Republic of the Philippines Department of Transportation...

Republic of the Philippines Department of Transportation and Communications Light Rail Transit Authority Concession Agreement in relation to the Manila LRT1 Extension, Operations and Maintenance Project

Table of Contents

Recitals ........................................................................................................................... 1

Section 1 DEFINITIONS AND RULES OF INTERPRETATION.........................................3

Section 2 DOCUMENTS COMPRISING THIS CONCESSION AGREEMENT ................. 34

Section 3 THE CONCESSION ............................................................................................ 34

Section 4 MILESTONES .................................................................................................... 37

Section 5 OBLIGATIONS PRIOR TO EFFECTIVE DATE ............................................... 41

Section 6 HANDOVER TO CONCESSIONAIRE ON THE EFFECTIVE DATE ................ 56

Section 7 CONSTRUCTION START DATE ...................................................................... 64

Section 8 EQUITY OBLIGATION ..................................................................................... 66

Section 9 CONCESSIONAIRE PERFORMANCE SECURITY ........................................... 68

Section 10 FINANCING OF PROJECT .............................................................................. 73

Section 11 RIGHT OF WAY .............................................................................................. 75

Section 12 DESIGN AND CONSTRUCTION OF THE WORKS ....................................... 84

Section 13 GRANTORS PROCUREMENT AND AFCS .................................................... 87

Section 14 COMMISSIONING AND ACCEPTANCE......................................................... 97

Section 15 SUBCONTRACTING ..................................................................................... 105

Section 16 OWNERSHIP, CUSTODY AND RISK OF ASSETS ...................................... 106

Section 17 DELAY AND COMPENSATION.................................................................... 110

Section 18 OPERATION, MAINTENANCE AND SERVICES......................................... 114

Section 19 MAJOR MAINTENANCE AND UPGRADES ................................................ 128

Section 20 CONCESSIONAIRE REVENUES ................................................................... 131

Section 21 INDEPENDENT ENGINEER ......................................................................... 147

Section 22 INSPECTION AND MONITORING .............................................................. 149

Section 23 GRANTORS UNDERTAKINGS..................................................................... 150

Section 24 PROJECT MANAGEMENT ........................................................................... 152

Section 25 RECORDS, REPORTING AND AUDIT ........................................................ 153

Section 26 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS ................. 160

Section 27 INSURANCE .................................................................................................. 167

Section 28 FORCE MAJEURE ......................................................................................... 170

Section 29 MATERIAL ADVERSE GOVERNMENT ACTION ....................................... 174

Section 30 GRANTORS COMPENSATION .................................................................... 177

Section 31 DEFAULT AND TERMINATION ................................................................. 178

Section 32 GRANTORS EMERGENCY RIGHT .............................................................. 194

Section 33 HANDBACK OF PROJECT ........................................................................... 196

Section 34 INDEMNITIES ............................................................................................... 199

Section 35 DISPUTE RESOLUTION............................................................................... 202

Section 36 MISCELLANEOUS PROVISIONS ................................................................. 205

Schedules:

1. EQUITY REQUIREMENTS

2. DESCRIPTION OF EXISTING SYSTEM

3. DESCRIPTION OF CAVITE EXTENSION

4. GRANTORS' RESPONSIBILITIES

5. MEETINGS

6. CONCESSIONAIRE RESPONSIBILITIES FOR THE OPERATIONS AND MAINTENANCE ACTIVITIES

7. ENGINEERING PROCUREMENT AND CONSTRUCTION OF THE CAVITE EXTENSION

8. INTEGRATION OF SYSTEM

9. FINANCIAL MATTERS

10. FINANCIAL CONSEQUENCES OF TERMINATION

11. APPROVED SUBCONTRACTORS

12. HANDBACK REQUIREMENTS

13. CONCESSIONAIRE PERFORMANCE SECURITY

14. ENVIRONMENTAL MATTERS

15. OPERATING FRANCHISE PARTICULARS

16. BASELINE SYSTEM PLANS

17. REQUIREMENTS FOR O&M AGREEMENT AND TECHNICAL SERVICES AGREEMENT

18. INDEPENDENT ENGINEER – FORM OF APPOINTMENT

19. SHARE ESCROW AGREEMENT

20. REPORTS

21. FORM OF ACKNOWLEDGEMENT AND CONSENT AGREEMENT

22. AFCS MEMORANDUM OF AGREEMENT

23. CYCLE TIME / AVAILABLE LRVs MATRIX

24. DETAILS OF COMMON STATION

25. VARIATION ORDER SAMPLE CALCULATION

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CONCESSION AGREEMENT

MANILA LRT 1 EXTENSION, OPERATIONS AND MAINTENANCE PROJECT

This Concession Agreement entered into this ______day of , in ____________, by and between:

The GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, acting through

its DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS,

hereinafter referred to as the "DOTC" with its office address at the Columbia

Tower, Barangay Wack-Wack, Ortigas Avenue, Mandaluyong City, Metro Manila,

Philippines, represented herein by its Secretary, [ ];

LIGHT RAIL TRANSIT AUTHORITY, an instrumentality of the Government of

the Republic of the Philippines created under Executive Order No. 603 (1980) as

amended, with its principal address at 2/F LRTA Administration Building, LRTA

Compound, Aurora Boulevard, Pasay City, Metro Manila, Philippines, represented

by its administrator, [ ], and hereinafter referred to as the "LRTA";

(DOTC and LRTA are hereinafter collectively referred to as the "Grantors" and

each individually as a "Grantor")

– and –

[ ], a corporation duly organized and existing under and by virtue

of the laws of the Republic of the Philippines with its office address at [ ], represented herein by its President/Chief Executive Officer [ ], and

hereinafter referred to as the "Concessionaire".

WITNESS THAT:

WHEREAS, this is a project of national significance to the Republic of the Philippines;

WHEREAS, the LRTA has been vested with the power and authority to construct, operate, maintain and/or lease light rail systems in the Republic of the Philippines;

WHEREAS, the DOTC, pursuant to its charter Executive Order No. 125, as amended by

Executive Order No. 125a, is vested with the power and authority to (1) establish and administer comprehensive and integrated programs for transportation, (2) issue

certificates of public convenience for the operation of rail transportation utilities and

services, (3) establish and prescribe rules and regulations for the issuance of certificates

of public convenience for public land transportation utilities such as railways, and (4)

determine, fix and/or prescribe charges and/or rates pertinent to the operation of land

transportation utility facilities and services;

2

WHEREAS, the Investment Coordination Committee and the board of the National

Economic and Development Authority of the Republic of the Philippines have approved

the development and implementation of the Project in accordance with the BOT Law;

WHEREAS, the Grantors issued an invitation to various bidders to tender for the Project

and have decided that the Project shall be developed and operated by the Concessionaire as a variant of the build transfer operate ("BTO") contractual

arrangement as provided in the BOT Law and as described further in Section 3;

WHEREAS, the bidders conducted their due diligence in connection with the Project,

including all necessary surveys, as specified in the Tender Documents;

WHEREAS, on [ ], the [consortium/corporation] of [ ] was selected as the

winning bidder for the Project and was invited to enter into this Concession Agreement

for the purpose of carrying out the Project; and

WHEREAS, the Concessionaire has been incorporated by the above [consortium/corporation] for the sole purpose of carrying out the Project and entering into this Concession Agreement.

NOW THEREFORE, for and in consideration of these premises and the mutual

commitments, obligations and undertakings hereunder, the Parties have agreed as

follows:

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Section 1 DEFINITIONS AND RULES OF INTERPRETATION

1.1 Definitions

In this Concession Agreement, each of the following terms has the meaning

stated below, unless its context as used in this Concession Agreement clearly indicates otherwise:

"Abandon" means to cease the construction of the Railway Infrastructure

Works, Railway System Works, System Upgrades or Additional System Upgrades

or the operation, and maintenance of the System or performance of the Services

for a continuous period of thirty (30) days or in such a manner that, in each case,

indicates an intention to cease construction, operation and/or maintenance of

the System on a permanent basis and "Abandonment" shall be construed

accordingly.

"Acceptable Reserve LC" means an irrevocable standby letter of credit

complying with the following requirements:

(a) it shall be callable on demand by the Grantors;

(b) it shall be non-recourse to the Concessionaire;

(c) it shall be for a period of one (1) year or such other period as Grantors

may agree;

(d) it shall be issued by a bank acceptable to the Grantors; and

(e) it shall provide that, if not renewed no later than five (5) days prior to its expiry date, it may be called in full by the Grantors.

"Acknowledgment and Consent Agreement" means the agreement to be

entered into between the Grantors, the Concessionaire and the Finance Parties' Agent as contemplated in Section 23.1 (Cooperation with Finance Parties) in

substantially the form set out in Schedule 21 (Form of Acknowledgment and Consent Agreement).

"Actual Fare" means at any time the fare charged to the travelling public by the

Concessionaire.

"Additional Free Ride Periods" has the meaning given in Section 20.3.g

(Notional Fare, Approved Fare and Actual Fare).

"Additional Obligor" has the meaning given in Section 31.3.c (Default and

Termination).

"Additional ROW" means any ROW that the Concessionaire needs for the

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construction, operation and maintenance of the Cavite Extension which is not

Basic ROW, ROW Required for Remedial Work or Identified Intermediate ROW

(CE).

"Additional System Upgrades" has the meaning given in Section 19.3 (Grantors'

Procurement Option).

"AFCS" means an automatic fare collection system to be introduced by the DOTC

for the System and for any other transit system as determined by DOTC.

"AFCS Concession Agreement" means the agreement entered into on 31 March

2014 by DOTC and the AFCS Concessionaire for the purpose of providing the

AFCS.

"AFCS Concessionaire" means Automatic Fare Collection Services Inc, the entity

selected by DOTC to develop, install and maintain the AFCS, to operate the AFCS

Clearing House and to do all things incidental thereto pursuant to the AFCS

Concession Agreement or such other person that the Grantors may appoint

succeeding to its functions, rights and obligations up to the end of the term of the

AFCS Concession Agreement, which may be extended by the Grantors.

"Affected Communities" means any people or communities located in the

Project Land’s geographical proximity, who are subject to actual or potential

direct risks and/or adverse impacts related to the construction or operation of

the Project.

"Affiliate" means, in relation to a person, a person who is effectively Controlled

by or Controlling the other person or is associated with such other person under

common ownership and Control.

"Approved Fare" means the maximum fare that the Concessionaire is

authorised to charge pursuant to Sections 20.3.b (Notional Fare, Approved Fare

and Actual Fare) and/or 30 (Grantors Compensation).

"Asia World Station" is the Station so identified to be located on Basic ROW

Package 1, to be constructed by the Concessionaire in accordance with this

Concession Agreement.

"Asset Register" means the non-comprehensive list of Project Assets of the

Existing System prepared by the Grantors as stated in paragraph 1 of Schedule 4,

to be taken over, maintained and expanded by the Concessionaire so as to create a comprehensive Asset Register and returned to the Grantor on the earlier of the

Termination Date or the Transfer Date.

"Available Employees" has the meaning given in Section 6.3 (Transferring Employees) and as identified in accordance with paragraph 1 of Schedule 4

(Grantors Responsibilities).

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"Balancing Payment" means any payment to be made pursuant to Section 20.6

(Balancing Payments).

"Baseline System Plan" means the indicative plan setting out the times at which

the Concessionaire will perform major maintenance and System Upgrades and

the nature of such work as set out in Schedule 16 (Baseline System Plan).

"Basic ROW" means the ROW detailed in the ROW Acquisition Plan.

"Basic ROW Package" means any of Basic ROW Package 1, Basic ROW Package 2

and Basic ROW Package 3.

"Basic ROW Package 1" means the Basic ROW starting at Baclaran station and

extending 6,195.38 meters to Dr. Santos Station, as more particularly defined in Part 1 of Schedule 4 (Grantors' Responsibilities).

"Basic ROW Package 1A" means that portion of Basic ROW Package 1 starting

at Baclaran Station and extending 3,391.24 meters to Asia World Station, as more particularly defined in Part 1 of Schedule 4 (Grantors' Responsibilities).

"Basic ROW Package 2" means the Basic ROW starting at the end point of Basic

ROW Package 1 and extending 3,241.48 meters to Zapote station and including the Satellite Depot, as more particularly defined in Part 1 of Schedule 4

(Grantors' Responsibilities).

"Basic ROW Package 3" means the Basic ROW starting at the end point of Basic

ROW Package 2 extending 2,366.58 meters to Niyog station, as more particularly

defined in Part 1 of Schedule 4 (Grantors' Responsibilities).

"Bid Documents" means the Qualification Documents, Technical Proposal and

Financial Proposal submitted by the winning bidder for the Project.

"Bid Submission Date" means [28 May 2014], the date when the bidders for this

Project were required to submit their Bid Documents to the Special Bids and

Awards Committee formed through Special Order No. 2012-108 by the DOTC.

"Blocked Account" has the meaning given in Section 20.10 (Blocked Account).

"BOT Law" means Republic Act No. 6957 as amended by Republic Act No. 7718

and its 2012 Implementing Rules and Regulations.

"Business Day" means a day (other than a Public Holiday, Saturday or Sunday)

when banks are open for business in Makati City, Metropolitan Manila.

"Calendar Quarter Date" means each of 31 March, 30 June, 30 September and

31 December in any year.

"Calendar Year End Date" means 31 December in any year.

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"Cavite Extension" means:

(a) the New Railway System;

(b) the Grantors Procured LRVs (when completed);

(c) the New Stations;

(d) the New Track; and

(e) the Grantors Depot Works (when completed).

Upon completion and integration of the Concessionaire AFCS Infrastructure with the Level 3 Infrastructure of the System in accordance with this Concession

Agreement, the Concessionaire AFCS Infrastructure shall form part of the Cavite

Extension.

"Change in Law" means any of the following events occurring after 1 January

2014 as a result of any action by any Government Authority:

(a) a change in or repeal of a Legal Requirement of national application (for the avoidance of doubt Republic Act No. 7160 as amended, also known as

the Local Government Code of 1991, and its implementing rules and

regulations constitute a Legal Requirement of national application);

(b) an enactment or making of a new Legal Requirement of national

application; and

(c) a change in the manner in which a Legal Requirement of national

application is applied, enforced or interpreted (including for the

avoidance of doubt, any material change in the interpretation or

enforcement regime after 1 January 2014 of a Legal Requirement of

national application enacted prior to such date).

Change in Law does NOT include:

(a) subject to item (a) above, a change in local taxation;

(b) an increase in the Annual Income Tax for Corporations and Partnerships

in the Philippines up to and including a level of thirty-five percent (35%)

(provided further that if, for example, the above tax rate increases to

thirty-seven percent (37%), the Concessionaire's entitlement to compensation pursuant to Section 29 (Material Adverse Government

Action) shall be restricted to compensation for the increase in such tax

between the levels of thirty-five percent (35%) and thirty-seven percent

(37%), which is, two percent (2%);

(c) adjustments in the minimum wage scales and rates in the Philippines;

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(d) introduction or adjustment of value added tax of general application to

companies doing business in the Philippines (but provided that a change

of or introduction in value added tax applied only to the Concessionaire or

to companies operating urban transport system, rail, mass rail transit,

light rail transit and similar systems and/or other form of non-rail urban

transport (for example, bus, taxi, jeepneys) shall be considered a Change

in Law); and

(e) improvements in railway technology or operational practices as reflected

in agreed System Plans.

"Coercive Practice" means impairing or harming, or threatening to impair or harm, directly or indirectly, or exercising undue influence upon any person or

property in order to influence any person's participation or action in the bidding

process for the Project or the implementation of this Concession Agreement.

"Commercial Agreement" means any agreement entered into by the

Concessionaire with a third party which relates in any way to Co mmercial

Revenue.

"Commercial Assets" has the meaning given in Section 20.11.a (Taxes).

"Commercial Business" means that part of the business and undertaking of the

Concessionaire that generates Commercial Revenue and provided that for the

purposes of Schedule 10 (Financial Consequences of Termination) the valuation

thereof shall be determined in accordance with the parameters set out in Section

25.2.a(6).

"Commercial Revenue" is any amount generated from:

(a) utilisation of the System and parts thereof to generate advertising and

similar revenue streams;

(b) payments (whether by way of rent, licence fee or otherwise) from shops, stalls and other retail outlets or other enterprises at Stations;

(c) payments made by telecommunications providers for use of the ROW

and/or the System;

(d) revenues from property development on the Project Land; and

(e) any other revenue that is not Farebox Revenue, Deficit Payments or

Grantors Compensation Payments.

"Commissioning and Acceptance Notice" means a notice given pursuant to

Section 14 (Commissioning and Acceptance).

"Commissioning and Acceptance Plan" has the meaning set out in Part 7 of

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Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension).

"Commissioning and Acceptance Tests" has the meaning set out in Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension).

"Commissioning and Acceptance Standards" means the standards as set out in

Part 7 of Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension).

"Common Station" means the proposed new terminal station of the System

which will provide a connection between the System, the existing Metro Rail

Transit System Line 3 (MRT-3) and the proposed Metro Rail Transit System Line

7 (MRT-7) to be located at the vicinity of the existing station of MRT-3 at North

Avenue along EDSA in Quezon City, Metro Manila as contemplated in Section 6.4

(Common Station).

"Common Station Cost" shall have the meaning given in Section 6.4.c ("Common

Station").

"Common Station Consultants" shall have the meaning given in Section 6.4.c

("Common Station").

"Common Station Consultants Report" shall have the meaning given in Section

6.4.c ("Common Station").

"Concession" means the exclusive right granted by the Grantors during the

Concession Period as set out in Section 3 (The Concession).

"Concessionaire AFCS Infrastructure" means the Levels 1-2 Infrastructure for

the Cavite Extension and any additional Levels 1-2 Infrastructure for the Existing

System, over and above that provided by the Grantors in accordance with Clause

7 of Part 2 of Schedule 2 (Description of Existing System), if and to the extent any is required by the Concessionaire.

"Concessionaire Preliminary Design" shall have the meaning given in Section

6.4.b (Common Station).

"Concession Payments" means the payments to be made by the Concessionaire

to the Grantors as set out in Section 20.5 (Concession Payment) and Part 2 of

Schedule 9 (Financial Matters).

"Concession Period" means the period of thirty-two (32) years commencing

from the Effective Date as extended or terminated as contemplated in Section 3.5 (Concession Period).

"Concessionaire Constitutional Documents" means true, complete and up-to-

date copies of the articles of incorporation and by-laws of the Concessionaire

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approved and certified by the Philippine Securities and Exchange Commission.

"Concessionaire Delay Event" has the meaning set out in Section 17.4.a (Delay Events).

"Concessionaire Event of Default" has the meaning set out in Section 31.1.a

(Concessionaire Events of Default).

"Concessionaire Performance Security" means any or all of the Operation

Performance Security, Construction Performance Security, Handback Security

and Warranty Security, each as contemplated in Section 9 (Concessionaire

Performance Security).

"Concessionaire Required Insurances" means the insurances set out in Section 27 (Insurance).

"Concessionaire Resolutions" means true, complete and up-to-date copies of

the resolutions adopted by the board of directors of the Concessionaire and, if applicable, the shareholders of the Concessionaire, in the Agreed Form

authorising the execution, delivery and performance of this Concession

Agreement and the Transaction Documents, as certified by its corporate

secretary.

"Concessionaire Revenue" means the revenue the Concessionaire is entitled to collect as set out in Section 20.1 (Concessionaire Revenue).

"Construction Dispute" means any dispute over which the Construction

Industry Arbitration Commission ("CIAC") has exclusive and original jurisdiction as provided by the CIAC charter and by applicable decisions of the Supreme

Court of the Philippines.

"Construction Performance Security" has the meaning set out in Section 9.3 (Construction Performance Security).

"Construction Period" means the period commencing from the Construction

Start Date and ending on the Extension Completion Date.

"Construction Start Date" means the date on which the Notice to Proceed is

issued to the Concessionaire pursuant to Section 7.4(c) (Procedure for

determining Construction Start Date) and the Concessionaire is obliged to

commence the Works.

"Contract Year" means each twelve (12) month period commencing on the Effective Date and on every subsequent anniversary of the Effective Date for the

duration of the Concession Period.

"Contracts Register" means a register of all contracts (excluding employment

10

contracts) entered into by LRTA in relation to the Existing System that either: (a)

are of an indefinite term; or (b) have a term that will expire after the then

anticipated Effective Date (which, in the case of the first Contracts Register

delivered shall be deemed to be the date six (6) months after the Signing Date).

"Corrupt Practice" means any of the prohibited acts and omissions punishable under Republic Act No. 3019 ("Anti-Graft and Corrupt Practices Act"), Act No.

3815 ("Revised Penal Code"), Republic Act No. 6713 ("Code of Conduct and Ethical Standards for Public Officials and Employees"), Republic Act No. 7080

("Plunder Law"), and other applicable laws and relevant rules and procedures,

by which a person improperly or unlawfully enriches or benefits himself or

others or induces others to do so and includes the offering, giving, receiving, or

soliciting, directly or indirectly, of anything of value to influence the actions of

any person connected with the bidding for the Project or the implementation of this Concession Agreement.

"CS Escrow Account" shall have the meaning given in Section 6.4.h (Common

Station).

"CS Escrow Agent" shall have the meaning given in Section 6.4.h (Common

Station).

"Cycle Time" is the time elapsed from when a train departs on a scheduled

service from an Originating Station (as defined in Part 3 of Schedule 6

(Concessionaire's Responsibilities for the Operation and Maintenance Activities)) to when it again departs from the same Originating Station having completed a full

return journey on the System and having stopped at all Existing Stations in both

directions. The current Cycle Time for the Existing System, as stated and applied

in the timetable, is one hundred and six (106) minutes.

"Data Room Disk" means the CD-Rom labelled "Manila LRT 1 Data Room Disk" appended to this Concession Agreement and initialled by the Parties for the

purposes of identification.

"Debt" means the aggregate of all outstanding amounts of all indebtedness (excluding indebtedness on subordinated terms to Shareholders, Affiliates and

other indebtedness falling within the definition of "Equity") and other liabilities

in the nature of indebtedness (including liabilities under capital leases and

finance leases) of the Concessionaire including accrued interest and other

charges.

"Deemed ECD" means the date on which all elements of the Cavite Extension

have been completed and, to the extent possible, tested in accordance with

Section 14 (Commissioning and Acceptance), but where the Provisional Acceptance Certificate or Final Acceptance Certificate as the case may be cannot

be issued by reason of a Grantors Delay Event.

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"Deficit Payment" means the deficit payment calculated in accordance with

Section 20.4 (Deficit Payment and Surplus Payment).

"Delay" is any event which delays the Concessionaire in:

(a) completing the Detailed Design;

(b) completing any part of the Works in accordance with the requirements of

the Works Timetable; or

(c) completing the whole of the Cavite Extension on or before the Required Extension Completion Date.

"Design Acceptance Certificate" has the meaning set out in Part 2 of Schedule 7

(Engineering, Procurement and Construction of the Cavite Extension).

"Design Requirements" has the meaning set out in Part 2 of Schedule 7


"Design Submittal Schedule" means the schedule submitted by the

Concessionaire and approved by the Independent Engineer setting out the

schedule for the submission of Detailed Design by the Concessionaire to the

Independent Engineer.

"Detailed Design" means all designs, engineering documentation, drawings,

specifications, models, samples and calculations necessary for the Concessionaire to carry out the Works and prepared in accordance with Section

12 (Design And Construction of the Works) and Part 2 of Schedule 7 (Engineering,

Procurement and Construction of the Cavite Extension).

"Detailed Design Change" means a Concessionaire Detailed Design Change

and/or a Proposed Grantors Detailed Design Change (each as defined in

paragraph 10 of Part 2 of Schedule 7 (Engineering, Procurement and Construction

of the Cavite Extension)).

"Differential Generation Cost" shall have the meaning given in Part 3 of Schedule 9.

"Distributions" means the payment by the Concessionaire of any dividends,

share buy-backs, redemptions of shares, payment of principal, interest or fees in respect of subordinated loans or other loans from Affiliates or Shareholders or

subordinated loans from any other parties, the making of any loan to Affiliates or

Shareholders, or the making of any other payment to Affiliates or Shareholders (other than pursuant to Transaction Documents approved by the Grantors).

"DOTC" means the Department of Transportation and Communications of the

Government of the Republic of the Philippines (or any department, agency or

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office of the Government of the Republic of the Philippines succeeding to its

functions, rights and obligations under this Concession Agreement).

"E&S Assessment" means the assessment to be carried out by or on behalf of the

Concessionaire pursuant to Section 26.3.b (Concessionaire Undertakings).

"E&S Impact Assessment" means an environmental and social impact assessment of the Detailed Design for the Cavite Extension prepared by a

reputable and qualified consultant engaged and paid by the Concessionaire in

accordance with the E&S Standards and all Relevant Rules and Procedures,

whichever is more stringent.

"E&S Standards" means the current version of the applicable IFC Performance

Standards on Environmental and Social Sustainability which is set out in Part 1

of Schedule 14 (Environmental Matters) including (i) "EHS Guidelines", being

the environmental, health, and safety technical reference document with general and industry-specific examples of Prudent Industry Practice, the current version

of which is set out in Part 2 of Schedule 14 (Environmental Matters) and (ii) "EHS

Guidelines for Railways", being the environmental, health and safety guidelines

for railways, the current version of which is set out in Part 3 of Schedule 14

(Environmental Matters).

"Economic Causes" has the meaning given in Section 6.3.c (Transferring

Employees).

"Effective Date" means the date as notified pursuant to Section 5.7 (Notification

of Effective Date) on which the conditions precedent set out in Sections 5.2

(Concessionaire's Obligations) and 5.3.a (Grantors' Obligations) are satisfied or

waived by the relevant Party in accordance with this Concession Agreement and on which the operation and maintenance of the Existing System are transferred

to the Concessionaire.

"Emergency Upgrade Contracts" means contracts contemplated in Section 5.6

(Emergency Upgrade Contracts) relating to the Existing System where some or all

of the work thereunder may continue after the Effective Date, which the Grantors consider necessary to award prior to the Effective Date to ensure the ability of

the Existing System to meet the Existing System Requirements and to remedy or

prevent any damage to the Existing System.

"Enhancement Cost" shall have the meaning given in Section 6.4.c (Common

Station).

"Enhancement Work" shall have the meaning given in Section 6.4.b (Common

Station).

"Equity" means the total audited book value of (a) all common and preferred

shares of stock of the Concessionaire which are issued and outstanding including

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current retained earnings of the Concessionaire and (b) the face amount of all

subordinated debt (both principal and accrued interest and all other amounts)

owed by the Concessionaire to Shareholders and Affiliates. If Equity must be

calculated between audited balance sheet dates, Equity shall include the book

value of common and preferred shares issued and outstanding between audited

balance sheet dates and subordinated debt borrowed between the balance sheet

dates each as attested to by the Concessionaire's treasurer, chief financial officer

or equivalent officer.

"Equity Documents" means the shareholders' agreement executed by the

Shareholders and the equity subscription agreements and subordinated loan

agreements executed by the Concessionaire and the Shareholders evidencing the

Equity and shareholding arrangements necessary for maintaining the Equity

Requirements in the Concessionaire as required pursuant to Schedule 1 (Equity Requirements).

"Equity Interests" means all shares of stock in the Concessionaire, in a Holdco

[and/or the Facility Operator as the case may be] and all rights in respect of

subordinated loans extended thereto by Shareholders and Affiliates of the

Concessionaire.

"Equity Requirements" means in respect of the Lead Member and each

Qualifying Initial Shareholder, the minimum shareholding requirements

applicable to such person as set out in Schedule 1 (Equity Requirements) (which

reflects the Bid Documents).

"ESMS" means the environmental and social management system to be

developed and maintained by the Concessionaire as indicated in Section

26.3.b(3).

"Existing Depot" means the maintenance facility for LRVs located at Baclaran, excluding (i) LRTA's existing administrative building, (ii) the car parking

facilities attached thereto and (iii) adequate road access thereto that LRTA has

reserved for its own continued use and possession.

"Existing Railway System" means the electrical and mechanical system forming

part of the Existing System, including the signalling.

"Existing Rolling Stock" means the fleet of LRVs used on the Existing System on the Bid Submission Date.

"Existing Stations" means the railway passenger stations at Balintawak,

Roosevelt, Monumento, 5th Avenue, Ricardo Papa, Jose Abad Santos, Blumentritt,

Tayuman, Bambang, Doroteo Jose, Carriedo, Central, United Nations Avenue,

Pedro Gil, Quirino Avenue, Vito Cruz, Gil Puyat, Libertad, EDSA and Baclaran

forming part of the Existing System on the Signing Date.

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"Existing System" means (without double counting):

(a) the Existing Depot;

(b) the Existing Railway System;

(c) the Existing Rolling Stock;

(d) the Existing Stations;

(e) the Existing Track; and

(f) the assets created, provided or improved as a result of any Emergency Upgrade Contracts;

all as set out in Schedule 2 (Description of Existing System).

The Existing System will also include the Common Station and the Grantors AFCS

Infrastructure (excluding Level 4), as and when completed.

"Existing System Requirements" means the requirements and operational

parameters of the Existing System as of the Effective Date as set out in

paragraphs 1 and 2 and Appendix of Schedule 4 (Grantors Responsibilities) and

which reflect the performance of the Existing System at the Bid Submission Date.

"Existing System ROW" means the ROW used by the LRTA as of the Signing

Date for the operation and maintenance of the Existing System.

"Existing Track" means the combination of existing railway lines and installations associated with any of the Track comprised in those lines which

together constitute a system of Track and other installations which is used for

and in connection with the support, guidance and operation of LRVs, known as LRT Line 1.

"Expert" means the independent expert to be appointed as contemplated in

Section 35.3 (Expert).

"Extended System" means the Existing System and the Cavite Extension

together with all improvements, replacements and additions thereto .

"Extension Completion Date" means the day the Final Acceptance Certificate is

issued by the Independent Engineer in relation to the Tested Works.

"Facility Operator" means the person identified as such in Schedule 1 (Equity Requirements) or any person appointed as such pursuant to Section 18.2 (Facility

Operator) or any replacement thereof being the person responsible for the

operation and maintenance of the System.

15

"Fare Medium" means as stated in Schedule 22 (AFCS Memorandum of

Agreement).

"Farebox Revenue" has the meaning given in Section 20.2 (Farebox Revenue).

"Final Acceptance Certificate" means a certificate given by the Independent

Engineer in accordance with Section 14.6.a (Final Acceptance Certificate).

"Finance Documents" means the finance documents between the

Concessionaire and the Finance Parties for the provision of any loan, credit

facility, capital lease, note issue, bond issue, letter of credit or other financial

assistance, and includes any inter-creditor agreements, security agreements,

hedging arrangements and any other documents relating to the financing or

refinancing of the Project.

"Finance Parties" means any person providing Debt in accordance with the

Finance Documents (for the avoidance of doubt, excluding all Shareholders and

their Affiliates other than an Affiliate that is a bank or financial institution

lending Debt in the ordinary course of its business and on arms length terms ).

"Finance Parties' Agent" means the intercreditor agent, facility agent, security

agent or security trustee (however described) selected by the Finance Parties to

enter into the Acknowledgment and Consent Agreement on their behalf.

"Financial Proposal" means the financial proposal submitted by the

Concessionaire in accordance with section 5.2 of the Instructions to Bidders.

"Force Majeure Event" has the meaning given in Section 28.1.a (Events of Force Majeure).

"Fraudulent Practice" means any hoax, delusion, falsification, scheme, artifice,

dishonesty, trickery, deceit, cheating and the like, especially when involving misrepresentation, omission, concealment, suppression, non-disclosure or

disclosure of incomplete facts, in order to influence the bidding process for the Project or the implementation of this Concession Agreement.

"Free Ride Periods" means the periods between 07:00 and 09:00 hours (am)

and between 17:00 and 19:00 hours (pm) on Independence Day throughout the

Concession Period (or such substitute or Additional Free Ride Periods as the

Grantors may prescribe in advance in writing) provided, in relation to the Free

Ride Periods on Independence Day ("IDFRP") or any substitute to the IDFRP prescribed by the Grantors, that: (a) there shall be no more than two (2) Free

Ride Periods in any such day; and (b) the aggregate amount of Free Ride Periods

in any such day may not extend four (4) hours in aggregate or be spread over

more than one (1) day in any Contract Year.

"Free Standing Commercial Assets" has the meaning given in Section 20.11.a

16

(Taxes).

"FSA Date" means as stated in Schedule 22 (AFCS Memorandum of Agreement).

"Funding Stages" has the meaning given in Section 20.12.a (Viability Gap

Funding).

"Government Authority" means any national or local agency, instrumentality,

body, official, employee or agent of the Republic of the Philippines exercising

executive, legislative, judicial or administrative powers and having jurisdiction

or authority over the matter in question.

"Grantors AFCS Infrastructure" means AFCS for the System (including for the

Common Station) and the Level 4 Infrastructure, excluding the Concessionaire AFCS Infrastructure.

"Grantors Compensation" means compensation to be provided by the Grantors

to the Concessionaire in certain circumstances as described in Section 30 .1 (Grantors Compensation).

"Grantors Compensation Payment" means any payment in respect of Grantors

Compensation to be made by the Grantors pursuant to Section 30.2 (Grantors Compensation).

"Grantors Delay Event" has the meaning given in Section 17.4.b (Delay Events).

"Grantors Depot Works" means the construction of the Satellite Depot and the

expansion of the Existing Depot including all elements set out in paragraph 3 of

Schedule 4 (Grantors Responsibilities) (in each case excluding those items to be

carried out by the Concessionaire as part of the Works (such as track and

signalling) details of which are set out in the introduction to Schedule 7

(Engineering Procurement and Construction of the Cavite Extension)) by the Grantors.

"Grantors Depot Works Contract" means the contract for development of the

Grantors Depot Works.

"Grantors Event of Default" has the meaning given in Section 31.1.b (Grantors

Events of Default).

"Grantors LRV Contract" means the contract for procurement of the Grantors

Procured LRVs.

"Grantors Procured Items" means the Grantors Procured LRVs and the

Grantors Depot Works.

"Grantors Procured LRVs" means the one hundred and twenty (120) new LRVs

to be procured and delivered by the Grantors.

17

"Grantors Procurement Contracts" means the Grantors LRV Contract and

Grantors Depot Works Contract.

"Gross Revenue" means in respect of any period the aggregate of the

Concessionaire Revenue received by the Concessionaire in that period.

"Handback Engineer" has the meaning given in Section 33.2 (Handback on Expiry).

"Handback Rectification Amount" means the aggregate of the cost necessary to

deliver the Handback Rectification Works as estimated by the Handback

Engineer in the Handback Survey.

"Handback Rectification Works" means the works required to rectify deficiencies in the System so as to ensure compliance with the Handback

Requirements, to be carried out in accordance with Section 33.2 (Handback on

Expiry).

"Handback Requirements" means the requirements set out in Schedule 12

(Handback Requirements).

"Handback Security" means the security to be given by the Concessionaire for the Handback Rectification Work in accordance with Section 9.5 (Handback

Security).

"Handback Security Date" has the meaning given in Section 9.5 (Handback

Security).

"Handback Survey" means the survey to be carried out by the Handback

Engineer in accordance with Section 33.2 (Handback on Expiry).

"Handover Protocol" means the protocol developed by the Grantors and the

Concessionaire pursuant to Section 5 (Obligations Prior to Effective Date) for the

transfer of the possession and responsibility for the operation and maintenance

of the Existing System to the Concessionaire on the Effective Date.

"Holdco" has the meaning given in Section 8.4 (Share Escrow).

"IDFRP" means the Free Ride Periods on Independence Day.

"Identified Intermediate ROW (CE)" has the meaning given in Section 11.3

(Other ROW).

"Independence Day" means the twelfth (12th) day of June in each year.

"Independent Engineer" means the independent engineer appointed by the Grantors in accordance with Section 21 (Independent Engineer).

18

"Independent Engineer Failure Report" means the report issued by the

Independent Engineer in accordance with Section 14.12 (Rejection).

"Initial Shareholders" means the persons specified in the table in Schedule 1

(Equity Requirements).

"Instructions to Bidders" means the documents issued by the Grantors on 5 December 2013, including any amendments thereto for the purpose of inviting

bids for the Project.

"IS Equity Requirements" are complied with so long as the Initial Shareholders

collectively hold at least sixty percent (60%) of the outstanding voting shares in

the Concessionaire.

"ITS-SWTP" shall have the meaning given in Section 12.2.h.

"Key Performance Indicators" means the key performance indicators as set out

in Part 3 of Schedule 6 (Concessionaire Responsibilities for the Operations and Maintenance Activities).

"KPI Charges" means the amounts payable by the Concessionaire to the

Grantors for failing to achieve the Key Performance Indicators pursuant to Section 18.5.b and as set out in Part 3 of Schedule 6 (Concessionaire

Responsibilities for the Operations and Maintenance Activities).

"Labor Code" means Presidential Decree No. 442 as amended, also known as the

Labor Code of the Philippines.

"Lapse of Relevant Consent (Local)" means the denial of, the refusal to renew,

an unreasonable delay in the granting or renewal of or the imposition of any

onerous conditions on the grant or renewal of any Relevant Consent by any local

Government Authority provided in each case (a) that the Concessionaire has made due application therefor in accordance with Relevant Rules and

Procedures, (b) that the refusal to grant or renew or delay in granting or renewing or the imposition of onerous conditions is not attributable to any

breach of any Relevant Rules and Procedures on the Concessionaire's part and

(c) the refusal or delay to grant or renew any such Relevant Consent has persisted for thirty (30) days or the period provided by law as applicable from

the date of the Concessionaire's due application therefor and complete

submission by the Concessionaire of all requirements therefor except of such

requirements or conditions deemed onerous in relation to such Relevant

Consent in accordance with items (a) and (b) above.

"Lapse of Relevant Consent (National)" means the denial of, the refusal to

renew, an unreasonable delay in the granting or renewal of or the imposition of

any onerous conditions on the grant or renewal of any Relevant Consent by any

national Government Authority provided in each case (a) that the Concessionaire

19

has made due application therefor in accordance with Relevant Rules and

Procedures, (b) that the refusal to grant or renew or delay in granting or

renewing or the imposition of onerous conditions is not attributable to any

breach of any Relevant Rules and Procedures on the Concessionaire's part, (c)

the Concessionaire has applied for assistance in accordance with Section 23.4

(Relevant Consents) and (d) the refusal or delay to grant or renew any such

Relevant Consent has persisted for thirty (30) days or the period provided by

law as applicable from the date of the Concessionaire's due application therefor

and complete submission by the Concessionaire of all requirements therefor

except of such requirements or conditions deemed onerous in relatio n to such Relevant Consent in accordance with items (a) and (b) above.

"Late Payment Rate" means the lower of the (a) two (2)-year Philippine Dealing

System Treasury Fixing ("PDST – F") reference rate per annum plus a margin of three percent (3%) per annum or (b) the rate of interest on any commercial loan

taken out by the Concessionaire in relation to bridging the late payment by the

Grantors; provided that if the Concessionaire does not take out a loan, the Late Payment Rate shall be the two (2)-year PDST-F rate reference rate per annum

plus a margin of three percent (3%) per annum.

"Lead Member" means the person identified as such in Schedule 1 (Equity

Requirements).

"Legal Requirement" means any domestic law, statute, ordinance, rule,

standard, administrative interpretation or guideline, regulation, order, writ,

injunction, directive, judgement, decree, Relevant Consent and any requirement

of any Government Authority having jurisdiction over the person, or any of its respective properties, assets or representatives, or the matter in question, and in

each case being of legally binding effect.

"Leverage Ratio" means (Debt / (Debt + Equity)) x 100, expressed as a

percentage.

"Level 1 Infrastructure" has the meaning given in Schedule 22 (AFCS

Memorandum of Agreement).





"Level 4 Infrastructure (AFCS Clearing House)" has the meaning given in

Schedule 22 (AFCS Memorandum of Agreement).

"Liability Cap" means the liability cap provided in Section 34 (Indemnities).

20

"Light Rail Vehicles" or "LRVs" means the individual rail cars that are combined

in sets to make a train.

"Lock-Up Period" means the period commencing from the Signing Date and

ending on the date falling on the 3rd (third) anniversary of the earlier of (a) the

Extension Completion Date or (b) where a Grantor Delay Event has delayed the achievement of the Extension Completion Date, the Deemed ECD.

"Longstop Date" means the date falling twelve (12) months after the Required

Extension Completion Date.

"LRTA" means the Light Rail Transit Authority, an instrumentality of the

Government of the Republic of the Philippines created under Executive Order No.

603 (1980) as amended, with its principal address at 2/F LRTA Administration

Building, LRTA Compound, Aurora Boulevard, Pasay City, Metro Manila,

Philippines, or any instrumentality, agency or office of the Government of the Republic of the Philippines succeeding to its functions, rights and obligations

under this Concession Agreement.

"LRTA's Operating Report" means the daily and/or monthly operating reports prepared by LRTA, examples of which are contained in the Data Room Disk.

"LRV Shortfall Payment" has the meaning given in Section 5.3.c (Grantors'

Obligations).

"Maintenance Contract" means the contract between the LRTA and the joint

venture of Comm. Builders & Technology Philippines Corp., PMP Inc. and

"Gradski Saobraaj" GRAS relating to the maintenance of the Existing System as

more particularly described in Schedule 2 (Description of Existing System).

"Material Adverse Government Action" means (a) any national government

agency action, (b) Change in Law, (c) a defect in the Grantor's title to any Basic

ROW, Existing System ROW, ROW Required for Remedial Work or Identified Intermediate ROW (CE), or (d) any Lapse in Relevant Consent (National), or (e)

any matter which this Concession Agreement specifically states is to be or is to

be treated as a Material Adverse Government Action, which in each case has a

material adverse effect on any of the rights and privileges of, or on the enjoyment

and/or exercise thereof by, the Concessionaire under this Concession

Agreement, or which has a material adverse effect on the achievement of a Milestone or the Concessionaire’s ability to comply with its financial and/or

other contractual obligations in relation to the Project.

"MIA Station" means the Station identified as such in Schedule 7 (Engineering,


"Milestones" means the various project milestones identified as such in Section

4.2 (Milestones).

21

"MPSS" means the Minimum Performance Specifications and Standards as set

out in Schedule 7 (Engineering, Procurement and Construction of the Cavite

Extension).

"NAIA Expressway Project" means the expressway project to be implemented

pursuant to the concession agreement executed between the Department of Public Work and Highways (DPWH) and Vertex Tollways Dev't Inc on 8 July

2013.

"NAIA Expressway Concessionaire" means Vertex Tollways Dev't Inc, the

concessionaire appointed by the DPWH to construct and operate the NAIA

Expressway Project pursuant to the concession agreement entered on 8 July 2013.

"New Railway System" means the electrical and mechanical system (including

the signalling system) forming part of the System, to be designed and constructed in accordance with this Concession Agreement.

"New Stations" means the eight (8) new passenger stations to be designed and

constructed in accordance with this Concession Agreement.

"New Track" means the combination of railway lines and installations

associated with any of the Track comprised in those lines which together are to

constitute a system of Track and other installations used for and in connection

with the support, guidance and operation of trains commencing from the

Baclaran end of the Existing Track, traversing the municipalities of Parañaque

and Las Piñas, and ending in Bacoor, Cavite, including into the Satellite Depot at

the southern end of the Cavite Extension.

"Notice of Award" means the notice issued by the Special Bids and Awards

Committee, selecting a bidder, to develop the Project in accordance with this


"Notice of Termination" means a notice so entitled delivered by the

Concessionaire or the Grantors as the case may be and delivered pursuant to

Section 31.2 (Procedure for Termination) or Section 5.4 (Right to Terminate Prior

to the Effective Date).

"Notice of Violation" means a notice so entitled delivered by the Concessionaire

or the Grantors as the case may be and delivered pursuant to Section 31.2

(Procedure for Termination).

"Notice to Proceed" means a notice issued by the Grantors pursuant to Sections

7.4 (Procedure for Determining Construction Start Date) and/or 12.2

(Construction).

"Notional Fare" means, at any time, the amount in Pesos as determined

22

pursuant to Part 1 of Schedule 9 (Financial Matters) as adjusted pursuant

thereto.

"O&M Agreement" means the agreement to be entered into between the

Concessionaire and any Facility Operator it may appoint relating to the operation

of the System.

"O&M Sponsor" means the person identified as such in Schedule 1 (Equity

Requirements).

"Operating Franchise" means the franchise for the operation of the System as a

public utility to be issued by the Grantors, in substantially the form set out in

Part 1 of Schedule 15 (Form of Operating Franchise) to the Concessionaire or the

Facility Operator it may appoint.

"Operation, Maintenance and Safety Documentation and Plans" means the

operation and maintenance documentation and plans defined in paragraph 2 of

Part 1 of Schedule 6 (Concessionaire Responsibilities for the Operation and

Maintenance Activities) prepared, updated and maintained by the Concessionaire

in accordance with Section 18.3 (Operation, Maintenance and Safety Documentation and Plans).

"Operation and Maintenance Requirements" means the standards to be

maintained for the operation and maintenance of the System as set out in

Schedule 6 (Concessionaire Responsibilities for the Operations and Maintenance

Activities).

"Operation Performance Security" has the meaning set out in Section 9.2

(Operation Performance Security).

"Parties" mean the persons party to this Concession Agreement and a "Party"

means any one of them.

"Payment Date" means the date on which payment (or when payment is made in more than one (1) instalment, the last such payment) is made in respect of a

payment due pursuant to Section 31.5 (Financial Consequences) and Schedule 10

(Financial Consequences of Termination).

"Permitted Security Interests" means (a) any Security Interest created over the

Concessionaire’s rights and interests in this Concession Agreement and/or over

Equity Interests in the Concessionaire, and (b) any Security Interest created over any of the Concessionaire's other assets and rights (excluding the Works, but

including (i) real estate or chattel mortgage over any Free Standing Commercial

Assets and (ii) Possessory Rights over the Commercial Assets), in each case in

favour of the Finance Parties securing indebtedness under the Finance

Documents, provided in each case such Security Interests recognise the rights of

the Grantors' under Sections 31 (Default and Termination), 32 (Grantors'

23

Emergency Right) and 33 (Handback of Project), provided further that the

creation of a real estate or chattel mortgage over the Free Standing Commercial

Assets is prohibited except where the Project Land on which the relevant Free

Standing Commercial Asset is constructed or located is covered by an original or

transfer certificate of title in the possession of the Grantors on which the real

estate or chattel mortgage and the Concession Agreement may be annotated.

"PhP" or "Peso" means Philippine Peso.

"Possessory Rights over the Commercial Assets" shall mean any rights or

interests that the Concessionaire has arising from or connected with the material

occupation or possession of the Commercial Assets.

"Potential Structural Defects" means the defects identified as Structural

Defects by the Concessionaire during the Structural Warranty Period.

"Prohibited Act" means, in relation to the Concessionaire that (a) it or (b) any of

its Initial Shareholders, Affiliates or Subcontractors, or (c) any agents, suppliers

or vendors of any of these entities (where the Concessionaire knew of or

participated in the commission of the act), has, whether directly or indirectly (1) violated any of the rules governing the bidding for the Project or (2) engaged in

any Coercive Practice, Corrupt Practice or Fraudulent Practice.

"Project" is as described in Section 3.1 (Project Description).

"Project Assets" mean all tangible assets (real and personal) required to enable

the Concessionaire to carry out the Project, including the System, the Project

Land, Commercial Assets, the project information, all Detailed Design,

documents, manuals and plans and interests in plant, machinery and buildings,

wherever they are situated but excluding (i) assets of Subcontractors not used

solely for the purposes of the Project and (ii) Commercial Assets located outside

the Project Land.

"Project Execution Plan" means the plan prepared by the Concessionaire and

submitted along with the Bid Documents and updated by the Concessionaire and

approved by the Grantors in accordance with Section 5.2.b (Concessionaire's

Obligations).

"Project Land" means the Basic ROW, ROW Required for Remedial Work,

Identified Intermediate ROW (CE), Existing System ROW and any Additional

ROW.

"Provisional Acceptance Certificate" means a certificate issued by the

Independent Engineer in accordance with Section 14.7.a (Provisional Acceptance

Certificate).

"Prudent Industry Practice" means, in relation to any undertaking, the exercise

24

of that degree of skill, diligence, prudence, foresight and care which would

reasonably be expected of an appropriately skilled and experienced:

(a) design, engineering, construction, or operation and maintenance

contractor having the same obligations as the Concessionaire (in the case

of the Concessionaire); and

(b) owner and regulator of a metropolitan commuter light rail system having

the same obligations as the Grantors (in the case of the Grantors).

"Public Holidays" means the regular holidays and nationwide special days (as

modified by law, order or proclamation) and local special days (as applicable)

referred to in Sections 26 and 27 of Chapter 7 of Book 1 of Executive Order No.

292 dated 25 July 1987, also known as the "Administrative Code of 1987".

"Punch List Item" means any item of work specified as such in a Provisional

Acceptance Certificate.

"Punch List Rectification Program" means the program prepared by the

Concessionaire pursuant to Section 14.8 (Punch List Rectification Program).

"Qualification Documents" means the qualification documents submitted by the Concessionaire in accordance with Section 4 of the Instructions to Bidders.

"Qualifying Initial Shareholder" means any of the persons named as such in

Schedule 1 (Equity Requirements) (being any Shareholder who was pre-qualified

as meeting the Financial Capability Qualification Requirements or Technical

Capability Qualification Requirements in respect of the Tender Documents).

"Rail Project Assets" has the meaning given in Section 20.11.a (Taxes).

