Bank pursuant to the provisions of the Loan Agreement and the General Conditions; and (c) the amounts of any expenses properly incurred by PNB (i) in connection with the purchase of the foreign currencies in which the Loan has to be repaid by PNB to the Bank, or (ii) generally in connection with enforcement of its rights under the Subsidiary Loan. Section 2.09. (a) The payments provided for in Section 2.07 and paragraph (a) of Section 2.08 shall, subject to the provision of paragraph (a) of Section 3.03 of this Agreement, be made semiannually on March 1 and September 1 in each year. (b) All other payments by PISO to PNB pursuant to this Agreement shall be made upon demand by PNB. Section 2.10. (a) PISO, upon agreement with PNB 60 days or more in advance, may repay in advance of maturity all or any portion of the principal amount of the Subsidiary Loan, in which case PNB shall prepay an equivalent amount of the Loan, but only in accordance with the provisions of the General Conditions relating to repayment of the Loan in advance of maturity by PNB to the Bank. (b) Unless the Bank and PISO shall otherwise agree, if a sub-loan or any part thereof shall be repaid to PISO in advance of maturity, or if a sub-loan or an investment or any part thereof shall be sold, transferred or otherwise disposed of for value, PISO shall promptly notify the Bank and PNB and shall pay to PNB on the next following interest payment date, together with the premium specified in Schedule 1 to the Loan Agreement unless such premium has been waived by the Bank, an amount of the Subsidiary Loan equal to: (i) in case of a sub-loan the amount withdrawn from the Loan Account in respect of such sub-loan or the said part thereof; or (ii) in the case of an investment, the excess, if any, of the amount withdrawn from the Loan Account in respect of such investment, on the said part thereof, over the amount of the Subsidiary Loan theretofore repaid to PNB in respect of such investment. PNB shall, in accordance with Section 2.09 of the Loan Agreement, repay to the Bank any repayments made to it pursuant to this sub-paragraph (b). ARTICLE III Miscellaneous Section 3.01. (a) PISO undertakes to assign to PNB all liens it shall receive from an investment enterprise as security for a sub-loan made to such investment enterprise if such sub-loan shall be made wholly out of the proceeds of the Loan; if such sub-loan shall be made only partly out of the proceeds of the Loan, then PISO shall assign to PNB only such part of the lien as propor- tionately corresponds to the amount of Loan funds used by PISO for such sub-loan. (b) PISO shall bear all costs and expenses arising in con- nection with the assignment of liens to PNB pursuant to paragraph (a) of this Section. Section 3.02. Whenever PISO shall pay to PNB any amounts owed to PNB pursuant to the provisions of this Agreement, after the date specified in Section 2.09 of this Agreement, PISO shall pay an additional charge at the rate of twelve per cent (12%) per annum on all amounts so owed from the date so specified to the date of actual payment. - 5 - Section 3.03. (a) Except as PNB and PISO shall otherwise agree, PISO shall make the payments provided for in Section 2.06, Section 2.07, paragraphs (a) and (b) of Section 2.08 and paragraph (b) of Section 2.10 of this Agreement not less than five (5) days prior to the due date thereof in order to give ample time to PNB to make payments to the Bank pursuant to the provisions of the Loan Agreement. No reduction of interest shall be permitted because of such prior payment. (b) Except as PNB and PISO shall otherwise agree, all payments by PISO to PNB shall be made in pesos. Section 3.04. PNB shall be entitled to one member on the Board of Directors of PISO as long as the Subsidiary Loan or any portion thereof remains outstanding. Section 3.05. If the right under the Loan Agreement to make withdrawals from the Loan Account shall have been suspended or terminated, regardless of the reason therefor, then the Subsidiary Loan shall likewise and simultaneously be suspended for the same period, or terminated, as the case may be. Section 3.06. If any of the events specified below shall occur, PNB may declare the principal amount of the Subsidiary Loan then outstanding to be due and payable immediately and upon such declaration all amounts due with respect to the Subsidiary Loan shall become due and payable immediately, anything in this Agree- ment to the contrary notwithstanding: (a) a default shall have occurred in the performance by PISO of any obligation or covenant under this Agreement, and such default shall continue for a period of 30 days; and (b) any of the events specified in Section 5.01 of the Loan Agreement shall have occurred and the Bank shall have declared the principal of the Loan then outstanding to be due and payable immediately. Section 3.07. This Agreement shall come into force and effect on the date on which the Loan Agreement becomes effective. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this -6- Subsidiary Loan Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. PHILIPPINE NATIONAL BANK By /s/ Oscar Carino Authorized Representative PHILIPPINE INVESTMENTS SYSTEMS ORGANIZATION By /s/ Victor Barrios Authorized Representative