"Railway Infrastructure Works" means:

(a) the design, procurement, engineering, construction, completion, testing and commissioning of the New Track and the New Stations; and

(b) the integration of the Cavite Extension with the Existing System,

as more particularly defined in Part 3 of Schedule 7 (Engineering Procurement

and Construction of the Cavite Extension).

"Railway System Works" means:

(a) the design, procurement, engineering, construction, completion, testing

and commissioning of the New Railway System; and

(b) the integration of the New Railway System with the Existing Railway

System,

25

as more particularly defined in Part 4 of Schedule 7 (Engineering Procurement

and Construction of the Cavite Extension).

"Relevant Consents" means all national and local consents, permissions,

approvals, authorisations, acceptances, licences, exemptions, filings,

registrations, notarisations and other matters which are required (including any agreements with any Government Authority) by any Legal Requirement or under

the terms of or in connection with this Concession Agreement (or which would, in accordance with the standards of a reasonable and prudent person, normally

be obtained) in connection with the Project, including:

(a) the Railway Infrastructure Works, the Railway System Works and the System Upgrades; or

(b) the operation, maintenance and renewal of the System and performance

of the Services,

of or from any Government Authority or third party and, where a Government

Authority or third party is authorised to prohibit a proposal, the passing of the

time limit for such prohibition without the proposal being prohibited.

"Relevant Rules and Procedures" means:

(a) the Constitution of the Republic of the Philippines in effect during the Concession Period and any Legal Requirement governing the activities of

the Concessionaire or applicable to this Concession Agreement and/or the

Project, including the BOT Law;

(b) all applicable railway industry standards (whether of the Republic of the

Philippines or international standards) which may come into force and

which are binding on the party in question or which must be applied in

relation to the Railway Infrastructure Works, the Railway System Works,

Services or the System Upgrades (as the case may be);

(c) all Relevant Consents and all conditions attaching thereto; and

(d) all instruments, regulations, requirements, rules, safety cases, codes of

practice and other documents or instruments contemplated by, made or

entered into under or pursuant to any of the things specified in paragraph

(a) or (b) above, and all other rules and other procedures which concern

the giving of any Relevant Consent in relation to, or the acceptance or approval of, the Railway Infrastructure Works, the Railway System

Works, Services or the System Upgrades or the operation of the LRVs on,

or for use on, the System.

"Report on Operations and Maintenance" means a report to be submitted as

provided in Section 25.2.b(3) (Reports) in the format set out in Part 2 of Schedule

26

20 (Reports).

"Report on Works" means a report to be submitted as provided in Section 25.2.b(1) (Reports) in the format set out in Part 1 of Schedule 20 (Reports).

"Required Effective Date" means the date falling twelve (12) months after the

Signing Date or as extended in accordance with this Concession Agreement.

"Required Extension Completion Date" means the date falling fifty-four (54)

months after the Signing Date or as extended in accordance with this Concession

Agreement.

"Restoration Cost" is the cost of repairing or restoring any Structural Defect in

accordance with the Structural Defect Report and the relevant Detailed Design.

"ROW" means all interests in land, including leases, licenses, easements,

ownership and other rights of use or occupation over the Basic ROW, ROW

Required for Remedial Work, Identified Intermediate ROW (CE), Existing System ROW and Additional ROW, acquired through negotiated sale, expropriation,

donation or any other modes of acquisition.

"ROW Acquisition Plan" means the plan setting out the dates by which each Basic ROW Package will be delivered to the Concessionaire as set out in Part 1 of

Schedule 4 (Grantors' Responsibilities).

"ROW Required for Remedial Work" has the meaning given in Section 11.3

(Other ROW).

"Satellite Depot" means the new depot to be constructed at Zapote, Las Pinas

City, Metro Manila.

"Security Interest" means any mortgage, charge (fixed or floating), pledge, lien,

hypothecation, right of set-off, security trust, assignment by way of security,

reservation or retention of title, right to repossession and any other security

interest or any other agreement or arrangement (including a sale and

repurchase agreement) having the effect of conferring security.

"Service Inspection" has the meaning given in Section 22.1 (Grantors' Right to

Inspect).

"Services" means the Train Services and the Station Services.

"Share Escrow Agent" means the person appointed pursuant to the Share Escrow Agreement to act as such or any replacement thereof.

"Share Escrow Agreement" means the agreement so entitled to be entered into between the Grantors, the Concessionaire, the Initial Shareholders and the Share

Escrow Agent to give effect to the requirements of Section 8.4 (Share Escrow) in

27

substantially the form set out in Schedule 19 (Share Escrow Agreement).

"Shareholders" means the Initial Shareholders and/or any person who subsequently becomes a shareholder in the Concessionaire.

"Signing Date" means the date of execution of this Concession Agreement by all

the Parties.

"Single Journey Media" has the meaning given in Schedule 22 (AFCS


"Station" means any Existing Station and any New Station.

"Station Services" means the services which consist of, or are comprised in, the

operation and maintenance of a Station in accordance with the Key Performance Indicators and Operation and Maintenance Requirements, including the

provision of access to and egress from trains which stop at the Station, including

the provision of elevators and escalators, passenger information, facilities and services for the purchase and issue of tickets (save to the extent that relevant

equipment is maintained by the AFCS Concessionaire in accordance with

Schedule 22 (AFCS Memorandum of Agreement)) and reasonable levels of

personal security for passengers.

"Step-in Notice" has the meaning given in Section 31.3 (Finance Parties' Step-in Rights).

"Step-in Rights" means the rights of the Finance Parties as contemplated in

Section 31.3 (Finance Parties' Step in Rights).

"Step-out Notice" has the meaning given in Section 31.3 (Finance Parties' Step-in

Rights).

"Stored Value Media" has the meaning given in Schedule 22 (AFCS


"Structural Defect" means any defect in the civil infrastructure of the Existing System that is attributable to defective design, defective or faulty workmanship,

defective materials (including hazardous materials), Force Majeure (occurring

before the Effective Date), faulty or improper use or prolonged use (or any

combination of these) and includes:

(a) any component essential to the stability of the buildings or any part of it

(including foundations, columns, beams and other structural components); and

(b) any component that forms part of the external walls or roof of the Existing

System.

28

Provided that any such defect must:

(a) result in, or be likely to result in, the Existing System or any part of the Existing System being required by or under any Legal Requirement to be

closed or prohibited from being used;

(b) prevent, or be likely to prevent, the continued use of the Existing System or any part of the Existing System;

(c) result in, or be likely to result in the destruction of or serious physical

damage to the Existing System or any part of the Existing System; or

(d) result in, or be likely to result in:

(i) a threat of imminent collapse that may reasonably be considered to cause destruction of the Existing System, or serious physical

damage to or any part of the Existing System; or

(ii) a threat to the safety of persons or property.

"Structural Defect Design Acceptance Certificate" has the meaning given in

Section 5.8.f (Structural Integrity of Existing System).

"Structural Defect Notice" has the meaning given in Section 5.8.c (Structural Integrity of Existing System).

"Structural Defect Report" has the meaning given in Section 5.8.b (Structural

Integrity of Existing System).

"Structural Defect Survey" means the survey conducted by the Concessionaire

to identify Potential Structural Defects.

"Structural Warranty Period" means the period expiring on the later of (a) the

second (2nd) anniversary of the Signing Date or (b) the first (1st) anniversary of

the Effective Date.

"Subcontractor" means any person to whom the Concessionaire sub-contracts

any material part of its obligations under this Concession Agreement in accordance with Section 15 (Subcontracting).

"Substitute Concessionaire" means an entity proposed by the Finance Parties

which fulfils the requirements of and may be appointed in accordance with Section 31.3 (Finance Parties' Step in Rights).

"Superstructure of Stations" means that part of the structural support system

of the guideways and Stations that is entirely above the foundation. It includes structural elements such as piers/columns, pier heads/coping beams,

beams/girders, deck slab etc.

29

"Surplus Payment" means the amount calculated as set out in Section 20.4.b

(Deficit Payment and Surplus Payment).

"System" means, prior to the Extension Completion Date, the Existing System

and, after the Extension Completion Date, the Extended System and includes (a)

Grantors AFCS Infrastructure (but excluding the Level 4 Infrastructure), (b) Concessionaire AFCS Infrastructure, (c) any additional LRVs procured by the

Concessionaire following any System Upgrade, and (d) additional stations constructed in accordance with Section 18.11 (Additions to the System).

"System Plan" means the plan prepared by the Concessionaire for the System

Upgrades and major maintenance of the System in accordance with Section 19 (Major Maintenance and Upgrades) and Part 2 of Schedule 6 (Concessionaire

Responsibilities for the Operations and Maintenance Activities).

"System Remedial Works" means any works necessary to ensure that the System complies with Legal Requirements.

"System Upgrades" has the meaning given in Section 19.1.a (Major Maintenance

and Upgrades).

"Technical Proposal" means the technical proposal submitted by the

Concessionaire in accordance with Section 5.1 of the Instructions to Bidders.

"Technical Services Agreement" means the agreement to be entered into

between the O&M Sponsor (or an Affiliate of the O&M Sponsor acceptable to the

Grantors and benefitting from a guarantee from the O&M Sponsor in a form

acceptable (in their absolute discretion) to the Grantors) and [the

Concessionaire] [the Facility Operator] and approved by the Grantors for the

provision of operational advice and expertise to [the Concessionaire] [the

Facility Operator].

"Tender Documents" means the Instructions to Bidders, a draft of this Concession Agreement and its Schedules, and the Updated Information

Memorandum issued by the Special Bids and Awards Committee to the Bidders

and includes all supplemental notices and bid bulletins issued in relation to those

documents.

"Termination Date" means the date on which this Concession Agreement is

terminated before the end of the Concession Period in accordance with the terms

hereof.

"Tested Works" means the Works, the Grantors Depot Works and the Grantors

Procured LRVs.

"Time Extension" means an extension of time to the Design Submittal Schedule,

Works Timetable and the Required Extension Completion Date, as may be

30

reasonably required and agreed between the Parties or , in default of agreement,

as determined by the Independent Engineer.

"Total Common Station Cost" shall have the meaning given in Section 6.4.g

(Common Station).

"Track" means any land or other property comprising the permanent way of any railway, taken together with the ballast, sleepers and metals laid thereon,

whether or not the land or other property is also used for other purposes; and

any reference to Track includes a reference to:

(a) any level crossings, bridges, viaducts, tunnels, culverts, retaining walls or

other structures used or to be used for the support, or otherwise in

connection with, Track; and

(b) any walls, fences or other structures bounding the railway or bounding

any adjacent or adjoining property.

"Traffic Impact Assessment" has the meaning given in paragraph 2(k) of the

introduction to Schedule 7 (Engineering Procurement and Construction of the

Cavite Extension).

"Train Services" means the operation and maintenance of the LRVs on the

System, the provision of passenger information on the LRVs and the control of passengers and other persons on the System in normal, degraded and emergency

operations each in accordance with the Operating and Maintenance

Requirements and so as to achieve the Key Performance Indicators .

"Transaction Documents" means (a) this Concession Agreement and (b) the

following contracts entered into or to be entered into by the Concessionaire in

connection with the Project:

[the EPC Contract]

[the O&M Agreement]

[the Technical Services Agreement]

[to be adjusted/completed based on winning bidder's bid]

"Transfer Date" means the date on which the Concessionaire hands over the

Project and Project Assets to the Grantors at the end of the Concession Period in

accordance with Section 33.1 (Handback of Project).

"Transferring Employees" means the employees transferred from LRTA to the

Concessionaire in accordance with Section 6.1 (Handover of the Existing System).

"Variation Order" shall have the meaning given in Section 18.12.g.

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"Variation Proposal" shall have the meaning given in Section 18.12.e.

"Variation Request" shall have the meaning given in Section 18.12.d.

"Viability Gap Amount" means the sum of [to be inserted from Bid] Peso (PhP[

]) to be paid by the Grantors pursuant to Section 20.12 (Viability Gap Funding).

"Warning Notice" means a notice served by the Grantors pursuant to Section

31.2.d(1) (Termination for Force Majeure).

"Warranty Amount" means the amount as determined pursuant to Section 9.4.b (Warranty Security).

"Warranty Period" means the period as set out in Section 9.4.a (Warranty

Security).

"Warranty Security" means the security to be provided by the Concessionaire in

accordance with Section 9.4 (Warranty Security).

"Works" means:

(a) the Railway Infrastructure Works; and

(b) the Railway System Works.

"Works Timetable" has the meaning given in paragraph 1 (Introduction) of

Schedule 7 (Engineering Procurement and Construction of the Cavite Extension)

and will be maintained and updated by the Concessionaire in accordance with

the provisions of Part 8 (Works Timetable) of Schedule 7 (Engineering


"Writ of Possession" is the judicial "order to take possession of the property and start the implementation of the project" referred to in Section 12 of the

Implementing Rules and Regulations of Republic Act No. 8974 ("An Act to

Facilitate the Acquisition of Right-of-Way, Site or Location for National

Government Infrastructure Projects and For Other Purposes").

1.2 Rules of Interpretation

In this Concession Agreement, unless the context otherwise requires:

1.2.a A document being in the "Agreed Form" means in a form agreed between

the Grantors and the Concessionaire and initialled for the purposes of

identification by the Grantors and the Concessionaire.

1.2.b "Include," "includes," and "including" are deemed to be followed by

"without limitation" or "but not limited to," whether or not actually

followed by such words or words of like import.

32

1.2.c References to any document or agreement shall be deemed to include

references to such document or agreement as amended, supplemented,

novated, varied or replaced from time to time.

1.2.d References to a person include his successors and permitted assigns.

1.2.e References to any gender include all genders, references to the singular include the plural, and vice versa, and words denoting persons includes

natural persons, partnerships, corporations, joint ventures, trusts,

associations, organizations or other entities (whether or not having a

separate legal personality).

1.2.f References to Sections are references to Sections of this Concession

Agreement, unless expressly provided otherwise.

1.2.g References to Schedules which do not specify what document they are

annexed to are references to Schedules to this Concession Agreement.

1.2.h Headings are for convenience only and shall not affect the interpretation

or construction of any provision of this Concession Agreement.

1.2.i References to a "day" refers to a calendar day, unless expressly provided otherwise; reference to a "month" refers to a calendar month, and a

"year" as a period of time commencing on a particular date and ending on the day before the anniversary of such date.

1.2.j "Control" means, for purposes of defining an Affiliate, the power to

direct or cause the direction of the management policies and actions of a body corporate whether through:

1.2.j (1) ownership, whether directly or indirectly, of at least fifty

percent plus one share (50%+1) of the outstanding voting shares; or

1.2.j (2) ownership, whether directly or indirectly, of at least twenty

percent (20%) of the outstanding voting shares and (a)

possession of at least fifty percent plus one share (50%+1)

of the voting rights through voting trust or other voting

agreements; or (b) the ability to elect a majority of the

members of that body corporate's board of directors; or (c)

any legal agreement or arrangement.

For this purpose, the term "voting shares" includes partnership contribution, membership interests, units of participation, and other similar forms of ownership which are entitled to vote.

33

1.2.k Any and all financial obligations of the Grantors (including any obligation

to make any payment to the Concessionaire) under this Concession

Agreement shall be construed as being the obligations of DOTC. If an

obligation is performed or fulfilled by one of the Grantors, it shall be

deemed to have been performed or fulfilled by both Grantors. If a right or

remedy is enforced or exercised by one of the Grantors, it shall be deemed

to have been enforced or exercised by both Grantors.

1.2.l Where an adjustment or payment denominated in Pesos is to be made,

such amounts shall be rounded off to the nearest Peso except in relation

to the determination of fares which shall follow the provisions set out in

Schedule 9. By way of example, if the centavo level is fifty (50) or above it

will be rounded up to a Peso and if the centavo level is below fifty (50) it

will be rounded down. However, the base amounts for the purpose of subsequent adjustment or indexation shall not be so rounded.

1.2.m Where the word "(Indexed)" appears after a numerical amount, that

amount shall be indexed annually to reflect movements in the Consumer

Price Index for All Income Households in the Philippines for All Items as

published by the National Statistics Office of the Republic of the

Philippines from the period after the Signing Date.

Thus, by way of example the value of the Operation Performance Security

in any month of year "n" of the Concession Period (Section 9.2.e) shall be:

PhP75,000,000 × [1 + (CPInx – CPI1) ]

CPI1

Where: CPIn is the above Consumer Price Index at month "x" of year n (for the avoidance of doubt "x" shall be a fixed

month); and

CPI1 is the above Consumer Price Index as at the month in

which the Bid Submission Date occurred.

1.2.n Where there is any conflict or inconsistency between the provisions of the

body of this Concession Agreement and of any Schedule thereto, the

former shall prevail.

1.2.o Where any party is required under this Concession Agreement to give a

consent, approval, or acceptance, make a determination or be satisfied or

find a matter acceptable or satisfactory, then, unless words "in its

absolute discretion" or words of similar import appear in the reference to

the relevant consent, approval, acceptance or determination, the relevant

consent, approval, determination, acceptance or expression of satisfaction

34

shall not be unreasonably withheld, delayed or issued subject to onerous

conditions.

1.2.p Wherever a reference appears in this Concession Agreement to the

"operation and maintenance of the System" (or words of like import)

this shall, unless a contrary intention is apparent, be deemed to include a reference to the performance of the Services. Similarly any reference to

the "provision of the Services" or "performance of the Services" (or words of like import) shall, unless a contrary intention is apparent, be

deemed to include a reference to the operation and maintenance of the

System.

1.2.q In addition to any specific obligation provided in this Concession

Agreement in relation to reporting of documents, any reports, drawings

or other documents to be provided by the Concessionaire to the Grantors

shall be provided in both hard and soft copies.

Section 2 DOCUMENTS COMPRISING THIS CONCESSION AGREEMENT

The following documents hereby comprise, and shall be read and construed as integral parts of, this Concession Agreement:

2.1 this Concession Agreement; and

2.2 Schedules 1 (Equity Requirements) to 25 (Variation Order) (inclusive).

Section 3 THE CONCESSION

3.1 Project Description

3.1.a The Project to be effected by the Concessionaire consists of:

3.1.a (1) the operation and maintenance of the System;

3.1.a (2) the design, engineering and construction of the Cavite

Extension;

3.1.a (3) the operation and maintenance of the Grantors Procured Items;

3.1.a (4) the operation and maintenance of the Common Station;

3.1.a (5) the operation and maintenance of the stations, if any, and

construction in accordance with Section 18.11;

3.1.a (6) the performance of the Services;

3.1.a (7) the carrying out of any System Upgrades;

35

3.1.a (8) the procurement, installation, operation and maintenance

of the Concessionaire AFCS Infrastructure and operation

and maintenance of Grantors AFCS Infrastructure

(excluding Level 4 Infrastructure) in accordance with

Schedule 22 (AFCS Memorandum of Agreement);

3.1.a (9) the carrying out of any Emergency Upgrade Contracts that

are novated to it;

3.1.a (10) the financing of the above activities;

3.1.a (11) the carrying out of the Commercial Business (at the

Concessionaire's option); and

3.1.a (12) the collection of Concessionaire Revenue,

all in accordance with this Concession Agreement.

3.1.b The accompanying work and obligations to be effected by the Grantors

consists of:

3.1.b (1) the acquisition of the Basic ROW, ROW Required for

Remedial Work and Identified Intermediate ROW (CE);

3.1.b (2) the procurement of the Grantors Procured Items;

3.1.b (3) the continuation and completion of any Emergency

Upgrade Contracts prior to the same being novated to the

Concessionaire;

3.1.b (4) the implementation of the Grantors AFCS Infrastructure in

accordance with Schedule 22 (AFCS Memorandum of

Agreement);

3.1.b (5) the procurement of the Common Station in accordance with

Section 6.4; and

3.1.b (6) the financing of the above activities,

all in accordance with this Concession Agreement.

3.1.c The above are more specifically described in Schedule 3 (Description of

Cavite Extension) and Schedule 4 (Grantors' Responsibilities).

3.2 Grant of Concession

Subject to the terms and conditions of this Concession Agreement, the Grantors

grant to the Concessionaire the exclusive right during the Concession Period to:

36

3.2.a carry out the Works;

3.2.b perform the Services;

3.2.c operate and maintain the System and carry out System Upgrades;

3.2.d collect the Concessionaire Revenue; and

3.2.e use the Existing System and the Project Land for the purpose of implementing the Project including the carrying out of the Commercial

Business thereon,

all of the above to be carried out in accordance with this Concession Agreement,

all Relevant Rules and Procedures and Prudent Industry Practice.

3.3 Purpose of Concession

The Grantors' aim is to provide an efficient and reliable rail based mass transit

system for Metropolitan Manila and extending to the province of Cavite. The aim

of this Concession Agreement is for the Concessionaire to establish the most

efficient and effective:

3.3.a operation and maintenance of the System; and

3.3.b engineering, procurement, construction and financing of the Cavite Extension.

To achieve this, the Parties will establish a close working relationship with each

other, and the Parties will work together in a mutually supportive manner to

deliver high quality transport services for the people of Metropolitan Manila and

the province of Cavite. The Grantors expect that the working partnership will be

based on the principles of commitment, trust, open communication and

collaboration.

Clarity of roles is an important factor in establishing such a relationship and thus

Schedules 3 (Description of Cavite Extension), 4 (Grantors' Responsibilities), 6

(Concessionaire Responsibility for the Operations and Maintenance Activities) and

7 (Engineering, Procurement and Construction of the Cavite Extension) set out the

specific roles and responsibilities of each Party, regarding design, construction,

operation and maintenance of the Project.

3.4 Commercial Business

The Grantors grant to the Concessionaire the exclusive right during the

Concession Period to carry out the Commercial Business (including for the

avoidance of doubt the right to charge fees for car parking on the Project Land)

as more particularly provided in Section 11.6 (Project Land and Commercial

Development).

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3.5 Concession Period

This Concession Agreement becomes effective on the Signing Date. The Concession Period shall commence on the Effective Date and shall end on the

date that is the thirty-second (32nd) anniversary of the Effective Date, unless

otherwise extended or terminated in accordance with this Concession Agreement. Notwithstanding any other term of this Concession Agreement, the

Parties acknowledge and agree that the Concession Period shall in no event exceed the date that is the fiftieth (50th) anniversary of the Effective Date.

Section 4 MILESTONES

4.1 Obligation of Parties

The Parties shall cooperate, coordinate and work together to achieve the timely

completion of the Project in accordance with the Milestones (as may be adjusted

in accordance with Section 17 (Delay)).

4.2 Milestones

Without limiting the foregoing, the key Milestones are:

Section Reference

Milestone Responsibility Deadline

5.1.e Certification of Identified Intermediate ROW (CE)

Grantors through

Independent Engineer

No later than seventy (70) days after the Signing Date

5.2.a and 9.2

Delivery of Operation Performance Security in an amount of PhP650 million (Indexed)

Concessionaire On or before the Signing Date

Schedule 9, Part 2

and Section 2

Payment of first instalment of Concession Payment

[Applies only if Concessionaire bids positive Concession Payment]

Concessionaire On or before the Signing Date

8.4 Appointment of Share Escrow Agent and execution of Share Escrow Agreement

Concessionaire

Grantors

No later than ten (10) days after the Signing Date

38

Section Reference


Schedule 4 para. 1

Transfer of non-comprehensive list of Project Assets

Grantors No later than thirty (30) days after the Signing Date

5.2.h / 35.2

Appointment of Project Dispute Resolution Board

Both Parties No later than thirty (30) days after the Signing Date

24.1 Appointment of Steering Group

Both Parties No later than thirty (30) days after the Signing Date

5.2.b Delivery of Updated Project Execution Plan

Concessionaire No later than one hundred twenty (120) days after the Signing Date

21.2.c Appointment of the Independent Engineer

Grantors

(DOTC)

No later than sixty (60) days after the Signing Date

5.2.c Submission of Design Submittal Schedule

Concessionaire No later than one hundred and twenty (120) days after the Signing Date

5.2.f Completion of Application for Operating Franchise

Concessionaire No later than thirty-five (35) days before the then anticipated Effective Date

5.3.e Issue of Operating Franchise

Grantors No later than thirty (30) days after the Concessionaire's application under Section 5.2.e

11.1.a Delivery of Basic ROW Package 1

Grantors No later than 15 October 2014 (and this constitutes a condition precedent to the occurrence of the Construction Start Date)

11.3.a Delivery of ROW Required for Remedial Work

Grantors No later than two (2) years from determination of ROW Required for Remedial Work

11.3.g Delivery of Identified Intermediate ROW (CE)

Grantors No later than two (2) years from certification of the Independent Engineer

5.4.a and 7.4

Achievement of Effective Date and Construction Start Date (Required Effective Date)

Both Parties No later than twelve (12) months after the Signing Date

9.2.d Decrease of Concessionaire On or after the Construction

39

Section Reference


Operation Performance Security to an amount of PhP50 million (Indexed)

Start Date

10.2.a Execution of Finance Documents and satisfaction or waiver of conditions precedent to draw down of funds thereunder

Concessionaire No later than twelve (12) months after the Signing Date

27.1.a Effecting required insurances

Concessionaire On or before the Effective Date

6.5, Schedule 9

Part 2, Section 3

Payment of second instalment of Concession Payment (if applicable)

Concessionaire On or before the Effective Date

18.1.a Operation of the Existing System

Concessionaire From the Effective Date

20.12 Payment of Instalments of Viability Gap Funding

[Applies only if Concessionaire bids for VGF]

Grantors As stated in Section 20.12

7.2.a and 9.3

Delivery of Construction Performance Security in an amount of PhP1.3 billion (Indexed)

Concessionaire Before the Construction Start Date (and this constitutes a condition precedent to the occurrence of the Construction Start Date)


Grantors No later than 15 June 2015


Grantors No later than 15 December 2015

18.10 Delivery of Operation, Maintenance and Safety Documentation and

Concessionaire No later than ninety (90) days after the Effective Date

40

Section Reference


Plans

26.3.b(3) Development of ESMS

Concessionaire At least thirty (30) days prior to the Effective Date

9.2.e Increase of Operation Performance Security to an amount of PhP100 million (Indexed)

Concessionaire On or before the Extension Completion Date

12.2.d Achieve Extension Completion Date

Concessionaire No later than fifty-four (54) months after the Signing Date

9.2.f Decrease of Operation Performance Security to an amount of PhP50 million (Indexed)

Concessionaire On the third (3rd) anniversary of the Extension Completion Date

13.1.a(5) Completion of LRV Procurement

Grantors No later than 31October 2017

13.1.a(6) Completion of Grantors Depot Works (relating to Existing Depot)

Grantors No later than 31 May 2016

13.1.a(7) Completion of Grantors Depot Works (relating to Satellite Depot)

Grantors No later than 31August 2017

18.1.b Operation of the Cavite Extension

Concessionaire Upon the earlier of the date of issuance of the Provisional Acceptance Certificate or Final Acceptance Certificate

9.2.g Increase of Operation Performance Security to an amount of PhP200 million (Indexed)

Concessionaire Ten (10) years before the Transfer Date

9.5.a Delivery of Handback Security (if required)

Concessionaire No later than five (5) days after the delivery of the Handback Survey to the Parties

41

Section Reference


9.4.a Delivery of Warranty Security in an amount of PhP150 million (Indexed)

Concessionaire On or before the Transfer Date

33.1.a Transfer of Project and Project Assets to Grantor

Concessionaire Unless the Concession Agreement is terminated earlier, the thirty-second (32nd) anniversary of the Effective Date

Section 5 OBLIGATIONS PRIOR TO EFFECTIVE DATE

5.1 Operation of the Existing System

5.1.a From the Signing Date until the Effective Date, the Grantors shall operate

and maintain the Existing System in accordance with Relevant Rules and

Procedures, the Operation and Maintenance Requirements and Prudent

Industry Practice. The Grantors and the Concessionaire shall work

together to facilitate the transfer of operation and maintenance of the Existing System to the Concessionaire.

5.1.b The transfer shall be effected pursuant to the Handover Protocol which

the Parties shall develop based on the Project Execution Plan.

5.1.c The Parties shall meet regularly and cooperate with each other to develop

the Handover Protocol and familiarise the Concessionaire with the

operation and maintenance of the Existing System and the Transferring

Employees.

5.1.d Save as specifically provided elsewhere in this Concession Agreement, the

Grantors are responsible for all costs of the operation and maintenance of

the Existing System up to the Effective Date and the Concessionaire shall

be responsible for all such costs thereafter. The Handover Protocol shall

include a procedure to provide for allocation of payments under contracts

(including in respect of utility supply) that are transferred to the

Concessionaire and a reconciliation payment to be made as a part of the

first (1st) Balancing Payment made after the Effective Date.

5.1.e If the Concessionaire submits its identification of the Identified

Intermediate ROW (CE) required on or before the Signing Date to the

Grantors, then the Independent Engineer shall, no later than seventy (70)

days after the Signing Date, certify whether the Identified Intermediate ROW (CE) identified by the Concessionaire has been appropriately

identified. However, if the Concessionaire submits its identification of the

42

Identified Intermediate ROW (CE) no later than one hundred and twenty

(120) days after the Signing Date, then the Independent Engineer shall, no

later than sixty (60) days after the date of submission of the

Concessionaire's identification of the Identified Intermediate ROW (CE)

certify whether the Identified Intermediate ROW (CE) identified by the

Concessionaire has been appropriately identified. If the Concessionaire

submits its identification of any Identified Intermediate ROW (CE) after

the aforesaid time periods, then it shall be considered as Additional ROW.

5.1.f The Handover Protocol may include a statement of any ROW Required for

Remedial Work that the Concessionaire requires to be obtained for it to

undertake any System Remedial Works. Nothing in this Section 5.1.f shall

operate to prevent the Concessionaire from identifying any ROW

Required for Remedial Work at any earlier or later date. If agreed between the Parties, the Handover Protocol shall also include any

identified advance works that the Concessionaire may carry out on the

Existing System notwithstanding that the Effective Date has not occurred.

5.1.g All of the above is more particularly described in Parts 1 and 2 of

Schedule 6 (Concessionaire Responsibilities for the Operations and

Maintenance Activities).

5.1.h No later than sixty (60) days after the Signing Date, the Parties shall

execute, and the Grantors shall ensure that the AFCS Concessionaire

executes, the AFCS Memorandum of Agreement as provided in Schedule

22 (AFCS Memorandum of Agreement), and the Grantors shall provide a

copy of the executed AFCS Concession Agreement (including the Minimum Performance Specifications and Standards for the AFCS) to the

Concessionaire.

5.2 Concessionaire's Obligations

5.2.a By the Signing Date, the Concessionaire shall deliver an executed original

of the Operation Performance Security as contemplated in Section 9.2

(Operation Performance Security) which has been duly authorised and

validly executed and which is in full force and effect and delivered by the

parties to it as and in respect of which all conditions precedent required

under it have been fully satisfied.

5.2.b The Concessionaire shall, no later than one hundred and twenty (120)

days after the Signing Date, submit to the Grantors an updated Project

Execution Plan, based on and consistent with the Project Execution Plan

submitted as part of the Bid Documents, detailing, among other things,

how it proposes to take over the operation and maintenance of the

Existing System. Any material differences from the previously approved

Project Execution Plan must be justified to and approved by the Grantors.

43

5.2.c The Concessionaire shall no later than one hundred and twenty (120)

days after the Signing Date submit a draft Design Submittal Schedule to

the Independent Engineer as contemplated in Section 12 (Design and

Construction of the Works).

5.2.d The Concessionaire shall (unless the same have been provided prior to the Signing Date) submit to the Grantors, no later than ninety (90) days

before the then anticipated Effective Date, either:

5.2.d (1) if the Concessionaire is engaging a Facility Operator, the

O&M Agreement and the Technical Service Agreement, each

complying with the relevant requirements of Schedule 17 (Requirements for O&M Agreement and Technical Service

Agreement), or

5.2.d (2) if the Concessionaire intends to operate the System itself, the Technical Service Agreement, complying with the

relevant requirements of Schedule 17 (Requirements for

O&M Agreement and Technical Service Agreement),

5.2.e The Concessionaire shall, no later than ten (10) days before the then

anticipated Effective Date (according to the current Handover Protocol) but in any event no later than ten (10) days before the Required Effective

Date, provide to the Grantors, in form and substance reasonably

acceptable to the Grantors:

5.2.e (1) all Relevant Consents required for the transfer of possession,

custody and risk of loss in and deterioration of the Existing

System; and

5.2.e (2) certified copies of the certificates of the Concessionaire

Required Insurances in accordance with Section 27

(Insurance), certified by the Concessionaire’s corporate

secretary.

5.2.f The Concessionaire shall submit, or procure that the Facility Operator

submits, an application for the Operating Franchise complying with the

requirements provided in Part 2 of Schedule 15 (Operating Franchise

Particulars) (with all required supporting documents) no later than thirty-five (35) days before the then anticipated target for achieving the

Effective Date but in any event thirty-five (35) days before the Required

Effective Date.

5.2.g No later than ten (10) days after the Signing Date the Concessionaire, the

Initial Shareholders and the Share Escrow Agent shall enter into the Share

Escrow Agreement as contemplated in Section 8.4 (Share Escrow).

44

5.2.h No later than thirty (30) days after the Signing Date, the Concessionaire

shall designate its representatives to the Project Dispute Resolution

Board in accordance with Section 35.2 (Dispute Resolution) and shall

provide written details of the same to the Grantors.

The achievement of all the conditions set out in this Section 5.2 is a condition precedent to the Effective Date.

5.3 Grantors' Obligations

5.3.a The relevant obligations of the Grantors prior to the Effective Date are set

out in paragraphs 1 and 2 of Schedule 4 (Grantors' Responsibilities). All

obligations of the Grantors shall be carried out in accordance with this

Concession Agreement, Relevant Rules and Procedures and Prudent

Industry Practice.

The achievement of all the conditions set out in this Section 5.3.a is a

condition precedent to the Effective Date.

5.3.b The Grantor shall operate and maintain the Existing System prior to the

Effective Date with the intent that the Existing System will, on the

Effective Date, meet the Existing System Requirements.

No earlier than thirty (30) days prior to the then anticipated Effective Date and no later than ten (10) days before the then anticipated Effective

Date, the Concessionaire shall provide to the Grantors and the

Independent Engineer its assessment of the ability of the Existing System

to meet the Existing System Requirements including the number of LRVs

it reasonably believes are in good working condition and its estimate of

the Cycle Time. The Grantors shall procure that the Independent Engineer

shall, within a period of ten (10) days of receipt of the assessment

provided by the Concessionaire certify whether or not the Existing

System will meet the Existing System Requirements on the Effective Date.

The Grantors must, between the Bid Submission Date and the Effective

Date, continue to inspect, maintain, monitor and report on the

performance of the Existing System to the same frequency and quality

and across the same indicators as undertaken prior to the Bid Submission

Date.

The table set out below shall be used to assess the level of adherence by

the Grantors to the Existing System Requirements from the Bid

Submission Date to the Effective Date. The baseline Existing System

Requirement parameters will be set at midnight on [28 April 2014] and

will be in accordance with Schedule 4 (Grantors' Responsibilities). The information used to establish the baseline measurement is as detailed in

the table below.

45

If the Existing System does not meet the baseline Existing System

Requirements parameters (as set out in the Existing System

Requirements table below), as certified by the Independent Engineer, the Grantors shall compensate the Concessionaire for the unavoidable

incremental cost (as determined by agreement or failing agreement by

the Expert) that the Concessionaire will incur to restore the Existing

System to the level necessary to meet all of the baseline Existing System

Requirements taking into consideration any Emergency Upgrade Contract executed by the Grantors for the same purpose.

The baseline Existing System Requirements parameters and the method

to assess the level of adherence by the Grantors to these baseline requirements are:

Existing System Requirements

Parameter Baseline

Method of monitoring

deterioration from the Baseline

The Existing System railway infrastructure and railway systems have, between [28 April 2014] and the Effective Date, undergone inspection monitoring, and maintenance to the standards in place at the Bid Submission Date.

Recording of the inspection, maintenance and monitoring activities undertaken as on [28 April 2014].

Review of LRTA's Operating Reports, verifying that inspection, maintenance and monitoring activities have been undertaken to the same level.

The LRVs required for revenue generating services between the [28 April 2014] and the Effective Date, remain sufficient to deliver the weekday, weekend and public holiday service timetable in place at the

The average number of LRVs available for revenue generating services on weekdays during the thirty (30) day period prior to April 28, 2014, as set out in f LRTA's Operating Reports

A negative deviation of more than one (1) from the average number of LRVs available for revenue generating services on weekdays during the thirty (30) day period prior to April 28, 2014,

46

Bid Submission Date. delivered after [28 April 2014] will be the baseline.

as set out in LRTA's Operating Reports delivered after [28 April 2014].

The present timetabled and programmed Cycle Time of at least one hundred and six (106) minutes.

The present

timetabled and

programmed (at the

control centre) Cycle

Time of at least one hundred and six (106)

minutes will be the

baseline.

An increase in Cycle Time by more than five (5) minutes as programmed and timetabled.

5.3.c In addition to the above, if the Grantors do not make available at least one

hundred (100) LRVs or the System is not able to operate to a Cycle Time

of at least one hundred and six (106) minutes, (or a combination of the

two as indicated in Table 1 of Schedule 23 (Cycle Time / Available LRVs

Matrix)) on the Effective Date, then they shall make the "LRV Shortfall Payment" in accordance with the formula provided below:

Where,

N is the number in the Cycle Time/Required LRVs Matrix shown in Table 1 in Schedule 23 corresponding to CycleTime t and LRV t .

t is each of the four (4) Balancing Payment periods when the LRV Shortfall Payment, if payable, shall be paid, and takes the values from 1 to 4.

LRV t corresponds to the average number of LRVs available for

revenue generating services during peak hours on weekdays (excluding Public Holidays) during the month immediately preceding the period t, except for t =1 when this shall be during the month immediately preceding the Effective Date. LRVt includes seven (7) LRVs, estimated as the number of LRVs undergoing planned maintenance on a typical weekday.

CycleTime t corresponds to the average Cycle Time of the System

during the five (5) days immediately preceding the period t, except for t =1 when this shall be during the five (5) days

47

immediately preceding the Effective Date.

LRVt and CycleTimet numbers will be derived from LRTA's Operating Reports and following the Effective Date, the Concessionaire’s daily

operating report and will be certified by the Independent Engineer .

If payable, the LRV Shortfall Payment shall be paid as a part of each of the

first four (4) Balancing Payments made following the Effective Date. The

LRV Shortfall Payment shall be recalculated using the same formula above

for each subsequent Balancing Payment period.

Provided that, if in respect of any subsequent Balancing Payment the

Cycle Time has increased or the number of LRVs has decreased from that

used in the previous LRV Shortfall Payment calculation, then the Cycle

Time and/or the number of LRVs from the previous calculation shall be

applied for the purpose of determining N.

As an example, if the average number of LRVs available for revenue

generating services on weekdays during the month before the Effective

Date (LRV1) was ninety-five (95) and the corresponding Cycle Time

(CycleTime1) was between one hundred and eight minutes and one

second (108:01) and one hundred and nine minutes (109), then the LRV Shortfall Payment1 included in the first Balancing Payment would be:

= [8] x PhP6,250,000 = PHP50,000,000

For the avoidance of doubt, the LRV Shortfall Payment mechanism will

cease to apply after the fourth (4th) Balancing Payment made following

the Effective Date.

5.3.d If the Concessionaire wishes to make a claim under Sections 5.3.b it must

present to the Grantors no later than five (5) days after the Effective Date

with a written notification of its intention, and not later than forty (40) days after presenting this written notification, the Concessionaire must

present a detailed estimate (with supporting documentation) of the costs

necessary to effect such restoration (which estimate shall take into

account any restoration being effected by the Grantors pursuant to any

Emergency Upgrade Contracts or otherwise).

The Grantors will be responsible between the Bid Submission Date and

the Effective Date for any capital expenditure replacement costs required

to ensure the Existing System Requirements are met.

5.3.e Provided the Concessionaire has complied with its obligations under

Section 5.2.e within the time contemplated therein, the Grantors shall

issue to the Concessionaire or the Facility Operator an Operating

Franchise within thirty (30) days from the Concessionaire’s or Facility

48

Operator’s compliance with all of the procedures and requirements in

Part 2 of Schedule 15 (Operating Franchise Particulars).

5.4 Right to Terminate

5.4.a If either the Effective Date or the Construction Start Date has not occurred

by the Required Effective Date, then (1) whichever Party that has fulfilled all its obligations in relation to achieving the Effective Date or

Construction Start Date (as the case may be), may give written notice to

the other Party of its intention to terminate this Concession Agreement or

(2) where neither Party has fulfilled all its obligations in relation to

achieving the Effective Date or Construction Start Date (as the case may be), either Party may give written notice to the other Party of its intention

to terminate this Concession Agreement.

5.4.b Alternatively, a Party may make proposals for an extension of the Effective Date or the Construction Start Date (as the case may be), or

alternatives for achieving the same but the other Party shall be under no

obligation to accept such proposals. Any agreement on an extension of the

Required Effective Date must be made in writing and signed by all the

Parties.

5.4.c If (1) no such proposals are made before the Required Effective Date or,

(2) if proposals are made but the Parties have failed to agree thereon

within sixty (60) days of the proposals having been made or (3) if proposals are agreed but are not proceeded with within thirty (30) days

of agreement thereon, either Party may terminate this Concession

Agreement by giving prior written notice to the other Party.

5.4.d Any notice given by a Party in accordance with Sections 5.4.a or 5.4.c shall

constitute a Notice of Termination. Such Notice of Termination shall (notwithstanding Section 31.2.e) state the Termination Date which shall

be no less than thirty (30) days and no more than ninety (90) days after

the date of the Notice of Termination. Following the Termination Date, the

provisions of Sections 31.4 (Consequences of Termination) and 31.5

(Financial Consequences) shall apply.

5.5 Consequences of Termination

5.5.a The financial consequences of termination of this Concession Agreement

prior to the Effective Date or the Construction Start Date (as the case may

be) are as set out in Schedule 10 (Financial Consequences of Termination).

5.5.b If the cause of termination of this Concession Agreement was a failure on

the part of the Concessionaire to satisfy the conditions precedent to the

Effective Date or the Construction Start Date (as the case may be) and

49

provided that the failure was not attributable to (i) Force Majeure, (ii)

failure of the Grantors to perform their obligations under this Concession

Agreement, (iii) Material Adverse Government Action, or (iv) Grantors

Delay Event, then, without prejudice to Section 5.5.a or to the other rights

of the Grantors under this Concession Agreement, provided that the

Grantors have satisfied those of their obligations under this Concession

Agreement required to be satisfied by the Effective Date or the

Construction Start Date (as the case may be), the Concessionaire shall pay

the Grantors a penalty of six hundred and fifty million Pesos

(PhP650,000,000) and the Grantors shall be entitled to enforce the Operation Performance Security to enforce that penalty.

5.5.c Where the Concession Agreement has been terminated for a failure to

achieve either the Effective Date or the Construction Start Date on or before the Required Effective Date (or as extended pursuant to this

Concession Agreement) and this is attributable to the failure of both

Parties to satisfy the applicable conditions precedent or to Force Majeure delaying the fulfilment of the applicable conditions precedent, then for the

purposes of assessing the financial consequences, such termination shall be treated under Schedule 10 (Financial Consequences of Termination) as

if it were a termination for extended Force Majeure.

5.5.d If the cause of termination of this Concession Agreement was a failure on the part of the Grantors to satisfy the conditions precedent of the Effective

Date or the Construction Start Date (as the case may be) then without

prejudice to Section 5.5.a or to the other rights of the Concessionaire

under this Concession Agreement and provided that the Concessionaire

has satisfied those of its obligations under this Concession Agreement

required to be satisfied by the Effective Date or the Construction Start

Date (as the case may be), the Grantors shall return the Operation

Performance Security in full (but net of any prior calls legitimately made

thereon) to the Concessionaire and, for the purposes of Schedule 10

(Financial Consequences of Termination) such termination shall be treated

as a termination for Grantors Event of Default.

5.6 Emergency Upgrade Contracts

5.6.a The Grantors shall, no later than thirty (30) days after the Signing Date,

provide copies of any Emergency Upgrade Contracts entered into by the

Grantors prior to the Signing Date to the Concessionaire. Where the

Grantors, after the Signing Date, consider that it will be necessary to enter

into any additional Emergency Upgrade Contract, they shall consult with

the Concessionaire and keep the Concessionaire informed as to all steps

they intend to take. They shall submit drafts of the technical specifications of such contracts to the Concessionaire and take account, to the extent

practicable, of any comments made by Concessionaire thereon.

50

5.6.b Subject to Relevant Rules and Procedures, the Grantors shall procure that

any Emergency Upgrade Contract proposed to be entered into by the

Grantors shall provide that:

5.6.b (1) it shall be transferrable by the Grantors to the Concessionaire

without the consent of the counterparty being required;

5.6.b (2) following the Effective Date (or earlier subject to the Grantors'

agreement), the Concessionaire may act as an agent of the

Grantors for the management of the Emergency Upgrade

Contract;

5.6.b (3) the contractor under the Emergency Upgrade Contract shall be

obliged to comply with all directions of the Concessionaire

regarding safety and working arrangements; and

5.6.b (4) the warranties given by the contractor thereunder and any

performance securities provided in support of those

obligations shall (independent of the provisions of Section

5.6.b(1) above) be assignable to the Concessionaire.

5.6.c Subject to Relevant Rules and Procedures, the Concessionaire shall, prior

to the Effective Date, elect whether it wishes to take novation of such

executed Emergency Upgrade Contract itself or, in the case of an

Emergency Upgrade Contract in respect of which the Grantors have

started the procurement process but not entered into the Emergency

Upgrade Contract in question, to arrange its own procurement process in

respect thereof and subsequently enter into that Emergency Upgrade

Contract.

5.6.d Subject to Relevant Rules and Procedures, if the Concessionaire decides to

exercise the above rights in respect of any Emergency Upgrade Contract,

the Grantors shall procure the novation of that Emergency Upgrade

Contract to the Concessionaire. Thereafter, the Concessionaire shall be

responsible for payments of all subsequent work executed by the relevant contractor, supervise the work and enforce the Emergency Upgrade

Contract so transferred. After the novation of the Emergency Upgrade

Contract, any delay in the performance of the Emergency Upgrade

Contract in question shall not constitute a Grantors Delay Event.

5.6.e If the Concessionaire elects not to novate any executed Emergency

Upgrade Contract into its name or is unable to novate the executed

Emergency Upgrade Contract due to Relevant Rules and Procedures, then

the Grantors shall be responsible for the timely implementation of the Emergency Upgrade Contracts in question including payments

thereunder and the Concessionaire shall act as the Grantors' agent

51

thereunder. The Grantors shall exercise their rights under that

Emergency Upgrade Contract on and from the Effective Date so as to

minimise any disruption and interference to the carrying out of the

Works, the Services, the restoration of Structural Defects, if any and

System Remedial Works, if any. The Grantors shall ensure that (i) the

work executed under the Emergency Upgrade Contract by the contractor

thereunder complies with the scope and standard of work required under

that Emergency Upgrade Contract and (ii) the work thereunder is

completed in accordance with the time schedule provided in the relevant

Emergency Upgrade Contract. The Concessionaire shall be entitled to a Quality Exclusion (as defined in Part 3 of Schedule 6 (Concessionaire

Responsibility for the Operations and Maintenance Activities)) to the extent

that the failure to achieve the Key Performance Indicators was the

inevitable and unavoidable consequence of carrying out implementation

of the Emergency Upgrade Contract by the Grantors. Any dispute as to

whether the work has been done in accordance with the scope and

standard of work specified in the Emergency Upgrade Contract and the

timeline and its effect on the Key Performance Indicators shall be

determined by the Independent Engineer. The failure of the Grantors to

fulfil the above obligations shall constitute a Material Adverse

Government Action. For the avoidance of doubt the Concessionaire's right to compensation in respect thereof shall be reduced to the extent that it

has caused or contributed to the problem through its actions or omissions

in its capacity as agent of the Grantors.

5.6.f The Grantors acknowledge that the Concessionaire may have an interest

in executing any such Emergency Upgrade Contract itself. Subject to Legal

Requirements concerning the procurement of infrastructure projects, the

Grantors may allow the Concessionaire to bid for such contracts or

negotiate for such contracts through a negotiated procurement process.

5.7 Notification of Effective Date

When the Concessionaire (1) has received from the Grantors evidence that the

Grantors have satisfied all of the conditions precedent to the Effective Date

required to be fulfilled by the Grantors, (2) has itself satisfied all of the

conditions precedent to the Effective Date required to be satisfied by it and has

received the Grantors' concurrence thereto and (3) has agreed with the Grantors pursuant to the Handover Protocol or otherwise the date it wishes to be the

Effective Date, it shall give written notice to the Grantors confirming the above and stating the date it requires to be the Effective Date. This date may not be less

than seven (7) days after the date of this notice. If the conditions precedent have

been satisfied but the parties have not, no later ten (10) days after such satisfaction, agreed on the Effective Date, then either party may by written notice

(such notice of the Effective Date shall not be less than fifteen (15) and not more

52

than thirty (30) days from the date the notice is given) designate the Effective

Date. If both Parties serve such notice, the earlier notice to be served shall

prevail.

5.8 Structural Integrity of Existing System

5.8.a The Concessionaire may during the Structural Warranty Period conduct the Structural Defect Survey and submit the Structural Defect Report. If

the Concessionaire (1) does not submit the Structural Defect Report

within the Structural Warranty Period or (2) fails to obtain the Structural

Defect Notice in accordance with the provisions hereof (other than as a

result of causes attributable to the Independent Engineer or the Grantors) or (3) fails to obtain the Structural Defect Design Acceptance Certificate

(other than as a result of causes attributable to the Independent Engineer

or the Grantors) in accordance with these provisions hereof, or (4) does

not diligently proceed to complete the rectification of the Structural

Defect in accordance with the Structural Defect Notice and the relevant

approved Detailed Design, then the Concessionaire shall not be entitled to

make any claim against the Grantors under this Section 5.8 in relation to

the Structural Defects in question.

5.8.b Upon completion of the Structural Defect Survey, the Concessionaire shall

provide the Independent Engineer and the Grantors with a report

("Structural Defect Report") (a) identifying all the Potential Structural

Defects, which shall include all supporting information and documents to

enable the Independent Engineer to analyse if the Potential Structural

Defects are the Structural Defects, (b) setting out an estimate of the Restoration Cost of each such Potential Structural Defect (along with a

quotation from at least three (3) independent contractors having experience in carrying out works of an equivalent nature and complexity),

(c) setting out a detailed plan for the restoration work with an estimate of

time required for restoration of each such Potential Structural Defect and

(d) indicating the need for shutdown of any Stations or sections of Track

to rectify each such Potential Structural Defect and setting out the length

of each such shutdown.

5.8.c The Independent Engineer shall render his decision on the Structural

Defect Report in accordance with the procedure and timeframes set out in

paragraph 5 to paragraph 9 of Part 2 of Schedule 7 (Engineering,

Procurement and Construction of the Cavite Extension). The Independent

Engineer shall, within this period, in consultation with the Grantors and

the Concessionaire, either approve or disapprove the Structural Defect

Report (in its entirety or in part). To this end, a certificate issued by the

Independent Engineer (1) certifying that some or all of the Potential Structural Defects as constituting Structural Defects and (2) approving

some or all of the costs as Restoration Costs and (3) the timeline for

53

restoration of the Structural Defect ("Structural Defect Notice"), shall be

binding on the Parties.

5.8.d If the Concessionaire fails to obtain a Structural Defect Notice, no later

than sixty (60) Business Days after its first (1st) submission of the

Structural Defect Report to the Independent Engineer (other than as a result of causes attributable to the Independent Engineer or the

Grantors), then the Concessionaire shall not be entitled to make any claim against the Grantors under this Section 5.8 (Structural Integrity of Existing

System) in relation to the Structural Defect.

5.8.e No later than sixty (60) days after the issuance of the Structural Defect Notice, the Concessionaire shall supply the Detailed Design of the works it

proposes to carry out to restore Structural Defects to the Independent

Engineer.

5.8.f The Independent Engineer shall review such Detailed Design in

accordance with the timeline and procedure set out in paragraph 5 to

paragraph 9 of Part 2 of Schedule 7 (Engineering Procurement and

Construction of the Cavite Extension). Following this review the

Independent Engineer may approve the Detailed Design, in which case,

the Independent Engineer shall issue a certificate of acceptance of the

Detailed Design to the Concessionaire ("Structural Defect Design

Acceptance Certificate").

5.8.g If the Concessionaire fails to obtain a Structural Defect Design Acceptance

Certificate in relation to the submitted Detailed Design (other than as a

result of causes attributable to the Independent Engineer or the

Grantors), within a period of sixty (60) Business Days after its first (1st)

submission to the Independent Engineer, then the Concessionaire shall

not be entitled to make any claim against the Grantors under this Section

5.8 in relation to the Structural Defect.

5.8.h The Concessionaire shall carry out the restoration of the Structural

Defects in accordance with the Structural Defect Notice and the approved

Detailed Design.

5.8.i Based on the Reports submitted to the Independent Engineer pursuant to

Section 25.2.b, the Grantors shall reimburse the cost incurred for

restoration of the Structural Defect as certified by the Independent

Engineer which shall be the aggregate of (1) the approved Restoration

Cost in the Structural Defects Notice and (2) any incremental cost

approved by the Independent Engineer in accordance with Section 5.8.j

and 5.8.k.

5.8.j If the Restoration Cost increases due to any Material Adverse Government

54

Action, then the Grantors shall pay the mutually agreed amount (or in

default of agreement as determined by the Independent Engineer) of

incremental cost to the Concessionaire. For avoidance of doubt, such costs

shall not be aggregated with other costs and losses incurred by the

Concessionaire as a result of other Material Adverse Government Actions,

and the thresholds for entitlement to compensation set out in Section 29.3

(Material Adverse Government Action) shall not apply.

5.8.k If the Restoration Cost increases due to Force Majeure, then subject to

Section 28.2 (Burden of Proof), 28.3 (Notification of Force Majeure), 28.4

(Obligation of Each Party in the event of Force Majeure) 28.5 (Damage

Caused by Force Majeure) and 28.6 (Continuous Performance), the

incremental cost of restoration (as determined by agreement or in default

of agreement as determined by the Independent Engineer) shall be first met by the Concessionaire from insurance proceeds available for the

purpose. If the insurance proceeds are not enough to meet the increase in

the Restoration Cost due to Force Majeure, then the excess cost shall be borne equally by the Grantors and the Concessionaire. Nothing herein

shall restrict the rights of the Parties to terminate the Concession Agreement in accordance with Section 28.5.d and 28.5.e, in which case the

provisions of Sections 28.5.d and 28.5.e shall apply to the exclusion of this

Section 5.8.k.

5.8.l The (i) Restoration Cost determined in accordance with Section 5.8.i, (ii)

the increase in the Restoration Cost due to Material Adverse Government

Action determined in accordance with Section 5.8.j, and (iii) the increase

in the Restoration Cost due to Force Majeure determined in accordance

with Section 5.8.k, shall be paid by the Grantors through the Balancing

Payments as contemplated in Section 20.6 (Balancing Payment). The

Restoration Cost specified in each Report delivered pursuant to Section

25.2.b as having been incurred (and as certified by the Independent

Engineer), shall be paid by the Grantors in four equal instalments, the first

to be paid as a part of the Balancing Payment first becoming due (i) after

the delivery of the Report or, if later, (ii) the date the costs are so certified and the remaining three instalments to be paid on each of the next three

Balancing Payment dates. For the avoidance of doubt if the Restoration

Cost is adjusted on delivery of a subsequent Report, the payments to be

made as part of the subsequent Balancing Payments shall be adjusted

accordingly.

5.8.m If any Structural Defect (during the period commencing from the Effective

Date and ending on the later of (i) the Structural Warranty Period or (ii) if

the Concessionaire has submitted the Structural Defect Report, then on the issuance of the Structural Defect Design Acceptance Certificate) or the

work necessary to cure the Structural Defect in accordance with the

55

Structural Defect Design Acceptance Certificate, requires a shutdown of

any Station after the Effective Date, then the Concessionaire shall be

entitled to compensation as computed in accordance with the second

(2nd) paragraph of this Section 5.8.m. If any Structural Defect during the

aforesaid period causes the shutdown of any Station, then the

Concessionaire shall immediately (i) inform the Independent Engineer of

the cause of shutdown of the Station and (ii) take steps necessary to cure

the Structural Defect including the formulation of a restoration work plan

and programme. The Independent Engineer shall, within a period of five

(5) days of receipt of each of the above information, certify (i) whether the shutdown of the Station was necessary and (ii) the restoration work

plan and programme proposed by the Concessionaire. Any compensation

payable under this Section shall be subject to certification by the

Independent Engineer. For the purpose of this Section, the Station shall be

deemed to be shut down if the Station cannot be opened for service over

an entire day. This compensation shall be paid as a part of the Balancing

Payments as contemplated in Section 20.6 (Balancing Payment). The

Concessionaire's right to compensation under this Section 5.8.m shall be

reduced to the extent that (i) the Concessionaire has caused or

contributed to the shutdown of the Station (except to the extent that the

Concessionaire has been required to do so in order to perform its obligations and exercise its rights under this Section 5.8 (Structural

Integrity of Existing System) and (ii) the Concessionaire has not used

reasonable efforts in accordance with any applicable Structural Defect

Report to minimize the duration and extent of the shutdown of the

Station.

The compensation shall be a sum for each day for which a shutdown of

one or more Stations subsists computed as set out below:

Number of Stations

unavailable

Daily payment per Station (in

Pesos)

1 300,000

2 – 3 315,000

4 – 7 331,000

8 – 11 347,200

12 – 15 365,820

16 – 19 383,000

56

5.8.n If a section of elevated or at grade structure, other than a Station, is

unavailable due to a Structural Defect (during the period commencing

from the Effective Date and ending on the later of (i) the Structural

Warranty Period or (ii) if the Concessionaire has submitted the Structural

Defect Report, then on the issuance of the Structural Defect Design

Acceptance Certificate) or the work necessary to cure the Structural

Defect in accordance with the Structural Defect Design Acceptance

Certificate, and this impacts the number of scheduled train trips, then in

addition to the compensation provided in Section 5.8.m, the

Concessionaire shall, to the extent that the above shutdown affects the number of actual trips completed (ATd) as measured against the number

of scheduled trips completed (STd) as contemplated in Section 3.1 of Part

3 of Schedule 6 (Service Level Requirements with Key Performance

Indicators for the Existing System and the Extended System) of this

Concession Agreement, be entitled to compensation at the rate provided

in the calculation below until train services resume on the affected section

of elevated or at grade structure.

Compensation payment = (∑FR STd - ∑FR ATd) *95%

Where ∑FR is the actual Farebox Revenue (plus Deficit Payment less

Surplus Payment) calculated over a similar period of days in the week

immediately preceding the week during which the section of elevated or at grade structure other than a station was unavailable for Services. If any

Structural Defect during the aforesaid period causes any part of the

elevated or at grade structure to be unavailable, then the Concessionaire

shall immediately (i) inform the Independent Engineer of the cause of

unavailability of elevated or at grade structure and (ii) take steps

necessary to cure the Structural Defect including the formulation of a

restoration work plan and programme. The Independent Engineer shall,

within a period of five (5) days of receipt of each of the above information,

certify (i) whether the elevated or at grade structure can be in operation

and (ii) the restoration work plan and programme proposed by the

Concessionaire. Any compensation payable under this Section shall be subject to certification by the Independent Engineer.

5.8.o The Grantor's liability to pay the Restoration Cost is capped at an amount

of two billion Pesos (PhP2,000,000,000). For the avoidance of doubt it is hereby clarified that the cap shall not apply to any amount payable by the

Grantors as a result of (i) Material Adverse Government Action under Section 5.8.j (ii) Force Majeure under Section 5.8.k, (iii) compensation

under Section 5.8.m and (iv) compensation under Section 5.8.n.

Section 6 HANDOVER TO CONCESSIONAIRE ON THE EFFECTIVE DATE

6.1 Handover of Existing System

57

Subject to fulfilment of the conditions precedent to the Effective Date as set out

in Sections 5.2 (Concessionaire's Obligations) and 5.3 (Grantors' Obligations), the

handover of the operation and maintenance of the Existing System by the

Grantors to the Concessionaire shall take place at 00:01 on the Effective Date or

such other time as may be agreed in writing between the Grantors and the

Concessionaire. At this point the Concessionaire shall:

6.1.a assume (without further condition) possession care, custody and control of and risk in the Existing System; and

6.1.b employ (subject to Section 6.3 (Transferring Employees) but without

further condition) and assume responsibility as employer of the Transferring Employees.

6.2 Asset Register

From the Effective Date, the Concessionaire shall take over the responsibility

during the Concession Period for the Asset Register and add to it all the

information in relation to the Cavite Extension, the System Remedial Works,

rectification of the Structural Defects, System Upgrades, Emergency Upgrade Contracts, Additional System Upgrades and the integration of the Existing

System with the Cavite Extension, any variations to the System implemented pursuant to Section 18.12 (Variations and Adjustments) and all information in

relation to any replacement, addition or improvement thereto.

6.3 Transferring Employees

6.3.a One (1) month prior to the Effective Date, the Concessionaire shall make

offers of employment to each of the employees of LRTA identified in

paragraph 1 of Schedule 4 (Grantors' Responsibilities) ("Available

Employees"). On the Effective Date, the Concessionaire shall hire all

those Available Employees who accept its offer of employment, subject to

a probationary period of one hundred and eighty (180) days starting on

the Effective Date, and with levels of compensation and associated

benefits no less favorable than those enjoyed by those employees prior to the date the offer is made. The Available Employees who accept the

Concessionaire's offer of employment shall be the Transferring

Employees.

6.3.b As at 00:01 on the Effective Date, the employment of the Transferring

Employees with the LRTA shall be terminated and each such Transferring

Employee shall execute and deliver a written release and quitclaim to the

LRTA, copies of which shall be provided to the Concessionaire as soon as

practicable after the Effective Date. Any retirement and severance payments due to the Transferring Employees by virtue of the termination

of their employment with the LRTA shall be the responsibility of the

58

Grantors.

6.3.c Without limiting the foregoing, the Concessionaire may not terminate the employment of any Transferring Employee due to economic reasons such

as the installation of labor-saving devices, redundancy, or retrenchment

to prevent losses ("Economic Causes") until the probationary period of one hundred and eighty (180) days has expired. After the aforesaid

period, if the Concessionaire wishes to dismiss any employee due to Economic Causes, then the Concessionaire may do so in accordance with

the Relevant Rules and Procedures.

6.3.d Those Transferring Employees retained after the probationary period of one hundred and eighty (180) days shall become regular employees of the

Concessionaire and shall be accorded all the rights and benefits accorded

to regular employees under the Relevant Rules and Procedures.

6.3.e To the extent that any Transferring Employee makes a claim against the

Concessionaire after the Effective Date relating to a breach or alleged

breach prior to the Effective Date by either of the Grantors of the

employment contract of such Transferring Employee with LRTA, then the

Concessionaire shall inform the Grantors thereof. The Grantors shall have

the power to conduct any proceeding against such Transferring Employee

at their own cost and to settle any such claim in accordance with

procedures applicable to the Grantors. The Grantors shall indemnify the

Concessionaire in respect of any payments required to be made by the

Concessionaire (at the request of the Grantors or at the order of the court)

and actually paid by the Concessionaire in respect of such claim and for any reasonable and unavoidable substantiated costs incurred by the

Concessionaire in defending such claim.

6.3.f If the aggregate remuneration payable in respect of the Transferring

Employees for the last one hundred and eighty (180) days prior to the

Effective Date including performance based bonus and incentives (disregarding the value of any salary increases awarded at the

Concessionaire's request) exceeds an amount of three hundred and six

million Pesos (PhP306,000,000), then the Grantors shall compensate the Concessionaire for the additional remuneration costs incurred by the

Concessionaire as a result of such excess over the above amount over the

one hundred and eighty (180) day probationary period stipulated in

Section 6.3.d. This compensation shall be paid in four (4) instalments over

the next four (4) Balancing Payments.

For the purpose of this Section, "remuneration" shall include all fringe

benefits and similar payable to the relevant Transferring Employees.

6.3.g In addition to the above, the Concessionaire shall be permitted to make

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offers of employment to current and ex-employees of LRTA whose work

related wholly or mainly to the System and the Grantors, to the fullest

extent permitted by Legal Requirements but subject to Section 26.4.b,

waive and disclaim any right to invoke any conflict of interest restrictions

imposed by contract or by Legal Requirements so as to impede any such

hiring.

6.4 Common Station

6.4.a The Grantors have commenced the process for the development (civil,

mechanical and engineering) of the Common Station. The Common

Station will be developed at the vicinity of the existing MRT-3 North Avenue Station along EDSA in Quezon City, Metro Manila as more

specifically identified in Schedule 24 (Details of Common Station).

6.4.b The Concessionaire shall no later than one (1) month after the issuance of the Notice of Award inform the Grantors whether it will submit an

alternative preliminary design of the Common Station. If the

Concessionaire confirms that they will submit an alternative preliminary

design of the Common Station, then the Concessionaire shall at its own

cost, no later than two (2) months after the Notice of Award, submit the

alternative preliminary design of the Common Station ("Concessionaire

Preliminary Design") to the Grantors in accordance with the parameters

provided in Schedule 24 (Details of Common Station), which may include

(i) any enhancements required on the Common Station for the purpose of

future development of the Commercial Business ("Enhancement Work")

and (ii) any part of the electrical and/or mechanical system (including the signalling system) of the Common Station, which the Concessionaire

proposes to do at its own risk and cost, and the cost of such components will be deducted from the Common Station Cost in accordance with the

breakdown of costs set out in Schedule 24 (Details of Common Station).

6.4.c No later than thirty (30) days after the submission of the Concessionaire Preliminary Design, the Grantors (through the consultants appointed by

the Grantors for the development of the Common Station ("Common

Station Consultants")) shall confirm (i) whether the Concessionaire Preliminary Design meets the requirements of Schedule 24 (Details of

Common Station), (ii) the estimated cost of the development of the

Common Station based on the Concessionaire Preliminary Design

(excluding the Enhancement Cost) ("Common Station Cost") (iii)

whether the Enhancement Work proposed by the Concessionaire can be

implemented within the proposed structure of the Common Station and

the cost of the Enhancement Work ("Enhancement Cost"), (iv) whether

any part of the electrical and/or mechanical system (including the signalling system) of the Common Station which the Concessionaire

proposes to do on its own can be given to the Concessionaire to be

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developed at its own risk and cost, and (v) whether the Common Station

based on the Concessionaire Preliminary Design can be completed within

the period of forty-eight (48) months from the Signing Date ("Common

Station Consultants Report"). This Common Station Consultants Report

shall form the basis for the development of the Common Station and shall

be binding on the Parties.

6.4.d If the Concessionaire has not submitted a Concessionaire Preliminary Design within the time period provided in Section 6.4.b, then the Grantors

shall proceed with the public procurement of the Common Station using

the existing design for Common Station on the Data Room Disk (design

‘7D’).

6.4.e If the Common Station is developed in accordance with Section 6.4.d, then

the Grantors shall ensure that (i) the Common Station is developed in

accordance with the preliminary design and the scope of work provided

to the Concessionaire, (ii) the Common Station is developed in accordance

with the parameters of Schedule 24 (Details of Common Station), and (iii)

the completed, tested and commissioned Common Station is handed over

to the Concessionaire no later than forty-eight (48) months after the

Signing Date in a fit state for the Concessionaire to carry out all works

involving the installation, testing and commissioning of Railway Systems

in the Common Station. If the Common Station is developed in accordance with Sections 6.4.b and 6.4.c, then the Grantors shall ensure that the

Common Station is developed in accordance with the Common Station

Consultants Report.

6.4.f The Grantors shall, provide advance drafts of the contract for

construction of the Common Station to the Concessionaire for review and comment prior to it being released for tender and may consider the

comments made by the Concessionaire at their absolute discretion.

6.4.g The Grantors shall pay for the development of the Common Station. However, if the Common Station is developed in accordance with the

Concessionaire Preliminary Design in accordance with Sections 6.4.b and

6.4.c, then the sum of the Common Station Cost and the Enhancement Cost ("Total Common Station Cost") shall be the approved budget for the

contract or the ceiling price for the public procurement to be conducted.

The Grantors shall then share pro-rata with the Concessionaire on the

final bid amount to be awarded to the winning Common Station

contractor based the ratio of the Common Station Cost and the

Enhancement Cost against the Total Common Station Cost wherein the

Grantors will cover the Common Station Cost while the Concessionaire

covers the Enhancement Cost. The maximum cost the Grantors shall pay for the development of the Common Station and the detailed breakdown

of the cost of the development of the Common Station to be shared by the

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Parties shall be as stated in Schedule 24 (Details of Common Station). To

illustrate: if the Common Station Cost is one billion four hundred million

pesos (Php1,400,000,000) and the Enhancement Cost is six hundred

million Pesos (Php600,000,000), then the Total Common Station Cost is

two billion Pesos (Php2,000,000,000). Thus, the pro-rata sharing of the

Grantors and the Concessionaire is seventy percent (70%) and thirty

percent (30%) respectively. If the bid amount for the Common Station is

one billion eight hundred million Pesos (Php1,800,000,000), then the

Grantors shall cover one billion two hundred sixty million Pesos

(Php1,260,000,000) while the Concessionaire shall cover five hundred forty million Pesos (Php540,000,000).

6.4.h If the Common Station is developed in accordance with the

Concessionaire’s Preliminary Design in accordance with Sections 6.4.b, 6.4.c, and 6.4.g, then the Concessionaire shall be required to open an

escrow account (“CS Escrow Account”) with a Philippine government

bank (“CS Escrow Agent”) and may either (a) deposit a sum equivalent to its total share in the Total Common Station Cost as determined in the final

bid amount to be awarded to the winning Common Station contractor before the issuance of the notice of award to the Common Station

contractor, or (b) (i) deposit a sum equivalent to its share in the projected

amounts to be paid to the Common Station contractor for the initial

Calendar Year or if there are no payments to be made in the initial

Calendar Year of the contract relating to the Common Station, the

Concessionaire’s share in the initial payment to be made to the Common Station contractor, and (ii) the balance of its share in the Total Common

Station Cost in irrevocable standby letters of credit in favour of the

Grantors. Should the Concessionaire opt to fund the CS Escrow Account

in accordance with clause (b) above, the Concessionaire shall, within

three (3) Business Days from the start of each calendar year, deposit in the CS Escrow Account the sum equivalent to its share in the projected

amounts to be paid to the Common Station contractor for that Calendar

Year, and the balance of its share in the Total Common Station Cost in the

succeeding years in irrevocable standby letters of credit in favour of the

Grantors.

6.4.i The monies due to the Common Station contractor under its contract shall

be paid pro-rata by the Grantors and the Concessionaire. Monies due from

the Concessionaire shall be drawn from the CS Escrow Account. The

Concessionaire shall be required to issue irrevocable instructions to and

authority for the CS Escrow Agent to release funds in the CS Escrow

Account for payment of sums due within five (5) Business Days upon

receipt by the CS Escrow Agent of written notice from the Grantors

confirming that the conditions for payment under the contract with the

Common Station contractor have been met and that the Grantors’ funds

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are available to be drawn for payment. Any interest on the balances

standing to the credit of the CS Escrow Account shall accrue to and be

paid to the Concessionaire.

6.4.j The irrevocable standby letters of credit in favour of the Grantors shall

have the following characteristics:

6.4.j (1) They shall be in the form acceptable to the Grantors and issued by

a universal bank or a commercial bank which is licensed by the

Bangko Sentral ng Pilipinas

6.4.j (2) they shall be callable on demand by the Grantors in the instance

that the CS Escrow Account is not funded within three (3)

Business Days from the start of each calendar year provided that

the amount that may be called shall be limited to the amount

equivalent to the projected amounts to be paid to the Common Station contractor for that Calendar Year;

6.4.j (3) All monies drawn from such letters of credit shall be deposited in

the CS Escrow Account;

6.4.j (4) they shall be for a period of one (1) year and any replacement

shall be effective from the day before the expiration date of the

previous applicable letter of credit; and

6.4.j (5) The irrevocable standby letter of credits shall be released upon

deposit of the applicable amount in the CS Escrow Account

representing the Concessionaire’s share in the amounts due to the

Common Station contractor in the last Calendar Year of its

contract.

6.4.k The Concessionaire may deliver more than one letter of credit complying

with the requirements set out above, provided that the aggregate total face amount of such letters of credit is equal to the applicable balance of

the Concessionaire’s share in the Total Common Station Cost, provided

that it may not provide more than three (3) such letters of credit.

6.4.l Costs in relation to the establishment of the CS Escrow Account, the fees

of the CS Escrow Agent, and any associated costs in relation to the release

of funds from the CS Escrow Account shall be for the account of the

Concessionaire.

6.4.m If the Common Station Consultant approves that part of the engineering

and/or mechanical work of the Common Station can be carried out

separately by the Concessionaire, then the Concessionaire shall develop

and integrate such part of the engineering and/or mechanical work of the

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Common Station with the Common Station at its own cost no later than

six (6) months after completion of the Common Station. .

6.4.n The Grantors shall appoint the Concessionaire as their agent for the

purpose of managing the construction of the Common Station. This

appointment shall be on the terms usual for appointments of such nature but the Concessionaire shall not be entitled to any remuneration in

respect thereof. This provision shall not apply should the Concessionaire or its Affiliate be the Common Station contractor under the public

procurement to be conducted.

6.4.o The Grantors shall coordinate the development of the Common Station with the Concessionaire. The Concessionaire shall be allowed to

participate in the testing and certification process for the Common

Station. The Concessionaire shall be entitled to propose an interface

protocol to govern the interface between the Works to be carried out by

the Concessionaire on the System for the purposes of connection with the

Common Station and the works of construction of the Common Station. If

approved by the Grantors this protocol shall be made a part of the

contract for the construction of the Common Station.

6.4.p On and from the Effective Date, the Grantors shall exercise their rights

under the contract for construction of the Common Station so as to

comply with all applicable rules and procedures of the Concessionaire

governing health and safety and to minimise disruption and interference

to the Works, the Services, the restoration of Structural Defects work, if

any and System Remedial Works, if any.

6.4.q Subject to the Concessionaire fulfilling its obligations under this Section

6.4, the failure of the Grantors to fulfil any of the above obligations shall

constitute a Material Adverse Government Action.

6.4.r The Concessionaire's right to make any claim against the Grantors for

Material Adverse Government Action shall be reduced to the extent that

the losses suffered by the Concessionaire under this Concession

Agreement have been caused by or contributed to by any action of the

Concessionaire or its Affiliate in its capacity as contractor under the

contract for construction of the Common Station. Should the Common

Station be procured using the Concessionaire Preliminary Design, the

Concessionaire, its Affiliates, and its Subcontractors directly involved in the preparation of the Concessionaire Preliminary Design, shall be

prohibited from bidding for the construction contract for the Common

Station.

6.4.s Upon completion of the Common Station in accordance with this Section

6.4, the possession of the Common Station shall be transferred to the

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Concessionaire and the Concessionaire shall be responsible for the

maintenance and operation of the Common Station. The ownership of the

Common Station shall always remain with the Grantors.

6.5 Concession Payment

[On or before the Effective Date and as a condition to the occurrence of the Effective Date, the Concessionaire shall pay the amount set out in Section 3 of

Part 2 of Schedule 9 (Concession Payment) to the Grantors.]

6.6 Tax

The Grantors shall be responsible for transfer taxes, if any, and registration fees,

if any, that may be applicable in connection with the handover of the Existing System to the Concessionaire in accordance with Section 6.1.

Section 7 CONSTRUCTION START DATE

7.1 Construction Start Date

The Construction Start Date shall occur and the Concessionaire shall be obliged

to commence construction of the Works on the date the Notice to Proceed is

received by the Concessionaire pursuant to Section 7.4.c (Procedure for

Determining Construction Start Date).

7.2 Concessionaire Conditions Precedent to Construction Start Date

As a condition precedent to the Construction Start Date, the Concessionaire shall

provide to the Grantors, in form and substance reasonably acceptable to the

Grantors:

7.2.a an executed original of the Construction Performance Security as

contemplated in Section 9.3 (Construction Performance Security) which

has been duly authorised and validly executed and which is in full force and effect and delivered by the parties to it;

7.2.b certified copies of those Relevant Consents required for commencement

of the Railway Infrastructure Works and Railway System Works;

7.2.c a certified true copy of each of the contract for execution of Railway

System Works and Railway Infrastructure Works, and other material

contracts entered into by the Concessionaire in respect of the Project (for

this purpose a contract is "material" if the contract value thereof is in

excess of one billion Pesos (PhP1,000,000,000) if entered into with an

Affiliate or four billion Pesos (PhP4,000,000,000) if entered into with any

other person), each complying with any requirements of this Concession

Agreement, which have been duly authorised and validly executed and

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which are in full force and effect and in respect of which all conditions

precedent required have been fully satisfied or waived. The

Concessionaire may remove confidential information, such as price and

payment terms, from the certified true copy submitted to the Grantors

provided that it shall certify that the contract value is above the relevant

threshold set out above;

7.2.d certification through a Design Acceptance Certificate issued by the Independent Engineer (in accordance with Schedule 7) in respect of the

Detailed Design in respect of the Railway Infrastructure Works (excluding

the Superstructure of Stations) to be executed on Basic ROW Package 1 in

accordance with Section 12 (Design and Construction of the Works); and

7.2.e evidence that the E&S Impact Assessment has been completed in

accordance with Section 26.3.b (E&S Obligations) and approved by any

relevant Government Authorities and has become effective and binding in

accordance with Section 26.3.b (E&S Obligations).

7.3 Grantors Conditions Precedent to Construction Start Date

As a condition precedent to the Construction Start Date, the Grantors shall

provide to the Concessionaire written certification from the Independent Engineer that the acquisition of Basic ROW Package 1 in accordance with the

ROW Acquisition Plan as set out in Schedule 4 (Grantors' Responsibilities) has

been achieved.

7.4 Procedure for Determining Construction Start Date

7.4.a Each Party shall notify the others in writing on achievement of each of the

conditions set out in Section 7.2 (in the case of the Concessionaire) or 7.3

(in the case of the Grantors).

7.4.b When the Concessionaire considers that all of the conditions set out in Section 7.2 (Concessionaire Conditions Precedent to Construction Start

Date) have been fulfilled or explicitly waived in writing by the Grantors

and when the Grantors have given notice of the fulfilment or waiver of all

the conditions in Section 7.3 (Grantors Conditions Precedent to

Construction Start Date) the Concessionaire shall give written notice to

the Grantors thereof.

7.4.c If the Grantors agree with the Concessionaire's notice pursuant to Section

7.4.b, DOTC shall within five (5) days of such notice issue to the

Concessionaire a Notice to Proceed which shall (1) confirm the

achievement of the Construction Start Date on the date of that Notice to

Proceed and (2) confirm that the Concessionaire is authorised to proceed

with the Works. If the Grantors do not agree with the Concessionaire's

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notice, DOTC shall so inform the Concessionaire within five (5) days of

such notice. The Concessionaire shall be entitled to refer the matter for

determination pursuant to Section 35 (Disputes).

7.5 Right to Terminate

If the Construction Start Date has not occurred by the Required Effective Date, then the Parties shall proceed in accordance with Sections 5.4 (Right to

Terminate) and 5.5 (Consequences of Termination prior to Required Effective

Date).

Section 8 EQUITY OBLIGATION

8.1 Equity Requirement

The Concessionaire's equity structure shall comply with the Equity

Requirements as set out in Schedule 1 (Equity Requirements) and also as

required under the Legal Requirements. These Equity Interests must be held directly by the Initial Shareholders.

8.2 Transfers during Lock-up Period

During the Lock-up Period, the Concessionaire shall not register or otherwise

permit any transfer of its Equity Interests or any rights in relation to its Equity

Interests except:

8.2.a if after such transfer:

8.2.a (1) the Lead Member and each Qualifying Initial Shareholder

continues to meet its Equity Requirements; and

8.2.a (2) the Initial Shareholders collectively continue to meet the IS

Equity Requirements,

and, in each case any new shareholder is approved by the Grantors, such

consent not to be unreasonably withheld;

8.2.b with the Grantors' consent (in their absolute discretion);

8.2.c by way of the grant of a Permitted Security Interest or the exercise of

rights under a Permitted Security Interest;

8.2.d where such transfer is necessary to comply with any applicable foreign

ownership restrictions imposed by Legal Requirements and the

transferee and the terms of the transfer are both approved by the

Grantors, such approval not to be unreasonably withheld so long as such transfer is only to the extent necessary to comply with applicable foreign

ownership restrictions; or

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8.2.e where such transfer is a transfer by an outgoing director of the

Concessionaire of his qualifying shares to a replacement director.

For the avoidance of doubt, references in this Section 8 to "transfer of Equity

Interests" or of rights in relation to Equity Interests shall be deemed to include

any transfer of any interest in a Holdco (as defined in Section 8.4.b) or the entering into of any contractual commitment which would or might transfer

control of the Concessionaire. Provided that nothing in this Section 8 shall operate to prohibit a transfer of Equity Interests arising by virtue of a change in

control of any company whose shares were at the Bid Submission Date and are at

the time of any such change in control, listed on any recognised stock exchange.

8.3 [Facility Operator

The Concessionaire shall procure that the [O&M Sponsor] continues to own no

less than twenty percent (20%) of the outstanding shares entitled to vote of the Facility Operator throughout the Lock-up Period.]

8.4 Share Escrow

8.4.a Within ten (10) days of the Signing Date, the Concessionaire, the Grantors,

the Initial Shareholders and the Share Escrow Agent shall enter into the

Share Escrow Agreement to give effect to the terms of this Section 8.4.

The fees, costs and expenses of the Share Escrow Agent shall be borne by

the Concessionaire.

8.4.b The Concessionaire shall procure that each of the Initial Shareholders

delivers to the Share Escrow Agent original stock certificates representing

all of its Equity Interests (on execution of the Share Escrow Agreement in

the case of Equity Interests already issued or within ten (10) days of

issuance of any new Equity Interests) in the Concessionaire (and that

when such Equity is held through an intermediate holding company

("Holdco") that both Holdco's Equity Interests in the Concessionaire and

the Initial Shareholder's Equity Interests in Holdco are so delivered). All

stock certificates shall be delivered together with a blank and undated assignment of such certificates duly executed by the registered holder of

such shares.

8.4.c Where an Initial Shareholder wishes to transfer shares as permitted by Section 8.2 (Transfers during Lock-up Period), the Concessionaire shall

procure that the Initial Shareholder provides the Grantors with not less

than thirty (30) days' prior written notice of the transfer together with

such evidence as the Grantors reasonably require to demonstrate

compliance with Section 8.2 (Transfers during Lock-up Period). If the Grantors are satisfied that the transfer is permitted by Section 8.2

(Transfers during Lock-up Period), they shall procure that the Share

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Escrow Agent (1) delivers the original stock certificates to the Initial

Shareholder or Holdco for the transfer of shares into the name of the

transferee or into the possession of the Finance Parties' Agent and (2)

(other than in the case of a transfer of Equity Interests pursuant to

Section 8.2.c) upon receipt of the stock certificates issued in the name of

the transferee and a blank and undated assignment of such certificates

duly executed by such transferee, the Share Escrow Agent shall surrender

the blank assignment previously executed by the transferring

Shareholder in question.

8.4.d If during the Lock-up Period, the Grantors have proof that any Initial

Shareholder or any permitted transferee from an Initial Shareholder or

any relevant Holdco transferred or purports to transfer any Equity

Interests (or rights in respect thereof) to any person in violation of Section 8.2 (Transfers during Lock-up Period), then, without prejudice to

any other rights of the Grantors, the Grantors or any person designated by

the Grantors may sell the Equity Interests (or rights in respect thereof) of that Initial Shareholder, Holdco or transferee who has caused the

Concessionaire to breach Section 8.2 (Transfers during Lock-up Period), to such person or person on such terms as it thinks fit (provided that the

sale shall be on arms length terms to a person who is not controlled by

the Republic of the Philippines) and shall account to that Initial

Shareholder, Holdco or transferee as the case may be for the net sales

proceeds of such Equity Interests (or rights in respect thereof). All taxes,

costs and expenses incurred by the Grantors as a result of the sale of such shares shall be for the account of the Initial Shareholder, Holdco or

transferee in question.

8.4.e The Grantors shall procure that the Share Escrow Agent shall return all of

the original stock certificates and blank and undated assignments of the

share certificates (other than stock certificates in respect of shares being

sold pursuant to Section 8.4.c above) to the relevant Initial Shareholder,

Holdco or transferee upon expiry of the Lock-up Period.

8.5 Reporting of Shareholders

On or before the date of each anniversary of the Signing Date during the

Concession Period, the Concessionaire shall submit a report listing all entities

which own, directly or indirectly, regardless of through how many layers of

holding companies, corporate vehicles, trusts, or other such entities, at least five

percent (5%) of the voting shares of stock of the Concessionaire as of the date of

submission of the report.

Section 9 CONCESSIONAIRE PERFORMANCE SECURITY

9.1 Concessionaire Performance Security

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9.1.a The Concessionaire shall be responsible for arranging and maintaining to

the Grantors' satisfaction each form of Concessionaire Performance

Security required under this Concession Agreement at the times set out

herein.

9.1.b Each Concessionaire Performance Security under this Concession Agreement shall be in the form of an irrevocable standby letter of credit,

issued by a universal bank or a commercial bank which is licensed by the Bangko Sentral ng Pilipinas and acceptable to the Grantors and shall be in

the form set out in the relevant part of Schedule 13 (Concessionaire

Performance Security) or otherwise acceptable to the Grantors. The

Concessionaire may satisfy its obligations under this Section 9 by delivery

of more than one (1) letter of credit complying with the requirements of

Section 9.1.b where the aggregate total face amount of such letters of credit is equal to the applicable required face amount of the applicable

Concessionaire Performance Security and provided that it may not

provide more than three (3) such letters of credit in respect of any Concessionaire Performance Security.

9.1.c Neither the delivery of any Concessionaire Performance Security nor the

making of any demand thereunder shall in any way prejudice, reduce or

restrict the rights and remedies of the Grantors under this Concession

Agreement or under applicable law generally except to the extent any payment is made under Concessionaire Performance Security in which

case the remedies of the Grantors will be reduced by the amount of the

payment.

9.1.d The Grantors:

9.1.d (1) if they intend to draw on any Concessionaire Performance

Security, give the Concessionaire five (5) days' notice of their

intention to do so identifying the breach of this Concession

Agreement in respect of which the call will be made or the other express right of the Grantors under this Concession

Agreement to make such call;

9.1.d (2) may only call on any Concessionaire Performance Security if

and to the extent this Concession Agreement otherwise

expressly permits a call on any Concessionaire Performance

Security or to the extent of any loss claimed by the Grantors as a result of the Concessionaire's breach of this Concession

Agreement; and

9.1.d (3) subject to the rights of the Grantors under Section 5.5, the

Concessionaire shall have the right to claim back from the

Grantors any amounts drawn by the Grantors from the

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applicable Concessionaire Performance Security in excess of

the loss suffered by the Grantors.

9.2 Operation Performance Security

9.2.a By the Signing Date, the Concessionaire shall have delivered an executed

original of the Operation Performance Security to the Grantors as security for the satisfaction of the Concessionaire's obligations under this


9.2.b The Concessionaire shall ensure that the Operation Performance Security

is at all times in full force and effect in accordance with the terms of the

Concession Agreement on and from the Signing Date until the day ninety

(90) days after the Transfer Date.

9.2.c The amount of the Operation Performance Security shall be maintained in

an amount of six hundred and fifty million Pesos (PhP650,000,000) on the

Signing Date until it is decreased in accordance with Section 9.2.d.

9.2.d On the Construction Start Date, the amount of the Operation Performance

Security shall be decreased to fifty million Pesos

(PhP50,000,000)(Indexed) and thereafter, the Operation Performance

Security shall be maintained at this amount until it is in accordance with

Section 9.2.e.

9.2.e On the Extension Completion Date, the amount of the Operation

Performance Security shall be increased to one hundred million Pesos

(PhP100,000,000) (Indexed) and thereafter, the Operation Performance

Security shall be maintained at this amount until it is reduced in

accordance with Section 9.2.f.

9.2.f On the third (3rd) anniversary of the Extension Completion Date, the

amount of the Operation Performance Security shall be reduced to fifty million Pesos (PhP50,000,000) (Indexed) and thereafter, the Operation

Performance Security shall be maintained at this amount until it is

increased in accordance with Section 9.2.g.

9.2.g On the date that is ten (10) years before the Transfer Date the amount of

the Operation Performance Security shall be increased to two hundred

million Pesos (PhP200,000,000) (Indexed) and thereafter, the Operation

Performance Security shall be maintained at this amount until the day

ninety (90) days after the Transfer Date.

9.2.h If for any reason, the Operation Performance Security is set to expire

before the Transfer Date, then the Concessionaire shall deliver to the

Grantors a new irrevocable standby letter of credit in the required

amount no later than five (5) days prior to the expiry of the existing

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Operation Performance Security. The replacement Operation

Performance Security shall be effective from the day before the expiration

date of the previous Operation Performance Security.

9.2.i If any amounts are drawn from the Operation Performance Security by

the Grantors in accordance with this Concession Agreement, the Concessionaire shall, on or before the date that is ten (10) days after the

date the value of the Operation Performance Security has fallen below fifty percent (50%) of the required amount, deliver an additional

irrevocable standby letter of credit in an amount equivalent to the

amount drawn by the Grantors, such that the amount of the Operation

Performance Security does not fall below six hundred and fifty million

Pesos (PhP650,000,000) in the period commencing from the Signing Date

until the Construction Start Date, fifty million Pesos (PhP50,000,000) (Indexed) in the period commencing from the Construction Start Date

until the Extension Completion Date, one hundred million Pesos

(PhP100,000,000) (Indexed) in the period from the Extension Completion Date until the third (3rd) anniversary of the Extension Completion Date,

fifty million Pesos (Ph50,000,000) (Indexed) in the period commencing from the third (3rd) anniversary of the Extension Completion Date until

the date ten (10) years before the Transfer Date and two hundred million

Pesos (PhP200,000,000) (Indexed) in the period commencing on the date

ten (10) years before the Transfer Date until the day ninety (90) days

after the Transfer Date, thereafter for a period longer than ten (10) days.

9.2.j The Grantors shall, provided that the Concessionaire has delivered the

Warranty Security, release the Operation Performance Security on the

Transfer Date, unless forfeited in accordance with the terms of this


9.3 Construction Performance Security

9.3.a As a condition precedent to the Construction Start Date, the Concessionaire shall deliver an executed original of the Construction

Performance Security to the Grantors as security for the satisfaction of the

Concessionaire's obligations to construct the Cavite Extension and integrate the Existing System with the Cavite Extension under this


9.3.b The Concessionaire shall ensure that the Construction Performance Security is at all times in full force and effect on and from the Construction

Start Date until the Extension Completion Date.

9.3.c The amount of the Construction Performance Security on the

Construction Start Date shall be in an amount of one billion and three

hundred million Pesos (PhP1,300,000,000).

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9.3.d If for any reason, the Construction Performance Security is set to expire

before the Extension Completion Date, then the Concessionaire shall

deliver to the Grantors a new irrevocable standby letter of credit in the

required amount no later than five (5) days prior to the expiry of the

existing Construction Performance Security. The replacement

Construction Performance Security shall be effective from the day before

the expiration date of the previous Construction Performance Security.

9.3.e The Grantors shall, provided that the Concessionaire has increased the

Operation Performance Security on the Extension Completion Date in

accordance with Section 9.2 above, release the Construction Performance

Security on the Extension Completion Date, unless forfeited in accordance

with the terms of this Concession Agreement.

9.4 Warranty Security

9.4.a On or before the Transfer Date and as a condition to the release of the

Operation Performance Security, the Concessionaire shall deliver an

executed original of the Warranty Security to the Grantors as security that

the System will meet the Handback Requirements for a period of one (1)

year after the Transfer Date ("Warranty Period") as required pursuant

to Section 33.3 (Cost of Handback).

9.4.b The Concessionaire shall ensure that the Warranty Security in an amount

equal to one hundred and fifty million Pesos (PhP150,000,000) (Indexed) (the "Warranty Amount"), is at all times in full force and effect during

the Warranty Period.

9.4.c The Grantors shall release the Warranty Security on the first (1st) anniversary of the Transfer Date, unless forfeited in accordance with

Section 33.2 (Handback on Expiry).

9.5 Handback Security

9.5.a No later than five (5) days after the date of delivery of the Handback

Survey to the Parties in accordance with Section 33.2 (Handback on

Expiry) ("Handback Security Date"), the Concessionaire shall deliver to

the Grantors an executed original of the Handback Security in an amount

equal to the amount by which the Handback Rectification Amount (comprising the aggregate of the cost necessary to deliver the Handback

Rectification Works) exceeds the face amount of the Operation

Performance Security.

9.5.b The Concessionaire shall ensure that the Handback Security is at all times

in full force and effect on and from the Handback Security Date until the

Transfer Date but it shall be released as provided in Section 9.5.c.

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9.5.c The Grantors shall release the Handback Security on the date when the

Handback Engineer confirms that the Handback Rectification Works have

been completed, unless forfeited in accordance with Section 33.2

(Handback on Expiry).

Section 10 FINANCING OF PROJECT

10.1 Concessionaire Funding

Save and except as provided in Sections 5.6 (Emergency Upgrade Contracts), 6.4

(Common Station), 13.5 (AFCS) (insofar as it relates to Grantors AFCS

Infrastructure), 10.4 (Funding for Grantors Procured Items) and 19.3 (Grantors'

Procurement Option), the Concessionaire shall finance the whole of the Project

and all the other obligations of the Concessionaire under this Concession

Agreement.

10.2 Terms of Finance

10.2.a The Concessionaire shall procure that the Finance Documents relating to

the provision of finance for the entire Works are executed and all

conditions precedent to drawdown of funds for the construction and

development of those Works to be carried out on ROW Package 1 have

been satisfied or waived no later than eighteen (18) months after the

Signing Date (provided that the Concessionaire shall not be in breach of

this obligation if the reason for failure to fulfil these conditions was solely

attributable to a breach by the Grantors of their obligations under this

Concession Agreement, a Material Adverse Government Action or an

event of Force Majeure).

10.2.b Within a period of fifteen (15) days of the satisfaction of the conditions

precedent to drawdown for the construction and development of those

Works to be carried out on ROW Package 1 under the Finance Documents,

the Concessionaire shall provide the Grantors with the evidence of

satisfaction or waiver of the aforesaid conditions precedent including:

10.2.b (1) a certificate, in a form and substance reasonably

satisfactory to the DOTC, issued and addressed by the

Finance Parties or by a person acting on their behalf to the

DOTC confirming that the Finance Documents for the provision of finance for the entire Works are in full force

and effect and that all conditions precedent to drawdown of

funds for the construction and development of those Works

to be carried out on ROW Package 1 have been satisfied or

waived;

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10.2.b (2) a certificate, in a form and substance reasonably

satisfactory to the DOTC, issued and addressed by the

Concessionaire to the DOTC, confirming that:

10.2.b (2) (a) the Equity Documents are in full force and

effect and that all conditions for the necessary capital stock contributions have

been met or waived; and

10.2.b (2) (b) the total amount in Peso of:

(i) Concessionaire’s Equity plus amounts

available but not yet paid to the

Concessionaire with respect to

subscribed shares not fully paid up

pursuant to the Equity Documents;

(ii) the amount available or committed

under the Finance Documents;

(iii) the anticipated and budgeted

Concessionaire Revenue that will be

received in cash (taking into account

timing of its receipt) over the period to

the then scheduled Extension

Completion Date; and

(iv) the Viability Gap Amount, if any;

is no less than the estimated costs of

constructing the Cavite Extension, operating

and maintaining the Existing System,

executing any required System Remedial Works, and carrying out its other obligations

under this Concession Agreement until the

then scheduled Extension Completion Date.

10.2.b (3) a true copy (as certified by the Concessionaire's Treasurer,

chief financial officer or equivalent officer) of all of the

Concessionaire’s Finance Documents relating to the

provision of finance for the entire Works which have been

duly authorised and validly executed and which are in full

force and effect and that all conditions precedent to

drawdown of funds for the construction and development

of those Works to be carried out on ROW Package 1 have

been satisfied or waived; and

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10.2.b (4) a true copy (as certified by the Concessionaire's Treasurer,

chief financial officer or equivalent officer) of the

Concessionaire's Equity Documents which have been duly

authorised and validly executed and which are in full force

and effect.

10.2.c The Concessionaire shall keep the Grantors updated on its plans to

arrange funding for the System Upgrades (including, but not limited to, providing the Grantors with a copy of all Finance Documents relating to

the System Upgrades).

10.2.d The Concessionaire shall ensure that the purchase arrangements for any LRVs procured as System Upgrades include express provisions that,

subject to Section 16.4 (Leasing), title in any such LRVs shall transfer

without condition to the Grantors upon their acceptance by the

Concessionaire and that this is expressly acknowledged by any parties

providing finance for the purpose of such System Upgrades.

10.3 Leverage Ratio

The Concessionaire shall procure that its Leverage Ratio shall not exceed a level

of eighty percent (80%) at any time prior to the Extension Completion Date.

10.4 Funding for Grantors Procured Items

The Grantors shall finance the Grantors Procured Items and shall deliver the

same to the Concessionaire free of any Security Interest (save for Security

Interests arising solely by operation of law).

Section 11 RIGHT OF WAY

11.1 Basic Right of Way

11.1.a The Grantors shall be responsible for delivering the Basic ROW in

accordance with the ROW Acquisition Plan as set out in Schedule 4

(Grantors' Responsibilities). The Basic ROW shall be delivered in 3 (three)

Basic ROW Packages, each of which is identified in Schedule 4 (Grantors'

Responsibilities). The dates on which Basic ROW for such Basic ROW

Packages shall be delivered to the Concessionaire are as follows:

Basic ROW Package 1 – 15 October 2014 (of which Basic Row

Package 1A is available as of the Signing Date for the Independent

Engineer to make its verification)

Basic ROW Package 2 – 15 June 2015

Basic ROW Package 3 – 15 December 2015

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11.1.b The Concessionaire shall be entitled to the exclusive use of and access to

the Basic ROW from the date on which such Basic ROW is deemed

delivered pursuant to Section 11.1.c and ending on the Termination Date

or the Transfer Date, whichever comes first. The Concessionaire may

request earlier delivery of portions of Basic ROW as contemplated in

Section 12.2.c(1) (Construction).

11.1.c When the Grantors consider that they have acquired any Basic ROW Package or where the Concessionaire requests such certification in

respect of any Basic ROW delivered pursuant to Section 12.2.c

(Construction), the Grantors shall inform the Concessionaire and the

Independent Engineer. The Concessionaire and the Independent Engineer

shall physically inspect the relevant Basic ROW and review the proof of

acquisition (such as but not limited to the purchase documents, donation documents or, in case of expropriation, the writ of possession) for the

Basic ROW Package in question. Within a period of five (5) days after

inspection and review of the proof of acquisition of the Basic ROW, the Independent Engineer shall issue a certificate addressed to the

Concessionaire and the Grantors which shall either:

11.1.c (1) confirm that the Grantors have acquired the Basic ROW

Package in accordance with Section 11.1.d; or

11.1.c (2) state that the Grantors have not acquired the Basic ROW

Package in accordance with Section 11.1.d in which case the

Grantors shall take all necessary steps to complete the

acquisition of the remainder of the Basic ROW Package in question.

Each Basic ROW Package shall be deemed delivered upon receipt by the

Concessionaire of the certification by the Independent Engineer pursuant

to this Section 11.1.c(1) that the relevant Basic ROW Package has been

delivered to the Concessionaire. A certificate issued by the Independent Engineer under this Section 11.1.c (Basic Right of Way) shall be binding

on the Parties.

11.1.d The Grantors shall acquire and deliver each of the Basic ROW Packages (i)

in a condition that will allow the Concessionaire to commence and carry

out permanent construction thereon and implement the Project and (ii)

free from all structures, occupants (including informal settlers) and utilities (subject to Section 11.5.a). If there is any current or pending

adverse litigation, dispute or adverse claim, with respect to the Basic

ROW, the Independent Engineer shall certify that the Basic ROW is

delivered by the Grantors if the Grantors present to the Independent

Engineer documents evidencing the right of the Grantors and its agents to

possess and occupy the land, including (i) a title in the name of either of

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the Grantors or the Republic of the Philippines, (ii) a judicial order, such

as a Writ of Possession, injunction or mandatory order, allowing either of

the Grantors or its agents to possess and occupy the Basic ROW, (iii) an

authorization from the relevant Government Authority allowing either of

the Grantors or its agents to possess and occupy the Basic ROW, or (iv) a

contract evidencing that the land has been sold or donated to either of the

Grantors or the Republic of the Philippines. The Concessionaire may, at

its absolute discretion, waive any of the preconditions to be fulfilled by

the Grantors as stated in this Section 11.1.d in relation to the delivery of

Basic ROW.

11.1.e In addition to the above, the Grantors warrant and undertake that part of

the Pulang-Lupa Dumpsite, located in Baranggay Pulang-Lupa Uno, Las

Pinas City, is part of the Basic ROW Package 2 (Dr. Santos to Zapote) shall be delivered to the Concessionaire free of all polluting and hazardous

materials.

11.1.f After the delivery of the Basic ROW Packages, the Grantors shall exert

best efforts to remove all mortgages, pledges, liens, security interests,

option agreements, easements, claims, charges, or encumbrances of any

kind from the Basic ROW.

11.1.g The Concessionaire shall prepare a road traffic management plan setting

out the road traffic management regime necessary to allow the

Concessionaire to discharge its obligation and submit the same to the

Grantors for approval. The Grantors shall no later than sixty (60) days

after the submission of this plan, approve the aforesaid plan or withhold approval giving reasons. Failure to respond within this period shall be

deemed to constitute an approval thereof. The Grantors shall be responsible for coordinating with the competent Government Authorities

so as to assist the Concessionaire to procure that the approved plan is

implemented.

11.1.h The Basic ROW shall be made available by the Grantors to the

Concessionaire at no cost to the Concessionaire.

11.1.i If the Grantors fail to deliver to the Concessionaire the Basic ROW, as

certified by the Independent Engineer in accordance with the ROW

Acquisition Plan, this shall constitute a Grantors Delay Event and a

continuing failure shall give the Concessionaire the right to terminate this Concession Agreement in accordance with Section 31 (Default and

Termination).

11.1.j In addition to their notification obligation under Section 11.1.c, the

Grantors shall, no later than thirty (30) days after the Signing Date and on

a monthly basis thereafter provide the Concessionaire with a report

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setting out the current amounts of Basic ROW acquired by the Grantors

identifying in reasonable detail the lots acquired and their combined area.

11.2 Additional Right of Way

11.2.a The Concessionaire shall be responsible for and bear the cost of acquiring

any Additional ROW which it needs for the construction of the Cavite Extension and operation of the System and which is not included in the

Basic ROW, ROW Required for Remedial Work or Identified Intermediate

ROW (CE).

11.2.b The Grantors shall use all reasonable endeavours to exercise their power

of eminent domain in the Concessionaire’s acquisition of such Additional

ROW, provided that:

11.2.b (1) the Concessionaire has given to the Grantors not less than

thirty (30) days’ notice of its request;

11.2.b (2) the Grantors have determined that such Additional ROW is

necessary for the construction of the Cavite Extension and

operation of the System and there are no feasible

alternatives which do not require the use of the Grantors'

powers of eminent domain;

11.2.b (3) the Concessionaire has undertaken, in form and substance

satisfactory to the Grantors, to pay any and all of the

Grantors' costs in the exercise of its powers of eminent

domain for the acquisition of the Additional ROW (including

payment of just compensation);

11.2.b (4) the Concessionaire shall be entitled to the exclusive use of

and access to such Additional ROW in the period beginning

on the date the Grantors become legally entitled to enter such Additional ROW and ending upon the Termination

Date or the Transfer Date, whichever comes first;

11.2.b (5) the Grantors do not make any undertaking, representation, or warranty that the institution of expropriation

proceedings will result in a favourable judgment or

outcome and the Concessionaire acknowledges that there is

no legal certainty as to how a court may consider and rule

upon the right of the Grantors to take possession of the

Additional ROW, the possible defences or objections that

owners of the Additional ROW may raise, and the amount of

just compensation for the property so taken; and

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11.2.b (6) notwithstanding the Grantors' exercise of any right of

eminent domain and the institution and pendency of any

expropriation proceedings for the Additional ROW, the

Concessionaire shall not be relieved from its obligations

under this Concession Agreement and shall still be held to

be responsible for any failure to meet any required

Milestone by the time required therefor or any other breach

of or failure to perform its obligations under this


11.2.c In relation to all Additional ROW:

11.2.c (1) the Grantors shall own any Additional ROW acquired in any

way; and

11.2.c (2) the Concessionaire is responsible for effecting all relocation including structures, occupants (including informal

settlers) and utilities in respect of any Additional ROW in

accordance with Legal Requirements and E&S Standards at

its own cost.

11.3 Other ROW

11.3.a "ROW Required for Remedial Work" is ROW required for the carrying

out of any System Remedial Works.

In each case where the Concessionaire consider that any portion of ROW

constitutes ROW Required for Remedial Work (as opposed to Additional

ROW) it shall inform the Grantors in writing, identifying the parcel of

ROW to be acquired and justifying why it should be treated as ROW

Required for Remedial Work. The Grantors shall determine whether to

agree to this categorisation. If the Grantors disagree, they shall give

detailed reasons therefor. On determination that such ROW constitutes

ROW Required for Remedial Work, the Grantors shall acquire and deliver

the ROW Required for Remedial Work no later than two (2) years after that determination. If there is any disagreement between the Grantors

and the Concessionaire, the Concessionaire shall be entitled to refer the

matter for determination to an independent engineer to be jointly

appointed by the Parties to assess such matters and make decisions

thereon or to dispute resolution pursuant to Section 35 (Dispute

Resolution). A failure by Grantors to respond within fourteen (14) days of

the Concessionaire's request shall be deemed to constitute agreement

that such ROW is ROW Required for Remedial Work.

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11.3.b "Identified Intermediate ROW (CE)" is ROW additional to the Basic

ROW which is required for the construction of ingress and egress from

the New Stations in accordance with the MPSS.

11.3.c The Grantors shall be responsible for acquiring and delivering any ROW

Required for Remedial Work and Identified Intermediate ROW (CE) and shall exercise their power of eminent domain to do so.

11.3.d ROW Required for Remedial Work and Identified Intermediate ROW (CE)

shall be acquired by the Grantors at their own cost.

11.3.e When the Grantors consider that they have acquired any identified

portion of ROW Required for Remedial Work and/or Identified

Intermediate ROW (CE), they shall inform the Independent Engineer. The

Independent Engineer shall physically inspect the relevant ROW and

review the proof of acquisition (such as but not limited to the purchase documents, donation documents or, in case of expropriation, the writ of

possession) for the portion of ROW Required for Remedial Work and/or

Identified Intermediate ROW (CE) in question. Following inspection and

review, the Independent Engineer shall within five (5) days issue a

certificate addressed to the Concessionaire and the Grantors which shall

either:

11.3.e (1) confirm that the Grantors have acquired the portion of

ROW Required for Remedial Work and/or Identified Intermediate ROW (CE) in accordance with Section 11.3.f;

or

11.3.e (2) state that the Grantors have not acquired the portion of ROW Required for Remedial Work and/or Identified

Intermediate ROW (CE) in accordance with Section 11.3.f in which case the Grantors shall take all necessary steps to

complete the acquisition of the remainder of the portion of

ROW Required for Remedial Work and/or Identified

Intermediate ROW (CE).

Each portion of ROW Required for Remedial Work and/or Identified

Intermediate ROW (CE) shall be deemed delivered upon receipt by the

Concessionaire of the certification by the Independent Engineer pursuant

to this Section 11.3.e(1) that the relevant portion of ROW Required for

Remedial Work and/or Identified Intermediate ROW (CE) Package has

been delivered to the Concessionaire. A certificate issued by the

Independent Engineer under this Section 11.3.e (Intermediate Right of

Way) shall be binding on the Parties.

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11.3.f The Grantors shall acquire and deliver each portion of ROW Required for

Remedial Work and/or Identified Intermediate ROW (CE) (i) in a

condition that will allow the Concessionaire to commence and carry out

permanent construction thereon and implement the Project and (ii) free

from all structures, occupants (including informal settlers) and utilities

(subject to Section 11.5.a). If there is any current or pending adverse

litigation with respect to that ROW Required for Remedial Work and/or

Identified Intermediate ROW (CE), the Independent Engineer shall certify

that such ROW Required for Remedial Work and/or Identified

Intermediate ROW (CE) is delivered by the Grantors if the Grantors present to the Independent Engineer documents evidencing the right of

the Grantors and its agents to possess and occupy the land, including (i) a

title in the name of either of the Grantors or the Republic of the

Philippines, (ii) a judicial order, such as a Writ of Possession, injunction or

mandatory order, allowing either of the Grantors or its agents to possess

and occupy the ROW Required for Remedial Work and/or Identified

Intermediate ROW (CE), (iii) an authorization from the relevant

Government Authority allowing either of the Grantors or its agents to

possess and occupy the ROW Required for Remedial Work and/or

Identified Intermediate ROW (CE), or (iv) a contract evidencing that the

land has been sold or donated to either of the Grantors or the Republic of the Philippines. The Concessionaire may, at its absolute discretion, waive

any of the preconditions to be fulfilled by the Grantors as stated in this

Section 11.3.f in relation to the delivery of the ROW Required for

Remedial Work and/or Identified Intermediate ROW (CE).

11.3.g Identified Intermediate ROW (CE) shall be acquired and delivered by the

Grantors no later than two (2) years following the Independent

Engineer's certification in accordance with Section 5.1.e and the Grantors'

failure to (i) appoint the Independent Engineer and get the Independent Engineer to certify the Identified Intermediate ROW (CE) in accordance

with the timeline provide in Section 5.1.e, or (ii) acquire and deliver the

Identified Intermediate ROW (CE) in accordance with this Section 11.3, to

the extent it directly causes delay to the completion of the Cavite

Extension, shall constitute a Grantors' Delay Event.

11.3.h After the delivery of the ROW Required for Remedial Work and/or

Identified Intermediate ROW (CE), the Grantors shall exert best efforts to

remove all mortgages, pledges, liens, security interests, option

agreements, easements, claims, charges, or encumbrances of any kind

from that ROW.

11.3.i The Concessionaire shall be entitled to the exclusive use of and access to the relevant portion of the ROW Required for Remedial Work and/or

Identified Intermediate ROW (CE) from the date on which such ROW

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Required for Remedial Work and/or Identified Intermediate ROW (CE) is

deemed delivered pursuant to Section 11.3.e and ending upon the

Termination Date or the Transfer Date, whichever comes first.

11.4 Existing System ROW

On and from the Effective Date to the Transfer Date or the Termination Date, whichever comes first, the Grantors shall give the Concessionaire full, exclusive

and uninterrupted right of access to the Existing System ROW and any challenge

to such right of access that materially and adversely affects the Concessionaire's

right to use the same or its access thereto shall constitute a Material Adver se

Government Action.

11.5 Obligations in relation to ROW

11.5.a The Grantors shall deliver the Basic ROW, ROW Required for Remedial

Work and the Identified Intermediate ROW (CE) free and clear of any

utility pipes, cables or other media and are responsible for the cost of

relocation of any utility pipes, cables or other media which may be

present on the Basic ROW, ROW Required for Remedial Work or the Identified Intermediate ROW (CE). Without prejudice to the rights of the

Concessionaire under this Concession Agreement, the Grantors may require the Concessionaire to undertake the actual relocation (or procure

that the relevant utility provider undertakes such relocation) as agent of

the Grantors. In such case, the Grantors may require the Concessionaire to fund the cost of such work. If the Concessionaire so funds such work, it

shall be entitled to be reimbursed any actual and documented costs it

incurs in doing so; such costs shall be invoiced quarterly to the Grantors

as a part of the statement submitted pursuant to Section 20.6 (Balancing

Payment) and shall be paid by the Grantors as a part of the relevant

Balancing Payment.

11.5.b The Concessionaire shall:

11.5.b (1) not erect or permit the erection of any housing, shelter or other similar structure on the Project Land under any

circumstances (but without prejudice to Section 11.6.c);

11.5.b (2) subject to Section 11.5.b(1), only erect or permit to be erected structures on the Project Land which are necessary

for the carrying out of the Works (including site officer and

temporary housing for workers) and/or delivering the

Services and/or pursuing any commercial development

forming part of the Commercial Business, all as permitted or required by this Concession Agreement; and

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11.5.b (3) following delivery of possession thereof pursuant to this

Section 11 (Right of Way) to the Concessionaire, prevent the

entry and/or occupation to or of the Project Land by any

unauthorised occupiers.

11.5.c The Concessionaire shall monitor the progress of construction works carried out by other persons on or adjacent to the Project Land and

promptly inform the Grantors of any such activity that could have an adverse impact on the Project.

11.5.d The Concessionaire shall immediately upon becoming aware, transfer

back to the Grantors the possession of any Project Land (excluding Additional ROW) that is not required for the Project. The Concessionaire

shall not be entitled to have this land subsequently included or

categorised as Project Land.

11.5.e The Concessionaire may, at its own cost and at its option, annotate on the

title its right to use and occupy the Basic ROW, ROW Required for

Remedial Work, Identified Intermediate ROW (CE), Existing System ROW

and Additional ROW, with the cooperation of the Grantors.

11.6 Project Land and Commercial Development

The Concessionaire shall be permitted to carry out commercial development

(either by itself or through lessees) of the Project Land without the making of

any additional payment to the Grantors for the purposes of the Commercial

Business. The following conditions shall apply to such development:

11.6.a all such development must be in compliance with Relevant Rules and

Procedures and E&S Standards;

11.6.b all Commercial Agreements relating to such Commercial Business shall be

consistent with the requirements of Section 20.7 (Commercial Revenue);

11.6.c no development may include any residential property component of any

nature (but provided that for this purpose the development of (1) hotels

and (2) serviced apartments/hotel apartments is not deemed to constitute "residential property"); and

11.6.d no development should prevent, hamper, delay or adversely affect the

implementation of the Works or the performance of the Services.

The Concessionaire shall ensure that all such requirements are passed down to

and made binding on its lessees and contractors. No leasing or subcontracting

shall in any way affect or reduce the Concessionaire's obligations under this Concession Agreement.

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Section 12 DESIGN AND CONSTRUCTION OF THE WORKS

12.1 Design

12.1.a The Concessionaire shall produce and complete the Detailed Design and

submit the same to the Independent Engineer for certification as

contemplated in Part 2 of Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension) and at the times contemplated by the

Design Submittal Schedule.

12.1.b The Detailed Design shall be subject to the approval and certification of

the Independent Engineer (whose decision thereon shall be binding upon

the Parties). The Independent Engineer shall render his decision on any

Detailed Design within the timeframes set out in Part 2 of Schedule 7


12.1.c The Concessionaire shall prepare the Detailed Design for certification by

the Independent Engineer in respect of each Basic ROW Package. The

Concessionaire may not proceed to permanent construction in any Basic

ROW Package until the Detailed Design relating to the Railway Infrastructure Works (excluding the Superstructure of Stations) to be

carried out in that Basic ROW Package has been prepared and certified by the Independent Engineer and the E&S Impact Assessment has been

prepared in accordance with Section 26.3.b (E&S Obligations) and

approved by any relevant Government Authority.

12.1.d The Detailed Design shall be in compliance with the requirements of

Schedule 3 (Description of Cavite Extension) and 7 (Engineering,

Procurement and Construction of the Cavite Extension), in compliance with all Relevant Rules and Procedures and in accordance with Prudent

Industry Practice and the ESMS.

12.1.e The Detailed Design may only be changed (at the request of either the

Concessionaire or the Grantors and provided that such change is

permitted under Schedule 7 (Design Procurement and Construction of the Cavite Extension)) if the change is approved by the Independent Engineer

strictly in accordance with Part 2 of Schedule 7 (Engineering, Procurement

and Construction of the Cavite Extension) following which it shall

constitute a "Detailed Design Change". Similarly, the MPSS may only be

changed if the change is approved by the Independent Engineer strictly in

accordance with Part 2 of Schedule 7 (Engineering, Procurement and

Construction of the Cavite Extension).

12.1.f Notwithstanding any review of or approval of any Detailed Design by the Independent Engineer, the Concessionaire shall not in any way be relieved

from any of its obligation in relation to the Detailed Design and the Works.

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The Concessionaire shall be solely responsible for the integrity of the

Detailed Design and the design of the Works.

12.1.g Where the Independent Engineer is required to give an approval or

consent or issue a certification, then, unless a specific other period of time

is stated, the Grantors shall procure that he does so within fourteen (14) days of receipt of the relevant documents or request.

12.1.h The Concessionaire shall deliver the final copy of the as-built drawings of

the Works to the Grantors no later than six (6) months after the issuance

of the Final Acceptance Certificate.

12.2 Construction

12.2.a The Concessionaire shall construct, commission and complete the

Railway Infrastructure Works and the Railway System Works:

12.2.a (1) in accordance with the requirements of Schedules 3 (Description of Cavite Extension) and 7 (Engineering,

Procurement and Construction of the Cavite Extension);

12.2.a (2) in accordance with the relevant approved Detailed Design;

12.2.a (3) in compliance with all Relevant Rules and Procedures, the E&S

Impact Assessment and the ESMS prepared and approved in

accordance with Section 26.3.b (E&S Obligations); and

12.2.a (4) in accordance with Prudent Industry Practice.

12.2.b No later than ten (10) days after the later to occur of:

12.2.b (1) acquisition of the Basic ROW Package in question; and

12.2.b (2) completion, approval and certification of Detailed Design in

respect of the Railway Infrastructure Works (excluding the

superstructure of Stations and viaducts and guideways)

comprised in that Basic ROW Package.

DOTC shall issue a Notice to Proceed in respect of the relevant Basic ROW

Package (in the case of Basic ROW Package 1 this shall be the Notice to

Proceed issued under Section 7.4 (Procedure for Determining Construction

Start Date)) following which the Concessionaire is authorised and obliged

to commence the Works on the relevant Basic ROW Package.

12.2.c Notwithstanding the above, the Concessionaire shall:

12.2.c (1) be entitled to request delivery of portions of the Basic ROW

not comprising a complete Basic ROW Package that the

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Grantors have identified that they are able to make available

to the Concessionaire and to commence permanent

construction thereon (if the Concessionaire so requests, the

Grantors must comply with that request);

12.2.c (2) be entitled to carry out works of site preparation and soil investigation and other pre-construction activities on any part

of the Basic ROW that has been obtained (even if this does not constitute a full Basic ROW Package).

12.2.c (3) give notice to the Grantors of its intention to perform such

works and shall comply with any reasonable requirements of the Grantors relating to the conduct of such works; and

12.2.c (4) be entitled to request access to any portion of Basic ROW not

yet acquired by the Grantors and the Grantors shall use reasonable efforts to procure such access to the extent

practicable.

12.2.d The Concessionaire shall complete the Works so as to achieve the Milestones set out in Section 4.2 (Milestones) by the applicable dates set

out in Section 4.2 (Milestones) and in particular to achieve the Extension Completion Date on or before the Required Extension Completion Date, in

each case subject to the Concessionaire's rights under Section 17 (Delay

and Compensation).

12.2.e The Independent Engineer shall have the right to monitor the progress of

the Works as provided in Schedule 7 (Engineering, Procurement and

Construction of the Cavite Extension).

12.2.f The conduct of works at the Existing Depot will require interface with the

NAIA Expressway Concessionaire. Pending acceptance of that part of the

Grantors Depot Works the Grantors shall manage such interface.

Following acceptance the Concessionaire shall conduct any works at or

around the Existing Depot in accordance with any interface procedures agreed between the Grantors and the NAIA Expressway Concessionaire.

12.2.g In respect of the interface at or around the proposed MIA Station, the

Concessionaire is obliged to cooperate and liaise with the Department of Public Works and Highways for the NAIA Expressway project so as to

minimise delivery risk to both projects.

12.2.h The Concessionaire shall ensure that the design of Asia World Station

makes provision for the construction of a direct access to and from the

Integrated Terminal System-Southwest Terminal Project ("ITS-SWTP").

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The Grantors and Concessionaire shall discuss and cooperate to

determine the final dimension and location of such access.

12.2.i The conduct of the Works at Asia World Station will require interface with

the developer of the ITS-SWTP. The Concessionaire shall, with the

assistance of the Grantors, discuss and cooperate with the developer of the ITS-SWTP to minimise the delivery risk to both the ITS-SWTP and this

Project.

12.3 Construction Coordination

During construction of the Works, the Grantors and the Concessionaire shall

establish a forum for the exchange of information including regular construction

review meetings between the Grantors, the Concessionaire and their relevant

contractors to facilitate the construction and completion of the Grantors Depot

Works and the Works as more particularly set out in Section 4 (Milestones) and Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension).

12.4 Cost of the Works

The Concessionaire shall be fully liable for all of the costs of the Works and shall

only be entitled to Grantors Compensation if the reason for the cost overrun is a

cause attributable to the Grantors under this Concession Agreement or where

Grantors Compensation is specifically required under this Concession

Agreement.

12.5 Environmental and Social Requirements

12.5.a Prior to the completion of the Detailed Design by the Concessionaire, an

environmental and social impact assessment (E&S Impact Assessment)

shall be performed by the Concessionaire. The E&S Impact Assessment

shall be carried out in accordance with (1) all Relevant Rules and

Procedures and (2) the E&S Standards, whichever is more stringent.

12.5.b Following the E&S Impact Assessment, the Concessionaire will design and

implement the ESMS and will implement mitigation measures consistent

therewith.

12.5.c The Concessionaire shall comply with all conditions of the Environmental

Compliance Certificate issued by the Department of the Environment and

Natural Resources to the Grantors on 10 June 2013, in respect of the Project (including any requirements relating to the Traffic Impact

Assessment prepared in connection therewith).

Section 13 GRANTORS PROCUREMENT AND AFCS

13.1 Grantors' Obligations

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13.1.a The Grantors shall:

13.1.a (1) ensure that the technical specifications for the Grantors Procured LRVs are issued for the Concessionaire's

comments no later than nine (9) months after the Signing

Date;

13.1.a (2) ensure that the technical specifications for those of

Grantors Depot Works relating to the Existing Depot are

issued for the Concessionaire's comments no later than

nine (9) months after the Signing Date;

13.1.a (3) ensure that the technical specifications for those of

Grantors Depot Works relating to the Satellite Depot are

issued for the Concessionaire's comments no later than

nine (9) months after the Signing Date;

13.1.a (4) ensure that the first (1st) delivery of no less than forty (40)

Grantors Procured LRVs is made on or before 31 December

2016;

13.1.a (5) ensure that no less than 120 Grantors Procured LRVs (for

the avoidance of doubt this includes those Grantors

Procured LRVs delivered under Section 13.1.(a)(4) above)

have been designed, procured, delivered, commissioned

and are ready for integrated testing on or before 31 October

2017;

13.1.a (6) ensure that the Grantors Depot Works relating to the

Existing Depot have been designed, procured, constructed

and completed and are ready for integrated testing on or

before 31 May 2016; and

13.1.a (7) ensure that the Grantors Depot Works relating to the

Satellite Depot have been designed, procured, constructed

and completed and are ready for integrated testing on or

before 31 August 2017.

13.1.b The Grantors shall procure that the Grantors LRV Contract:

13.1.b (1) contains (i) technical specifications for the Grantors Procured LRVs that are consistent with the technical

specifications for the third (3rd) generation vehicles used

on the Existing System (as contained in the Data Room

Disk) and (ii) requirements for supply of drawings,

manuals, spares inventories and ongoing requirements to

supply spare parts that are consistent with the reasonable

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requirements of the Concessionaire as delivered by the

Concessionaire no later than thirty (30) days after the

Signing Date;

13.1.b (2) contain requirements for coordination with the Works of

the Concessionaire and for exchange of information (to enable the Grantors to achieve this, the Concessionaire shall

provide its reasonable requirements for such coordination and information exchange to the Grantors in writing no

later than ninety (90) days after the Signing Date);

13.1.b (3) allow the Concessionaire to be part of the testing and certification process and provide for integrated testing of

the Grantors Procured LRVs with the System upon

completion (to enable the Grantors to achieve this, the

Concessionaire shall provide its reasonable requirements

for integrated testing to the Grantors and the Independent

Engineer for the Independent Engineer's approval no later

than ninety (90) days after the Signing Date);

13.1.b (4) contain provisions for assignment of certain benefits of and

rights (including warranty rights, rights in respect of

systemic or latent defects, rights to training, spare parts,

intellectual property and ongoing support and the benefit of

any bonds or guarantees in relation thereto) under the

Grantors LRV Contracts to the Concessionaire upon

issuance of the completion certificate or final acceptance certificate (however defined) of the Grantors Procured

LRVs; and

13.1.b (5) requires that delivery of not less than forty (40) Grantors

Procured LRVs is made not later than 31 December 2016

and that a total of one hundred and twenty (120) Grantors Procured LRVs have been delivered on or before 31 October

2017 and that not less than one hundred and twenty (120)

Grantors Procured LRVs have been delivered, tested and accepted on or before the Required Extension Completion

Date.

The Grantors shall provide advance drafts of the Grantors LRV Contract to the Concessionaire for review and comment prior to it being released for

tender and shall consider comments made by the Concessionaire in

relation to the items listed above.

13.1.c The Grantors shall procure that the Grantors Depot Works Contract:

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13.1.c (1) contains technical specifications for the Satellite Depot and

expansion of the Existing Depot that (i) reflect the interface

requirements prepared by the Grantors and contained in

the Data Room Disk and (ii) are consistent with the

technical specifications of the Works (to enable the

Grantors to achieve this, the Concessionaire shall provide

its specification for the Railway Infrastructure Works and

Railway System Works at and interfacing with the Satellite

Depot and the Existing Depot to the Grantors no later than

thirty (30) days after the Signing Date);

13.1.c (2) contains requirements for coordination with the Works of

the Concessionaire and for exchange of information (to

enable the Grantors to achieve this, the Concessionaire shall provide its reasonable requirements for such coordination

and information exchange to the Grantors in writing no

later than thirty (30) days after the Signing Date);

13.1.c (3) allow the Concessionaire to be part of the testing and

certification process and provide for integrated testing of

the Grantors Depot Works with the Works upon completion

(to enable the Grantors to achieve this, the Concessionaire

shall provide its reasonable requirements for integrated testing to the Grantors and the Independent Engineer for

the Independent Engineer's approval no later than thirty

(30) days after the Signing Date);

13.1.c (4) contains provisions for assignment of certain of the benefits

of and rights of the Grantors under the Grantors Depot Works Contract (including warranty rights, rights in respect

of systemic or latent defects, rights to training, spare parts,

intellectual property and ongoing support and the benefit of

any bonds or guarantees in relation thereto) to the

Concessionaire upon issuance of the completion certificate

or final acceptance certificate (however defined) of the

relevant Grantors Depot Works; and

13.1.c (5) contains details of the interface points between the Works

and the Satellite Depot as set out at paragraph 3 to Schedule

4 (Grantors Responsibilities) and the introduction to

Schedule 7 (Engineering, Procurement and Construction of

the Cavite Extension).

The Grantors shall, provide to the Concessionaire the advance drafts of

the Grantors Depot Works Contract for review and comment prior to it

being released for tender and shall consider comments made by the

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Concessionaire in relation to the items listed above.

13.1.d The Grantors shall provide the Concessionaire with the relevant provisions detailing the rights and obligations of the parties to the

Grantors LRV Contract and Grantors Depot Works Contract (provided

that the Grantors may excise details of price and payment thereunder and other details which the Grantors reasonably believe are confidential and

which do not impact on the Concessionaire).

13.2 Coordination

13.2.a The Grantors shall procure that all specifications of the Grantors Procured

Items are reviewed and approved by a reputable engineering consultant

engaged by the Grantors and that all design when approved is furnished

to the Independent Engineer and the Concessionaire. No change shall be

made to such approved specifications without the written agreement of the Concessionaire.

13.2.b The Grantors shall use reasonable efforts to procure that the contractors

appointed under the Grantors LRV Contract and the Grantors Depot Works Contract shall enter into interface agreements with the

Concessionaire reflecting the Concessionaire's requirements for construction interface or, failing this, the Grantors shall work with the

Concessionaire to coordinate the interface arrangements.

13.2.c Where the Grantors are required to exercise a discretion or form a view

as to satisfaction on any matter relating to the completion, commissioning

or testing of the Grantors Procured LRVs or the Grantors Depot Works,

they shall first consult with the Concessionaire and seek the Concessionaire's opinion and shall take due account of the

representations of the Concessionaire before exercising such discretio n.

13.3 Transfer of Rights

13.3.a Upon issuance of the completion certificate/acceptance certificate

(however described) under the Grantors Depot Works Contract, the

Grantors shall:

13.3.a (1) transfer possession, care, custody and control of the

Existing Depot and the Satellite Depot free and clear of all

Security Interests to the Concessionaire; and

13.3.a (2) assign and transfer absolutely (and at no consideration) to

the Concessionaire all of their remaining rights and benefits

under the Grantors Depot Works Contract and any

supporting bonds and guarantees outstanding at that time.

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13.3.b Upon issuance of a completion certificate/acceptance certificate (however

described) under the Grantors LRV Contract in respect of any delivery of

the Grantors Procured LRVs, the Grantors shall:

13.3.b (1) transfer possession, care, custody and control of the

Grantors Procured LRVs free and clear of all Security Interests to the Concessionaire; and

13.3.b (2) assign and transfer absolutely (and at no consideration) to

the Concessionaire all of their remaining rights and benefits

under the Grantors LRV Contract in respect of these

Grantors Procured LRVs so transferred to the Concessionaire and any supporting bonds and guarantees

outstanding at that time.

13.3.c In addition, the Grantors shall transfer operation and maintenance manuals, spares inventories and as built drawings delivered to them

under the Grantors LRV Contract and the Grantors Depot Works Contract

to the Concessionaire at no consideration no later than thirty (30) days

after the Grantors' receipt of the same.

13.4 Trial Running and Training

13.4.a The Grantors LRV Contract will contain (1) requirements for trial running

of the Grantors Procured LRVs and (2) obligations for the provision of

training to the drivers and operators of the Grantors Procured LRVs in

each case consistent with the reasonable requirements of the

Concessionaire notified to the Grantors no later than thirty (30) days after

the Signing Date. The Grantors shall communicate such final requirements to the Concessionaire as soon as they are available.

13.4.b The Concessionaire shall, at its own cost,

13.4.b (1) make available the System for trial running at the times

provided in the Grantors LRVs Contract (as adjusted

pursuant thereto and communicated to the Concessionaire).

Such access shall be given on the basis that any disruption

to the operation of the System shall be minimised; and

13.4.b (2) make staff available to undergo training at the times and

places provided in the Grantors LRV Contract (as adjusted

pursuant thereto and communicated to the Concessionaire).

13.5 AFCS

13.5.a The AFCS shall be developed by the AFCS Concessionaire in accordance

with Schedule 22 (AFCS Memorandum of Agreement).

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13.5.b The ownership of the Concessionaire AFCS Infrastructure shall vest in the

Grantors upon the issuance of a Provisional Acceptance Certificate or

Final Acceptance Certificate in respect of the portion of the Cavite

Extension in which the relevant Concessionaire AFCS is included, whilst

the possession, custody and risk of loss or deterioration thereof shall be

with the Concessionaire and the Concessionaire AFCS Infrastructure shall

form part of the System.

13.5.c The Concessionaire shall enter into an agreement with the Grantors and

the AFCS Concessionaire in the form set out in Schedule 22 (AFCS

Memorandum of Agreement) within the period prescribed in Section 5.1.h.

13.5.d The Concessionaire shall perform its obligations under Schedule 22 (AFCS

Memorandum of Agreement) and shall be directly liable to the AFCS

Concessionaire for the performance of its obligations under Schedule 22

(AFCS Memorandum of Agreement).

13.5.e The failure to integrate the Concessionaire AFCS Infrastructure of the

Cavite Extension with the Level 3 Infrastructure of the System by the

Required Extension Completion Date shall be a Concessionaire Delay

Event provided that such failure to integrate is not due to (i) failure of the

Grantors (or any third party appointed by the Grantors) to provide to the

Concessionaire the specifications and standards of the Level 1

Infrastructure and Level 2 Infrastructure by the earlier of three (3)

months after the FSA Date or three (3) years before the Required

Extension Completion Date, or (ii) failure of the AFCS Concessionaire to

integrate the Level 1 Infrastructure and Level 2 Infrastructure of the Cavite Extension (which has been approved by the Grantors (or third

party appointed by the Grantors)) to the Level 3 Infrastructure of the System within a period of thirty (30) days from notice by the

Concessionaire.

13.5.f The Grantors (or a third party appointed by the Grantors) shall provide to the Concessionaire the specifications and standards of the Level 1

Infrastructure and Level 2 Infrastructure by the earlier of three (3)

months after the FSA Date or three (3) years before the Required Extension Completion Date. The Concessionaire shall reflect the

requirements of these specifications regarding interface in the Detailed

Design provided these specifications have been made available to the

Concessionaire.

13.5.g The ownership of the Grantors AFCS Infrastructure (excluding the Level 4

Infrastructure) shall vest in the Grantors on the FSA Date. Upon transfer

of ownership thereof or thereto, the Grantors shall simultaneously

transfer the possession and operation thereof to the Concessionaire and it

shall thereupon form part of the System. The possession, custody and risk

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of loss or deterioration thereof shall be with the Concessionaire. The

Concessionaire shall be responsible for procuring the insurance for the

Level 1 Infrastructure, Level 2 Infrastructure and Level 3 Infrastructure

for the System.

13.5.h From the FSA Date, the Concessionaire shall pay an annual program fee to the Scheme Provider in accordance with Schedule 22 (AFCS Memorandum

of Agreement). The Grantors shall ensure that the Scheme Provider acts fairly and reasonably at all times.

13.5.i The Concessionaire will be required to be a member of the AFCS Clearing

House for the purpose of settlement of AFCS transaction between the AFCS Concessionaire and the Concessionaire in accordance with the

terms of Schedule 22 (AFCS Memorandum of Agreement).

13.5.j The AFCS Concessionaire and the Grantors (or any party appointed by the Grantors) shall be liable to the Concessionaire for any failure to fulfill

their obligations under Schedule 22 (AFCS Memorandum of Agreement) in

accordance with Schedule 22 (AFCS Memorandum of Agreement) and this

Concession Agreement. If the AFCS Concessionaire is liable to compensate

the Concessionaire for any Financial Loss A and/or Financial Loss B

suffered by the Concessionaire in accordance with Schedule 22 (AFCS

Memorandum of Agreement), then the Concessionaire may claim

compensation for such loss from the AFCS Concessionaire and/or the

Grantors in accordance with the provisions below:

13.5.j (1) until the later of four (4) years after FSA Date or the day

after two (2) consecutive Calendar Quarters during which

the AFCS Concessionaire incurs no more than ten (10)

penalty points in each Calendar Quarter against the

Concessionaire as more specifically stated in Section 4 of

Schedule 22 (AFCS Memorandum of Agreement) (“AFCS

Initial Period”), the Concessionaire shall be entitled to claim compensation of (i) up to an aggregate amount of five

hundred million Pesos (PhP500,000,000) either from the

Grantors or from the AFCS Concessionaire (subject to paragraph 13.5.j(3) below) in accordance with Schedule 22

(AFCS Memorandum of Agreement) and (ii) an additional

aggregate amount of two hundred and fifty million Pesos

(PhP250,000,000) from the Grantors under this Concession

Agreement. The Concessionaire may claim the

compensation due under sub-paragraph (i) above either

from the Grantors or from the AFCS Concessionaire at its

discretion;

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13.5.j (2) commencing from the end of the AFCS Initial Period until

the expiry or termination of the AFCS Concession

Agreement, the Concessionaire shall be entitled to claim

compensation of (i) up to five hundred million Pesos

(PhP500,000,000) from the AFCS Concessionaire (subject

to paragraph 13.5.j(3) below) in accordance with Schedule

22 (AFCS Memorandum of Agreement) and (ii) up to two

hundred and fifty million Pesos (PhP250,000,000) from the

Grantors under this Concession Agreement. Under this

paragraph 13.5.j(2), the Concessionaire shall be entitled to claim compensation from the Grantors under sub-

paragraph 13.5.j(2)(ii) above, only after claiming all the

compensation from the AFCS Concessionaire under sub-

paragraph 13.5.j(2)(i) above. By way of example, if the

compensation payable by the AFCS Concessionaire to the

Concessionaire is five hundred and fifty million Pesos

(PhP550,000,000), then the Concessionaire has to claim

first five hundred million Pesos (PhP500,000,000) from the

AFCS Concessionaire pursuant to Schedule 22 (AFCS

Memorandum of Agreement) and then claim fifty million

Pesos (PhP50,000,000) from the Grantors under this Concession Agreement; and

13.5.j (3) in both paragraphs 13.5.j(1)(i) and 13.5.j(2)(i) above, the

Concessionaire shall be entitled to claim up to an aggregate amount of five hundred million Pesos (Php500,000,000)

from the AFCS Concessionaire, provided the AFCS

Concessionaire has not paid any compensation to any other

PTOs and/or the DOTC as provided in Section 4 of Schedule

22 (AFCS Memorandum of Agreement). If the AFCS Concessionaire has already paid compensation to other

PTOs and/or the DOTC, then the aggregate compensation so

paid by the AFCS Concessionaire to PTOs and/or the DOTC

shall be deducted from the five hundred million Pesos

(Php500,000,000) to determine the amount of

compensation the Concessionaire can claim against the AFCS Concessionaire. By way of example, if the Financial

Loss A and/or Financial Loss B incurred by the

Concessionaire is five hundred and fifty million Pesos

(PhP550,000,000) and if the AFCS Concessionaire has

already paid compensation of one hundred million Pesos (PhP100,000,000) in aggregate to other PTOs and/or the

DOTC, then the Concessionaire shall be entitled to claim up

to four hundred million Pesos (PhP400,000,000) from the

AFCS Concessionaire under paragraphs 13.5.j(1)(i) and

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13.5.j(2)(i) above and one hundred and fifty million Peso

(PhP150,000,000) from the Grantors.

For the avoidance of doubt, except as provided in sub-paragraph 13.5.j(1)

of this Section 13.5.j, the obligation of the Grantors to pay the

Concessionaire for Financial Loss A and/or Financial Loss B suffered by the Concessionaire under Schedule 22 (AFCS Memorandum of Agreement)

shall, in the aggregate, not exceed Two Hundred Fifty Million Pesos (PhP250,000,000) for the period of the AFCS Concession.

The compensation payable by the Grantors under this Section shall be

paid through the Balancing Payments.

13.5.k The Concessionaire's right to make any claim against the Grantors under

the above Section 13.5.j shall be reduced to the extent that the losses

suffered by the Concessionaire under this Concession Agreement have been caused by or contributed to by any action of the Concessionaire or

its Affiliate in its capacity as AFCS Concessionaire.

13.5.l The Grantors shall ensure that the AFCS Concession Agreement is not amended to adversely affect the rights of the Concessionaire under this

Concession Agreement. Further, in case of early termination or expiry of the AFCS Concession Agreement, the Grantors shall ensure that (i) the

Level 4 Infrastructure continues to be operated in accordance with the

MPSS of the AFCS Concession Agreement and the specifications released by the Grantors (or a third party appointed by the Grantors), and (ii) any

substitution or replacement of the AFCS Concessionaire, or if the Grantors

decide to operate the AFCS on their own, is on terms that preserve

equivalent rights for the Concessionaire to those under this Concession

Agreement and under Schedule 22 (AFCS Memorandum of Agreement).

The failure of the Grantors to fulfil the above obligations shall constitute a

Material Adverse Government Action.

13.6 Risk

Any (1) failure by the Grantors to comply with any of their obligations under this

Section 13, (2) defect or deficiency in any Grantors' Procured Item occurring

prior to the date on which care custody and control of such equipment is

transferred to the Concessionaire in accordance with this Concession Agreement,

or (3) any failure of the Tested Works to pass any of the Tests prescribed in

Section 14 (Commissioning and Acceptance) caused by any Grantors Procured

Item or AFCS (provided that failure of the Tested Works to pass any of the Tests

prescribed in Section 14 (Commissioning and Acceptance) is not caused by failure

of the Levels 1-2 Infrastructure procured by the Concessionaire from a third

party and the integration of these levels to Level 3 of the System), shall constitute

a Material Adverse Government Action and, to the extent the same delays the

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completion of the Cavite Extension, a Grantors Delay Event (provided that no

compensation shall be paid twice).

Section 14 COMMISSIONING AND ACCEPTANCE

14.1 Obligation to perform

The Concessionaire shall carry out all testing of the Works and various parts

thereof and shall carry out integrated tests of the Works together with the

Grantors Procured Items and the Existing System, all in accordance with Part 7 of

Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension).

14.2 Notification of intention to carry out Commissioning and Acceptance Tests

14.2.a The Concessionaire shall give:

14.2.a (1) the Grantors; and

14.2.a (2) the Independent Engineer,

not less than twenty (20) days prior written notice of its intention to carry out the final Commissioning and Acceptance Tests (including the tests relating to the

integration of the Existing System, Cavite Extension and the Grantors Procured

Items) in respect of the whole of the Cavite Extension.

14.3 Commissioning and Acceptance Plan

The Concessionaire shall carry out the Commissioning and Acceptance Tests

(including the tests relating to the integration of the Existing System, Cavite

Extension and the Grantors Procured Items):

14.3.a in accordance with the Commissioning and Acceptance Plan; and

14.3.b in the presence of the Independent Engineer (and the Grantors shall be

given the opportunity to attend these tests if they so desire).

14.4 No relief from liability

Any review by the Grantors or the Independent Engineer of the Commissioning

and Acceptance Tests shall not relieve the Concessionaire of any of its obligations under this Concession Agreement.

14.5 Determination

Within ten (10) days of the Concessionaire carrying out the Commissioning and

Acceptance Tests (including the tests relating to the integration of the Existing

System, Cavite Extension and the Grantors Procured Items), the Independent

Engineer shall be required to determine, and notify the Parties in a

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Commissioning and Acceptance Notice, whether it believes that the

Commissioning and Acceptance Tests:

14.5.a have been carried out in accordance with the Commissioning and

Acceptance Plan;

14.5.b indicate that the Tested Works fully meet the requirements of the Commissioning and Acceptance Standards;

14.5.c indicate that the Tested Works substantially meet the requirements of the

Commissioning and Acceptance Standards; and/or

14.5.d indicate that the Tested Works fail to meet the requirements of the

Commissioning and Acceptance Standards specifying the failures in detail and notifying the:

14.5.d (1) Concessionaire in writing of any of the Works and/or

Grantors Procured Items (in respect of which all relevant rights under the relevant Grantors Procurement Contracts

have been transferred to the Concessionaire in accordance

with Section 13.3 (Transfer of Rights)) failing to meet such

requirements; and

14.5.d (2) Grantors in writing of any Grantors Procured Items (to which Section 14.5.d(1) above does not apply) failing to

meet such requirements.

14.6 Full acceptance

14.6.a Final Acceptance Certificate

If the Independent Engineer states in a Commissioning and Acceptance

Notice that:

14.6.a (1) the Commissioning and Acceptance Tests (including the

tests relating to the integration of the Existing System, Cavite Extension and the Grantors Procured Items) have

been carried out in accordance with the Commissioning and

Acceptance Plan;

14.6.a (2) the Tested Works fully meet the requirements of the

Commissioning and Acceptance Standards; and

14.6.a (3) the Tested Works have been certified as being safe for

commercial operation by the Independent Engineer based

on the following criteria: (i) works (manufacturing,

construction, and installation) shall be based on a design

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approved and certified by the Independent Engineer; (ii) all

manufacturing tests, and construction and installation

along with the evidence of controls shall be approved by the

Independent Engineer; (iii) system and sub-systems’ RAM

and performances shall be demonstrated by suppliers /

contractors and approved by the Independent Engineer;

(iv) safety as per the safety case based on the existing

concept shall be successively proven from definition

through design, factory tests, installation and integration to

test and commissioning by suppliers / contractors under the control of the Concessionaire; and (v) punch lists of

successive steps to authorize test and commissioning, trial

run and system acceptance and to enter into operation with

passengers shall be cleared by the Independent Engineer ,

the Grantors shall procure that the Independent Engineer issues a Final

Acceptance Certificate for the Tested Works, confirming that the Works comply with the relevant Detailed Design and MPSS and that the Grantors

Procured Items comply with the equivalent design and specification provisions in the Grantors Procurement Contracts. The issue of the Final

Acceptance Certificate shall signify achievement of the Extension

Completion Date.

14.6.b Consequence of Issuance of Final Acceptance Certificate

Following the issue of a Final Acceptance Certificate in accordance with

Section 14.6.a:

14.6.b (1) the Concessionaire shall be permitted to start operations of

the Extended System (as contemplated in Section 18

(Operation, Maintenance and Services)); and

14.6.b (2) the Extension Completion Date shall occur.

14.7 Substantial Acceptance

14.7.a Provisional acceptance certificate

If the Independent Engineer states in the Commissioning and Acceptance

Notice that:

14.7.a (1) the Commissioning and Acceptance Tests (including the

tests relating to the integration of the Existing System,

Cavite Extension and the Grantors Procured Items) have

been carried out in accordance with the Commissioning and

Acceptance Plan;

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14.7.a (2) the Tested Works substantially comply with the


14.7.a (3) the Tested Works have been certified as being safe for

commercial operation by the Independent Engineer based

on the following criteria: (i) works (manufacturing, construction, and installation) shall be based on design

approved and certified by the Independent Engineer; (ii) all manufacturing tests, and construction and installation

along with the evidence of controls shall be approved by the

Independent Engineer; (iii) system and sub-systems’ RAM

and performances shall be demonstrated by suppliers /

contractors and approved by the Independent Engineer;

(iv) safety as per the safety case based on the existing concept shall be successively proven from definition

through design, factory tests, installation and integration to

test and commissioning by suppliers / contractors under the control of the Concessionaire; and (v) punch lists of

successive steps to authorize test and commissioning, trial run and system acceptance and to enter into operation with

passengers shall be cleared by the Independent Engineer,

then the Grantors shall procure that the Independent Engineer shall, within ten (10) days of the above confirmation from the Grantors, issue a

Provisional Acceptance Certificate for the Tested Works:

14.7.a (4) confirming that the Works substantially comply with the relevant Detailed Design and the Grantors Procured Items

substantially comply with the design requirements in the relevant Grantors Procurement Contracts;

14.7.a (5) confirming that the Works substantially comply with the

MPSS and the Grantors Procured Items substantially comply with the minimum performance and specification

requirements in the relevant Grantors Procurement

Contracts; and

14.7.a (6) identifying any Punch List Item:

14.7.a(6)(a) to the Concessionaire which relates to: (i)

the Works; and (ii) any Grantors Procured

Items in respect of which all relevant rights

under the relevant Grantors Procurement

Contracts have been transferred to the

Concessionaire in accordance with Section

13.3 (Transfer of Rights) to the

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Concessionaire; and

14.7.a(6)(b) to the Grantors which relates to any Grantors Procured Items to which Section 14.7.a(6)(a)

above does not apply.

14.7.b No relief

Following the issue of a Provisional Acceptance Certificate in

accordance with Section 14.7.a, the Concessionaire shall be permitted to

start operations of the Extended System (as contemplated in Section 18

(Operation, Maintenance and Services)). Notwithstanding the issue of a

Provisional Acceptance Certificate, the Concessionaire and the Grantors

shall remain obliged to carry out the works contemplated in Sections

14.8 (Punch List Rectification Program) to 14.11 (Failure to Rectify

Defects) (inclusive) until a Final Acceptance Certificate is issued and the Extension Completion Date shall not occur until the Final Acceptance

Certificate is issued.

14.8 Punch List Rectification Program

The Concessionaire shall send to the Grantors and the Independent Engineer,

within ten (10) days of receipt of a Provisional Acceptance Certificate:

14.8.a a program specifying how it intends to rectify the Punch List Items

specified in the Provisional Acceptance Certificate relating to: (i) the

Works; and (ii) any Grantors Procured Items

14.8.b in respect of which all relevant rights under the relevant Grantors

Procurement Contracts have been transferred to the Concessionaire in

accordance with Section 13.3 (Transfer of Rights);

14.8.c a written notification specifying to the Grantors in detail any Punch List

Items specified in the Provisional Acceptance Certificate relating to the Grantors Procured Items to which Section 14.8.a above does not apply;

and

14.8.d the timetable for rectifying Punch List Items identified under each of

Sections 14.8.a and 14.8.b.

14.9 Rectification of Punch List Items

14.9.a The Concessionaire shall rectify Punch List Items relating to: (i) the Works; and (ii) any Grantors Procured Items in respect of which all

relevant rights under the relevant Grantors Procurement Contracts have

been transferred to the Concessionaire in accordance with Section 13.3

(Transfer of Rights) in accordance with the applicable Punch List

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Rectification Program or such other date as the Grantors may

reasonably specify in a notice given to the Concessionaire.

14.9.b The Grantors shall procure the rectification of any Punch List Items

relating to the Grantors Procured Items to which Section 14.9.a above

does not apply in accordance with the applicable Punch List Rectification Program or such other date as the Concessionaire may

reasonably specify in a notice given to the Grantors.

14.10 Notice of rectification of Punch List Items

14.10.a The Concessionaire shall notify the Grantors and the Independent

Engineer when any Punch List Item relating to: (i) the Works; and (ii)

any Grantors Procured Items in respect of which all relevant rights

under the relevant Grantors Procurement Contracts have been

transferred to the Concessionaire in accordance with Section 13.3 (Transfer of Rights) has been rectified, and Section 14.2 (Notification of

intention to carry out Commissioning and Acceptance Tests) to 14.5

(Determination) (inclusive) shall apply to the retesting of those items.

14.10.b The Grantors shall notify the Concessionaire and the Independent

Engineer when any Punch List Item relating to the Grantors Procured Items to which Section 14.9.a above does not apply has been rectified,

and Section 14.2 (Notification of intention to carry out Commissioning

and Acceptance Tests) to 14.5 (Determination) (inclusive) shall apply to the retesting of those items.

14.10.c The cost of any retesting of any Grantors Procured Items shall be for the

account of the Grantors.

14.11 Failure to rectify defects

14.11.a Without prejudice to any other right the Grantors may have under this Concession Agreement, if the Concessionaire fails to rectify any Punch

List Items for which it is responsible within the time provided in Section

14.8.c (Punch List Rectification Program):

14.11.a (1) the Grantors shall, upon reasonable notice to the

Concessionaire, be entitled to have the Punch List Items in

question corrected; and

14.11.a (2) the Concessionaire shall within thirty (30) days of the

Grantors' demand therefor reimburse the reasonable costs

and expenses of the Grantors in so doing, and the Grantors

shall be entitled to enforce the Construction Performance

Security to recover those amounts to the extent they have

not been paid within this thirty (30) day period.

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14.11.b Without prejudice to any right the Concessionaire may have under this

Concession Agreement, if the Grantors fail to procure rectification of any

Punch List Items for which they are responsible within the time

provided in Section 14.8.c (Punch List Rectification Program):

14.11.b (1) the Concessionaire shall, upon reasonable notice to the Grantors, be entitled to have the Punch List Items in

question corrected; and

14.11.b (2) the Grantors shall within thirty (30) days of the

Concessionaire's demand therefor but subject to Section

20.9 (Grantors Payment) reimburse the reasonable costs and expenses of the Concessionaire in so doing.

14.12 Rejection

If the Independent Engineer states in a Commissioning and Acceptance Notice

that:

14.12.a a Commissioning and Acceptance Test (including the tests relating to

the integration of the Existing System, Cavite Extension and the

Grantors Procured Items) has not been carried out in accordance with

the Commissioning and Acceptance Plan; or

14.12.b the Tested Works do not comply with the Commissioning and

Acceptance Standards,

then the Independent Engineer shall issue a report in respect of the relevant part or parts of the Tested Works ("Independent Engineer Failure Report"),

specifying in detail:

14.12.c the reasons why the Commissioning and Acceptance Test was not carried out in accordance with the Commissioning and Acceptance Plan;

or

14.12.d the reasons why the Tested Works do not comply with the

Commissioning and Acceptance Standards and, where relevant,

identifying separately any non-compliance of Grantors Procured Items;

and

14.12.e the actions that the Concessionaire must take, in relation to: (i) the

Works; and (ii) any Grantors Procured Items in respect of which all

relevant rights under the relevant Grantors Procurement Contracts have

been transferred to the Concessionaire in accordance with Section 13.3

(Transfer of Rights), to ensure that:

14.12.e (1) any further Commissioning and Acceptance Tests meet the

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requirements of the Commissioning and Acceptance Plan;

or

14.12.e (2) the Tested Works meet the requirements of the


14.12.f the actions that the Grantors must procure, in relation to the Grantors Procured Items to which Section 14.12.e above does not apply, to

ensure that:

14.12.f (1) any further Commissioning and Acceptance Tests meet the

requirements of the Commissioning and Acceptance Plan;

or

14.12.f (2) the Tested Works meet the requirements of the


14.12.g a reasonable timetable for:

14.12.g (1) taking the actions specified under Sections 14.12.e and

14.12.f; and

14.12.g (2) carrying out further Commissioning and Acceptance Tests

in relation to that relevant part or parts of the Tested

Works, and

the Concessionaire and the Grantors shall proceed with all due dispatch to take

the actions specified under Sections 14.12.e and 14.12.f, and notify the

Independent Engineer (and, in the case of Section 14.12.e, the Concessionaire

will also notify the Grantors) when they have been carried out.

14.13 Further Commissioning and Acceptance Tests

As soon as reasonably practicable following the completion of the actions specified under Sections 14.12.e and 14.12.f, the Concessionaire shall carry out

further Commissioning and Acceptance Tests in accordance with the timetable specified in the Independent Engineer Failure Report, and Sections 14.2

(Notification of intention to carry out Commissioning and Acceptance Tests) to

14.5 (Determination) (inclusive) shall apply to the retesting in question.

14.14 Acceptance of Part

The Concessionaire may propose in the Commissioning and Acceptance Plan that

it be entitled to apply for Provisional Acceptance Certificates and hence the right

to commence operation of parts of the Cavite Extension upon its or their

completion and acceptance in accordance with this Concession Agreement. Any

such application shall be subject to the Grantors' approval. If approval for

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acceptance of the Cavite Extension in parts is approved, the provision of Section

14 (Commissioning and Acceptance) shall apply to acceptance of each part so

identified. Notwithstanding that Provisional Acceptance Certificates may be

issued in respect of parts of the Cavite Extension only one (1) Final Acceptance

Certificate may be issued in respect of the Cavite Extension and only the issue of

this Final Acceptance Certificate shall constitute the achievement of the

Extension Completion Date.

Section 15 SUBCONTRACTING

15.1 General

The Concessionaire may appoint another person to carry out any part of the

Works or to provide any part of the Services, subject to the provisions of this

Section 15 (Subcontracting).

15.2 Subcontractor qualifications and approval

15.2.a The Concessionaire may use the contractors who have been approved by

the Grantors for carrying out the Work and the Services as set out in

Schedule 11 (Approved Subcontractors).

15.2.b Each proposed Subcontractor must be at least as well qualified as the

Concessionaire in respect of the tasks to be sub-contracted to it and must be in possession of all Relevant Consents necessary for it to carry out the

obligations subcontracted to it.

15.2.c A Subcontractor not named in Schedule 11 (Approved Subcontractors) that is carrying out a portion of the operation of the System, the

construction of the Cavite Extension or the carrying out of System

Upgrades that, in each case, are material in the context of the Project as a

whole may only be appointed by the Concessionaire with the written

approval of the Grantors, which approval may only be withheld on the grounds of its technical and operational competence or its financial

standing in relation to the tasks to be subcontracted to it.

15.2.d The Concessionaire shall within thirty (30) days of entering into any sub-contract submit complete certified copies thereof to the Grantors,

provided that the Concessionaire may exclude the pricing and payment

sections thereof from the copies so submitted.

15.3 Primary Responsibility

Notwithstanding the appointment of any Subcontractor, the Concessionaire shall

retain full responsibility for the prosecution and completion of the Project and operation and maintenance of the System and shall remain fully liable to the

Grantors for the acts and omissions of any Subcontractor in its capacity as such

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as if they were the Concessionaire's own acts or omissions.

Section 16 OWNERSHIP, CUSTODY AND RISK OF ASSETS

16.1 Ownership and Custody

16.1.a Ownership of Existing System, Project Land, Works, Commercial Assets

and Free Standing Commercial Assets

The ownership of the Existing System and the Project Land shall remain

with the Grantors at all times. The ownership of the Works shall vest in the Grantors on the date of issuance of the Final Acceptance Certificate.

The ownership of the Free Standing Commercial Assets shall remain with

the Concessionaire during the Concession Period but shall forthwith vest in the Grantors free and clear of all Security Interests on the earlier of the

Transfer Date or the Termination Date. The ownership of the Commercial

Assets which are part of the Rail Project Assets shall always remain with

the Grantors.

16.1.b Ownership of LRVs

Unless otherwise specifically agreed (including pursuant to Section 16.4 below), ownership of all LRVs procured by the Grantors shall remain with

the Grantors and ownership of all LRVs procured by the Concessionaire shall vest in the Grantors on the date that an acceptance certificate or final

completion certificate (however described) is issued in respect of any

such LRV under the contract for the procurement thereof.

16.1.c Ownership of Satellite Depot

Ownership of the Satellite Depot shall, as between the Grantors and the

Concessionaire, at all times vest in the Grantors.

16.1.d Possession, custody and risk of loss or deterioration

16.1.d (1) Possession, custody and risk of loss or deterioration in the Works and System shall vest in the Concessionaire during

the Concession Period.

16.1.d (2) Possession, custody and risk of loss or deterioration in the Grantors Procured Items shall vest in the Concessionaire

from the time identified in Section 13.3 (Transfer of Rights)

throughout the remainder of the Concession Period.

16.1.d (3) Possession, custody and risk of loss or deterioration in

LRVs procured by the Concessionaire shall vest in the

Concessionaire from the time identified in Section 13.3

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(Transfer of Rights) throughout the remainder of the

Concession Period.

16.1.d (4) Possession, custody and risk of loss or deterioration to the

Works, System, LRVs, Satellite Depot and all other Project

Assets shall vest in the Grantors upon the earlier of Termination Date or the Transfer Date.

16.1.d (5) Possession, custody and risk of loss to the Commercial

Assets shall vest in the Grantors upon the earlier of the

Termination Date or the Transfer Date.

16.2 Security Interests

16.2.a The Concessionaire shall not create or permit to subsist any Security

Interest other than a Permitted Security Interest.

16.2.b The Concessionaire shall not create any Security Interest over (i) the Works, (ii) the Rail Project Assets and (iii) the Project Land.

16.2.c Except when the Permitted Security Interests over shares in the

Concessionaire are foreclosed and acquired by another person or entity, the Concessionaire shall not grant the holders of any Permitted Security

Interest or their representatives any voting rights in the Concessionaire, or participation in the management of the Concessionaire.

16.2.d In case of Permitted Security Interests over the Commercial Assets, the

Concessionaire shall secure the Grantors' prior written consent, which shall not be unreasonably withheld, for the creation of such Permitted

Security Interest and these Permitted Security Interests shall be further

subject to the following requirements:

16.2.d (1) The Concessionaire shall ensure that the person or entity in

whose favor such Permitted Security Interest will be created shall be notified and informed in writing of the

terms and conditions of this Concession Agreement prior to

the execution of any agreement creating such Permitted Security Interest. For this purpose, the Concessionaire shall,

as a precondition for the approval by the Grantors, submit

to the Grantors written proof acknowledged by the person

in whose favor such Permitted Security Interest shall be

created attesting to the fact that it has been informed of and

will respect the terms and conditions of this Concession

Agreement. Further, the Concessionaire shall be allowed at

its own cost and expense to have any real estate or chattel

mortgage over the Free Standing Commercial Assets as

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permitted under this Concession Agreement registered

with the appropriate Registry of Deeds and annotated on

the original or transfer certificate of title, or in absence

thereof, on the Declaration, over the portion of the Project

Land where the relevant Free Standing Commercial Asset is

constructed or located.

16.2.d (2) Permitted Security Interests over the Free Standing Commercial Assets and Possessory Rights over the

Commercial Assets shall not prejudice the right of the

Grantors to the Handback of the Project and the transfer of

the Project Assets at the Termination Date or the Transfer

Date as provided in Section 33 (Handback of Project),

irrespective of whether the Commercial Assets are developed by the Concessionaire or any other person.

16.2.d (3) The Concessionaire shall likewise secure the Grantors’ prior

written consent in case of any change in the holder of such

Permitted Security Interest and shall submit proof

acknowledged by the said person or entity who shall hold

such Permitted Security Interest that it has been informed

of and will respect the terms and conditions of this


16.2.e In case of Permitted Security Interests over the Concessionaire Revenue

or shares in the Concessionaire, the Concessionaire shall not be required

to secure the prior written consent of the Grantors but shall be subject to the following notice requirements:

16.2.e (1) The Concessionaire shall notify the Grantors of any plan to

create any Permitted Security Interest at least thirty (30)

days prior to the execution of any agreement creating such

Permitted Security Interest. Such notice shall include information on (i) the identities of the persons or entities in

whose favor such Permitted Security Interest is proposed to

be created, (ii) the amount of the obligation proposed to be secured by such Permitted Security Interest, (iii) the

proposed duration of such Permitted Security Interest, and

as the case may be, (iv) the proposed amount and source of

the Concessionaire Revenue, and (v) the number, types, and

names of the owner of the shares in the Concessionaire

subject of such Permitted Security Interests.

16.2.e (2) After such Permitted Security Interest is created, and within

thirty (30) days from the execution of the agreements

creating the Permitted Security Interests, the

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Concessionaire shall notify the Grantors to confirm or

update the information provided in the foregoing notice

based on the information contained in the executed

agreements creating such Security Interest.

16.2.e (3) The Concessionaire shall likewise notify the Grantors of any change in the holder of such Permitted Security Interest

within a period of thirty (30) days from the date of such change.

In the event of a Concessionaire Event of Default under Section 31.1.a (7),

if the Permitted Security Interest over any shares in the Concessionaire is invoked or foreclosed by the Finance Parties during the Lock–up Period,

the said shares in the Concessionaire may only be transferred to such

third parties as approved by the Grantors, with such consent not to be

unreasonably withheld, and provided the prospective transferee meets all

the qualification requirements set out in the Instructions to Bidders. The

Concessionaire shall procure that (i) it shall not record in its corporate

books any such transfers that are made in violation of the provisions of

this Concession Agreement, (ii) such conditions are annotated on the

shares subject of this restriction, and (iii) reflected in the Finance

Documents creating the Permitted Security Interest over its shares in

favor of the Finance Parties.

16.2.f Unless a different consent or notice requirement is mandated under this

Section 16.2, the Concessionaire shall inform the Grantors of the creation

of any Permitted Security Interest within a period of fifteen (15) days of creation of such Permitted Security Interest under the Finance

Documents.

16.3 Obsolete Assets

The Concessionaire shall, unless otherwise agreed, deliver any obsolete or wo rn

out Project Assets to LRTA at a location in Metro Manila to be identified by LRTA

from time to time at no cost to LRTA and LRTA shall accept the same. Should the

Legal Requirements concerning the disposal of government owned assets (or the

application of such Legal Requirements to the Project) change, the Parties shall

consult to determine an alternative mechanism to give the Concessionaire

greater freedom as to how to deal with such assets.

16.4 Leasing

The Concessionaire may, notwithstanding the provisions of this Section 16

(Ownership, Custody and Risk of Assets), request the Grantors' consent to the procurement of LRVs by way of a lease (where title to the LRVs remains with a

third party lessor). If the Concessionaire is able to demonstrate that the

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proposed lease arrangements fully recognise the Grantors' rights under Sections

31 (Default and Termination), 32 (Grantors' Emergency Right) and 33 (Handback

of Project), and are such that on the Transfer Date or the Termination Date the

ownership of the LRVs shall be automatically transferred to the Grantors at no

cost and that the Grantors will in no circumstances have any financial liability to

that lessor, the Grantors shall not withhold their consent to that proposed

arrangement. If the Concessionaire breaches any of these requirements, then on

the Termination Date or the Transfer Date the Concessionaire shall indemnify

the Grantors against all costs incurred in obtaining free and unencumbered title

to and possession of such LRVs and the Grantors shall be entitled to enforce the relevant Concessionaire Performance Security in respect thereof.

Section 17 DELAY AND COMPENSATION

17.1 Occurrence of Delay

If any Delay occurs, the Concessionaire shall promptly notify the Grantors:

17.1.a the cause of the Delay;

17.1.b its estimate of the financial consequences (including loss of net operating

cash flow) of the Delay;

17.1.c its estimate of the impact of the Delay on the probability that the Works Timetable will be met; and

17.1.d the action it has taken or proposes to take to mitigate the effects of the

Delay.

17.2 Communications

The Concessionaire shall provide regular updates to the Grantors (no less

frequently than monthly) of the notifications provided under Section 17.1

(Occurrence of Delay) including as to the effects of the incident, the likely delay to

be caused thereby and the steps that it is taking or proposes to take to mitigate

the effects of the incident.

The provision of notification under Section 17.1 (Occurrence of Delay) and

updates under this Section 17.2 and the use by the Concessionaire of a ll

reasonable efforts to overcome or mitigate the Delay are conditions precedent to

the Concessionaire's entitlement to any adjustment of any Milestones.

17.3 Mitigation of Delay

The Concessionaire shall take all reasonable action necessary to mitigate the

consequences of a Delay and resume performance of its obligations as soon as

practicable.

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17.4 Delay Events

17.4.a A "Concessionaire Delay Event" is a Delay that is not a Grantors Delay Event, a Force Majeure Delay Event or a MAGA Delay Event.

17.4.b A "Grantors Delay Event" is a Delay caused by:

17.4.b (1) a Proposed Grantors Detailed Design Change as defined in

paragraph 10.1 of Part 2 of Schedule 7 (Engineering,

Procurement and Construction of the Cavite Extension);

17.4.b (2) a Proposed Grantors MPSS Change as defined in paragraph

11.1 of Part 2 of Schedule 7 (Engineering, Procurement and

Construction of the Cavite Extension);

17.4.b (3) the failure by the Grantors to deliver the Basic ROW in

accordance with Section 11.1 in respect of any Basic ROW

Package by the due date therefor;

17.4.b (4) the failure by the Grantors to deliver any portion of ROW

Required for Remedial Work and/or Identified

Intermediate ROW (CE) in accordance with Section 11.3;

17.4.b (5) failure of the Grantors to provide any part of the Viability

Gap Amount in accordance with Section 20.12 (Viability Gap

Funding);

17.4.b (6) any delay caused by the (i) failure of the Grantors (or any

third party appointed by the Grantors) to provide to the

Concessionaire the specifications and standards of the

Levels 1 Infrastructure and Level 2 Infrastructure by the

earlier of three (3) months after the FSA Date or three (3) years before the Required Extension Completion Date, or

(ii) failure of the AFCS Concessionaire to integrate the Concessionaire AFCS Infrastructure (which has been

approved by the Grantors (or third party appointed by the

Grantors) if procured from a third party by the Concessionaire) relating to the Cavite Extension with the

Level 3 Infrastructure of the System within a period of

thirty (30) days from notice by the Concessionaire to the

AFCS Concessionaire;

17.4.b (7) the failure by the Grantors to comply with any of their other

material obligations under this Concession Agreement;

17.4.b (8) any delay (howsoever caused) in the procurement of any

Grantors Procured Items or any failure of any Grantors'

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Procured Items to meet the applicable specifications

therefor;

17.4.b (9) any delay in the appointment of the Independent Engineer

or any failure by the Independent Engineer to give any

response by the time required in this Concession Agreement (provided this is not due to failure of the

Concessionaire to fulfil its obligations in relation to the appointment or payment of the Independent Engineer);

17.4.b (10) a delay arising from any failure of the NAIA Expressway

Concessionaire to perform or comply with its obligations in respect of interface with the Concessionaire as

contemplated in Section 12.2.f (save to the extent that the

delay was caused or contributed to by the Concessionaire);

or

17.4.b (11) any other event specifically designated as a Grantors Delay

Event elsewhere in this Concession Agreement.

17.4.c A "Force Majeure Delay Event" is a delay caused by a Force Majeure

Event and includes any delay caused or contributed to by any local Government Authority (for the avoidance of doubt where by reason of the

operation of Section 23.4 (Relevant Consents) a Lapse in Relevant Consent

(Local) is to be treated as a Lapse in Relevant Consent (National) such event shall constitute a MAGA Delay Event) or any change in Legal

Requirements imposed at a local government unit level (provided that the

affected Party was in compliance with all relevant Legal Requirements

prior to the change) (provided, in each case, that the affected Party has

used all reasonable endeavours in accordance with this Concession

Agreement to overcome or mitigate the effects of such event).

17.4.d A "MAGA Delay Event" is a delay caused by a Material Adverse

Government Action (provided that the Concessionaire has used all

reasonable endeavours in accordance with this Concession Agreement to

overcome or mitigate the effects of such event).

17.5 Consequences of Concessionaire Delay Event

17.5.a The Grantors shall be entitled to receive compensation from

Concessionaire in an amount equal to one million Pesos (PhP1,000,000)

for each day of Delay between the Required Extension Completion Date

and the date of issue of the Provisional Acceptance Certificate or if more

than one Provisional Acceptance Certificates are issued, the date of the last Provisional Acceptance Certificate to be issued (or, if no Provisional

Acceptance Certificate is applied for the Extension Completion Date, the

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date of issue of the Final Acceptance Certificate) to the extent that the

Delay was attributable to a Concessionaire Delay Event.

17.5.b If the Concessionaire fails to pay the compensation within ten (10) days of

the Grantors' demand, the Grantors shall be entitled to interest at the Late

Payment Rate on the unpaid amount and to enforce the Construction Performance Security and/or Operation Performance Security to recover

such compensation.

17.5.c The Concessionaire's liability to pay damages in accordance with Section

17.5.a due to any Concessionaire Delay Event is capped at an amount of

six hundred million Pesos (PhP600,000,000).

17.5.d The payment of the above liquidated damages is, save in the case of

termination of this Concession Agreement, the Concessionaire's sole

financial liability for delay in achieving the completion of the Cavite Extension, however this shall not affect any of the Grantors' rights or the

Concessionaire's other obligations under this Concession Agreement.

17.6 Consequences of Grantors Delay Event or MAGA Delay Event

If the Concessionaire is delayed by a Grantors Delay Event or MAGA Delay Event:

17.6.a The Concessionaire shall be entitled to a Time Extension as may be reasonably required to complete the Works provided that the amount of

the Time Extension shall be reduced to the extent that there is a

Concessionaire Delay Event that causes a delay concurrent with the delay

caused by the Grantors Delay Event or MAGA Delay Event in question. In

the event of dispute, the Time Extension shall be determined by the

Independent Engineer.

17.6.b The Concessionaire shall be entitled to receive Grantors Compensation as

set out in Section 30 (Grantors Compensation) provided that the amount of the Grantors Compensation shall be reduced to the extent that the

Concessionaire has caused or contributed to the delay.

17.6.c Any Delay caused by a Grantors Delay Event or MAGA Delay Event which lasts for more than fourteen (14) months shall entitle the Concessionaire

to terminate this Concession Agreement (provided that this shall not in

any way limit the Concessionaire's rights under Section 31.1.b(4)).

17.7 Consequences of a Force Majeure Delay Event

17.7.a If the Concessionaire is delayed by a Force Majeure Delay Event, the

Concessionaire shall be entitled to a Time Extension as may be reasonably required to complete the Works provided that the amount of the Time

Extension shall be reduced to the extent that there is a Concessionaire

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Delay Event that causes a delay concurrent with the delay caused by the

Force Majeure Delay Event in question. In the event of dispute, the Time

Extension shall be determined by the Independent Engineer.

17.7.b If the Concessionaire is delayed by a Force Majeure Delay Event, the

Concession Period shall be extended by a number of days equal to the period of the Force Majeure Delay Event but the Concessionaire shall not

be entitled to any Grantors Compensation.

17.7.c If the Force Majeure Delay Event extends for more than three hundred

and sixty-five (365) days, either Party may terminate this Concession

Agreement in accordance with Section 28.5.e (Damage Caused by Force Majeure).

Section 18 OPERATION, MAINTENANCE AND SERVICES

18.1 General Obligations

Subject to the terms and conditions of this Concession Agreement, the

Concessionaire shall operate and maintain:

18.1.a the Existing System from the Effective Date;

18.1.b the Extended System (except the Grantors Procured Items) from the

earlier of the date of issuance of the Provisional Acceptance Certificate or

the date of issuance of the Final Acceptance Certificate in each case by the

Independent Engineer;

18.1.c the Grantors Procured Items from the date stated in Section 13.3

(Transfer of Rights);

18.1.d any additional LRVs procured by the Concessionaire from the date stated

in Section 13.3 (Transfer of Rights);

18.1.e the Level 1 Infrastructure, Level 2 Infrastructure and Level 3

Infrastructure of the AFCS in accordance with the obligations stated in Schedule 22 (AFCS Memorandum of Agreement);

in each case in accordance with:

18.1.f the requirements of this Concession Agreement;

18.1.g the Operation and Maintenance Requirements;

18.1.h the Operation, Maintenance and Safety Documentation and Plans;

18.1.i all Relevant Rules and Procedures; and

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18.1.j Prudent Industry Practice;

and so as to achieve the Key Performance Indicators.

18.2 Facility Operator

18.2.a The Concessionaire may, subject to the approval of the Grantors, operate

and maintain the System through a Facility Operator who:

18.2.a (1) meets all the requirements to obtain an Operating

Franchise as set out in Schedule 15 (Operating Franchise Particulars); and

18.2.a (2) obtains an Operating Franchise from the Grantors in

accordance with the procedures set out in Schedule 15 (Operating Franchise Particulars).

18.2.b If the Concessionaire decides to engage a Facility Operator, it shall

procure that the Facility Operator:

18.2.b (1) if proposed to be engaged during the Lock-Up Period,

enters (no later than ninety (90) days before the then

anticipated Effective Date) into a Technical Services

Agreement with the O&M Sponsor on terms which are

consistent with those set out in Schedule 17 (Requirements

for O&M Agreement and Technical Services Agreement); and

18.2.b (2) enters (no later than ninety (90) days before the then

anticipated Effective Date) into an O&M Agreement with the

Concessionaire, on terms which are consistent with those

set out in Schedule 17 (Requirements for O&M Agreement

and Technical Services Agreement).

18.2.c The Grantors shall approve the Concessionaire’s proposed Facility

Operator if the Concessionaire and the Facility Operator meet the

requirements set out in Sections 18.2.a and 18.2.b.

18.2.d If (i) the Grantors disapproves the Concessionaire’s designation of a

Facility Operator and/or the Facility Operator’s application for an

Operating Franchise or (ii) the Concessionaire wishes to replace the

Facility Operator, the Concessionaire may propose to the Grantors

another candidate for Facility Operator which meets the requirements in

Sections 15 (Subcontracting), 18.2.a and 18.2.b above. The Concessionaire

shall only engage the proposed Facility Operator if it has obtained the

prior written

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18.2.e of the Grantors and the Facility Operator has obtained an Operating

Franchise from the Grantors.

18.2.f The Concessionaire shall ensure that the Facility Operator complies at all

times with the requirements of this Section 18.

18.2.g Notwithstanding the engagement of a Facility Operator, the Concessionaire shall remain directly responsible and liable to the

Grantors for all obligations under the Concession Agreement, and in the

event of breach by the Facility Operator of any of the operation and

maintenance obligations under this Concession Agreement, such breach

shall be deemed to be a breach by the Concessionaire for which the Grantors may hold the Concessionaire responsible and liable.

18.2.h Where the Concessionaire elects to operate the System itself it shall:

18.2.h (1) itself apply for an Operating Franchise at the time and in the

manner prescribed in Section 18.2(a); and

18.2.h (2) on and from a date no later than ninety (90) days before the

then anticipated Effective Date until the end of the Lock-Up

Period, itself be party to a Technical Services Agreement

with the O&M Sponsor on terms that are (i) consistent with

those set out in Schedule 17 (Requirements for O&M

Agreement and Technical Services Agreement), and (ii)

approved by the Grantors.

18.2.i Approval by the Grantors of the O&M Agreement and/or the Technical

Services Agreement shall not be withheld if the Concessionaire

demonstrates to the Grantors' satisfaction that these documents are

consistent with the requirements set out in Schedule 17 (Requirements for

O&M Agreement and Technical Services Agreement).

18.3 Operation, Maintenance and Safety Documentation and Plans

The Concessionaire shall provide, update and maintain the Operation,

Maintenance and Safety Documentation and Plans in accordance with Parts 1 and 2 of Schedule 6 (Concessionaire Responsibilities for the Operations and

Maintenance Activities) and Schedule 8 (Integration of System) at the times

contemplated therein.

18.4 Operating personnel

The Concessionaire shall, or shall cause the Facility Operator to, employ or

engage a sufficient number of persons having the qualifications, expertise and experience most appropriate to perform the Services, in each case in accordance

with the requirements of this Concession Agreement. The Concessionaire shall

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(or shall procure that the Facility Operator shall) ensure that continuous

training, qualifications and expertise of such staff shall be maintained throughout

the Concession Period.

The Concessionaire shall be solely and exclusively responsible for recruitment,

transportation, accommodation, payment of the salaries, wages and other payments and costs incidental thereto, health, hygiene, safety, etc, and all taxes,

charges, levies, duties payable under Relevant Rules and Procedures arising from the respective terms and conditions of employment of all employees, personnel

and labour employed by the Concessionaire or the Facility Operator, its

Subcontractors and their agents and representatives on or in connection with

the Project.

18.5 Key Performance Indicators

18.5.a Obligation of Concessionaire

The Concessionaire shall perform the Services so as to achieve the Key

Performance Indicators as set out in Parts 2 and 3 of Schedule 6

(Concessionaire Responsibilities for the Operations and Maintenance Activities).

18.5.b Failure to meet Key Performance Indicators

If the Concessionaire fails to meet the Key Performance Indicators, the

Concessionaire shall be liable to pay KPI Charges in the amounts provided

in Part 3 of Schedule 6 (Concessionaire Responsibilities for the Operations

and Maintenance Activities) and the Grantors may, to the extent they do

not collect the same through the Balancing Payments, enforce the unpaid

balance thereof through the Operation Performance Security.

Notwithstanding anything to the contrary in Part 3 of Schedule 6

(Concessionaire Responsibilities for the Operation and Maintenance

Activities), the level of KPI Charges payable by the Concessionaire in

respect of any month shall not exceed five per cent (5%) of the average

monthly Farebox Revenue (plus any Deficit Payment less any Surplus Payment) received over the previous twelve (12) months.

18.6 Change to Key Performance Indicators

18.6.a Right to propose change

Either the Grantor or the Concessionaire may propose a change to the Key

Performance Indicators at any time.

18.6.b Agreement

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Implementation of any such changes to the Key Performance Indicators

shall require written agreement between the Parties and shall be subject

to Legal Requirements.

18.7 Breach

The Concessionaire’s failure to operate, maintain, repair and renew the Project Assets in accordance with the requirements of this Concession Agreement or any

material safety-related incident or any other breach by the Concessionaire of this

Concession Agreement shall each entitle the Grantors to take any remedial

measures appearing to them to be necessary and shall entitle the Grantors to

enforce the Operation Performance Security to recover any sums owed by the Concessionaire pursuant to this Section 18.7.

18.8 Environmental and Social Requirements and Safety

18.8.a The Railway Infrastructure Works, the Railway Systems Works, the

System Upgrades, the Additional System Upgrades and the performance

of the Services by the Concessionaire shall be consistent with Relevant

Rules and Procedures and the E&S Standards, whichever is more stringent.

18.8.b The Concessionaire shall implement and comply with the ESMS as

provided in Section 26.3.b (Concessionaire Undertakings).

18.8.c The Grantors attach especial significance to safe operation of the System

and the safety of the travelling public. If the Grantors are aware of any

action or inaction on the part of the Concessionaire that indicates a failure

to operate and maintain the System with due regard to safety, the

Grantors may forthwith exercise their rights under Section 18.7 (Breach).

18.9 Commercial Business

18.9.a The Concessionaire shall submit a draft Commercial Business plan in relation to the construction, operation and management of the

commercial development to be carried out on the Project Land ("Draft

Commercial Development Plan") for the approval of the Grantors within a reasonable time after the Effective Date. No later than fifteen

(15) days after the receipt of the Draft Commercial Development Plan or

any amendment thereto, the Grantors, acting reasonably, shall approve or

request any amendments to the Draft Commercial Development Plan.

Amendments may only be requested on the basis that the Draft

Commercial Development Plan is inconsistent with this Concession

Agreement. Upon receiving any such comments, the Concessionaire shall

be responsible for amending and re-submitting the Draft Commercial

Development Plan to the Grantors for approval. Upon approval of the

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Draft Commercial Development Plan by the Grantors, the Draft

Commercial Development Plan shall be the Commercial Development

Plan for the Project.

18.9.b The Draft Commercial Development Plan shall include amongst others,

the following items:

18.9.b (1) details of proposed projects (including the identification of

specific parcels or portions of the Project Land intended to

be used for the development of Free Standing Commercial

Assets);

18.9.b (2) project costs and financing plans; and

18.9.b (3) milestones.

18.9.c The Concessionaire shall prepare and deliver to the Grantors periodic

updates to the Commercial Development Plan, as necessary and, in any event, no later than thirty (30) days after the first (1st) anniversary of the

Effective Date and every anniversary thereof.

18.9.d The Grantors shall have the right to periodically review the Commercial Development Plan to ensure consistency with this Concession Agreement

and, if the Grantors believe any revision thereof is necessary for this reason, shall propose such revision to the Concessionaire. The Grantors

and the Concessionaire shall thereupon meet as required in good faith to

agree on a revised Commercial Development Plan.

18.9.e The Concessionaire may propose revisions to the Commercial

Development Plan at any time. Any such revisions shall be subject to the

process set out in Section 18.9.a.

18.9.f The Concessionaire shall at its own cost and expense cause the annotation

of this Concession Agreement on any original or transfer certificate of title covering the specific parcels or portions of the Project Land intended to

be used for the development of Free Standing Commercial Assets or

where any Free Standing Commercial Asset is actually constructed or located no later than sixty (60) days after the date of the Concessionaire’s

receipt of the relevant Declaration or original or transfer certificate of

title from the Grantors. For the purpose of this Section 18.9.f, the Grantors

shall provide the Concessionaire all relevant Declarations upon the

approval of the Draft Commercial Development Plan or all relevant

original or transfer certificates of title on the date of their issuance. The

Concessionaire shall pay the Grantors a penalty of twenty thousand Peso

(PHP20,000) for each day of delay in performing the above obligations.

This payment shall be made as part of the Balancing Payments. The

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Concessionaire shall submit to the Grantors the annotated Declaration or

annotated original or transfer certificate of title (as the case may be)

evidencing the registration of the Concession Agreement within five (5)

days from its release by the relevant Assessor’s Office or Registry of

Deeds. If the Concessionaire fails to register and/or annotate the

Concession Agreement on the Declaration or original or transfer

certificate of title within the aforesaid period, then, without limiting the

Concessionaire's liability to pay the above penalties, the Grantors shall be

entitled to register and annotate the Concession Agreement on the

Declaration or original or transfer certificate of title at the cost of the Concessionaire.

18.10 Training

18.10.a The Concessionaire shall provide such services as are required for the

proper training and briefing of the employees and personnel of the

Grantors (and/or any other persons nominated by the Grantors) (but

not exceeding thirty (30) persons in aggregate in each year), with the

intent that such personnel shall undergo comprehensive training which

will enable them to fully understand the technical and operational

parameters of the System. The cost of training (except travel,

accommodation and living expenses) shall be borne by the

Concessionaire.

18.10.b The training shall take place in or around Metro Manila, Philippines at a

venue identified by the Concessionaire and agreed to by the Grantors

(or at a venue outside Metro Manila if the Parties so agree and the Grantors undertake to be responsible for all travel and subsistence costs

of their personnel attending such training) for a period of at least three (3) days no later than one hundred and twenty (120) days after the

Extension Completion Date and of the end of every one (1)-year period

thereafter. The approach of the training shall be to start from the

general and progress into specific details, including (without limitation)

a general description of the System, indicating the main functions of the

System and main equipment items. From this general introduction, the

training shall be progressively extended to include specific aspects of

the equipment or functions to a final function by function description. If

necessary, the training shall offer basic information, theoretical items, calculations and analysis of design, special characteristics of the design,

maintenance criteria, interfaces between the subsystems, as well as written tests and/or drills aimed to facilitate understanding.

18.10.c The Concessionaire shall prepare and deliver to the Grantors the

operation, maintenance and training manuals of the System ("System O&M Manual") no later than ninety (90) days after the Effective Date

(this initial System O&M Manual to refer only to the Existing System), an

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updated System O&M Manual (to refer to the Existing System and the

Cavite Extension) no later than ninety (90) days after the Extension

Completion Date and an updated System O&M Manual at the end of

every one (1)-year period thereafter, which shall be in a form and

substance acceptable to the Grantors and which shall, among other

things, take into account the then Relevant Rules and Procedures and

standards. The Concessionaire shall revise the System O&M Manual to

accommodate any comments or concerns of the Grantors.

18.11 Additions to the System

18.11.a The Concessionaire may develop the two (2) additional stations on the Cavite Extension (Manuyo Uno and Talaba) at any time entirely at its

own cost and risk.

18.11.b On the successful construction and integration of the stations at Manuyo Uno and/or Talaba with the System, (i) these stations shall from part of

the System and shall be managed and operated by the Concessionaire at

its own cost, (ii) the ownership of these stations shall vest in the

Grantors and (iii) the possession, custody and risk of loss or

deterioration shall be on the Concessionaire in accordance with Section

16.1.d.

18.11.c For the avoidance of doubt, it is hereby clarified that the provisions of

Section 18.12 (Variations and Adjustments) shall not apply to the development of the aforementioned stations.

18.12 Variations and Adjustments

18.12.a Either Party may by written notice to the other Party notify of their

desire to make a variation to the System. This Section 18.12 shall not

apply to (i) any work which is required to be carried out by the Parties

under this Concession Agreement including under Sections 18.11, 19.1

and 19.3 or (ii) the making of a Grantors Detailed Design Change or

Grantors MPSS Change (each as defined in Schedule 7 (Engineering, Procurement and Construction of the Cavite Extension)), made in

accordance therewith.

18.12.b If the Grantors proposed the variation and if the Grantors have not already provided a technical feasibility study, then the Concessionaire

shall within a reasonable period of time as agreed between the Parties

conduct a technical feasibility study which shall include but not limited

to:

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18.12.b (1) whether the proposed variation will have any adverse

effects on the operation and maintenance of the System and

whether such effects can be overcome; or

18.12.b (2) if the Concessionaire reasonably believes that it will be

unable, given the above, to effect the variations, a statement to this effect in which case the Grantors shall have the right

to cancel, confirm or vary the instructions; or

18.12.b (3) if the Concessionaire reasonably believes that amendments

are necessary or desirable, the amendments to the variation

that the Concessionaire proposes and reasonably believes are necessary to overcome the effects.

18.12.cIf the Concessionaire has proposed the variation, the Concessionaire shall

along with its (i) notice of a desire to effect a variation and (ii) the technical feasibility study, also confirm whether the proposed variation

will have any adverse effects on the operation and maintenance of the

System and whether such effects can be overcome.

18.12.d The Parties shall discuss the Concessionaire's representation under

Section 18.12.b and Section 18.12.c within a reasonable period of time and the Grantors shall take into account the reasonable requests of the

Concessionaire. If following such discussion the Parties have not reached

agreement either Party may require the engagement (at the cost of the requesting Party) of an independent technical consultant to give

recommendations as to the technical feasibility of the proposed variation

and each Party shall consider the recommendations of that consultant

reasonably and in good faith but without affecting the rights of the

Grantors. Following this discussion, the Grantors may at their absolute

discretion (whether the Concessionaire or the Grantors have initiated

the discussion) either issue a formal variation request ("Variation

Request") to the Concessionaire or reject the variation initiated under Section 18.12.a.

18.12.e The Concessionaire shall within a reasonable period of time respond to

the Variation Request with a written Variation Proposal which shall:

18.12.e (1) provide an outline design and method statement as to how

it will design and construct the variation in question;

18.12.e (2) provide an estimate of the time to complete the variation

and the capital cost thereof;

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18.12.e (3) provide an estimate of the effects on the operation and

maintenance of the System and the Concessionaire's

proposals for mitigation thereof; and

18.12.e (4) provide an indication of the Concessionaire's estimate of

the net effect the completed variation will have on the net present value ("NPV") of the Concessionaire’s free cash

flows (prior to debt service but after adjusting for the impact of taxes and equity return) until the end of the

Concession Period, such as the effects on revenues

(including fare adjustment and incremental farebox

revenue arising from the Variation Order, while normal

growth based on historic traffic should not be considered);

operating and maintenance costs (including the cost of any security that may be required to secure the

Concessionaire’s obligations to deliver the Variation in a

timely manner); non-cash items such as depreciation or amortisation (including the tax impact thereof); movements

in working capital items, of the System, and from which the NPV of the capital cost will be deducted, to derive the total

NPV impact. To calculate the NPV impact ("Total NPV

Impact"), the free cash flow projections (which shall

include the amount and timing of the capital investments

and projected changes in free cash flows) shall be

discounted by the deemed weighted average cost of capital (WACC) of the Concessionaire for the Variation, at the time

of the determination of the Variation Order. The free cash

flow projections and WACC shall be calculated on a pre-

finance, but on an after tax ("pre-finance post-tax") basis,

which means that the impact of taxes on interest expense and depreciation and amortisation, shall be considered.

The free cash flows shall be calculated based on the formula

provided in Section 18.12.h.The WACC shall be calculated

based on the following formula:

WACC = Kd x (1 – Tc) x D*/V* + Ke x E*/V*

Where:

Kd is the cost of debt for the proposed variation

Ke, Tc, D*, E* and V* are as defined in Section E of Schedule 10.

18.12.e (5) If the Grantors have proposed the variation and the NPV

impact of the Variation Request is negative, then the

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Concessionaire may request the Grantors to compensate

the Concessionaire through an adjustment to the

Concession Payment or the Viability Gap Amount, an

increase in Notional Fares or Approved Fares, the making of

additional payments to the Concessionaire by the Grantors,

by extension of the Concession Period or a combination of

the above. For the avoidance of doubt, the compensation to

be made through each of the above modes of compensation

shall be reckoned on an NPV basis through the formula to

calculate the Total NPV Impact provided in Section 18.12.e(4).

If the mode of compensation is not to be made through a

lump-sum upfront payment, then the increase in Notional Fares or Approved Fares, or the making of additional

payments to the Concessionaire by the Grantors, or by

extension of the Concession Period, shall be set so that the resulting cumulative NPV of any or a combination of these

options, will be equivalent to the negative NPV impact of the Variation Request. For example, if the NPV impact was

estimated to be negative 300, the calculation of the

cumulative NPV could be as shown in the example given in

Schedule 25 (Variation Order) – Part A (where

compensation is made until Quarter 20, when the

cumulative NPV reaches 300. In this example, the mode of compensation by the Grantors to the Concessionaire is

through equal quarterly instalment payments (EQIPs) made

over 5 years (20 Quarters). For the avoidance of doubt, the

agreed payment terms shall be fixed at the time that the

determination of the Variation Order is being made, and no adjustments shall be made even if actual results deviate

from projections.

18.12.e (6) If the Variation Order proposed by the Grantors is shown to create a positive Total NPV Impact on the Concessionaire,

then the Concessionaire may either (i) contribute thirty

percent (30%) of the positive NPV of the incremental future

free cash flows as its share of the cost of implementing the

proposed Variation Order, in which case, (x) the balance of

the cost of the Variation Order, if any, will be paid by the

Grantors and (y) if 30% of the NPV is determined to be

greater than the total cost of the Variation Order, the

Concessionaire may opt to bear the full cost of the Variation

Order and be entitled to retain the remaining positive NPV

resulting from the Variation Order.

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By way of example, where the Concessionaire decides to

contribute to the capital cost of the Variation Order, if the

capital cost of the Variation Order is 100 and the Total NPV

Impact of the Variation Order is 300, then Concessionaire's

share in the capital cost of the Variation Order will be thirty

percent (30%) of three hundred (300) or ninety (90). Thus,

Variation Order will be financed up to ninety (90) by the

Concessionaire and the rest ten (10) by the Grantors.

However, if the capital cost for the Variation order is

hundred (100) and the Total NPV Impact of the Variation Order is 400, then thirty percent (30%) of four hundred

(400) is one twenty (120), but since capital cost is just only

hundred (100), the Concessionaire covers the full capital

cost of the Variation Order. In the above scenarios, the

Concessionaire shall be entitled to all the revenue

generated as a result of implementation of the Variation

Order, or

(ii) the Concessionaire may request the Grantors to pay for the entire cost of the Variation Order, in which case, the

Grantors shall be entitled to an annual revenue share which

NPV is equivalent to thirty percent (30%) of the positive

Total NPV Impact as determined at the time of negotiations

to be paid only through equivalent equal quarterly

instalments to be made from the time the Variation Order was completed until the end of the Concession Period

("EQIP") to be applied as part of the Balancing Payments.

For the avoidance of doubt, the NPV of the EQIP should be

equivalent to thirty percent (30%) of the positive Total NPV

Impact computed in accordance with Section 18.12.e(4).

By way of example, if the positive Total NPV Impact were

500, Grantors’ share of thirty percent (30%) of such

positive Total NPV Impact is 150. If the remaining life of the Concession is 4 years (16 Quarters) and WACC is twelve

(12%) par annum, the EQIP is 11.94 per quarter. Please see

Schedule 25 (Variation Order Sample Calculation) – Part B.

Under (ii), should the Concession Agreement be terminated

prior to the expiry of the term of the Concession, the Grantors will be entitled to recover the net present value of

the future unpaid EQIPs at the time of termination,

discounted by the WACC at the time of the determination of the Variation Order (Please see also Schedule 25 – Part B

for sample calculation of NPV of future unpaid EQPIs). For

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the avoidance of doubt, for a termination arising under this

clause (ii) this regime will apply to all Termination Payment

scenarios provided in Schedule 10 with the exception of a

termination arising under A.2 of Schedule 10 in which case

future EQIPs owed to the Grantors will be deducted in

deriving Equity Cashflows to calculate Rail EMV.

18.12.e (7) If the Variation Order is proposed by the Concessionaire and the Variation Order is carried out at the cost of the

Concessionaire (including ROW acquisition cost, if

applicable), then the Grantors shall not be entitled to a

share of the revenues generated as a result of

implementation of the Variation Order.

If the Grantors request the variation, irrespective of

whether the Variation Proposal is subsequently approved

or not, the Grantors shall bear all reasonable costs incurred

by the Concessionaire associated with the preparation of

the various proposals for variation.

18.12.f The Variation Proposal shall be set out to a sufficient level of detail and be

supported with sufficient documentation to allow the Grantors to fully

analyse the consequences of making the variation. The Variation

Proposal shall be in accordance with the requirements of the MPSS, the

Relevant Rules and Procedures and Prudent Industry Practice.

18.12.g Within a reasonable period of time after receiving the Variation Proposal,

the Grantors, subject to Legal Requirements and at their absolute

discretion, may by written notice approve the Variation Proposal

("Variation Order"). If the Grantors fail to issue a Variation Order within

this time period, then the Variation Request shall be deemed to have

failed. If the Variation Order is approved by the Grantors, then the

Grantors shall, within a reasonable period of time, proceed for approval of the Variation Order from the relevant Government Authority. Upon

approval of the Variation Order by the relevant Government Authority,

the Concessionaire shall implement the Variation Order.

18.12.h The formula to calculate the pre-finance post-tax free cash flows (FCF)

arising from the Variation is as follows:

FCF = EBIT x (1 – Tc) + Dep – NWC – Capex where: EBIT = Additional Earnings Before Interest and Taxes arising from the Variation, after subtracting depreciation and other non-cash items pertaining to the Variation Tc is as defined in Section E of Schedule 10

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Dep = Depreciation, amortisation and other non-cash expenses which were subtracted from Revenues to derive EBIT, arising from the Variation NWC = Increases in Net Working Capital, arising from the Variation Capex = Capital cost to implement the Variation Order and other capital expenditures

18.12.i The WACC shall be calculated at the time that the Variation order is being

considered, and will be based on the following formula:

WACC = Kd x (1 – Tc) x D*/V* + Ke x E*/V* Where: Kd is the cost of debt for the proposed variation Ke, Tc, D*, E* and V* are as defined in Section E of Schedule 10.

18.12.j The Concessionaire shall while carrying out the variation be entitled to a

Quality Exclusion (as defined in Part 3 of Schedule 6 (Concessionaire

Responsibility for the Operations and Maintenance Activities)) to the

extent that the failure to achieve the Key Performance Indicators was

the inevitable and unavoidable consequence of carrying out variation in

accordance with Prudent Industry Practice.

18.12.k The Grantors may develop additional stations which shall be included in

the System at their own cost. To the extent that the construction of any

such additional station causes (i) the Concessionaire to fail to achieve the

Key Performance Indicators, this shall be treated as a Quality Exclusion

(as defined in Part 3 of Schedule 6 (Concessionaire Responsibility for the

Operations and Maintenance Activities) or (ii) any additional cost (including but not limited to loss of revenue) to the Concessionaire, this

shall be compensated by the Grantors through the provision of Grantors Compensation.

18.12.l Upon completion of any variation, the variation shall (i) form part of the

System, (ii) be managed and operated by the Concessionaire at its own cost and (iii) the possession, custody and risk of loss of deterioration

shall remain with the Concessionaire in accordance with Section 16.1.d.

The ownership of the variation shall always be with the Grantors.

18.12.mFor the avoidance of doubt, nothing in this Section 18.12 (Variations and

Adjustments) shall give the Concessionaire any exclusive right to

implement any extension to the System.

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Section 19 MAJOR MAINTENANCE AND UPGRADES

19.1 Obligation

19.1.a As more particularly described in Part 2 of Schedule 6 (Concessionaire

Responsibilities for the Operations and Maintenance Activities):

19.1.a (1) a Baseline System Plan has been agreed to by the Grantors

and the Concessionaire (and forms Schedule 16 to this

Concession Agreement) setting out the current estimate of

the Parties as to the requirements for major maintenance

and System Upgrades commencing from the Signing Date

and continuing over the Concession Period, including

assumptions upon which the Baseline System Plan has been

prepared and agreed;

19.1.a (2) starting from the Effective Date (the Concessionaire may

commence this at any time after the Signing Date and must

do so no later than the Effective Date) the Concessionaire

shall supply annually a rolling five (5) year System Plan (which shall: (i) explain divergences from the Baseline

System Plan; and (ii) provide for major maintenance, necessary upgrades and expansions of the System capacity

(including the purchase of additional LRVs, the upgrading of

the signalling systems, etc.; and (iii) set out projected capital costs for implementing the System Plan) to reflect

(1) the actual ridership of the System and the differences

from the ridership projected in the previous System Plan,

(2) the projected ridership over the period from the date of

such System Plan to the Transfer Date and (3) changes to

railway technology (the aggregate of work to be performed

under sub-paragraphs (ii) and (iii) of this Section 19.1(a)(2)

being together referred to as "System Upgrades")) and which shall be consistent with the ESMS and contain the

information stated in Part 2 of Schedule 6 (Concessionaire

Responsibilities for the Operations and Maintenance Activities) to the Grantors for approval;

19.1.a (3) the Concessionaire shall provide the Grantors for approval

the estimated capital cost (which shall be in accordance with the relevant approved System Plan) of any System

Upgrades prior to implementation thereof. Once approved,

this cost or the actual cost incurred in implementing the

System Upgrades, whichever is lower, shall be approved for

inclusion in the definition of WIPtd or DCCapextd as used in

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Schedule 10 (Financial Consequences of Termination), as

applicable; and

19.1.a (4) the Concessionaire shall be obliged to carry out all major

maintenance and System Upgrades at the times set out in

the approved System Plan.

19.1.b The Concessionaire shall be required to perform regular major

maintenance overhauls and replacements of parts of the System in

accordance with approved System Plans and Prudent Industry Practice.

For the avoidance of doubt no such work and no System Upgrades shall

be considered variations to the System to which Section 18.12 (Variations and Adjustments) shall apply.

19.1.c The Concessionaire shall be obliged to implement and finance by itself

any System Upgrade necessary to put the System in compliance with the MPSS irrespective of whether this is "economic". If the Concessionaire

demonstrates to the Grantors' satisfaction that it would not be

"economic" to implement any System Upgrades apart from those

necessary to put the System in compliance with the MPSS, then the

Grantors shall either direct the Concessionaire not to implement such

upgrades or shall, subject to the restrictions in Section 3.5 (Concession

Period) extend the Concession Period or provide Grantors

Compensation in such a way so as to render the implementation of such

System Upgrades economic.

19.1.d In this Section 19.1 "economic" in the context of a System Upgrade

means that the Concessionaire is able to recover the costs (including

financing amortization and cost on any debt and equity) incurred to

fund such System Upgrades over the remaining Concession Period (as

extended).

19.1.e The Grantors may at any time direct the Concessionaire to carry out

System Upgrades in addition to those in the System Plan and unless it

demonstrates to the Grantors' satisfaction that such proposed upgrades

are not technically and/or operationally desirable, the Concessionaire

shall, subject to agreement on the level and form of Grantors

Compensation to be provided, implement such System Upgrades. The

Grantors shall provide Grantors Compensation sufficient to compensate

the Concessionaire for the total cost of effecting such System Upgrades.

19.2 Acceptable Reserve LCs

19.2.a The Concessionaire shall, at its own cost, provide to the Grantors Acceptable Reserve LCs in a face amount equal to the Required Amount

as defined below and thereafter, at each date when a revised System

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Plan is supplied pursuant to Section 19.1, shall issue further or

replacement Acceptable Reserve LCs such that the face amount of all

Acceptable Reserve LCs equals the then Required Amount.

19.2.b On the Termination Date, the Acceptable Reserve LCs may be called by

the Grantors (irrespective of the reason for termination) and applied towards the cost of any System Upgrades set out in the System Plan

current as at the Termination Date with any unspent balance being returned to the Concessionaire upon the completion of all such System

Upgrades. On the Transfer Date, any Acceptable Reserve LCs shall be

released to the Concessionaire.

19.2.c The "Required Amount" is:

19.2.c (1) at any time in the five (5) years before the Transfer Date,

twenty percent (20%) of the estimated cost of System Upgrades as shown in the current System Plan over the

shorter of:

19.2.c (1) (a) the five (5) year period covered by that System Plan; or

19.2.c (1) (b) the period from the date of that System Plan

to the Transfer Date;

19.2.c (2) at any other time two percent (2%) of the estimated cost of

System Upgrades as shown in the current System Plan over

the five (5) year period covered by that System Plan.

19.3 Grantors' Procurement Option

If either the Concessionaire or the Grantors identify any System Upgrades in addition to those identified in the System Plan delivered on the last date before

the start of the last five (5) years of the Concession Period that are necessary or desirable to be made at any point during this period ("Additional System

Upgrades") and:

19.3.a the Concessionaire demonstrates (with reasonable supporting

evidence) to the Grantors' satisfaction that the Concessionaire will be

unable to recover the cost of the necessary investments to effect such

Additional System Upgrades over the remainder of the Concession Period; and

19.3.b the Grantors nevertheless instruct the Concessionaire to proceed with

such Additional System Upgrades,

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then the Grantors shall undertake to be responsible for the cost of the Additional

System Upgrades ("Grantors' Contribution") such that the Concessionaire is

expected to be able to recover its cost (including financing amortization and

costs on debt assuming a one hundred per cent (100%) debt financing) to be

incurred in effecting such Additional System Upgrades over the remaining term

of the Concession solely from such Grantors' Contribution. For the avoidance of

doubt the Grantors Contribution shall be payable in cash as provided in this

Section 19.3 and shall not be subject to the provisions of Sections 20.9 (Grantors

Payment) or 30 (Grantors' Contribution) regarding modes and times of payment.

Any portion of the Additional System Upgrades which the Grantors instruct the Concessionaire to proceed with which are not covered by Grantors’ Contribution,

and which are actually completed by the Concessionaire shall also form part of

the cost of System Upgrades as may be calculated in Schedule 10.

Section 20 CONCESSIONAIRE REVENUES

20.1 Concessionaire Revenue

During the Concession Period, the Concessionaire shall be entitled to collect and

receive the Concessionaire Revenue. The Concessionaire Revenue shall consist

of:

20.1.a Farebox Revenue;

20.1.b Deficit Payments, if any;

20.1.c Grantors Compensation Payments, if any; and

20.1.d Commercial Revenue.

20.2 Farebox Revenue

20.2.a The Concessionaire shall charge, collect and retain fares paid by users of

the System (the "Farebox Revenue").

20.2.b The Farebox Revenue shall be collected by the Concessionaire in accordance with the procedure provided in Schedule 22 (AFCS


20.2.c The Fare Medium shall be supplied to the Concessionaire in accordance with Schedule 22 (AFCS Memorandum of Agreement).

20.2.d The following principles shall apply as to when revenue is recognised as

Farebox Revenue for the purpose of this Concession Agreement:

20.2.d (1) The revenue generated from the sale of Single Journey

Media by the Concessionaire shall accrue directly to the

Concessionaire and constitute Farebox Revenue on the day

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the Single Journey Media is sold by the Concessionaire.

20.2.d (2) The settlement of sums payable to the Concessionaire in respect of the use of the Stored Value Media for travel shall

be completed no later than the following Business Day after

the calendar day on which the transaction was executed. This consolidated revenue shall constitute Farebox

Revenue when so received by the Concessionaire.

20.2.d (3) The Stored Value Media sold by the Concessionaire shall not

constitute Farebox Revenue. When a Stored Value Media is

used, the revenue associated with the use of the Stored Value shall be transferred to the Concessionaire in

accordance with Schedule 22 (AFCS Memorandum of

Agreement).

20.3 Notional Fare, Approved Fare and Actual Fare

20.3.a The Notional Fare is set out in Part 1 of Schedule 9 (Financial Matters)

and shall be adjusted during the Concession Period as set out in Part 1 of Schedule 9 (Financial Matters).

20.3.b The Approved Fare shall be the fares approved by the Grantors (or

other Government Authority having jurisdiction over fare levels) from

time to time. Whenever the Notional Fare is adjusted, the

Concessionaire shall apply to the Grantors for an adjustment of the

Approved Fare so that it is at least equal to the Notional Fare. The

Grantors shall seek to obtain necessary Relevant Consents for such

adjustment. Once approval to any adjustment of the Approved Fare has been obtained, the Grantors shall, at the cost of the Concessionaire,

publish such adjustment in accordance with applicable Legal Requirements. This revision shall become the Approved Fare upon

obtaining the Relevant Consents to the adjustment. For the avoidance of

doubt, (i) a change to the structure of the fares imposed by the Grantors

(for example the imposition of a single boarding charge for journeys

across more than one system) shall, for the purpose of this Concession

Agreement, constitute a change in the Approved Fare and (ii) pending

introduction of AFCS, the stored value cards used on the System

incorporate a "last ride bonus" and this shall be considered part of the

Approved Fare.

20.3.c No later than the date sixty (60) days prior to any scheduled adjustment

to the Notional Fare, the Grantors and the Concessionaire shall

commence the taking of any steps required by Legal Requirements to

obtain an adjustment to the Approved Fare so as to make it equal to the

increase in Notional Fare following such adjustment.

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20.3.d The Concessionaire can determine and charge the Actual Fare which

may be less than the Approved Fare. For the avoidance of doubt:

20.3.d (1) The Concessionaire may, subject to any applicable Legal

Requirements, apply promotional fares and discounted

fares (provided that such Actual Fare shall be lower than the Approved Fare) and shall notify these to the Grantors;

and

20.3.d (2) the Concessionaire shall implement all concessionary fares

imposed by Legal Requirements (such as reduced fares for

children and senior citizens).

20.3.e The Concessionaire shall publish the schedule of proposed revised

Actual Fares in three (3) newspapers of general circulation in Metro

Manila and Cavite, Philippines at least fifteen (15) days but not prior to thirty (30) days before the implementation of any change to the Actual

Fares or in accordance with such manner or frequency as may be

reasonably required by the Grantors.

20.3.f The Concessionaire may not charge any fares or other charges to the

travelling public for any journeys originating during the IDFRP or such period the Grantors substitute, at their absolute discretion, for the

IDFRP.

20.3.g Without prejudice to Section 20.3.e, the Grantors have the right to notify

the Concessionaire of Free Ride Periods additional to the IDFRP (each

an "Additional Free Ride Period"). Within seven (7) days of any

Additional Free Ride Period, the Concessionaire shall provide a written and auditable statement generated from the AFCS to the Grantors

setting out the equivalent of the aggregate actual Farebox Revenue that would have accrued to the Concessionaire during that Additional Free

Ride Period as derived from the actual ridership (in terms of passenger

journeys over such period) had the Concessionaire been able to charge

the Actual Fare during that Additional Free Ride Period. The amount

stated on this statement shall, unless disputed by the Grantors, be added

to the amount payable by the Grantors in the next Balancing Payment.

The Grantors shall have the right to investigate and audit such

statement. In case of a dispute, the Grantors or the Concessionaire, as

the case may be, shall pay the undisputed amount of any such statement delivered by the Concessionaire or the Grantors, as the case may be, as

part of the next Balancing Payment.

20.4 Deficit Payment and Surplus Payment

20.4.a In any period, where the Approved Fare is lower than the Notional Fare,

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the Grantors shall pay to the Concessionaire a Deficit Payment ("DP")

(adjusted to take account of ridership when Concessionaire introduced

promotional fares are in operation as indicated below), to reflect the

difference between the Notional Fare (NF) and the Approved Fare (AF),

computed as follows:

DPn = Rn x (NFATn - AFATn)

where

DPn is the Deficit Payment for the three (3)-month period n to be paid by the Grantors to the Concessionaire

Rn is the actual ridership (in terms of passenger journeys over period n) (but excluding for this purpose (i) all journeys originating during the IDFRP and (ii) in respect of the second (2nd) and subsequent periods after a Deficit Payment first (1st) becomes due, all journeys made on promotional fares or special discounts introduced by the Concessionaire)

NFATn is the Notional Fare computed on the basis of the actual Average Trip (AT) length over the period n where AT is as determined below

AFATn is the Approved Fare computed on the basis of the actual Average Trip (AT) length over the period n where AT is as determined below

AT = TMn / Rn

where TMn is the actual total passenger-kilometres travelled over the period n

20.4.b In any period, where the Approved Fare is higher than the Notional Fare, the Concessionaire shall pay to the Grantors a "Surplus Payment"

("SP"), computed as follows:

SPn = 90% [Rn x (ACFATn - NFATn)]

where

SPn is the Surplus Payment for the three (3) month period n to be paid by the Concessionaire to the Grantors;

ACFATn is the Actual Fare computed on the basis of the actual Average Trip (AT) length over the period where AT is as determined in Section 20.4.a above; and

Rn, NFATn and TMn are as set out in Section 20.4a.

20.4.c For the purposes of the calculation above in respect of the first

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Balancing Payment to be made and the Final Balancing Payment (as

defined in Section 20.6.f) referenced above to a "three (3) month

period" shall be deemed to refer to the period covered by the relevant

Balancing Payment.

20.5 [Concession Payment

The Concession Payments ("Concession Payments") shall be payable by the

Concessionaire to the Grantors in accordance with Part 2 of Schedule 9 (Financial

Matters).] [This Section to be deleted if the Concessionaire has bid a Concession

Payment of zero or has required VGF.]

20.6 Balancing Payment

20.6.a Every quarter (which for this purpose shall be a calendar quarter

provided that the first (1st) such "quarter" shall be the period from and

including the Effective Date until the Calendar Quarter Date first

occurring thereafter), the Balancing Payment (reflecting a netting off of

Deficit Payments, Grantors Compensation Payments, Surplus Payments,

KPI Charges, Concession Payments, payments under Section 18.12 (Variations and Adjustments), and any other payment under this

Concession Agreement expressed to be paid through the Balancing Payments) shall be calculated by the Concessionaire who shall deliver

its calculation and statement to the Grantors quarterly no later than

thirtieth (30th) of each January, April, July and October (i.e. in the month following the end of the quarter in question). Each invoice shall

attach reasonable supporting evidence of all amounts claimed and shall

be determined as set out below.

20.6.b The calculation of the Balancing Payment ("BP") shall be as follows:

BP= (DP+GCmP+GOP) – (SP+KPIC+CCP+COP)

where

DP is the Deficit Payment (if any) payable in respect of the period in

question pursuant to Section 20.4.a (Deficit Payment and Surplus Payment);

GCmP is the Grantors Compensation Payment (if any) payable in

respect of the period in question pursuant to Section 30 (Grantors Compensation);

GOP is the aggregate of any other agreed payments payable by the

Grantors to the Concessionaire in the relevant three (3) month period pursuant to this Concession Agreement;

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SP is the Surplus Payment (if any) payable in respect of the period in

question pursuant to Section 20.4.b (Deficit Payment and Surplus

Payment);

KPIC is the aggregate of KPI Charges payable in respect of the period in

question pursuant to Section 18.5 (Performance Indicators);

CCP is any Concession Payment in respect of the period in question

pursuant to Section 20.5 (Concession Payment); and

COP is the aggregate of any other agreed payments payable by the

Concessionaire to the Grantors in the relevant three (3) month period

pursuant to this Concession Agreement;

20.6.c If BP is a positive number, the Grantors shall, subject to Section 20.9

(Grantors Payment), pay that amount to the Concessionaire ("Grantors

Balancing Payment"). If BP is a negative number, the Concessionaire

shall pay that amount to the Grantors ("Concessionaire Balancing

Payment").

20.6.d On receipt of the Concessionaire's statement under Section 20.6.a and

the reports required under Section 25.2.b(3), the Grantors shall have

twenty (20) days starting on the date on which the reports required

under Section 25.2.b(3) are delivered in which to (i) approve or (ii)

require recalculations and amendments. Both parties shall maintain

sufficient records to enable verification of all invoices. Failure by the

Grantors to comment on the invoice within the above twenty (20)-day

period shall be deemed to constitute approval. Payment shall be made

within seven (7) Business Days of approval (or deemed approval) of the statement, subject to Section 20.9 (Grantors Payment).

20.6.e Where the Grantors have exercised their rights under Section 20.9

(Grantors Payment) to defer any payment then, notwithstanding the

exercise of such rights, the Concessionaire shall be entitled to set off any

amounts payable by it under this Section 20.6 against such amounts.

20.6.f In addition to the Balancing Payment provided in this Section 20, there

shall be a final Balancing Payment made on the earlier of the Transfer

Date or the Termination Date. This Balancing Payment shall cover the period from the last Calendar Quarter Date until the Transfer Date or

the Termination Date (as applicable). No Concession Payment shall be

payable in respect of the period covered by this Balancing Payment.

This Balancing Payment ("Final Balancing Payment") shall be invoiced

no later than twenty (20) days following the Transfer Date or Termination Date (as applicable). The payment under this Final

Balancing Payment shall be reconciled with any payments that may be

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due pursuant to Schedule 10 (Financial Consequences of Termination).

20.7 Commercial Revenue

20.7.a The Concessionaire shall be entitled to make arrangements for and

charge for and collect the Commercial Revenue generated from the

Project subject to Relevant Rules and Procedures.

20.7.b The Concessionaire shall provide the Grantors the information specified

below:

20.7.b (1) a register of all Commercial Agreements entered into by it

setting out in respect of each Commercial Agreement the

counterparty thereto, the scope and purpose thereof, the term, anticipated termination date and any provisions

relating to extension thereof and the anticipated revenue to

be generated therefrom;

20.7.b (2) a quarterly update of the above register to be provided on

the fifteenth (15th) of each March, June, September and

December; and

20.7.b (3) a quarterly statement delivered at the times of the update

of the above register showing the Commercial Revenue (i) accrued and (ii) actually received by the Concessionaire

broken down over each Commercial Agreement.

20.7.c The Concessionaire shall ensure that no Commercial Agreement shall have a term (including renewals thereof) that would extend beyond the

Concession Period and that each Commercial Agreement shall provide

for the assignment or novation of all of the Concessionaire’s rights and

benefits thereunder to the Grantors on the Termination Date at the

Grantors' request or for the termination of the relevant Commercial Agreement (without recourse to the Grantors) on the Termination Date

at the Grantors' request.

20.8 Payment Mechanics

20.8.a All payments to be made by either Party under this Concession

Agreement shall be made (i) in Philippine Peso (PhP) and (ii) by direct

transfer to the account designated by the other Party.

20.8.b Where any payment or part thereof is disputed by either Party in good

faith then:

20.8.b (1) the paying Party shall pay the undisputed amount; and

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20.8.b (2) the amount withheld that is subsequently agreed to be

payable or determined under Section 35 (Dispute

Resolution) to be payable shall bear interest at the Late

Payment Rate from the date payment was withheld until

the date payment was made.

20.8.c Either party (the "first party") shall be entitled to set off any other

amounts due to the first party from the other party against the amount of any payment to be made by the first party.

20.9 Grantors Payment

Subject to Relevant Rules and Procedures, any sum the Grantors are responsible

to pay the Concessionaire in the form of: (i) any Grantors Balancing Payment in

accordance with Section 20.6.c, (ii) any other payment in respect of Grantors

Compensation or (iii) any other payment under this Concession Agreement that is expressed to be subject to this Section 20.9, in each case where the Grantors do

not have the Relevant Consents necessary to make such payments and in each

case less any amount previously set off, shall be paid by the Grantors on the

following basis:

20.9.a first the Grantors shall draw on the Blocked Account to make the payment;

20.9.b after the payment pursuant to Section 20.9.a, the remaining amount

shall be the "Grantors Sum";

20.9.c from the date the Grantors Sum becomes due to the Concessionaire, a

twenty-four (24) month grace period shall be given to the Grantors

before the Grantors Sum becomes due for payment by the Grantors or

until such payment or any portion thereof is recovered by the

Concessionaire through Section 20.6.e (Balancing Payment);

20.9.d interest shall accrue (and be payable by the Grantors) on the Grantors

Sum during the twenty four (24) month grace period at the Late

Payment Rate;

20.9.e if the Grantors do not effect due payment of any Grantors Sum in excess

of ten million Pesos (PhP10,000,000) (Indexed) (together with the

interest accrued) to the Concessionaire by the expiry of the twenty four

(24) month grace period, then the Concessionaire shall be entitled to

immediately terminate this Concession Agreement; and

20.9.f should this Concession Agreement terminate for a reason other than

failure of the Grantors to pay a Grantors Sum during the twenty-four

(24) month grace period, the due payment by the Grantors of the

Grantors Sum (together with the interest accrued) will accelerate and

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be taken into account in determining the consequences of such

termination (including payment of compensation).

20.10 Blocked Account

20.10.a No later than thirty (30) days after the Effective Date, either or both of

the Grantors shall create a budget and/or a fund within the Philippine Treasury or, if permitted by Legal Requirements, establish a bank

account (the "Blocked Account") in that Grantor's name, the

operational arrangements for which shall provide that it may only be

operated as provided in this Section 20.10.

20.10.b Subject to Legal Requirements, the Grantors shall on or before 30 June

2016, transfer a sum of five hundred million Pesos (PhP500,000,000)

(Indexed) to the Blocked Account. Thereafter, subject to Legal

Requirements, the Grantors shall, on every anniversary of the Effective Date, replenish any amount that has been drawn from the Blocked

Account the previous year such that the balance in the Blocked Account

after replenishment is five hundred million Pesos (PhP500,000,000)

(Indexed). Any interest on the balances standing to the credit of the

Blocked Account shall accrue to and be paid to the Grantors.

20.10.c The Grantors may only make withdrawals from the Blocked Account (i)

to make payments due to the Concessionaire under this Concession

Agreement; or (ii) with the Concessionaire's consent; or (iii) if after such withdrawal the remaining balance on the Blocked Account will be

no less than five hundred million Pesos (PhP500,000,000) (Indexed); or

(iv) following the Transfer Date or Payment Date; or (v) upon the

posting of standby letters of credit as provided in Section 20.10.d.

20.10.d The Grantors may replace the cash balance on the Blocked Account by providing irrevocable standby letters of credit in favour of the

Concessionaire with the following characteristics:

20.10.d (1) they shall be callable on demand by the Concessionaire provided that the Concessionaire has first given the

Grantors' ten (10) Business Days notice of its entitlement to

and intention to make such a call;

20.10.d (2) they shall be for a period of one (1) year or such other

period as the Concessionaire may agree and shall be

replaced by the Grantors on the day before expiry; and

20.10.d (3) they shall be issued by a universal or commercial bank

licensed by the Bangko Sentral ng Pilipinas and acceptable

to the Concessionaire.

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Where the Grantor has substituted the cash balances with such letters of

credit, all references in this Section 20.10 (Blocked Account) to the

balance standing to the credit of the Blocked Account shall be to the

aggregate of the cash balance of the Blocked Account and the face

amount (net of any calls thereon) of all letters of credit issued pursuant

to this Section 20.10.d.

20.11 Taxes

20.11.a Defined Terms

In this Section 20.11, the following words shall have the following

meanings:

"Commercial Assets" means (i) the free standing assets constructed on

the Project Land which are used purely for the purpose of generating

Commercial Revenue ("Free Standing Commercial Assets") and the

Project Land where such Free Standing Commercial Assets are

constructed or located; (ii) assets which are part of the Rail Project

Assets and used for the purpose of the generation of Commercial Revenue (for example, includes separate floors of the Stations used as a

shopping mall, but shall not include kiosks, any banner on the Stations, small stand alone shops on the Stations), which shall be identified by the

Concessionaire in accordance with Section 20.11.c(3)(b); and (iii)

vacant Project Land intended to be used for the sole purpose of the generation of Commercial Revenue.

"Declaration" means any declaration that the Grantors and/or the

Concessionaire are required to make with the relevant local Government Authority in relation to the Real Property Tax on the Rail

Project Assets and the Commercial Assets in accordance with Relevant Rules and Procedures, including a statement declaring the market value

of the properties, whether previously declared or undeclared, taxable or

exempted.

"Rail Project Assets" means (i) the System including all assets used for

generating Commercial Revenue which are incidental to the System (for

example, kiosks on the Stations, shops in the Stations, advertising

boards on the walls of the Stations and LRVs); (ii) the Project Land

where the System and such assets as aforesaid are constructed or

located; and (iii) vacant Project Land intended to be used for the sole

purpose of development of the System.

"Real Property Tax" means the real property tax and the Special Education Fund levy which a relevant local Government Authority may

impose in accordance with Relevant Rules and Procedures.

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20.11.b General Taxes

Save as stated in Section 20.11.c (Responsibility for Real Property Tax), the Concessionaire shall be liable for and shall be responsible for paying

as and when the same shall become due, all national and local taxes,

which may accrue at any time during the Concession Period in connection with the implementation of the Project.

20.11.c Responsibility for Real Property Tax

20.11.c (1) The Grantors shall be liable and responsible for paying as

and when the same shall become due, all Real Property

Taxes, which are payable at any time in respect of the Rail

Project Assets.

20.11.c (2) The Concessionaire shall be liable and responsible for

paying as and when the same shall become due, all Real

Property Taxes, which are payable at any time during the

Concession Period on the Commercial Assets.

20.11.c (3) No later than thirty (30) days after the Effective Date the

Concessionaire shall prepare and submit to the Grantors for

approval the following lists:

20.11.c (3) (a) a list of the Commercial Assets;

20.11.c (3) (b) a list of those Rail Project Assets which are

either used exclusively for provision of the Services or where any use thereof for the

generation of Commercial Revenue is

wholly incidental to their use for the

provision of the Services (such Rail Project

Assets shall include all LRVs, all Stations and all of the Railway Infrastructure and

Railway Systems); and

20.11.c (3) (c) in the case of other Rail Project Assets (such as buildings used partly for the

performance of the Services and partly for

the generation of Commercial Revenue) an

estimate of the percentage of the value of

each such Rail Project Asset attributable to

(1) the provision of the Services and (2) to

the generation of the Commercial Revenue.

Each such list shall be updated (i) annually and (ii) fifteen

(15) days after any significant new asset is added to the

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System and/or to the Commercial Business. Each such list

shall be accompanied by supporting documentation and in

the case of this paragraph 20.11.c (iii) by a detailed,

reasoned justification for the split.

20.11.c (4) The Grantors shall have fifteen (15) days in which to approve or disapprove any list submitted by the

Concessionaire. If the Grantors disapprove any list, they shall provide supporting documents and a detailed

justification for the disapproval. If the Grantors disapprove

any list, the Parties shall negotiate together for fifteen (15)

days to determine the correct entry, failing which the

matter may be referred to the Expert pursuant to Section

35 (Dispute Resolution). Failure by the Grantors to respond on a list submitted by the Concessionaire shall constitute

deemed approval thereof. Once a list has been approved (or

deemed approved) it shall be initialled by the Parties and thereafter shall be in the Agreed Forms.

20.11.c (5) If any Real Property Tax is assessed on and/or collected

from a Party who is not liable and/or responsible for paying

the Real Property Tax in accordance with this Section 20.11,

then the Party who is liable and responsible for paying the Real Property Tax in accordance with this Section 20.11

shall either directly pay the Real Property Tax to the

Government Authority in the manner and within the period

required by law or reimburse the Real Property Tax paid or

payable by the other Party to the Government Authority

upon the latter Party’s demand.

20.11.d Tax Declaration

20.11.d (1) The Grantors shall be responsible for making all Declarations for any Real Property Tax in relation to the

Rail Project Assets. The Grantors shall, within the applicable

period prescribed by Relevant Rules and Procedures, make and/or update the Declaration with the relevant

Government Authority stating among others that (i) the

Grantors are the owner of the Rail Project Assets and (ii)

the Grantors are liable and responsible for paying the Real

Property Tax, if any, on the Rail Project Assets. The

Concessionaire shall within a period of ten (10) days of

request by the Grantors provide all information in relation

to the Rail Project Assets required by the Grantors to make the relevant Declarations.

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20.11.d (2) The Concessionaire shall be responsible for filing all

Declarations in relation to the Commercial Assets. The

Concessionaire shall within the applicable period

prescribed by Relevant Rules and Procedures, make and/or

update the Declaration with the relevant Government

Authority stating among others that the Concessionaire is

liable and responsible for paying the Real Property Tax on

the Commercial Assets during the Concession Period.

20.11.e Payment of Real Property Tax

The Grantors shall pay all Real Property Tax in respect of the Rail Project Assets provided that in the case of those Rail Project Assets

described in Section 20.11.c(3)(c) the Concessionaire shall on demand

of the Grantors pay to the Grantors or to the relevant local Government

Authority (as the Grantors may direct) that proportion of Real Property

Tax attributable to the percentage of use of the relevant Rail Project

Asset for the generation of Commercial Revenue as determined

pursuant to Sections 20.11.c(3) and 20.11.c(4).

20.11.f Indemnification

20.11.f (1) The Grantors shall indemnify, defend and keep the

Concessionaire harmless against all costs, expenses,

charges, loss, damages, claims, demands or actions of whatsoever nature suffered or sustained by the

Concessionaire by reason of (i) the failure of the Grantors to

make any Declaration that they are responsible for making

pursuant to Section 20.11.d, (ii) subject to the provisions of

Section 20.11.e, the failure of the Grantors to pay any Real

Property Tax on the Rail Project Assets, and (iii) subject to

the provisions of Section 20.11.e, collection of the Real

Property Tax from the Concessionaire in respect of any Rail Project Asset by a local Government Authority (a "Rail

Project Asset Tax Claim").

20.11.f (2) Upon receipt of a Rail Project Asset Tax Claim by the

Concessionaire, the Concessionaire shall no later than

fifteen (15) days after receipt thereof, deliver a written

notice informing the Grantors of the Rail Project Asset Tax Claim. No later than fifteen (15) days after receipt of such

notification the Grantors shall give directions to the

Concessionaire as to how the Grantors wish the

Concessionaire to respond. This direction may (i) indicate

that the Grantors shall themselves pay the relevant Real

Property Tax or (ii) direct the Concessionaire to dispute the

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assessment of any such Real Property Tax. The

Concessionaire shall comply with any such direction issued

by the Grantors and the Grantors shall keep the

Concessionaire indemnified against any and all costs,

expenses, charges, losses and damages claims, demands or

actions suffered or sustained by the Concessionaire in

relation to such direction.

20.11.f (3) Where Grantors have directed the Concessionaire to

dispute any such assessment, the Grantors may assume the

defence of the suit, action, claim or proceeding against the

relevant local Government Authority in respect of the

relevant Rail Project Asset Tax Claim. If requested by the

Grantors, the Concessionaire shall co-operate to the extent reasonably requested (at the expense of the Grantors) in

the defence of any suit, action, claim, proceeding or

investigation.

20.11.f (4) If the Grantors have not been able to mitigate or avoid the

Rail Project Asset Tax Claim against the Concessionaire

within the time period provided in the Rail Project Asset

Tax Claim or the Relevant Rules and Procedures and the

Rail Project Asset Tax Claim has become due and payable by the Concessionaire, then the Concessionaire may pay the

Rail Project Asset Tax Claim but, if the Grantors so direct,

under protest and reserving the right to appeal against the

Rail Project Asset Tax Claim. The Concessionaire shall

confirm in writing to the Grantors its intention to pay any

such claim.

20.11.f (5) Upon the payment of any Rail Project Asset Tax Claim, the

Concessionaire shall immediately provide to the Grantors

the tax payment documents. The Grantors shall upon

receipt of the relevant tax payment document confirm to

the Concessionaire within a period of thirty (30) days

whether they will refund the Rail Project Asset Tax Claim

paid by the Concessionaire to the Government Authority by

means of an immediate payment or if it will make the payment to the Concessionaire in accordance with 20.9

(Grantors Payment).

20.11.f (6) Notwithstanding the above, if the Concessionaire fails to

comply with any reasonable requirements of the Grantors

in relation to the Rail Project Asset Tax Claim, then the Grantors shall not be liable to refund or indemnify any Rail

Project Asset Tax Claim assessed against the Concessionaire

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to the extent such loss is suffered due to non-compliance

with the Grantors request.

20.12 Viability Gap Funding

20.12.a The Grantors shall pay the Viability Gap Amount to the Concessionaire

on achievement of the following milestones ("Funding Stages"):

20.12.a (1) twenty percent (20%) of the Viability Gap Amount upon the

later of the achievement of the Effective Date or the

disbursement of twenty percent (20%) of the Debt;

20.12.a (2) fifty percent (50%) of the Viability Gap Amount upon

completion and commissioning of the Railway Infrastructure Works and Railway System Works from

Baclaran Station to Dr Santos Station to a level as certified

by the Independent Engineer that they are ready for trial

running. However, the Concessionaire shall not have any

obligation to commence commercial operation;

20.12.a (3) twenty percent (20%) of the Viability Gap Amount upon

completion and commissioning of the Railway

Infrastructure Works and Railway System Works from Dr

Santos Station to Niyog Station to a level as certified by the

Independent Engineer that they are ready for trial running.

However, the Concessionaire shall not have any obligation

to commence commercial operation;

20.12.a (4) ten percent (10%) of the Viability Gap Amount upon the

issue of either the last Provisional Acceptance Certificate (if

more than one Provisional Acceptance Certificate is issued)

or, if no Provisional Acceptance Certificate is issued, the

Final Acceptance Certificate in respect of the Cavite

Extension.

20.12.b Upon the achievement of the first Funding Stage requirements as stated

in Section 20.12.a(1), the Concessionaire shall provide all the necessary

documents to the Grantors to satisfy them that the first Funding Stage

requirements have been achieved. No later than twenty (20) days thereafter, the Grantors shall confirm whether they are satisfied that the

first Funding Stage has been achieved or not. Any dispute as to the

achievement of the first Funding Stage shall be referred to an Expert in

accordance with Section 35.3 (Expert). No later than forty-five (45) days

from the confirmation by the Grantors or determination by the Expert that the first Funding Stage has been achieved, the Grantors shall pay

the portion of the Viability Gap Amount attributable to the first Funding

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Stage to the Concessionaire.

20.12.c Upon the achievement of each of the second and third Funding Stage requirements as stated in and in accordance with Section 20.12.a(2) and

20.12.a(3) respectively, the Concessionaire shall request the

Independent Engineer to certify that the Works for the relevant Funding Stage have been completed. The Independent Engineer shall no later

than twenty (20) days after the receipt of notice from the Concessionaire, based on the Reports submitted to the Independent

Engineer pursuant to Section 25.2.b (Reports) and on its own inspection,

confirm if the relevant Works meet the standards prescribed in Sections

20.12.a(2) and/or 20.12.a(3). If the relevant Works meet these

standards, then the Independent Engineer shall issue a success

certificate ("VGA Payment Certificate"). The Concessionaire shall provide the Grantors with the VGA Payment Certificate, along with a

letter of demand stating the amount of the Viability Gap Amount to be

paid by the Grantors. The Grantors shall, no later than forty-five (45) days after the receipt of the above letter, pay the applicable portion of

the Viability Gap Amount to the Concessionaire.

20.12.d Upon the achievement of the last Funding Stage requirements as stated

in Section 20.12.a(4), the Concessionaire shall provide the Grantors

either with the Provisional Acceptance Certificate or the Final Acceptance Certificate, as the case may be, along with a letter of demand

stating the amount of the Viability Gap Amount to be paid by the

Grantors. The Grantors shall, no later than forty-five (45) days after the

receipt of the above letter, pay the applicable portion of the Viability

Gap Amount to the Concessionaire.

20.12.e The Grantors shall not be entitled to apply the payment mechanism

provided in Section 20.9 (Grantors Payments) in respect of payments

under this Section 20.12.

20.13 Power Generation Cost

20.13.a The Concessionaire shall install separate meters for the System and the

Commercial Business.

20.13.b Every year the Concessionaire may calculate and claim, if any, the

Differential Generation Cost for the System in accordance with the

procedure provided in Part 3 of Schedule 9 (Differential Generation Cost).

20.14 Existing System not in compliance with Legal Requirements

20.14.a If any part of the seismic protection or fire protection elements of the

Existing System is believed by the Concessionaire not to be in compliance

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with the Legal Requirements as of the Effective Date, then the

Concessionaire shall give the Grantors notice of this belief no later than

thirty (30) days after the Effective Date. Any such non-compliance shall

be referred to as "Seismic/Fire Defects" for the purpose of this Section

20.14. The Grantors may require the Concessionaire to provide further

evidence as to whether such defects do in fact represent non-compliance

with the above Legal Requirements and the Concessionaire shall do so

(and such evidence may include comments of the Concessionaire's

proposed insurance providers). The Grantors shall consider any such

evidence and if the Grantors do not agree that the defects in question represent non-compliance, the matter shall be referred to dispute

resolution as contemplated in Section 35 (Dispute Resolution).

20.14.b The Grantors may, at their own cost, require the Concessionaire to rectify the aforesaid defects.

20.14.c If no rectification of the Seismic/Fire Defects has been required by the

Grantors and subsequently damage occurs to the Existing System and the

insurers, in accordance with the terms of the relevant insurance policy,

are entitled to withhold insurance coverage solely because of the

existence of the Seismic/Fire Defects, then the Grantors shall

compensate the Concessionaire for the amount of insurance proceeds

they would have received but for the Seismic/Fire Defects. This compensation shall be used by the Concessionaire solely in the

reinstatement of the Existing System.

Section 21 INDEPENDENT ENGINEER

21.1 General

The Grantors shall appoint an independent engineer of appropriate international standing (including ISO certification), having not less than ten (10) years'

relevant experience to carry out the functions outlined in Part 1 of Schedule 7


21.2 Appointment Process

Subject to all Relevant Rules and Procedures, the process of appointment of the

Independent Engineer is as follows:

21.2.a DOTC has initiated the procurement process for the Independent

Engineer in accordance with Relevant Rules and Procedures and its own

internal guidelines;

21.2.b on the Signing Date, the DOTC shall provide the Concessionaire a short-

list of three (3) candidates for selection of the Independent Engineer. The

DOTC has prepared the short-list in accordance with the Relevant Rules

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and Procedures for selecting consultants;

21.2.c on or before the date that is five (5) Business Days after finalizing the short-list of candidates, the DOTC shall proceed with the procurement of

the Independent Engineer by inviting proposals from the short-listed

consultants. The DOTC shall then evaluate the proposals and choose the Independent Engineer. The DOTC shall complete the procurement

process of the Independent Engineer on or before the date that is sixty (60) days after the Signing Date;

21.2.d upon choosing the Independent Engineer, the DOTC shall notify the

Concessionaire of its proposed award of the contract (substantially in the form of Schedule 18 (Independent Engineer – Form of Appointment)) and

the Concessionaire shall forthwith send written acknowledgement of the

proposed award to the DOTC. Upon receipt of the notice from the DOTC

and issue of its acknowledgement, the Concessionaire shall sign the

contract of the Independent Engineer to acknowledge the appointment

and the terms and conditions of the appointment of the Independent

Engineer; and

21.2.e as part of the competitive bidding process, the prospective Independent

Engineer shall be required by the Grantors and the Concessionaire to

submit to them a complete disclosure statement specifying all past,

present and anticipated or planned future relationships of the prospective

Independent Engineer to the Project and with every person who has or is

likely to have a connection with it, confirming that there is or is not likely

to be any conflict of interest.

21.3 Fees of Independent Engineer

The fees and expenses of the Independent Engineer shall be paid as to fifty percent (50%) by the Grantors and as to fifty percent (50%) by the

Concessionaire.

21.4 Findings of Independent Engineer

Any certification of the Detailed Design and any certification as to testing by the

Independent Engineer shall be binding on the Parties.

21.5 Replacement of Independent Engineer

If the contract under which the Independent Engineer is appointed is

terminated:

21.5.a the Grantors must appoint a replacement consultant as the Independent Engineer as soon as reasonably practicable in accordance with a process

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which is substantially the same as the process set out in Section 21.2

(Appointment Process); and

21.5.b the terms of the appointment of the replacement consultant shall be the

same as those set out in Schedule 18 (Independent Engineer – Form of

Appointment).

21.6 Absence of Independent Engineer

If the Independent Engineer is required to provide any certification under this

Concession Agreement (for example the certification of the acquisition of any

ROW Required for Remedial Work under Section 11.3 (Other ROW)) and the

contract of the Independent Engineer has either expired or been terminated,

then the Grantors shall provide the certification in question within the same

period as the Independent Engineer would have been required to provide that

certification. If the Concessionaire disagrees with the certification of the Grantors, then the Concessionaire shall inform the Grantors within a period of

ten (10) days of receipt of the certification, following which the matter shall be

determined in accordance with the dispute resolution procedures provided in

Section 35 (Dispute Resolution).

Section 22 INSPECTION AND MONITORING

22.1 Grantors' right to inspect

Either of the Grantors (or any consultant engaged by them) and/or the

Independent Engineer shall, upon reasonable notice being given to the

Concessionaire, be entitled to inspect, check or test:

22.1.a the extent (including as to quality) of the provision of any Service; and

22.1.b any part or parts of the System and the Project Assets,

at any time after the Effective Date and during the Concession Period (a "Service

Inspection").

22.2 Minimum disruption and Safety

The Grantors shall procure that their consultant or the Independent Engineer

shall, during a Service Inspection:

22.2.a use all reasonable endeavours to minimise any disruption to the

provision of the Services; and

22.2.b comply with all safety and security procedures and requirements of the

Concessionaire.

22.3 Concessionaire obligation

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The Concessionaire shall:

22.3.a ensure that each of the Grantors, their consultants and the Independent Engineer are given sufficient access to any relevant part of the System for

the purpose of each Service Inspection;

22.3.b provide such assistance, equipment and materials as may be reasonably required to carry out each Service Inspection; and

22.3.c not cover up any part of the System or otherwise make any part of the

System inaccessible during a Service Inspection.

22.4 Rectification

The Concessionaire shall promptly at its own cost correct any breach of any of its obligations which is brought to its notice by the Grantors, their consultants or

the Independent Engineer.

22.5 No Relief from Liability

No review by the Grantors or by the Independent Engineer shall relieve the

Concessionaire of any of its obligations under this Concession Agreement.

Section 23 GRANTORS UNDERTAKINGS

23.1 Cooperation with Finance Parties

23.1.a The Grantors shall cooperate with the Concessionaire in relation to the

arrangement of its financing for the Works and/or the System Upgrades

by assisting in the due diligence to be carried out by the Finance Parties.

23.1.b The Grantors shall, when requested by the Concessionaire (but only when the Security Interest in question is a Permitted Security Interest) enter

into the Acknowledgment and Consent Agreement to consent to the grant

of Permitted Security Interests and shall comply with their obligations

thereunder.

23.1.c The Grantors shall permit the Finance Parties to exercise their rights under Section 31.3 (Finance Parties' Step-in Rights).

23.2 Tax Exemption Incentives

The Grantors shall provide assistance requested by the Concessionaire in

relation to its registration, application and qualification for tax exemptions and

other investment incentives allowed under the BOT Law and Omnibus

Investment Code.

23.3 Security Service

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The Grantors shall cooperate with the Concessionaire to ensure that the

arrangements between the Grantors and the appropriate unit/s of the Philippine

National Police for the provision of security services and policing continue to

apply after the Effective Date for the benefit of the Concessionaire.

23.4 Relevant Consents

The Grantors shall, on request by the Concessionaire (but without prejudice to

the Concessionaire's obligation to maintain all Relevant Consents required)

provide the Concessionaire with such reasonable and lawful assistance as the

Concessionaire may request in liaising with national or local Government

Authorities to assist the Concessionaire to obtain such required Relevant Consents.

The Concessionaire shall keep the Grantors informed of its applications to all

Government Authorities for the Relevant Consents. The Concessionaire shall inform and provide a copy of the application to the Grantors the day it makes the

application to the Government Authorities for the Relevant Consents. If the

Concessionaire is unable to procure any Relevant Consents from any local or

national Government Authority within a period of thirty (30) days or such

period as may be prescribed under the Relevant Rules and Procedure after

fulfilling all the requirements under the Relevant Rules and Procedure and so

informs the Grantors of the same requesting the Grantors to procure such

Relevant Consents, then the Grantors shall procure such Relevant Consents and

the failure of the Grantors to obtain such consents within a period of sixty (60)

days from receipt of the Concessionaire's request to the Grantors to obtain such

Relevant Consents shall, for the purpose of this Concession Agreement, be deemed to constitute a Lapse in Relevant Consent (National).

23.5 Non-discrimination

The Grantors shall take reasonable steps within their power to implement a fair ,

reasonable and non-discriminatory regime for public transportation systems in

Metro Manila and Cavite Province.

23.6 Sovereign Immunity

Each Grantor hereby irrevocably waives and agrees not to claim (to the fullest

extent permitted under Legal Requirements) any immunity to which it or its property may, at any time be or become entitled to, from any legal action, suit or

proceeding in any jurisdiction including sovereign immunity, immunity from

service of process, immunity from jurisdiction of any court, tribunal or arbitral

body, and any immunity of any of its property from attachment prior to

judgment or arbitral award or from execution of a judgment or arbitral award , except in respect of the following, in respect of which the Grantors do not waive

any immunity:

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23.6.a in respect of assets which are (i) used by a diplomatic or consular mission

of the Republic of the Philippines, (ii) of a military character and under

the control of a military authority or defence agency of the Republic of the

Philippines, or (iii) located in the Philippines and dedicated to a public or

governmental use (as distinguished from patrimonial assets or assets

dedicated to commercial use); or

23.6.b in respect of special accounts with banks outside the Republic of the Philippines which are established pursuant to binding agreements

between the Republic of the Philippines and its lenders, are administered

by paying agents, and are pledged and used solely to service the Republic

of the Philippines' external debt to such lenders.

Section 24 PROJECT MANAGEMENT

24.1 Establishment and purpose

The Parties shall on or before the date thirty (30) days after the Signing Date

appoint representatives to a steering group to:

24.1.a keep under review the progress of the Parties in relation to the

achievement of the overall purpose of the Project; and

24.1.b be the principal means of regular communication between the Parties in relation to the Project.

24.2 Representation

The steering group shall consist of up to four (4) representatives of the Grantors

and up to four (4) representatives of the Concessionaire. Each party shall notify

the other of:

24.2.a the names and communication details of its representatives and of any

alternate representative; and

24.2.b any change of its representative or their communication details.

24.3 Meetings

24.3.a Meetings

The steering group shall meet as provided in Schedule 5 (Meetings) at least once every six (6) months or more frequently as required by the

Grantors (but no more frequently than once a month). Meetings shall take

place within Metropolitan Manila or such other place as the Grantors and

the Concessionaire shall agree. Any regulator of metropolitan rail

systems, if there is one, shall be entitled to attend any such meetings as an

observer.

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24.3.b Scheduled meetings

A secretary shall be appointed by the Parties who shall convene meetings. At the first steering group meeting to be held after the Effective Date the

steering group shall agree on a schedule of meetings for the remainder of

the year. The last such scheduled steering group meeting shall agree a schedule of meetings for the following year (each a "Scheduled

Meeting").

24.3.c Notification of meetings

Each of the Parties shall be given a written reminder (by the secretary) of

each Scheduled Meeting not less than five (5) Business Days before the

date of the meeting. Any other meetings of the steering group shall be

convened by the secretary within five (5) Business Days of a written

request for a meeting received from either Party.

24.3.d Information to be provided with notice of meeting

A notice calling a Scheduled Meeting (including a notice issued as a

reminder of a Scheduled Meeting) shall be accompanied by an agenda and

such supporting information as it is reasonable for each Party to have

provided to it to enable it:

24.3.d (1) to assess in reasonable detail the proposals to be made and

other subject matter to be considered at the meeting; and

24.3.d (2) to determine the advice and assistance which may be necessary for that Party to obtain before the meeting and the

personnel who should attend it.

Section 25 RECORDS, REPORTING AND AUDIT

25.1 General Obligations with regard to information

25.1.a Recording of information

Throughout the Concession Period, the Concessionaire shall collect,

compile, create and maintain, and make available to the Grantors,

information concerning the performance of its obligations under this Concession Agreement, in accordance with the following terms of this

Section 25 (Records, Reporting and Auditing).

25.1.b Standard of accuracy

The information in question shall, to the greatest extent reasonably

practicable, be:

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25.1.b (1) true, up-to-date and complete; and

25.1.b (2) such as shall permit any user of such information to make sound and reliable decisions in connection with the operation

and maintenance of the System in accordance with Prudent

Industry Practice, all Relevant Rules and Procedures and the terms of this Concession Agreement, and to plan its affairs

with a reasonable degree of assurance.

25.1.c Timing

Except where this Section 25 expressly provides for a particular period

within which information is to be given to the Grantors, the

Concessionaire shall provide the information in question to the Grantors

not later than fifteen (15) days after the end of each Calendar Quarter

Date starting with first Calendar Quarter Date occurring after the Effective Date.

25.1.d Right of access

In addition to the Grantors' rights under this Section 25 to receive

information on a regular or specified basis, the Concessionaire shall:

25.1.d (1) ensure that the Grantors, or any authorised representative of the Grantors, is given access to the records and premises of

the Concessionaire to inspect the information of the Project;

and

25.1.d (2) if so requested by the Grantors, such copies shall be given to

the Grantors in such form and using such means (either or

both of which may be electronic) as the Grantors shall

reasonably specify.

25.2 Information to be collected etc.

25.2.a Financial information

25.2.a (1) The Concessionaire shall give to the Grantors:

25.2.a (1) (a) as soon as they become available, and in any event within one hundred and twenty

(120) days after the end of each financial

year of the Concessionaire, copies of:

25.2.a (1) (b) the audited financial statements, and all

supporting documents, which the

Concessionaire is required to file with the

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Philippine Securities and Exchange

Commission in accordance with the

applicable financial reporting standards

for the Concessionaire; and

25.2.a (1) (c) a calculation of the Concessionaire's Leverage Ratio as at the end of that

financial year (provided that the Concessionaire shall not be obliged to

provide this calculation in respect of any

financial year starting after the Extension

Completion Date).

25.2.a (2) during the Lock Up Period as soon as they become

available, the audited consolidated financial statements of

each Shareholder for each of their accounting periods

commencing after the Signing Date;

25.2.a (3) [as soon as they become available and in any event within

one hundred and twenty (120) days after the end of each

financial year of the Facility Operator, the audited,

consolidated financial statements of the Facility Operator.]

25.2.a (4) as soon as they become available and in any event within

forty-five (45) days of the end of the relevant half-year, the un-audited financial statements of the Concessionaire for

the first half of each financial year of the Concessionaire;

25.2.a (5) as soon as they become available, and in any event within forty-five (45) days of the end of each accounting quarter,

the Concessionaire’s un-audited management accounts as at the end of that accounting quarter, including:

25.2.a (5) (a) a profit and loss account;

25.2.a (5) (b) a balance sheet;

25.2.a (5) (c) a cash flow statement; and

25.2.a (5) (d) a management commentary,

in such form as the Grantors may reasonably specify in a

notice given to the Concessionaire. The Concessionaire may

elect, by notice to the Grantors not later than sixty (60)

days before the beginning of a Contract Year, to provide the information in question on a fiscal year basis instead of a

Contract Year basis.

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25.2.a (6) Without limiting the Grantors' rights to make requirements

as to the form of all financial statements delivered under

this Section 25.2.a, all statements of profit and loss and all

cashflow statements shall account separately for

Commercial Revenue, Farebox Revenues and any net

Balancing Payments received or made over the relevant

period (and shall include separate statements of the

Farebox Revenue and Commercial Revenue received over

the period covered by the relevant financial statements)

and each balance sheet shall account separately for the fixed assets purely attributable to the Commercial Business.

25.2.b Reports

25.2.b (1) From the Construction Start Date to the Extension

Completion Date, the Concessionaire shall submit to the

Grantors (with a copy to the Independent Engineer) on a

monthly basis no later than thirty (30) days after the end of

each month a Report on Works in the format contained in

Part 1 of Schedule 20 (Reports) and containing the

information required therein.

25.2.b (2) From time to time as applicable from the Extension

Completion Date to the Transfer Date, upon commencement

of any System Upgrades and Additional System Upgrades,

the Concessionaire shall submit to the Grantors on a

monthly basis no later than thirty (30) days after the end of each month a Report on Works covering such System

Upgrades and Additional System Upgrades in the format contained in Part 1 of Schedule 20 (Reports) and containing

the information required therein.

25.2.b (3) From the Effective Date to the Transfer Date (or, if earlier, the Termination Date) the Concessionaire shall submit to

the Grantors at the end of every calendar quarter, no later

than thirty (30) days after each Calendar Quarter Date a Report on Operations and Maintenance in the format

contained in Part 2 of Schedule 20 (Reports) and containing

the information required therein.

25.2.b (4) From the commencement of the rectification of the

Structural Defects until the completion of the rectification

of the Structural Defects in accordance with Section 5.8

(Structural Integrity of the Existing System), the

Concessionaire shall submit to the Grantors (with a copy to

the Independent Engineer) on a monthly basis no later than

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thirty (30) days after the end of each month a Report on the

rectification work completed in the format set out in Part 1

of Schedule 20 (Reports) and containing the information

required therein.

25.2.b (5) The first Report on Works shall be submitted no later than forty-five (45) days after the Construction Start Date. The

first Report on Operations and Maintenance must be submitted no later than one hundred and twenty (120)

days after the Effective Date.

25.2.b (6) The Grantors can modify the required format of the Report on Works and/or Report on Operations and Maintenance as

they think fit at any time and the Concessionaire shall

comply with such request.

25.2.c Standard Requirements

In relation to all periods after the Effective Date, the information to which

Section 25.1 (including the reports required under Section 25.2.b) applies is, in addition:

25.2.c (1) the planned activities and volumes of work on or in

connection with the System for its operation, maintenance

and upgrade, including any work to be done by a person

other than the Concessionaire (for the avoidance of doubt

including all work carried out pursuant to the Operation

Plans and System Plans) ("Relevant Activities");

25.2.c (2) the expected effect of the Relevant Activities on the quality

and capability of the System, the quality of Services and the

ability of the Concessionaire to provide improved services

to users of the System;

25.2.c (3) the expected effect of the Relevant Activities on the ability

of the Concessionaire to perform its obligations under this

Concession Agreement;

25.2.c (4) a plan for identifying and managing the material risks

which are likely to be faced in carrying out the Relevant

Activities;

25.2.c (5) a statement of the Concessionaire’s expected expenditure in

carrying out the Relevant Activities;

25.2.c (6) the safety information specified in Section 25.3 (Safety

Information);

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25.2.c (7) such other information in relation to the Concessionaire’s

performance of its obligations under this Concession

Agreement as the Grantors shall reasonably require and

specify in a written notice given to the Concessionaire,

and, so far as practicable, the information in question shall be given to the Grantors in the Agreed Form.

25.2.d Ridership

The Concessionaire shall provide to the Grantors on a weekly basis

information derived from the AFCS (upon installation of the AFCS) setting

out the ridership on the System for each day in the preceding week. Such

reports shall be provided no later than 16:00 hours on the Tuesday after

the end of the week (Monday – Sunday) to which it refers. Such

information shall be in the level of detail reasonably required by the Grantors to enable the Grantors to make calculation of the payment to be

made under Section 20 (Concessionaire Revenue).

25.2.e Additional Requirements in Construction Period

In relation to the period between the Construction Start Date and the

Extension Completion Date, the information to which Section 25.1

(General Obligations with regard to information) applies is, in addition:

25.2.e (1) the progress which has been made and is likely to be made

in carrying out the Works;

25.2.e (2) the extent to which difficulties have been encountered in

that respect;

25.2.e (3) the likelihood that the Works Timetable will be met, and, if it is not likely to be met, the extent to which it will be

exceeded, the Concessionaire’s expectations as to the consequences of the timetable not being met and, in each

case, its reasons; and

25.2.e (4) the safety information specified in Section 25.3 (Safety

Information),

and the information in question shall be given to the Grantors in a form

approved in advance by the Grantors.

25.3 Safety Information

25.3.a General

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The safety information to which Section 25.1 (General Obligations with

regard to information) applies is information as to:

25.3.a (1) any accident, serious injury or fatality occurring during the

Works;

25.3.a (2) any accident, dragging, serious injury or fatality occurring during operation of the System; and

25.3.a (3) any claim or action against the Concessionaire or any of its

Subcontractors which may be likely to have a material

adverse effect on the Project.

25.3.b Proactive Provision

The safety information specified in Section 25.3.a must be given to the

Grantors as soon as reasonably practicable after and in any event no later

than five (5) days after the occurrence of the event in question.

25.4 Other Information, Advice and Assistance

Without prejudice to the generality of Section 25.1 (General Obligations with

regard to information) to 25.3 (Safety Information), the Concessionaire shall

provide the Grantors with, or procure that the Grantors are provided with

information, advice and assistance reasonably required by the Grantors:

25.4.a which is sufficient to enable the Grantors to determine:

25.4.a (1) the application of any Relevant Rules and Procedures, or

proposed Relevant Rules and Procedures, to or in connection with the System;

25.4.a (2) whether it is or may be necessary or expedient for any change

to be made to:

25.4.a (2) (a) any aspect of the design, construction, testing,

commissioning, delivery or operation of the

components of the System;

25.4.a (2) (b) any aspect of any application which has been, is

being, will be or should be made for a Relevant

Consent in respect of the System; or

25.4.a (2) (c) any proposals in respect of any of them; and

25.4.a (3) whether any person has failed, is or may be failing or likely to fail:

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25.4.a (3) (a) to carry out or procure the carrying out of the

design, construction, testing, commissioning,

delivery or operation of the components of the

Cavite Extension; or

25.4.a (3) (b) to obtain any applicable Relevant Consents,

in the most efficient and economic manner, including in

relation to opportunities which any such person had, has or

may have to improve the quality of the System or any aspect of

that person’s participation in the achievement of the purpose

of the Project; and

25.4.b in relation to any dealings which the Concessionaire (or any person on its

behalf) may have, have had, ought or proposes to have with any

Government Authority in relation to the design, construction, testing, commissioning, delivery, operation and maintenance of the System.

Section 26 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

26.1 Concessionaire representations and warranties

The Concessionaire hereby represents and warrants the following:

26.1.a It has [and the Facility Operator has] the financial, technical and legal

standing (or has entered into subcontracts with persons having such

technical standing), resources and capacity to perform its obligations


26.1.b Its Shareholders have the financial standing, resources, and capacity to

fund the obligations of the Concessionaire to the extent they are not

financed through debt.

26.1.c No Concessionaire Event of Default has occurred and is continuing.

26.1.d It has not and no Facility Operator has engaged in any other business or activity, incurred any liabilities on or before the date of this Concession

Agreement, other than those incurred in connection with the

implementation of the Project and it does not have subsidiaries.

26.1.e It is and any Facility Operator is duly organized and existing and in good

standing under the laws of the Republic of the Philippines and has the

requisite legal power, authority and right to carry out the business which it now conducts or proposes to conduct.

26.1.f It has full legal power, authority and right to execute and deliver this

Concession Agreement and to perform its obligations thereunder, and has

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taken all necessary corporate legal action and approvals to authorise the

execution, delivery, and performance thereof. It is not debarred,

blacklisted, or otherwise disqualified in any list that results in

disqualification in the proper jurisdiction from entering and/or fulfilling

its obligations under this Concession Agreement.

26.1.g This Concession Agreement constitutes the legal, valid, direct and binding

obligations of the Concessionaire, enforceable against the Concessionaire in accordance with its terms, save as enforceability may be limited by

applicable bankruptcy, insolvency, moratorium or similar laws affecting

the rights of creditors generally and by general principles of equity. This

Concession Agreement is in satisfactory and proper legal form under the

laws of the Republic of the Philippines.

26.1.h The Concessionaire’s signatory is of age, has full legal capacity and has

been duly authorised by the Board of Directors and Shareholders (if

applicable) of the Concessionaire to sign, execute and deliver this

Concession Agreement for and on behalf of the Concessionaire.

26.1.i It has the required authority, ability, skills and capacity to perform and

shall perform its obligations under this Concession Agreement in a

manner consistent with Prudent Industry Practice and the ESMS utilising

sound engineering principles, project management procedures and

supervisory procedures. Any Facility Operator has the required authority,

ability, skills and capacity to perform and shall perform the obligations of

the Concessionaire sub-contracted to it in a manner consistent with

Prudent Industry Practice and the ESMS utilising sound engineering principles, project management procedures and supervisory procedures.

26.1.j It is satisfied with and accepts all conditions relating to the physical

requirements for the Project, the Project site and the surrounding

locations and access thereto, the availability of equipment, the availability

of electricity and water, and similar matters that may impact upon the performance by Concessionaire of its obligations under this Concession

Agreement.

26.1.k It has informed or will inform itself of the requirements of and due

process for the issuance of any Relevant Consents, and has obtained or

will obtain all Relevant Consents or required exemptions, on or before the

date they are required to enable the Concessionaire to perform its obligations under this Concession Agreement in a timely manner.

26.1.l There are no actions, suits, proceedings or investigation, pending or to its

knowledge threatened against it [or against the Facility Operator] before

any court, executive, legislative or administrative body that are

reasonably likely to be determined against it [or against the Facility

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Operator] and that, if so determined are reasonably likely to result in any

materially adverse effect on its business, properties, or assets [or those of

the Facility Operator] or its condition, financial or otherwise [or that of

the Facility Operator], or in any impairment of its ability to perform its

obligations under this Concession Agreement [or those of the Facility

Operator].

26.1.m The Project can and shall be constructed, operated and maintained in conformity with this Concession Agreement and all Relevant Rules and

Procedures.

26.1.n It owns or has the right to use all intellectual property rights or any other rights or intangible properties necessary to perform its obligations under

this Concession Agreement.

26.1.o Neither it, nor any of its Shareholders, nor any Subcontractor, nor any Affiliate, agent, supplier, or vendor of any of these, has at any time

violated any of the rules governing the bid process for the Project or

committed any Prohibited Act.

26.1.p It recognizes, understands, and acknowledges that the Grantors are

providing no representation or warranty regarding and specifically disclaims any responsibility for the usefulness, accuracy, completeness,

validity or propriety of any or all reports, data, inferences, conclusions

and other information provided by or to be provided by the Grantors (including in the bidding process organised by the Grantors). The

Concessionaire acknowledges and agrees that it is not relying on the

Grantors for any information, data, inferences, conclusions, or other

information with respect to the required works for the Project, and has

conducted its own independent assessment of the Project prior to

entering into this Concession Agreement, including the conduct of all

necessary investigations and technical, financial, and legal due diligence.

The representations and warranties are made on the Signing Date and (other

than representation in Section 26.1.d) are deemed to be repeated on the

Effective Date and on the anniversary of the Effective Date each year for the

duration of the Concession Period.

26.2 Grantors representations and warranties

The Grantors hereby represent and warrant the following as on the Signing Date:

26.2.a The entry into and the performance of their obligations under this

Concession Agreement constitute commercial or proprietary acts of each

Grantor and each Grantor can sue and be sued in relation to its dealings

with the Concessionaire.

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26.2.b The Grantors have all the requisite legal power, authority and right to

execute and deliver this Concession Agreement and to perform their

obligations under this Concession Agreement.

26.2.c The Grantors have taken all appropriate legal and/or other actions and

have obtained all approvals required from Government Authorities required and/or appropriate to authorize the execution, delivery, and

performance of this Concession Agreement and all other agreements, instruments, or documents contemplated thereunder.

26.2.d This Concession Agreement constitutes the legal, valid, direct and binding

obligations of the Grantors, enforceable against the Grantors in accordance with the terms of this Concession Agreement, save as

enforceability may be limited by applicable moratorium or similar laws

affecting the rights of creditors generally and by general principles of

equity. This Concession Agreement is in satisfactory and proper legal

form under the laws of the Republic of the Philippines.

26.2.e The financial obligations of DOTC under this Concession Agreement

constitute direct obligations of the Government of the Republic of the

Philippines.

26.2.f The Grantors have the legal authority to issue the Operating Franchise

and approve the Approved Fares.

26.3 Concessionaire Undertakings

26.3.a Consents

The Concessionaire shall obtain, maintain and renew all Relevant

Consents (other than those which by their nature can only be obtained by

the Grantors) as and when the same are needed for the purposes of the

implementation of the Project. The Concessionaire shall be responsible for applying for, obtaining, renewing and complying with the conditions

attaching to all Relevant Consents necessary for the undertaking of the

Works and System Upgrades and operation and maintenance of the

System.

26.3.b E&S Obligations

26.3.b (1) The Concessionaire shall operate, and maintain the Existing System and shall design, build, operate, and maintain the Cavite

Extension in compliance with environmental and social

Relevant Rules and Procedures and the E&S Standards.

26.3.b (2) Prior to completion of the Detailed Design by the

Concessionaire, the E&S Impact Assessment shall be performed

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by a reputable and qualified consultant engaged and paid by

the Concessionaire. The E&S Impact Assessment shall be

carried out in accordance with (1) all Relevant Rules and

Procedures and (2) E&S Standards, whichever is more

stringent.

26.3.b (3) The Concessionaire shall develop, implement, and notify in

writing to the Grantors, at least thirty (30) days prior to the Effective Date, an environmental and social management

system ("ESMS") in accordance with the requirements set forth

in the E&S Standards. The ESMS shall manage environmental

and social ("E&S") risks and impacts of the Project in a

structured way on an ongoing basis. The ESMS shall be initiated

and at all times duly supported and funded by the Concessionaire’s management, and shall incorporate:

26.3.b (3) (a) an overarching policy that states the principles

guiding the achievement of sound E&S

performances and confirms the commitment to

operating the Project in accordance with the

E&S Relevant Rules and Procedures and the E&S

Standards, whichever is more stringent;

26.3.b (3) (b) organizational capacity and competency to

implement the ESMS. In particular the

Concessionaire shall define key E&S roles and

responsibilities, assign them to staff with appropriate skills and expertise, and train staff

on management of E&S risks and impacts;

26.3.b (3) (c) processes to identify E&S risks and impacts of

the Project. The E&S Assessment of the Cavite

Extension is one element of this process that shall also include procedures to assess risks and

impacts of the Existing System and risks and

impacts during operation of the Project over the entire Concession Period;

26.3.b (3) (d) management programme to define mitigation

and performance improvement measures and actions that address identified E&S risks and

impacts. The programme shall include (i) E&S

management and monitoring plans defined

within the E&S Assessment of the Cavite

Extension, (ii) detailed plans to implement

corrective actions emerged from the life, fire

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and safety review of the Existing Systems, and

(iii) management and monitoring plans and

procedures to deal with risks and impacts

during the operation and maintenance of the

System over the Concession Period. Processes

and programs to identify and manage E&S risks

and impacts of the Project shall address, but not

be limited to: Occupational Health and Safety,

working conditions and grievance mechanism

for workers; Health and Safety of the Affected Communities and the public using the System;

waste from field operations and maintenance of

rolling stock; and noise and vibrations during

operations. This management programme shall

apply broadly to all Subcontractors;

26.3.b (3) (e) emergency, preparedness and response systems in line with Prudent Industry Practice and

designed to prevent and mitigate any harm to people, including the Concessionaire’s workers,

the public using the System, the Affected

Communities, and the environment;

26.3.b (3) (f) monitoring programs to monitor and measure

the effectiveness of the management programs

and compliance with relevant legal obligations.

E&S indicators to be monitored shall be in line

with EHS General Guidelines and Prudent

Industry Practice; and

26.3.b (3) (g) the stakeholder engagement process, aiming to

establish and maintain a constructive

relationship with key stakeholders, including

the Affected Communities. This stakeholder

engagement process shall be an on-going

process and shall include, at different levels

depending on the results of stakeholder analysis

and the extent of risks and impacts, external communications, disclosure of relevant

information to, and consultation process with, the Affected Communities, and grievance

mechanism to receive and facilitate resolution of

concerns and grievances of the Affected Communities.

26.4 Warranty against Corruption

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26.4.a The Concessionaire and its officers, advisers, agents, employees, and

representatives, including those of its Affiliates, subsidiaries or

Subcontractors shall observe the highest standard of ethics at all times.

26.4.b The Concessionaire warrants that its officers, agents, employees, or

representatives, including those of its Affiliates or any person acting on its behalf or for its benefit, have not exerted or utilized any corrupt practice

or unlawful influence to secure or solicit this Concession Agreement for any commission, favour, or any other consideration.

26.4.c The Concessionaire shall not subcontract any portion or portions of its

obligations under this Agreement to any public officer, official, employee or to relatives within the fourth degree of consanguinity or affinity

(including bilas, inso and balae) of any public officer, official or employee

directly or indirectly involved in the award of this Concession Agreement

or the implementation of the Project.

26.4.d Notwithstanding anything to the contrary contained in this Concession

Agreement, any breach of the warranties and undertakings under Section

26.4.b (Warranty Against Corruption) shall constitute a Concessionaire

Event of Default under Section 31.1.a(13) and shall entitle the Grantors to

terminate this Concession Agreement. In such an event, the Grantors shall

be entitled to call on the appropriate Concessionaire Performance

Security in accordance with Section 31.4.c(4), without prejudice to any

other right or remedy that may be available to the Grantors hereunder or

otherwise, including the filing of civil or criminal actions against (i) the

Concessionaire and/or its officers, employees, agents and representatives, (ii) officers, officials, employees and representatives of the Government

Authority involved in the commission of the Prohibited Act and (iii) other parties liable under applicable laws.

26.4.e The Concessionaire undertakes that it shall:

26.4.e (1) disclose the name of the person/s and the amount paid, if any

commission, favor or consideration is given to any private

person or government official or employee;

26.4.e (2) disclose any information on complaints, investigations, formal

inquiries, prosecution or other enforcement actions initiated

or conducted against the Concessionaire and its officers,

officials, agents, employees or representatives, including those

of its Affiliates, subsidiaries, or Subcontractors, relating to

corruption, bribery, money laundering, racketeering,

obstruction of justice or other legal or ethical violation; and

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26.4.e (3) make available for examination and reproduction any

document relating to compliance with anti-corruption,

corporate, accounting and tax laws or regulations.

26.4.f The Concessionaire and any of its Subcontractors shall be prohibited from

engaging in relation to the Project any legal, financial or technical advisors engaged by either of the Grantors in relation to the Project or

who was an employee of either Grantor, save where such engagement or employment has ended or been terminated for a period of not less than

one (1) year. This prohibition does not apply to the institutions engaged

by the Grantors as legal, financial or technical advisors, but does apply to

the specific persons handling the transactions in these instances. Further,

this prohibition shall not apply in respect of employees of LRTA who were

prior to the Effective Date providing services exclusively or almost exclusively in respect of the Existing System and the Concessionaire shall

be entitled to make offers of employment to such persons.

26.4.g Without prejudice to the rights and remedies which the Grantors may

have under this Concession Agreement, if the Concessionaire is found by

the Grantors to have directly or indirectly or through an agent, committed

a Prohibited Act, the Concessionaire and its Affiliates shall not be eligible

to participate in any bidding of the DOTC or the LRTA from the date the

Concessionaire is found to have directly or indirectly engaged in any such Prohibited Act.

26.4.h The Grantors shall seek to impose the maximum penalties for civil,

criminal and/or administrative liability available under applicable laws and relevant rules and procedures on persons found to have engaged in a

Prohibited Act.

Section 27 INSURANCE

27.1 Concessionaire Required Insurance

27.1.a From the Effective Date until the Extension Completion Date, the Concessionaire shall maintain at its cost at all times:

27.1.a (1) All Risk Insurance in respect of the Existing System, in an

amount equal to the full replacement cost of assets destroyed or damaged subject to a limit of three hundred and fifty

million US Dollars (US$350,000,000) (Indexed) for storms

and seismic events in respect of the Existing System and one

hundred and twenty five million US Dollars

(US$125,000,000) (Indexed) per occurrence for other insurable events;

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27.1.a (2) (starting on the Construction Start Date) Construction All

Risks Insurance, at least up to the full replacement value of

the Works;

27.1.a (3) third party liability insurance with a liability limit of at least

ten million US Dollars (US$10,000,000) (Indexed) per claim;

27.1.a (4) worker’s compensation insurance;

27.1.a (5) Marine Transit Insurance on an "All Risks" basis in an amount

of not less than one hundred and ten percent (110%) of

replacement value (including customs freight and insurance

charges) of each shipment subject to a limit of one hundred

million US Dollars (US$100,000,000) (Indexed) per shipment;

27.1.a (6) Terrorism Asset Protection based on the wording of the Lloyd

T4 terrorism insurance form (or, if agreed by the Grantors

the wording of the T3 or T3A form) in an amount at least

equal to one hundred million US Dollars (US$100,000,000)

(Indexed) any one event and in the aggregate in respect of material damage; and

27.1.a (7) any other insurance that may be necessary to protect the

Concessionaire, its employees and the Project Assets against

loss, damage or destruction, including as a result of any Force

Majeure Event that is insurable and not otherwise covered by

the insurance at Sections 27.1.a (1) to (6) provided the same

is available in the worldwide insurance market on reasonable

terms.

27.1.b From the Extension Completion Date until the Transfer Date or the

Termination Date, whichever comes earlier, the Concessionaire shall

maintain at its cost at all times:

27.1.b (1) all Risk Insurance in respect of the System, in an amount

equal to the full replacement cost of assets destroyed or

damaged subject to a limit of three hundred and fifty million

US Dollars (US$350,000,000) (Indexed) for storms and

seismic events and one hundred and twenty five million US Dollars (US$125,000,000) (Indexed) per occurrence for other

events;

27.1.b (2) third party liability insurance with a liability limit of at least

ten million US Dollars (US$10,000,000) (Indexed) per claim;

27.1.b (3) workers’ compensation insurance;

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27.1.b (4) Terrorism Asset Protection based on the wording of the Lloyd

T4 terrorism insurance form (or, if agreed by the Grantors

the wording of the T3 or T3A form) in an amount at least

equal to one hundred million US Dollars (US$100,000,000)

(Indexed) any one (1) event and in the aggregate in respect of

material damage; and

27.1.b (5) any other insurance that may be necessary to protect the Concessionaire, its employees and the Project Assets against

loss, damage or destruction, including as a result of any Force

Majeure Event that is insurable and not otherwise covered by

the insurance policies enumerated in Sections 27.1.b(1) to (4)

provided the same is available in the worldwide insurance

market on reasonable terms.

27.1.c All insurances must be (i) placed with GSIS or (ii) any other insurance

entity possessing a valid certificate of authority duly issued by and in

good standing with the Office of the Insurance Commissioner with not

less than ninety (90) per cent of the amount of such insurance reinsured

with international reinsurers having a credit rating of (1) A- or above by

Standard & Poor’s or (2) A3 or above by Moody’s or (3) A- by AM Best.

27.1.d The Concessionaire shall submit to the Grantors certified copies of the

insurance policies and all renewal certificates upon receipt thereof from

the insurer.

27.1.e Each insurance policy required under this Section 27 shall provide that

the same shall not be cancelled or terminated unless ten (10) days’

written notice of cancellation is provided to the Grantors. If at any time

the Concessionaire fails to purchase and maintain in full force and effect

any and all insurance policies required under this Concession Agreement,

the Grantors may at their option purchase and maintain such insurance,

and all sums incurred by the Grantors for this purpose shall be reimbursed by the Concessionaire immediately on demand. Should the

Concessionaire fail to reimburse the costs of procuring and maintaining

any required insurance policies to the Grantors, the Grantors shall be entitled to call on the Operation Performance Security up to the value of

such amounts.

27.1.f If the Concessionaire is unable to comply with its obligations under this Section 27.1 (Concessionaire Required Insurance) because the insurances

required are either not available or are not available on reasonable

commercial terms (as agreed by the Grantors) this shall not constitute a

breach by the Concessionaire of its obligations or a Concessionaire Event

of Default, provided that the Concessionaire uses and continues to use

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reasonable efforts (including approaching the insurance market no less

frequently than once every six (6) months) to obtain such cover.

27.2 Insurance Beneficiaries

The insurance policies taken by the Concessionaire under this Section 27 shall

name the Concessionaire and the Grantors as co-insured parties of the insurance policies. The proceeds of insurance policies arising from damage to or

destruction of any of the System shall first be used to complete, repair,

rehabilitate or reconstruct the System, and the balance remaining, if any, shall be

applied to payment of Concessionaire’s other liabilities incurred by virtue of the

Project.

Section 28 FORCE MAJEURE

28.1 Events of Force Majeure

28.1.a "Force Majeure" or "Force Majeure Event" refers to an event or a circumstance which cannot be foreseen or even though foreseen is

beyond the reasonable control of a Party or is unavoidable despite the

exercise of due diligence, the cause of which event is not due to the fault

of a Party, and which wholly or partially prevents or delays such Party

from performing and fulfilling its obligations under this Concession

Agreement. Except when otherwise expressly provided by law or stated

in this Concession Agreement, no failure or omission to carry out or

observe any of the terms, provisions or conditions of this Concession

Agreement shall give rise to any claim by any party against another party

or be deemed to be a breach or default of this Concession Agreement if

the same shall be caused by or arise directly out of Force Majeure. Force Majeure shall in no event include any Material Adverse Government

Action.

Causes of Force Majeure Events may include without limitation the

following:

• any war, declared or not,

• hostilities,

• blockade,

• embargo,

• revolution,

• insurrection,

• riot,

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• public disorder, political violence or acts of sabotage or terrorism,

• export or import restrictions,

• closing of harbours, docks, canals or other assistance to or adjuncts

of shipping or navigation of or within any place,

• rationing or allocation, whether imposed by law, decree or

regulation by, or by compliance of industry at the insistence of, any

Government Authority, in each of the above cases,

• fire,

• severe flood,

• drought,

• earthquake,

• volcanic eruption,

• storm,

• lightning,

• tide (other than normal tide),

• tsunami,

• air crash,

• archaeological finds,

• hazardous materials,

• unexploded ordnance,

• nuclear contamination,

• epidemic,

• quarantine,

• electrical grid failure affecting the Works or the System,

• any instance analogous to the foregoing, or any event, matter or

thing, wherever occurring.

28.1.b Notwithstanding the foregoing, the occurrence of any Force Majeure

Event shall not release any Party from any of its monetary obligations.

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28.2 Burden of Proof

The burden of proof for a Force Majeure Event and its effect on the performance of obligations or the delivery of services under this Concession Agreement lies

with the Party that issued the notice of Force Majeure.

28.3 Notification of Force Majeure

The Party invoking a Force Majeure Event shall, upon knowledge of such event

and in any case within two (2) days from the time it is practicable for such Party

to serve notice to the other Party, shall immediately notify the other Party of the

occurrence or cessation of the Force Majeure Event and the extent to which such

Force Majeure Event affects the notifying Party’s obligations under this


28.4 Obligation of Each Party in the event of Force Majeure

If a Force Majeure Event or a direct consequence thereof, prevents or delays a Party from performing its obligations hereunder or, in the opinion of such Party,

adversely affects any of its rights or benefits under this Concession Agreement,

such Party shall be responsible for taking such actions and precautions as may be

reasonably necessary to mitigate the adverse effects of the Force Majeure Event

acting in accordance with Prudent Industry Practice. To the extent the Force

Majeure Event and the adverse effects thereof could not be so mitigated, the

Party invoking a Force Majeure Event shall be excused from performance of

those obligations that are directly affected by the Force Majeure Event. The

Parties will consult with each other and take all reasonable steps to minimize the

losses of either Party resulting from a Force Majeure Event. The Parties shall

continue performance, with all due diligence, of all obligations not affected by Force Majeure.

28.5 Damage Caused by Force Majeure

28.5.a All insurance proceeds in respect of insurances in relation to physical

damage received by or payable under any such insurance policy shall be

applied as required by Section 27.2 (Insurance Beneficiaries). The

Concessionaire shall be responsible for any repairs or reconstruction to

the System caused by the Force Majeure Event as soon as possible.

28.5.b Provided that the insurance policies required under Section 27

(Insurance) are in force at the time of the Force Majeure Event, if the

Concessionaire serves notice to the Grantors that the insurance proceeds

received or to be received or payable by reason of any such damage will

be insufficient to cover the costs of the required reconstruction or repair

work on the damage to the System, the Grantors shall be responsible for

providing Grantor Compensation in the amounts and subject to the

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procedures set out in this Section 28.5. In determining whether insurance

proceeds received will be insufficient to cover the cost of the required

works of reconstruction or repair, any deductible or similar amounts

payable by the Concessionaire shall not be considered as part of the costs

of such works and the Grantors shall not be obliged to provide Grantors

Compensation in respect thereof. Within thirty (30) days of the

Concessionaire notifying the Grantors of the insufficiency of funds, the

Concessionaire and the Grantors shall meet to discuss in good faith

whether it would be "economic" to restore the System and, if not, whether

a further extension to the Concession Period (in addition to the provision of Grantors Compensation as contemplated below) would render the

restoration economic. In this Section 28.5 "economic" means that the

Concessionaire is able to recover its share of the cost of the restoration

work (including the financing amortization and costs on any debt

incurred to finance such restoration) over the Concession Period (as

extended). A dispute between the Parties as to whether restoration would

be economic shall be resolved by the Expert. The discussion or the

Expert's determination shall also address how the Concessionaire can be

compensated for the difference between these reconstruction or repair

costs and the insurance proceeds received or to be received. The

difference between the cost of reconstruction or repair and the available insurance proceeds (received or to be received) is the "FM Restitution

Amount". Once the Parties have reached agreement or the Expert has

made a determination regarding the amount and proposals for payment

of the FM Restitution Amount, the Concessionaire shall be responsible for

conducting the necessary repairs and reconstruction work and raising the funds for such purpose, unless the System is expressly taken over by the

Grantors without the fault of the Concessionaire.

28.5.c If the Parties have determined or the Expert has made a determination

that restoration would be economic, the Grantors shall provide Grantors

Compensation with a value sufficient to cover one half of the FM

Restitution Amount. The Concessionaire shall itself be responsible for

raising funds to provide the other half of the FM Restitution Amount (the

"Concessionaire Portion"). Once agreement has been reached on the

amount and form of the FM Restitution Amount, neither Party shall be entitled to terminate this Concession Agreement in respect of the Force

Majeure Event in question.

28.5.d If on or before the date that is three (3) months after the commencement

of negotiations between the Grantors and the Concessionaire, (i) the

Parties are unable to agree on how to compensate the Concessionaire

under this Section for the FM Restitution Amount (less the Concessionaire

Portion thereof), and the Parties do not agree to extend this three (3)-

month period or (ii) the Expert has been required to make a

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determination in which case the period shall automatically be extended

until the date thirty (30) days after the date of the Expert's determination,

then subject as provided below either Party shall have the right to

terminate this Concession Agreement and Section 31 (Default and

Termination) shall apply.

28.5.e If a Force Majeure Event does not cease on or before the date that is three

hundred and sixty-five (365) days after the date of the notice required pursuant to this Section 28 (Force Majeure), and the Parties do not agree

to extend this period, then either Party shall have the right to terminate

this Concession Agreement through the means set out in Section 31.2.d. If

the Concessionaire elects not to terminate this Concession Agreement and

instead elects to extend the Concession Period, it shall give notice to the

Grantors stating the election it has made and the period (not exceeding the duration of the Force Majeure Event) by which it proposes the

Concession Period to be extended. Upon concurrence by the Grantors, the

Grantors shall issue, obtain, or exert best efforts to cause to be issued or obtained, all Relevant Consents which may be required or necessary to

extend the Concession Period by such period as requested by the Concessionaire.

28.6 Continuous Performance

Upon the occurrence of any Force Majeure Event, the Concessionaire shall

continue to be responsible for performing such of its obligations as are still

reasonably possible to be performed taking into account safety considerations,

whether wholly or partially. Irrespective of the occurrence of a Force Majeure Event, the Concessionaire shall continue to be responsible for the safety of the

System and its users.

Section 29 MATERIAL ADVERSE GOVERNMENT ACTION

29.1 Upon occurrence of a Material Adverse Government Action, the Concessionaire

shall provide written notice to the Grantors thereof within thirty (30) days of

becoming aware of the same with supporting evidence. The Concessionaire shall

have the burden of proving both the existence of any Material Adverse

Government Action and the effect (both as to nature and extent) which any such

Material Adverse Government Action has on its performance and its costs or

losses arising from the Material Adverse Government Action.

29.2 If the Concessionaire is rendered wholly or partly unable to perform its

obligations under this Concession Agreement directly as a result of such Material

Adverse Government Action, it shall be excused from performance of such

obligations to the extent that it is unable to perform on account of such Material

Adverse Government Action provided that:

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29.2.a the suspension of performance shall be of no greater scope and of no

longer duration than is reasonably required by the Material Adverse

Government Action;

29.2.b the Concessionaire shall make all reasonable efforts to mitigate or limit

the effects of the Material Adverse Government Action on its performance of this Concession Agreement; and

29.2.c when the Concessionaire is able to resume performance of its obligations

under this Concession Agreement, it shall give to the Grantors written

notice to that effect and shall promptly resume performance of such

obligations.

29.3 If a Material Adverse Government Action or combination of Material Adverse

Government Actions in the aggregate causes the Concessionaire to (i) incur

capital cost in relation to the System in an amount of one hundred million Pesos (PhP100,000,000)(Indexed) over a rolling period of the previous five (5)

Contract Years; or (ii) increase its costs and expenses in relation to the System or

causes loss of Farebox Revenue (for this purpose taking into account any savings

in operating costs or other costs and movements in working capital also

consequent upon the Material Adverse Government Action or combination of

Material Adverse Government Actions in question) of, in aggregate, more than

ten million Pesos (PhP10,000,000) (Indexed) in the previous Contract Year,

(calculated at the time the Concessionaire claims such financial threshold to have

been met), then the Concessionaire shall notify the Grantors in writing of the

total of costs or losses suffered by it due to that Material Adverse Government

Action or combination of Material Adverse Government Actions.

Provided that the Concessionaire has demonstrated to the satisfaction of the

Grantors (i) the amount of these costs and that they were caused by Material

Adverse Government Actions and (ii) that it has used and is continuing to use all

reasonable efforts to overcome or mitigate or minimise the financial effects of

the Material Adverse Government Action, then the Concessionaire shall be entitled to and the Grantors shall provide Grantors Compensation in accordance

with the terms of this Concession Agreement. Provided further that costs,

expenses, or loss in Farebox Revenues that were compensated in accordance with this Section 29.3 shall not be included in determining whether the relevant

threshold has been reached in the following Contract Years.

For the avoidance of doubt, it is hereby clarified that in the computation of the capital cost and/or revenue losses for the purpose of determining whether the

threshold is breached, such costs may be Indexed. In addition, if the capital cost

and/or revenue losses exceeds the aforesaid threshold, then the Concessionaire

shall be entitled to the entire nominal amount of the capital cost and/or the

revenue losses suffered by the Concessionaire in that relevant period and not

only the amount in excess of the aforesaid threshold. Furthermore, any amounts

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(i) already paid or that the Grantors have agreed to compensate by way of

Grantors Compensation, or (ii) incurred more than five (5) Contract Years prior

to the relevant period shall not be included in the calculation of the costs

incurred by the Concessionaire due to a Material Adverse Government Action or

combination of Material Adverse Government Actions in succeeding years. The

Parties shall conduct negotiations in good faith for a period not exceeding ninety

(90) days from date of the Concessionaire’s notification to the Grantors above

(with the first meeting taking no later than seven (7) days after the

Concessionaire's notification under this Section 29.3), unless a longer period is

specifically provided or agreed among the Parties, after which, if they are unable to reach an agreement within the said period, the matter shall be determined in

accordance with the dispute resolution procedures pursuant to Section 35

(Dispute Resolution) or the Concessionaire shall have the right to terminate this

Concession Agreement for a Grantors Event of Default or the Grantors shall h ave

the right to terminate this Agreement under Section 31.1.c.

The Concessionaire shall inform and provide all the relevant documents to the Grantors each time (i) the Concessionaire incurs capital cost in relation to the

System or (ii) there is any increase in the costs and expenses of the System or loss of Farebox Revenue, due to Material Adverse Government Actions.

A worked example of the operation of the thresholds is set out in the table below.

All figures are in million Peso.

Year Capital costs incurred due

to MAGA

Cumulative total for purpose of the

threshold (Indexed)

Threshold (Indexed at CPI ~ 5%)

Compensation (Nominal)

Notes

1 10.00 10.00 100.00 0.00

2 20.00 30.50 105.00 0.00

3 0.00 32.03 110.00 0.00

4 30.00 63.63 116.00 0.00

5 0.00 66.81 122.00 0.00

6 0.00 57.39 128.00 0.00 The PhP10 incurred in year 1 falls away

7 0.00 34.73 134.00 0.00 The PhP20 incurred in year 2 falls away

8 80.00 116.47 141.00 0.00

9 70.00 154.00 148.00 150.00 The PhP30 incurred in year 4 falls away; the threshold is breached due to MAGA in years 8 and 9, compensation of Php150M is paid

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Year Capital costs incurred due

to MAGA

Cumulative total for purpose of the

threshold (Indexed)

Threshold (Indexed at CPI ~ 5%)

Compensation (Nominal)

Notes

(nominal amount) and the cumulative total is reset to zero for the succeeding year

10 0.00 4.20 155.00 0.00

Section 30 GRANTORS COMPENSATION

30.1 If the Concessionaire is delayed in the completion of the Works or is prevented from operating any part of the System or incurs additional cost or loss of revenue

by reason of:

30.1.a a Material Adverse Government Action;

30.1.b a Grantors Delay Event;

30.1.c subject to Section 5.3(b), the failure of the Existing System to meet the Existing System Requirements on the Effective Date;

30.1.d a variation in accordance with Section 18.12.g; or

30.1.e any other cause in respect of which this Concession Agreement provides

for the provision of Grantors Compensation,

the Grantors shall be liable (subject to Section 20.9 (Grantors Payment)) to

provide compensation to the Concessionaire ("Grantors Compensation").

30.2 The Grantors shall pay the mutually agreed Grantors Compensation (or in

default of agreement as determined pursuant to Section 35 (Dispute Resolution)), which shall be calculated on the principle that, subject as provided below, it

should restore the Concessionaire in the cashflow position to what it would have

been had above event not occurred, subject to the provisions of Section 20.9 (Grantors Payment). For this purpose the Grantors Compensation shall be

through an adjustment to the Concession Payment, an increase in Notional Fares

or Approved Fares, the making of additional payments to the Concessionaire

("Grantors Compensation Payment") or (by agreement between the Parties)

an extension to the Concession Period or a combination of the above.

30.3 The Grantors shall determine the method in which Grantors Compensation is to

be provided which shall be subject to the principles set out in Section 30.2.

30.4 Fare Adjustment

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In circumstances where the Parties have agreed that all or part of any Grantor

Compensation is to be provided by an adjustment of the Notional Fare, then Part

1 of Schedule 9 shall forthwith be adjusted accordingly.

In the case of an adjustment to the Approved Fare, the Concessionaire shall apply

to the Grantors for an extraordinary adjustment thereof and the Grantors may approve such adjustment. If the Grantors do not approve the adjusted Approved

Fare, the Grantors shall be deemed to have approved an adjustment to the Notional Fare to take it to the level of the proposed adjusted Approved Fare had

the increase been implemented. The Grantors shall verify the materiality, bases

and justifications for the application for extraordinary adjustment of the

Approved Fare in the circumstances set out in the paragraph above and shall

determine the appropriate adjustments, if any.

Once the extraordinary adjustment of the Approved Fare is approved by the

Grantors or other Government Authority having jurisdiction, and subject to any

publication required by the applicable Legal Requirements, the Concessionaire

will be entitled to adjust the Actual Fare.

For the avoidance of doubt it is hereby clarified that if the Approved Fare is

upwardly adjusted and the Notional Fare is not accordingly adjusted, then the

Surplus Payment shall not be payable by the Concessionaire during the period

when the adjustment is in effect.

Section 31 DEFAULT AND TERMINATION

31.1 Events of Default

31.1.a Concessionaire Events of Default

The following are Concessionaire Events of Default:

31.1.a (1) failure to pay any sum in excess of ten million Pesos

(PhP10,000,000) (Indexed) due to the Grantors within a period of sixty (60) days from when this becomes payable

(save where the Grantors have collected this amount by

enforcing any Concessionaire Performance Security);

31.1.a (2) failure to achieve the Extension Completion Date by the

Longstop Date;

31.1.a (3) failure to meet any one (1) or more of the Key Performance

Indicators pursuant to Section 18.5 and Schedule 6 such that

at any point in time, the Concessionaire's liability to pay KPI

Charges over the previous twelve (12)-month period would, but for the application of the caps on individual KPI Charges

have exceeded ten percent (10%) of Farebox Revenue plus

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Deficit Payments less Surplus Payments in the last calendar

year;

31.1.a (4) any representation or warranty made by the Concessionaire

under Section 26 (Representations, Warranties and

Undertakings) is false or inaccurate in any material respect and this is reasonably likely to have a material adverse effect

on the ability of the Concessionaire to carry out the Project;

31.1.a (5) the Concessionaire breaches Section 36.1 (Assignment);

31.1.a (6) the Concessionaire [or, during the Lock-Up Period, the

Facility Operator] is being liquidated or dissolved for any

reason, or is declared insolvent;

31.1.a (7) the Finance Parties have declared that an event of default has

occurred under the Finance Documents, have enforced their

security and have not issued a Step-in Notice as contemplated

in Section 3 of Schedule 21 (Form of Acknowledgement and

Consent Agreement) within the time contemplated therein or have not transferred to a Substitute Concessionaire (as

defined in and contemplated by Section 31.3 (Finance Parties' Step-in Rights)). Notwithstanding the above, no

Concessionaire Event of Default shall occur under this Section

31.1.a(7) if the Finance Documents in question relates purely to the financing of the Commercial Business and there are no

provisions entitling the Finance Parties in respect of the

financing of the remainder of the Project to call an event of

default (however described) under their Finance Documents

in respect of such default;

31.1.a (8) a transfer of shares of the Concessionaire [or, during the

Lock-Up Period, in the Facility Operator] occurs which is in

breach of Section 8 (Equity Obligation);

31.1.a (9) the Concessionaire Abandons the Project;

31.1.a (10) the Concessionaire becomes subject to any litigation,

arbitration or administrative proceeding which is resolved against it (with no further right of appeal) which has

material adverse effect on the Project;

31.1.a (11) the Concessionaire fails to comply with any of its obligations

under Section 9 (Concessionaire Performance Security) or

Section 27 (Insurance) to effect, maintain, replenish or

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replace any Concessionaire Performance Security or

insurances in accordance with this Concession Agreement;

31.1.a (12) a Prohibited Act is committed;

31.1.a (13) the Grantors become entitled to terminate this Concession

Agreement pursuant to Section 26.4.d (Warranty against Corruption);

31.1.a (14) there occurs any significant breach by the Concessionaire of

its obligation to operate and maintain the System with proper

regard to the safety of the travelling public or the

Concessionaire fails or refuses after reasonable notice from

the Grantors to rectify any such deficiency or otherwise

perform the Services in accordance with this Concession

Agreement and the Concessionaire is not excused by any of the other provisions of this Concession Agreement;

31.1.a (15) if during the Lock-Up Period without the Grantors' prior

written consent:

31.1.a (15) (a) the O&M Agreement is terminated [this will

only apply if a Facility Operator is used]; or

31.1.a (15) (b) the Technical Services Agreement is

terminated; or

31.1.a (15) (c) the O&M Sponsor ceases to hold 20% (twenty percent) of the shares of the Facility

Operator entitled to vote [this will only apply

if a Facility Operator is used];

unless in each case the Concessionaire has procured a

replacement Technical Services Agreement [or O&M Agreement – only applies if Facility Operator is used] on terms

and with a counterparty acceptable to the Grantors in their

absolute discretion (however, no consent of the Grantors will be needed if the new O&M Sponsor is one of the three (3)

O&M Sponsors indicated in the Bid Documents by the

Concessionaire and they continue to meet their qualification

requirements under the Technical Documents and the new

Technical Services Agreement [or O&M Agreement – only

applies if Facility Operator is used] in accordance with the

terms provided in Schedule 17 (Requirements for O&M

Agreement and Technical Services Agreement);

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31.1.a (16) if the Concessionaire fails to submit the reports required in

Section 8.5 (Reporting of Shareholders) and/or Section 25.2.b

(Reports), such that, at any given point in time, more than six

(6) required monthly or quarterly reports which are already

due to be submitted by the Concessionaire to the Grantors

have not yet been submitted;

31.1.a (17) prior to the Extension Completion Date the Concessionaire breaches Section 10.3 (Leverage Ratio) and this is not cured

no later than one hundred and eighty (180) days after

notification from the Grantors; and

31.1.a (18) breach by the Concessionaire of any of its other material

obligations under this Concession Agreement which has a

material adverse effect upon the Concessionaire's ability to

construct the Works or perform the Services.

31.1.b Grantors Events of Default

The following are the Grantors Events of Default:

31.1.b (1) either of the Grantors is dissolved, reconstituted or abolished

and this Concession Agreement ceases to be enforceable

against it, unless the obligations of the relevant Grantor are

assumed by the Government or by an entity owned by the

Government;

31.1.b (2) the Grantors fail to pay any amount in excess of ten million

Pesos (PhP10,000,000) (Indexed) due to the Concessionaire

within a period of sixty (60) days from when this becomes

payable (but subject to the provisions of Section 20.9

(Grantors Payment));

31.1.b (3) the Parties have been unable to agree on compensation in

respect of a Material Adverse Government Action as

contemplated in Section 29 (Material Adverse Government

Action);

31.1.b (4) the Grantors fail to deliver any Basic ROW Package by the date

ninety (90) days after the scheduled delivery date therefor;

31.1.b (5) the whole or any material part of the assets of or shares in the

Concessionaire [or the Facility Operator] are expropriated,

nationalised or confiscated or steps of an equivalent nature

are taken by any Government Authority that deprive the

Shareholders (directly or indirectly) of the ability to direct the

management of the Concessionaire [or the Facility Operator] ;

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31.1.b (6) any representation or warranty made by the Grantors under

Section 26.2 is false or inaccurate in any material respect and

this is reasonably likely to have a material adverse effect on

the ability of the Concessionaire to carry out the Project; and

31.1.b (7) either of the Grantors breaches any of its other material obligations under this Concession Agreement and this has a

material adverse effect upon the Concessionaire's ability to construct the Works or to perform the Services.

31.1.c Grantors' Additional Termination Right

When the common good so requires, the Grantors shall be entitled to

terminate this Concession Agreement for any reason at any time upon one

(1) month's written notice to the Concessionaire. For the purpose of this

Section 31.1.c, the term "common good" refers to "compelling interests that affect the public at large".

31.2 Procedure for Termination

31.2.a Termination for Concessionaire Event of Default

31.2.a (1) Upon the occurrence of any Concessionaire Event of Default,

the Grantors shall serve a written Notice of Violation to the Concessionaire, stating (i) the nature of the Concessionaire

Event of Default, (ii) whether the same is capable of remedy

(for the avoidance of doubt Concessionaire Events of Default

under Sections 31.1.a(2), 31.1.a(6), 31.1.a(7), 31.1.a(12)

(where the Concessionaire, the O&M Sponsor [, Facility

Operator] or any Initial Shareholder has committed the

Prohibited Act) and 31.1.a (13) are deemed to be incapable of

remedy and all other Concessionaire Events of Default are

deemed to be capable of remedy) and (iii) if the same is

capable of remedy, requiring the Concessionaire to remedy

the Concessionaire Event of Default within a cure period of one hundred twenty (120) days from its receipt of such Notice

of Violation or such longer period as the Grantors may specify.

To expedite the curing process, the Grantors and the

Concessionaire shall promptly meet, on or before the date that

is seven (7) days after receipt of the Notice of Violation, to

negotiate in good faith for the purpose of reaching an

agreement as to the means, period, and other terms and

conditions for the curing of the Concessionaire Event of

Default. If the Concessionaire Event of Default is not capable of

remedy or the Concessionaire fails to remedy the default

within the cure period (or, in cases where the Parties have

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agreed that a longer cure period is necessary, the

Concessionaire has failed to proceed diligently with remedial

steps), the Grantors may, and in the case of a termination for a

Concessionaire Event of Default under Section 31.1.a(12) or

31.1.a(13) shall, issue a Notice of Termination, without

prejudice to all other rights or remedies.

31.2.a (2) Except in relation to a Concessionaire Event of Default under Sections 31.1.a(12) and 31.1.a (13) where the Finance Parties

had knowledge or ought to have known of the commission of

the Prohibited Act at the time they entered into the Finance

Documents with the Concessionaire or where the Finance

Parties directly participated in, induced the Concessionaire to

do, or cooperated or conspired in any manner with the Concessionaire in the commission of, the Prohibited Act, the

Grantors' rights under this Section 31.2.a are subject to the

rights of the Finance Parties under Section 31.3 (Finance Parties Step-in Rights).

31.2.a (3) If (i) this Concession Agreement is terminated pursuant to

Section 31.1.a(13) and (ii) as a result of litigation, arbitration

or administrative proceeding (with no further right of appeal)

the Concessionaire is found not to be in breach of any of its obligations under Section 26.4.b (Warranty Against

Corruption), then notwithstanding the above, it shall

constitute a Grantors Event of Default and the Concessionaire

shall be compensated as if this Concession Agreement had

been terminated for a Grantors Event of Default. The

compensation payable to the Concessionaire under this

provision Section 31.2.a(3) shall be net of any payment paid to

the Concessionaire as a result of termination of this

Concession Agreement pursuant to Section 31.1.a(13).

31.2.b Termination by Grantors under Section 31.1.c

If the Grantors wish to terminate this Concession Agreement under Section 31.1.c (Grantors' Additional Termination Right) they shall issue a

Notice of Termination stating the date on which such termination shall

take effect.

31.2.c Termination by Concessionaire for Grantors Event of Default

31.2.c (1) Upon the occurrence of any of the events of Grantors Event of

Default, the Concessionaire may serve a written Notice of

Violation to the Grantors, stating therein (i) the nature of the

Grantors Event of Default, (ii) whether the same is capable of

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remedy (for the avoidance of doubt a Grantor Event of Default

under Sections 31.1.b(1) and 31.1.b(4) shall be deemed

incapable of remedy) and (iii) if the same is capable of remedy,

requesting that the default be cured by the Grantors within at

least one hundred and twenty (120) days from its receipt of

the Notice of Violation.

31.2.c (2) To expedite the curing process, the Grantors and the Concessionaire shall promptly meet, on or before the date that

is seven (7) days after receipt of the Notice of Violation, to

negotiate in good faith for the purpose of reaching an

agreement as to the means, period, and other terms and

conditions for the curing of the Grantors Event of Default.

31.2.c (3) If (i) the Grantors Event of Default is not capable of remedy or

(ii) the Grantors fail to cure a Grantors Event of Default within

one hundred and twenty (120) days (or such longer period as

the parties may agree), the Concessionaire may serve a

written Notice of Termination to the Grantors terminating this

Concession Agreement, without prejudice to any other rights

and remedies of the Concessionaire.

31.2.d Termination for Force Majeure

If a Party is entitled to and intends to terminate this Concession Agreement under Sections 17.7, 28.5.d, 28.5.e or 32.3.c:

31.2.d (1) The Grantors shall serve a Warning Notice on the

Concessionaire. The Warning Notice may be served prior to the expiry of the three hundred and sixty-five (365) days

period referred to in Section 28.5.e but shall expire on the later of (i) the expiry of that three hundred and sixty-five

(365) day-period or (ii) the date one hundred and eighty

(180) days after the date of the Warning Notice. The parties

shall meet no later than seven (7) days after the date of the

Warning Notice. If the effect of the Force Majeure cannot be

remedied within the period prescribed in the Warning Notice,

the Grantors may issue a Notice of Termination.

31.2.d (2) The Concessionaire may, upon expiry of the three hundred

and sixty-five (365) day period referred to in Section 28.5.e

issue a Notice of Termination.

31.2.e Notice of Termination

31.2.e (1) Each Notice of Termination shall state the Termination Date.

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31.2.e (2) The Termination Date in any Notice of Termination delivered

by the Grantors may be any date at least seven (7) days but

not more than one hundred (100) days after the date of the

Notice of Termination (but subject to Section 31.3 (Finance

Parties Step in Rights) below).

31.2.e (3) The Termination Date in any Notice of Termination delivered

by the Concessionaire may be any date at least sixty (60) days but not more than one hundred (100) days after the date of

the Notice of Termination.

31.3 Finance Parties Step-in Rights

31.3.a In the case of a potential termination for Concessionaire Event of Default,

the Grantors shall furnish copies of any Notice of Violation to the Finance

Parties' Agent simultaneously if requested in writing by the Concessionaire, and if the Concessionaire has previously provided the

Grantors with the contact information of the Finance Parties' Agent. If the

Concessionaire fails to remedy the default within the curing period, the

Grantors may issue a Notice of Termination (which shall be copied to the

Finance Parties' Agent), without prejudice to all other rights or remedies.

31.3.b From the date the Finance Parties' Agent receives a copy of the Notice of

Termination, the Finance Parties (other than Finance Parties to whom

Section 31.2.a(2) applies) (acting through the Finance Parties' Agent) shall have:

31.3.b (1) a period of ninety (90) days to give notice (a "Step-in Notice")

to the Grantors whether they intend to take action to cure the Concessionaire Event of Default; and

31.3.b (2) a period of two hundred and seventy (270) days in which to

cure the Concessionaire Event of Default or to appoint a

Substitute Concessionaire,

in each case in accordance with the provisions below.

31.3.c If the Finance Parties Agent gives a Step in Notice then following that Step

in Notice the Finance Parties or a party nominated by them (the

"Additional Obligor") shall become entitled to cure the Concessionaire

Event of Default giving rise to the Notice of Termination and the Grantors

shall accept performance of this Concession Agreement from the

Additional Obligor until (i) the default is cured and a Step-Out Notice is

issued or (ii) the Substitute Concessionaire is approved by the Grantors or

(iii) the Additional Obligor notifies the Grantors that it no longer intends

to effect such a cure, whichever is earliest. The acts of the Additional

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Obligor shall be considered as acts of the Concessionaire and shall be

binding on the Concessionaire.

31.3.d If the Finance Parties' Agent has not served a Step-in Notice within the

ninety (90) day period referred to above, its rights under this Section 31.3

shall not apply. If the Additional Obligor has been appointed and subsequently serves notice that it no longer intends to continue to cure

the Concessionaire Event of Default in question and that the Finance Parties no longer intend to seek the appointment of a Substitute

Concessionaire, the Finance Parties' Agent's rights under this Section 31.3

shall forthwith terminate.

31.3.e Upon service of a Step-in Notice, the Termination Date shall be suspended

until the earliest of:

31.3.e (1) the end of the period referred to in Section 31.3.b(2); and

31.3.e (2) the date on which the Finance Parties' Agent confirms in

writing that the Finance Parties do not wish to exercise or

continue to exercise their rights under this Section 31.3.

31.3.f If the Finance Parties or the Additional Obligor cures the Concessionaire

Event of Default or a Substitute Concessionaire is appointed (in each case

within the period referred to in Section 31.3.b (2)) the Notice of

Termination shall cease to have further effect and shall be deemed to

have been revoked by the Grantors and the Termination Date shall not

occur.

31.3.g Where the Finance Parties wish to appoint a Substitute Concessionaire

they shall provide the Grantors with evidence that the Substitute

Concessionaire satisfies the following requirements:

31.3.g (1) it has the legal, financial and technical capacity (or has entered into contracts for the provision of such technical expertise

with persons having such expertise) to enter into this

Concession Agreement and perform the obligations of the

Concessionaire hereunder;

31.3.g (2) it either has obtained an Operating Franchise or has entered

into a contract with a person acceptable to the Grantors who

holds an Operating Franchise; and

31.3.g (3) provided that (i) the Substitute Concessionaire is in

compliance with Section 31.3.g(1) above and (ii) it or a

qualified person in contract with it has made application in

proper form in compliance with and met the requirements of

Schedule 15 (Operating Franchise), the Grantors shall procure

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the issue of an Operating Franchise to the Substitute

Concessionaire.

31.3.h Provided that the Substitute Concessionaire meets these requirements,

the Grantors shall not withhold approval of the Substitute Concessionaire

and any such approval will be provided within the period of two hundred and seventy (270) days prescribed in Section 31.3.b(2) (but subject to

Section 31.3.i). If a Substitute Concessionaire that meets these requirements is not appointed by the Finance Parties within the

prescribed period of two hundred and seventy (270) days, and this two

hundred and seventy (270)-day period is not extended by the Grantors at

their sole discretion, the procedures set out in Section 31.4 (Consequences

of termination) shall apply.

31.3.i The substitution shall be effective upon approval by the Grantors that the

Substitute Concessionaire meets the requirements specified in Section

31.3.g. The Grantors shall give their concurrence or rejection on or before

the date that is twenty (20) days after the Grantors' receipt of the written

notice of the proposed appointment of the Substitute Concessionaire by

the Finance Parties. This twenty (20) day period for the Grantors to give

or withhold approval shall not count towards the two hundred and

seventy (270) day period granted to the Finance Parties' Agent pursuant

to Section 31.3.b(2). Failure by the Grantors to respond to the notice within this time period shall be deemed to constitute approval. Upon such

approval by the Grantors: (i) this Concession Agreement shall be novated

from the Concessionaire to the Substitute Concessionaire and the latter

shall be entitled to exercise the rights, privileges, and shall bear all

obligations of the Concessionaire under this Concession Agreement; and

(ii) no Termination Date shall occur and no Termination Payment shall be

payable in respect of the Concessionaire Event of Default that give rise to

the Notice of Termination. Should the Grantors reject the proposed

Substitute Concessionaire on or before the date that is twenty (20) days

after their receipt of the notice of the proposed appointment, provided

that two hundred and seventy (270) days have not yet expired since the Concessionaire’s receipt of the Notice of Termination, the Finance Parties

may appoint another Substitute Concessionaire, and the process outlined

in this Section will be repeated. The Grantors and Concessionaire shall,

during the turnover of the System, extend all reasonable assistance to the

Substitute Concessionaire to enable it to perform its rights and

obligations under the Concession Agreement.

31.3.j For the avoidance of doubt the Grantors confirm that if an Additional

Obligor appointed pursuant to Section 31.3.c is able to cure the Concessionaire Event of Default (i) this constitutes a cure acceptable to

them and their termination right in respect of the Event of Default in

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respect of which the relevant Notice of Termination was issued shall

thereupon cease and (ii) at that point the Additional Obligor may give a

notice ("Step-out Notice") to the Grantors confirming the same. If the

Additional Obligor fails to cure the Concessionaire Event of Default no

later than two hundred and seventy (270) days after the date the Finance

Parties' Agent received a copy of the Notice of Termination, it shall be

deemed to have given a Step-out Notice on the last day of that period.

31.3.k The Grantors shall, pursuant to Section 3 of Schedule 21 (Form of

Acknowledgement and Consent Agreement) accord the Finance Parties'

Agent equivalent time periods to exercise its rights in the case of an

enforcement of security under the Finance Documents.

31.4 Consequences of termination

31.4.a Surviving provisions

The termination of this Concession Agreement shall not affect the rights

and obligations of the Parties under Sections 1.2 (Interpretation), 31

(Default and Termination), 33 (Handback of Project), 34 (Indemnities), 35 (Dispute resolution) and 36 (Miscellaneous Provisions) which shall survive

termination of this Concession Agreement.

31.4.b Accrued Rights

Any termination of this Concession Agreement shall be without prejudice

to the accrued rights and obligations of the Parties on and before such

termination (including outstanding payment obligations arising before

the date of termination).

31.4.c Rights of Grantors

After the issuance of a Notice of Termination, the Grantors shall have the

right to:

31.4.c (1) direct the Concessionaire to continue the performance of its

obligations under this Concession Agreement after the

Termination Date for a reasonable fee reflecting the average

of the Concessionaire's actual monthly cash costs of

operation and maintenance over the two (2) years prior to

the Termination Date plus a margin of five percent (5%) thereon until the Grantors have procured suitable

arrangements to continue the Project;

31.4.c (2) assume (on and from the Termination Date) the rights and obligations of the Concessionaire under this Concession

Agreement;

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31.4.c (3) allow the Finance Parties to exercise their rights under this

Concession Agreement and to enforce their Permitted

Security Interests under the Finance Documents in

accordance with Section 31.3 (Finance Parties Step in Rights);

31.4.c (4) in case of a termination under Section 31.2.a (Termination for Concessionaire Event of Default) call on the Concessionaire

Performance Security and/or seek damages, including proceeding against any other bond, guaranty, letter of credit

or other security given by the Concessionaire for its

obligations under this Concession Agreement to the extent of

any liabilities owed to the Grantors as a result of such breach

by the Concessionaire of its obligations under this Concession

Agreement and/or any amounts owing but unpaid by the Concessionaire to the Grantors;

31.4.c (5) on and from the Termination Date, without incurring any

liability to the Concessionaire, have the right (either with or

without the use of the Concessionaire’s materials, equipment,

tools, and instruments) to complete the Cavite Extension

whether by enforcing any security given by the

Concessionaire for its performance under this Concession

Agreement or otherwise, in which case the Grantors shall have the right to take possession of and use all equipment,

materials, tools, and instruments of the Concessionaire

necessary for completion of the Cavite Extension, and the

Concessionaire shall have no right to remove such items from

the Project until such completion; and

31.4.c (6) subject to the rights of the Grantors as provided in this

Section 31.4, if the Grantors require the Concessionaire to

carry out any System Upgrades or effect any variations or

System Remedial Works after the Notice of Termination, then

the Grantors shall be liable for the cost of all such work.

31.4.d Obligations of Concessionaire

On and from the Termination Date stated in a Notice of Termination, if

requested by the Grantors, the Concessionaire shall:

31.4.d (1) withdraw from the Project;

31.4.d (2) hand over the Project including possession of the Project

Assets and transfer the ownership of the Free Standing Commercial Assets in accordance with Section 16.1;

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31.4.d (3) assign to the Grantors such of Concessionaire’s contracts or

subcontracts as the Grantors may request;

31.4.d (4) deliver and make available to the Grantors at no cost to the

Grantors all proprietary information, patents, licenses and

other intellectual property rights of the Concessionaire related to the Project reasonably necessary to permit the

Grantors to complete or cause the completion of the Cavite Extension or to take over the operation and maintenance of

the System;

31.4.d (5) authorise the Grantors to use such information in completing the Cavite Extension, carrying out any work in relation to the

Existing System or for the operation and maintenance of the

System;

31.4.d (6) remove (at its own cost) such materials, equipment, tools and

instruments, debris or waste materials used or generated by

the Concessionaire in undertaking the Project as the Grantors

may direct; and

31.4.d (7) give the Grantors (without charge) any or all designs, drawings, manuals, other relevant information and site

facilities of the Concessionaire related to the Project

necessary for completion of the Cavite Extension or for the operation and maintenance of the System.

31.4.d (8) Section 33.3 (Cost of Handback) shall apply to a termination

of this Concession Agreement under this Section 31 (Default and Termination) in the same way that it applies to the

handback of the Project to the Grantors on the Transfer Date.

31.4.e General

On and from the Termination Date stated in the applicable Notice of

Termination, the Concessionaire and the Grantors shall no longer, except

as provided in this Section 31.4 have any further obligations towards each

other pursuant to this Concession Agreement. Notwithstanding that the

appointment of the Concessionaire may have been terminated, the Concession Agreement remains in effect for purposes of novation to a

Substitute Concessionaire or to a third party selected by the Grantors.

31.4.f Cooperation on Termination

Upon termination of this Concession Agreement, the Concessionaire shall,

in addition to its obligations under Section 31.4.c and 31.4.d, cooperate

with the Grantors (at the Concessionaire's own cost) and comply with the

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instructions of the Grantors to facilitate the transfer of the System (and, if

applicable the Works) including but not limited to:

31.4.f (1) permitting the Grantors or persons authorised by them to

make offers of employment to employees of the

Concessionaire employed in the operations, maintenance and management of the System;

31.4.f (2) taking such steps as the Grantors require to procure the

assignment or novation of contracts, authorisations and

licences pertaining to the System to the Grantors or to a

person designated by them;

31.4.f (3) maintaining all records relating to the operation and

maintenance of the System and transferring these to the

Grantors or to a person designated by them.

31.4.g Termination Payment Obligation

On any termination of this Concession Agreement the Grantors shall be

obliged to make the payment calculated pursuant to Schedule 10

(Financial Consequences of Termination) and, if termination occurred

prior to the Extension Completion Date, this shall constitute a purchase of

the Works.

31.5 Financial consequences

31.5.a Termination Payments

The Termination Payments payable by the Grantors on termination of this

Concession Agreement differ depending on when it occurs and whether it

has been terminated by reason of:

31.5.a (1) a Concessionaire Event of Default or failure to satisfy the

conditions precedent to the Effective Date or Construction

Start Date for reasons attributable to the Concessionaire;

31.5.a (2) a Grantors Event of Default, exercise by the Grantors of their

right to terminate under Section 31.1.c, or failure to satisfy the

conditions precedent to the Effective Date or Construction

Start Date for reasons attributable to the Grantors; or

31.5.a (3) extended Force Majeure or a termination contemplated under Section 5.5.c.

Those financial consequences of termination of this Concession

Agreement are as set out in Schedule 10 (Financial Consequences of

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Termination).

31.5.b Payment Arrangements

31.5.b (1) Any Termination Payment shall be in Philippine Pesos, which

may be paid outright in cash deposited with the bank account

designated by the Concessionaire or, subject to Legal Requirements, by the issuance of a promissory note from the

Republic of the Philippines through the Department of

Finance. If the Grantors opt to settle the Grantors Termination

Payment by promissory note, the Grantors shall notify the

Concessionaire of this decision and shall cause the issuance by the Republic of the Philippines through the Secretary of

Finance of two (2) promissory notes on a day that is no later

than one hundred and eighty (180) days after the Termination

Date, unless the parties agree on another period. The

promissory notes shall be payable by the Republic of the

Philippines to the Concessionaire and shall reflect two (2)

equal instalments of the total amount owed to Concessionaire,

including interest accruing from the Termination Date on the

outstanding amounts based on the Late Payment Rate. The

promissory notes (including interest thereon) shall be due and

payable at the end of the first (1st) and second (2nd) years, respectively, of their date of issuance.

31.5.b (2) If the Grantors elect to settle the Termination Payment in cash,

the Grantors shall notify the Concessionaire of this decision and the outstanding amount shall (i) be settled on a date that

is no later than two (2) years after the Termination Date and (ii) include interest at the Late Payment Rate which accrue

from the Termination Date until the date of payment.

31.5.b (3) Upon receipt of the Notice of Termination, the Parties shall meet within two (2) Business Days and continue to meet daily

to determine the amount of the Grantors Termination

Payment, as applicable. If the Parties cannot agree on the amount of the Termination Payment, as applicable, on or

before the date that is thirty (30) days after the time of the

receipt by one party of a Notice of Termination from the other,

the matter may be referred by any party to an Expert

appointed in accordance with Section 35.3 (Expert) and (in

relation to a dispute as to the value of the Commercial

Business) an Independent Appraiser appointed in accordance

with Section 35.4 (Independent Appraiser).

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31.5.b (4) The Grantors Termination Payment, as applicable, shall be

computed based on values as of Termination Date, provided

that for the avoidance of doubt, in respect of the Grantors

Termination Payment, any cashflows earned by the

Concessionaire during the period from the Termination Date

until the actual turnover of the cashflows to the Grantors, shall

be for the account of the Grantors and set off against the

Grantors Termination Payment.

31.5.b (5) The Termination Payment whether made in cash or

promissory note, shall, when received, be considered as full

payment and discharge by the Grantors of all their obligations

under or in connection with this Concession Agreement. Its

payment, whether in cash or promissory note, shall extinguish any and all rights and obligations of the Parties, their

successors-in-interests and assigns under this Concession

Agreement. All other claims that were not demanded or referred to arbitration prior to the Payment Date shall also be

deemed waived or settled by the Termination Payment. For the avoidance of doubt, the Grantors shall have the right to

take immediate possession of the System following the

Termination Date irrespective of payment of any Termination

Payment in accordance with this Concession Agreement.

31.5.b (6) If the Termination Payment, as applicable, is made by

promissory note, the obligations of the Grantors after its

issuance shall be limited to discharging its obligation to pay

under that promissory note in accordance with its terms.

31.5.b (7) If the Grantors have no further right to damages (as

applicable) as of the Termination Date, then the Grantors shall,

subject to the provisions of Section 5.5.b, return the relevant

Concessionaire Performance Security (as applicable), net of

any amounts drawn thereunder on the Payment Date.

31.5.b (8) If the Concessionaire has to make any Termination Payment, then the Concessionaire shall make the Termination Payment

no later than one hundred and eighty (180) days after the

Termination Date. If the Concessionaire fails to pay the

Termination Payment within the aforesaid period, then the

Grantors shall be entitled to interest at the Late Payment Rate

on the unpaid amount.

31.5.c Ownership of Works in Progress

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If the termination of this Concession Agreement occurs prior to the Extension Completion Date, the ownership of all the works in progress existing as of the date of issuance of the Notice of Termination shall vest in the Grantors upon payment of the Termination Payment.

31.6 Obligations on Expiry

The rights and obligations of the Parties under Sections 31.4.b, 31.4.c, 31.4.d,

31.4.e and 31.5.c shall also apply on expiry of the Concession Period.

Section 32 GRANTORS EMERGENCY RIGHT

32.1 Grounds for Action

32.1.a Concessionaire Event of Default

The Grantors may take action pursuant to this Section 32 if a Concessionaire Event of Default has occurred whether or not a Notice of

Violation or Termination Notice has been given to the Concessionaire in accordance with Section 31.2 (Procedure for Termination) or if the

Concessionaire [or the Facility Operator] ceases to hold an Operating

Franchise.

32.1.b Hostilities, tension, national emergency and Force Majeure Event

In time of hostilities, whether actual or imminent, severe international

tension or great national emergency or any other time when a Force

Majeure Event has occurred, the Grantors shall be entitled to take action

in accordance with this Section 32, whether or not a Concessionaire Event

of Default subsists.

32.1.c Great national emergency

In this Section 32, "great national emergency" means any natural disaster or other emergency which, in the opinion of the Grantors, is or

may be likely to give rise to such disruption of the means of transport that

the population, or a substantial part of the population, of Metro politan

Manila or relevant part of the province of Cavite is or may be likely to be

deprived of essential goods or services.

32.2 Procedure for Grantors Emergency step-in

32.2.a Obligation to notify

If Section 32.1 (Grounds for Emergency Step-in) applies and the Grantors

wish to take action, the Grantors shall, to the extent reasonably practicable in the circumstances, notify the Concessionaire of:

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32.2.a (1) the action they wish to take;

32.2.a (2) the reason for such action;

32.2.a (3) the date they wish to commence such action;

32.2.a (4) the period which they believe is likely to be necessary for such

action; and

32.2.a (5) to the extent practicable, the effect on the Concessionaire and

its obligation to carry out the Project during the period such action is being taken.

32.2.b Required action

Following service of a notice under Section 32.2.a:

32.2.b (1) the Grantors shall be entitled to take the action so notified and

any incidental or consequential action they reasonably believe

to be necessary or expedient (together, the "Required

Action"); and

32.2.b (2) the Concessionaire shall give all reasonable advice and

assistance to the Grantors whilst they are taking or preparing to take the Required Action.

32.3 Consequence of Emergency step-in

32.3.a Concessionaire Event of Default

If the Grantors exercise their emergency step-in rights in the event of a

Concessionaire Event of Default:

32.3.a (1) the Concessionaire shall be relieved from any obligations

which cannot be performed by reason of the step-in;

32.3.a (2) the Grantors shall collect and retain all Concessionaire

Revenue accruing during the period of the step-in;

32.3.a (3) during the period of the step-in, the Grantors shall (i) discharge all actual operating and maintenance costs of the

Concessionaire and (ii) shall provide a payment to the

Concessionaire representing the payments accruing under

the Finance Documents during the period of exercise by the

Grantors of their emergency step-in rights (but shall not be

required to make payments of any Deficit Payment that would, but for this Section 32.3 have accrued during the

relevant period);

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32.3.a (4) all environmental and other liabilities incurred as a direct

result of the actions of the Grantors during the step-in shall

be for the account of the Grantors; or

32.3.a (5) any deterioration of assets (fair wear and tear excepted) and

the consequences of the deferral of maintenance or renewal of assets arising as a direct result of the actions of the

Grantors during the step-in shall be for the account of the Grantors.

32.3.b Step-in for Other Reasons

32.3.b (1) If the Grantors exercise their step-in rights under Section

32.1.b, then, in addition to the provisions of Section 32.3.a the

Concession Period shall be extended by the period of the

Required Action; and

32.3.b (2) at the end of the period of step-in by the Grantors, the

Grantors will deduct from the Concessionaire Revenue

received during the period of step-in the costs discharged by the Grantors pursuant to Section 32.3.a(3), and pay to the

Concessionaire ninety percent (90%) of the remaining amount.

32.3.c Termination Right

If a step-in under Section 32.1.b continues in excess of one hundred and

eighty (180) days, then either Party shall be entitled to terminate this

Concession Agreement in accordance with Section 31.2.d (Termination for

Force Majeure).

Section 33 HANDBACK OF PROJECT

33.1 Transfer Date

33.1.a Unless this Concession Agreement is terminated earlier, the Concession

shall end and the Concessionaire shall transfer the possession of the

Project and the Project Assets and the ownership of the Free Standing

Commercial Assets in accordance with Section 16.1 to the Grantors on the

Transfer Date. On the Transfer Date, the Project Assets must be in the

condition required under the Handback Requirements.

33.1.b The Concessionaire shall transfer the Project Assets to the Grantors on

the Transfer Date in the condition, fair wear and tear excluded, which is

necessary or expedient for the continued efficient and economical operation, maintenance and renewal of the Project Assets in compliance

with:

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33.1.b (1) the terms of this Concession Agreement (on the assumption

that it will continue in force on the same terms); and

33.1.b (2) all Relevant Rules and Procedures,

on the basis that the Project Assets will continue to be operated until at

least the date which is three (3) years from the Transfer Date.

33.1.c In the last one (1) year of the Concession Period, the Parties shall by

mutual consultation prepare the procedures and protocol for handover of

the System to the Grantors on the Transfer Date.

33.1.d Upon the Transfer Date or, if earlier the Termination Date, if requested by

the Grantors, the Concessionaire shall withdraw from the Project, assign to the Grantors at no cost (without recourse to Concessionaire) such

Concessionaire’s subcontracts as the Grantors may request, and deliver

and make available to the Grantors at no cost all proprietary information,

patents, and licenses of Concessionaire related to the Project reasonably

necessary to permit the Grantors to complete or cause the completion of

the Project and operate and maintain the System. In connection therewith the Concessionaire authorises the Grantors to use such information in

completing the Project and operating and maintaining the System. To this effect the Concessionaire shall ensure that, whichever practicable,

intellectual property necessary for the construction, operation and

maintenance of the System is licensed to the Grantors or, where licensed to the Concessionaire, the license is assignable to the Grantors (at no cost

to the Grantors) without any consent being required. The Concessionaire

shall, at its own cost, remove such materials, equipment, tools and

instruments used by the Concessionaire and any debris or waste

materials generated by Concessionaire in the performance of the Project

as the Grantors may direct. The Grantors shall take possession of any or

all designs, drawings and facilities of Concessionaire related to the Project

necessary for completion of the Project and the operation and maintenance of the System.

33.1.e The Concessionaire shall assign to the Grantors, if the Grantors so

request, any rights and benefits which it is able to assign, including any

unexpired warranties in respect of the Project, its equipment and

systems.

33.2 Handback on Expiry

Twelve (12) months prior to the Transfer Date, a leading international

engineering consultancy with international expertise in the review of operations of mass transit systems, selected by the Grantors from a list of three (3) firms

that are proposed by the Concessionaire (the "Handback Engineer") shall be

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engaged and paid for by the Concessionaire (but owing duties to both Grantors

and the Concessionaire). The Handback Engineer shall undertake a

comprehensive survey (including inspections at designated times) to determine

whether the System complies with the Handback Requirements and whether the

Assets Register accurately reflects the Project Assets ("Handback Survey").

Where deficiencies from the Handback Requirements are discovered during the

Handback Survey (the "Handback Rectification Works"), the Concessionaire

shall be obliged to rectify the same within the timeframe stipulated by the

Handback Engineer. The Grantors will only be entitled to draw down on the

Handback Security or Operation Performance Security in respect thereof to the extent of the Concessionaire's failure under this Section 33.2 where the

Concessionaire fails to complete the Handback Rectification Works within the

timeframe stipulated by the Handback Engineer. The Handback Survey shall

state the estimated cost of the Handback Rectification Works.

33.3 Cost of Handback

33.3.a The Concessionaire shall obtain all Relevant Consents and take such

action as may be necessary for the transfer pursuant to this Section 33

(Handback of Project).

33.3.b The Concessionaire shall, no later than ninety (90) days after the Transfer

Date, remove any annotations made by it pursuant to Section 11.5

(Obligations in relation to ROW) on any titles to any of the Project Land at

its own cost. If it fails to do so the Grantors are authorised to remove such

annotations at the Concessionaire's cost and may recover such costs by

drawing on the Warranty Security.

33.3.c Subject to Section 33.3.b, the Grantors shall be responsible for transfer

taxes, and registration fees, as may be applicable, in connection with the

handback of the System to the Grantors. Save and except costs associated

with the (i) removal of annotations on original or transfer certificates of

titles and the Declarations and (ii) recording of change of ownership which shall be borne by the Concessionaire, the Grantors shall be

responsible for transfer taxes, registration fees, and any natio nal internal

revenue tax, as may be applicable, in connection with the transfer of ownership and possession of the Free Standing Commercial Assets to the

Grantors.

33.4 Performance following Expiry

33.4.a The Concessionaire is obliged to ensure that the System shall, fair wear

and tear excluded and assuming operation in line with the guidelines

proposed by the Concessionaire, meet the Handback Requirements on the

Transfer Date and be capable of meeting them during the Warranty

Period.

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33.4.b The Concessionaire shall be obliged to repair or rectify, at its own cost,

any defects and deficiencies observed by the Grantors during the

Warranty Period and which are not attributable to operation by the

Grantors in a manner contrary to the Concessionaire's recommendations

above, such that the System conforms with the Handback Requirements.

33.4.c If the Concessionaire fails to repair or rectify such defect or deficiency on

or before the date that is fifteen (15) days after the date the Concessionaire receives written notification of the defect or deficiency

from the Grantors, the Grantors shall be entitled to have the same

repaired or rectified at the Concessionaire’s risk and cost. All costs

incurred by the Grantors in this respect shall be reimbursed by the

Concessionaire to the Grantors on or before the date that is fifteen (15)

days after receipt of demand.

33.4.d The Grantors shall be entitled to call upon the Warranty Security

immediately upon the Concessionaire's failure to comply with its

obligations under Sections 33.3 (Cost of Handback) and 33.4 (Performance

Following Expiry).

Section 34 INDEMNITIES

34.1 Definitions

In this Section 34:

"Claiming Party" means the party who makes a claim for indemnification under

this Section 34.

"Excluded Losses" means:

(a) Losses which are Indirect Losses;

(b) insofar as they are direct losses, loss or deferment of profit or revenue,

loss of use, loss of contract, loss of opportunity and loss of goodwill; and

(c) losses which result from the negligence or breach of contract by the

Claiming Party.

"Indirect Losses" are Losses which, in relation to a breach of this Concession Agreement:

(a) do not arise naturally from the breach; and

(b) were not, or may not reasonably be supposed to have been, within the

contemplation of the parties:

(i) at the Signing Date; or

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(ii) where the breach relates to a modification or amendment to this

Concession Agreement, at the time of the making of such

modification or amendment,

as the probable result of the breach.

"Innocent Party" means, in relation to a breach of this Concession Agreement, the party who is not in breach or otherwise liable.

"Liability Cap" means until the first (1st) anniversary of the Effective Date two

billion and two hundred million Pesos (PhP2,200,000,000) (Indexed) and

thereafter in any Contract Year, one hundred percent (100%) of the Farebox

Revenue received in the previous Contract Year.

"Losses" means losses, liabilities, damages, penalties, actions, claims,

proceedings, costs, demands or expenses (including fees) which are sustained or

incurred by the Innocent Party or accrue to the account of the Innocent Party as

a result of that occurrence.

"Relevant Losses" are Losses which are not Excluded Losses.

34.2 Concessionaire indemnity

34.2.a The Concessionaire shall indemnify, defend, save and hold harmless the

Grantors and their officers, employees, agents and any applicable

Government Authority (the "Grantor Indemnified Persons") against any

and all Relevant Losses arising out of any breach by or on behalf of the

Concessionaire of any of its obligations under this Concession Agreement.

34.2.b For avoidance of doubt, it is hereby clarified that the Concessionaire is

liable for all claims relating to the Existing System and the Cavite

Extension once they are handed over to it by the Grantors in accordance with this Concession Agreement, including (but not limited to) (i) all taxes

and (ii) all claims arising from any Emergency Upgrade Contracts following, in each case, completion under any such contract and transfer

of warranty rights thereunder to the Concessionaire as contemplated in

this Concession Agreement, but excluding (i) any claims for taxes accruing or alleged to have accrued prior to the Effective Date and (ii) any claims

arising out of a failure of the Existing System to comply with Legal

Requirement prior to the Effective Date.

34.3 Grantor indemnity

34.3.a The Grantors shall indemnify and hold the Concessionaire, its

Shareholders, directors, officers and employees free and harmless from and against any and all Relevant Losses arising as a result of:

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34.3.a (1) the non-performance by either Grantor of any of its

obligations under this Concession Agreement;

34.3.a (2) any claim made against the Concessionaire in respect of the

Existing System and its operation before the Concessionaire

took over the Existing System (provided that no claim may be made under this Section 34.3.a (2) at any point after the first

(1st) anniversary of the Effective Date unless such claim (a) relates to death or injury to any person or is a claim of the

nature contemplated in the exclusions set out in Section 34.2.b

above in which case this limitation shall not apply);


Project Land (excluding Additional ROW) except where the

claim relates to how the Project Land is used once it is turned-

over to the Concessionaire;


Existing System not meeting the Legal Requirements in force

as at the Effective Date;

34.3.a (5) any failure of the Concessionaire to carry out any System Remedial Work provided such failure is caused solely by the

failure of the Grantors to acquire the ROW Required for

Remedial Work in accordance with the timeline agreed under Section 11.3.a.

34.3.b The Grantors shall have no liability to make any payment to any

subcontractor, supplier, consultant, agent, employee or any personnel of the Concessionaire save as specified in Section 34.3.a.

34.4 Liability Cap

The indemnity liability of a Party under this Section 34 shall not exceed the

Liability Cap. In this regard the combined indemnity obligations of both Grantors

shall not exceed the Liability Cap.

34.5 No Limitation of Liability in certain cases

To the extent that any Relevant Losses:

34.5.a result from a conscious and intentional breach of this Concession

Agreement, or the committing of a Prohibited Act, by the party other than

the Claiming Party;

34.5.b result from any claim made against the Concessionaire in respect of the

Project Land except where the claim relates to how the Project Land is

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used once it is turned-over to the Concessionaire;

34.5.c result from the Grantors' obligation (subject to Section 20.9 (Grantors Payment)) to provide Grantors Compensation or to make payments on

termination;

34.5.d are in respect of obligations to compensate any person for liability for death or personal injury, whether resulting from the negligence of a Party

or the negligence of any of its officers, employees or agents or from a

failure by a Party to comply with any of its other obligations under this

Concession Agreement;

34.5.e are in respect of any Required Action taken under Section 32 (Grantors

Emergency Right);

34.5.f are in respect of the violation of:

34.5.f (1) any Legal Requirement; or

34.5.f (2) the conditions of any Relevant Consent,

such Relevant Losses:

34.5.g are not subject to the limitations or exclusions of liability in this Section 34 (Indemnities); and

34.5.h shall not be taken into account when calculating the amount of Relevant

Losses in respect of claims admitted or finally determined in a Contract

Year for the purposes of the limitations of liability in this Section 34

(Indemnities).

34.6 Performance regime

The limitations and exclusions of liability do not apply in any case where this

Concession Agreement expressly provides for:

34.6.a any entitlement of the Concessionaire to be reduced by reason of its

performance falling short of the Key Performance Indicators; and

34.6.b any Party to bear the financial consequences of a change to the design or

specification for any part or parts of the Works.

Section 35 DISPUTE RESOLUTION

35.1 Consultation

Any disagreement or dispute among the Grantors, Concessionaire and/or the

Independent Engineer in respect of this Concession Agreement and any non-

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contractual claim arising in connection therewith (the "Dispute") shall be settled

by the Parties within thirty (30) days from either Party informing the other of

the existence of a Dispute through amicable means. If the Dispute cannot be

settled through amicable means within the prescribed period, either Party may

refer it to the Project Dispute Resolution Board in accordance with Section 35.2

(Project Dispute Resolution Board).

35.2 Project Dispute Resolution Board

35.2.a The disputes which remain unresolved through amicable means shall

immediately be referred by way of written notice to the Project Dispute

Resolution Board for resolution or amicable settlement. The Project Dispute Resolution Board shall seek to resolve such Dispute not later than

thirty (30) days from date of the written notice.

35.2.b The Project Dispute Resolution Board shall be composed of (i) a representative to be chosen by the Grantors, (ii) a representative to be

chosen by the Concessionaire, and (iii) a representative to be appointed

by the two representatives chosen by the Grantors and the

Concessionaire. Both Parties shall agree on the selection, term of office

and fees of the Project Dispute Resolution Board on or before the date

that is thirty (30) days after the Signing Date.

35.2.c Each Party shall continue to fulfil its obligations under this Concession

Agreement, where such works shall not be affected by the outcome of any pending disagreement or dispute.

35.3 Expert

35.3.a All calculations of (i) any amount payable by way of Grantors

Compensation, (ii) any amount payable under Section 19.3 (Grantors'

Procurement Option), (iii) any FM Restitution Amount under Section 28.5

(Damage Caused by Force Majeure) or whether restoration would be

economic, (iv) any determination of liability for Real Property Tax

pursuant to Section 20.11.c (Taxes), any determination as to whether the First Funding Stage has been achieved in accordance with Clause 20.12.b

(Viability Gap Funding), (v) any determination of payment under Section

18.12 or (vi) any payment under Schedule 10 (Financial Consequences of

Termination) (save and except the valuation determined by the

Independent Appraiser in accordance with Section 35.4 below) shall, if

not agreed between the Parties be finally resolved by an expert (the

"Expert") to be determined by agreement or if agreement is not reached

no later than thirty (30) days after one Party gives notice of its intention

to refer a matter to the Expert, appointed by the International Chamber of

Commerce International Centre for Expertise in accordance with its rules.

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35.3.b The Expert shall not have any business relationship with the Grantors, the

Concessionaire or any Affiliate of the Concessionaire.

35.3.c The Expert shall be a financial services professional with at least ten (10)

years' relevant experience and shall be internationally recognized for its

expertise and experience in resolving disputes of the type to be referred to it under this Concession Agreement.

35.3.d The Expert shall have freedom to determine the conduct of any matter

referred to him for a decision.

35.3.e The Expert shall give his written decision within one hundred and twenty

(120) days of the matter being referred to him.

35.3.f The fees of the Expert shall be borne as the Expert determines.

35.3.g In reaching his decision the Expert shall act as expert and not as

arbitrator and his decision shall be final and binding.

35.4 Independent Appraiser

35.4.a In the event of issue of Notice of Termination, the Parties shall by

agreement appoint or, if agreement is not reached no later than thirty

(30) days after one Party gives notice of its intention to refer a matter to

the Independent Appraiser, require the ICC International Centre for

Expertise to appoint in accordance with its rules, an independent

appraiser ("Independent Appraiser") to determine the value of the

Commercial Business as required under Schedule 10 (Financial Consequences of Termination).

35.4.b The Independent Appraiser shall have at least ten (10) years' of

experience in valuation of commercial property assets, must be accredited by the Bangko Sentral ng Pilipinas or the Philippines Securities

and Exchange Commission and shall be recognized for its expertise and experience in valuation of commercial property assets as referred to it


35.4.c The Independent Appraiser shall have freedom to determine the method

and manner of valuation of the Commercial Business referred to it under

this Concession Agreement.

35.4.d The Independent Appraiser shall give its written valuation report with

details of the method of valuation to the Parties within sixty (60) days of

the matter being referred to him.

35.4.e The fees of the Independent Appraiser shall be shared equally between

the Parties.

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35.4.f In reaching its decision the Independent Appraiser shall act as expert and

not as arbitrator and its decision shall be final and binding.

35.5 Arbitration

35.5.a Any Dispute that is not resolved amicably by the Parties on or before the

date that is thirty (30) days after the date of the notice referred to in Section 35.2.a (Project Dispute Resolution Board) shall be finally settled by

arbitration as provided under this Section 35.5 (Arbitration).

35.5.b In case of a Construction Dispute, the Dispute shall be referred to and

finally settled through arbitration by the CIAC under the Rules of

Procedure Governing Construction Arbitration promulgated by the CIAC,

pursuant to Executive Order No. 1008 (Construction Industry Arbitration

Law), as amended by Republic Act No. 9285 (Alternative Disputes

Resolution Act of 2004) (or any other laws applicable to Construction Disputes at the time that the Dispute arises). The legal seat of the

arbitration shall be the Republic of the Philippines and the venue of the

arbitration shall be in Metropolitan Manila.

35.5.c All Disputes that are not Construction Disputes shall be settled under the

Rules of Arbitration of the International Chamber of Commerce (the "ICC Rules") in effect at the time the request for arbitration is submitted in

accordance with the ICC Rules, by such number of arbitrators as the

parties may agree or, in the absence of such agreement, by a panel of three (3) arbitrators appointed in accordance with the ICC Rules. The

legal seat and venue of the arbitration shall be Singapore. The English

language shall be used in the arbitral proceedings, and all documents,

exhibits and other evidence shall be in the English language. Any award

made under this Section 35.5.c shall be deemed to be a Singapore award

made in relation to a dispute arising out of a commercial relationship for

the purposes of the New York Convention on the Recognition and

Enforcement of Foreign Arbitral Awards of 1958.

Section 36 MISCELLANEOUS PROVISIONS

36.1 Assignment

36.1.a Subject to compliance with prevailing laws on nationality requirements for public utilities, government procurement and all other Relevant Rules

and Procedures, the Concessionaire has the right to assign any of its

rights, title, interest, or obligations under this Concession Agreement, in

whole or in part, provided that:

36.1.a (1) such assignment will not in any way diminish its principal

liability under this Concession Agreement; and

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36.1.a (2) the Concessionaire secures the Grantors' prior written

approval of the assignment, which (save in the case of the

creation of a Permitted Security Interest) approval shall be

given or withheld in the Grantors' absolute discretion.

36.1.b The Concessionaire has the right to assign any of its actual or expected income and revenue under this Concession Agreement, in whole or in

part, without need of approval from the Grantors provided that the Concessionaire shall give a written notice to the Grantors prior to the

assignment.

36.2 Modification and Amendment

36.2.a At any time during the term of this Concession Agreement, upon request

of the Grantors or the Concessionaire, the Grantors and the

Concessionaire shall consult with each other to determine whether in light of relevant circumstances, provisions of this Concession Agreement

need revision. Such revision shall ensure that this Concession Agreement

operates equitably and without major detriment to the interest of any of

the Parties. In reaching agreement on any revision in accordance with

this Section 36.2, the Parties shall ensure that no revision to this

Concession Agreement shall prejudice the Concessionaire’s financial

credibility or its ability to raise funds by borrowing or other means. Any

consultation among the Parties pursuant to this Section 36.2 shall be

carried out in a spirit of cooperation with due regard to the intent and

objectives of this Concession Agreement.

36.2.b This Concession Agreement shall not be modified, amended or varied in

any manner unless such modification, amendment or variation is in

writing and executed by the Parties and approved in accordance with all

Relevant Rules and Procedures.

36.3 Notices

36.3.a Any notice or communication required or permitted in, or otherwise issued in connection with, this Concession Agreement shall be in writing

and shall be delivered personally, transmitted by facsimile, or scanned

and sent by electronic mail, or sent by registered, postage prepaid mail to

the following:

The Grantors:

The Concessionaire:

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36.3.b Any such notice or communication shall be deemed given when so

delivered personally to, or if transmitted by facsimile or sent by electronic

mail or sent by registered mail, upon its receipt, in the respective

addresses of the Parties.

36.4 Waiver

36.4.a No waiver of any of the terms or provisions of this Concession Agreement

shall be valid unless made in writing and signed by the Parties.

36.4.b The waiver by any Party of any breach of any provision of this Concession

Agreement shall not be construed as a waiver of a subsequent breach,

whether of the same or different provision.

36.4.c The failure or delay by any Party to enforce any rights or remedies under

this Concession Agreement shall not be construed as a waiver of its right

to exercise or enforce such right or remedy or a waiver of any continuing,

succeeding or subsequent breach of any of its provisions.

36.5 Governing Law

This Concession Agreement and its interpretation or construction shall be

governed by the laws of the Republic of the Philippines.

36.6 Severability

The declaration by competent authority of any provision of this Concession

Agreement as void, invalid or otherwise unenforceable shall not invalidate the

remaining provisions hereof, and the Parties shall promptly amend this

Concession Agreement and/or execute such additional document/s as may be

necessary and/or appropriate to correct any void, invalid or otherwise unenforceable provision in such a manner that, when taken with the remaining

provisions, will achieve the intended commercial purpose of this Concession

Agreement.

36.7 Entire Agreement

This Concession Agreement comprises the entire agreement of the Parties and

replaces and supersedes all prior negotiations, representation and agreements

(whether oral or in writing).

36.8 Exclusive Remedies

36.8.a Where this Concession Agreement specifies financial remedies, damages

or penalties in respect of any breach or other situation, such remedies,

damages or penalties shall be to the exclusion of all other financial claims.

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For the avoidance of doubt the Grantors' only financial remedy in relation

to a failure by the Concessionaire to achieve any of the Key Performance

Indicators shall be the payment of KPI Charges.

36.8.b So far as permitted by Legal Requirement the only rights available to the

Parties to terminate this Concession Agreement are those expressly set out in this Concession Agreement and no Party shall be entitled to

exercise a right to terminate or rescind or accept the repudiation of this Concession Agreement under any other right whether arising under a

Legal Requirement or otherwise.

36.8.c Where in respect of any single event or circumstance a right to compensation might accrue to the Parties pursuant to more than one

provisions of this Concession Agreement, then the Parties shall not be

entitled to any double recovery in respect of that same event or

circumstance.

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[Signature page follows.]

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IN WITNESS WHEREOF, the Parties have set their hands on the date and at the place first stated above.

By:

By:

WITNESSED BY:

_______________________________. _______________________________

Republic of the Philippines Department of Transportation...

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