1.1 Definitions

Unless the context otherwise requires, the following terms whenever used in this Agreement shall have the following meanings:

"Accounting Principles" means the generally accepted accounting principles applicable from time to time in the Philippines, as determined by the Financial Reporting Standards Council or its successor body.

"Affiliate" means, with respect to any specified person, any other person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person. For purposes of this definition, "control" means the ownership, directly or indirectly, or as trustee, personal representative, or executor, of more than fifty percent (50%) of the outstanding capital stock of such person, or other equity interests having the power to elect a majority of the board of directors, or similar body governing the affairs of such person or the power to direct or cause the direction of the business affairs or management of such person.

"Agency Event of Default" is defined in Section 15.2 (Agency Events of Default).

"Agency Parties" is defined in Section 14.1 (Indemnification by the Company).

"Agency Rectification Plan" is defined in Section 20.1.1(c).

"Agency Revenue" is defined in Section 8.1.3 (Agency Revenue).

"Agency Step-in Rights" is defined in Section 17.1 (Step-in Rights).

"Agreement" means this Concession Agreement signed by the Parties on the Signature Date, including any amendments that may be made from time to time in accordance with its terms.

"Asset Register" is defined in Section 6.5(b)(ii).

"Auditors" means the independent public accountants appointed by the Company with the prior written approval of the Agency.

"Billing Month" means (i) the period from the Provisional Operations Start Date until the last Day of the calendar month in which the Provisional Operations Start Date occurs; (ii) each successive period of one calendar month thereafter, exclusive of the calendar month in which the Termination Date occurs; and (iii) the period from the first Day of the calendar month in which the Termination Date occurs until the Termination Date.

"BOI" means the Board of Investments of the Department of Trade and Industry.

"BOT Law" means Republic Act No. 6957, as amended, and its Implementing Rules and Regulations.

"Business Day" means any Day other than a Saturday, a Sunday, and any Day which is a legal non-working holiday in [●], Philippines or any Day when commercial banks in [●], Philippines are closed.

"Change-in-Law" means any of the following events occurring as a result of any action by any Government Authority of the Philippines:

(a) A change in or repeal of a Legal Requirement;

(b) An enactment or making of a new Legal Requirement; or

which in any case was not reasonably foreseeable at the Signature Date, but not a change in Taxation and an in improvement in rail technology or operational policies or practices which are generally regarded by rail developers or operators and regulatory authorities in advanced jurisdictions as appropriate for service providers to have to make.

"Change of Ownership" means:

(a) any sale, transfer or disposal of any legal, beneficial or equitable interest in any or all of the shares in the Company, including control over the exercise of voting rights conferred on those shares, control over the right to elect, appoint or remove directors, or control over the right to declare dividends; and

(b) any other arrangements that have or may have or which result in the same effect as paragraph (a) above.

"Claims" means with respect to any person, any and all suits, sanctions, legal proceedings, claims, assessments, judgments, damages, penalties, fines, liabilities, demands, reasonable out-of-pocket expenses of whatever kind (including reasonable attorneys' fees and expenses) and losses incurred or sustained by or against such person but excluding any lost profits or other special, incidental, indirect, punitive, or consequential damages suffered by such person.

"COA" means the Commission on Audit.

"Commercial Development" means the commercial development of the Facilities and Project Land upon terms to be separately agreed between the Agency and the Company/provided in Schedule 18 (Commercial Development).

"Company Event of Default" is defined in Section 15.1 (Company Events of Default).

"Company Parties" is defined in Section 14.2 (Indemnification by Agency).

"Company Rectification Plan" is defined in Section 20.1.1(b).

"Company Revenue" is defined in Section 8.1.1 (Company Revenue).

"Concession Fee" means the fee payable by the Company to the Agency for the exclusive right to carry out the Project calculated in accordance with Schedule 19 (Concession Fee);

"Confidential Information" is defined in Section 21.4.1 (Confidentiality).

"Consent" means any permit, license, approval, concession, right, award, registration, certification, waiver, exemption, or other authorization, including any amendments thereto, that is required under the terms of or in connection with this Agreement.

"Continuous Construction Date" means the date on which the Company commences continuous construction activities to perform the Works at the Site, including clearing, earthworks, excavation, formworks, piledriving, laying of foundations, or other activities approved in writing by the Agency as constituting commencement of continuous construction activities for the Works.

"Contract Management Body" is defined in Section 9.1 (Contract Management Body).

"Contract Year" means (i) initially, the period starting on the Provisional Operations Start Date and continuing until the end of that calendar year (such initial period being "Contract Year 1") and (ii) thereafter, each successive period consisting of twelve (12) consecutive monthly Billing Months (the first such period being "Contract Year 2" and so on), provided that the last Contract Year shall end on the Termination Date.

"Customers" shall mean those persons who from time to time use the Facilities and avail of the Services provided by the Company, including those who patronize the Commercial Development by the Company.

"Day" means a 24-hour period beginning and ending at midnight, Philippine time.

"Delay" is defined in Section 5.8.1 (Occurrence of Delay).

"Delay Liquidated Damages" is described in Section 5.8.2 (Delay Liquidated Damages).

"DENR" means the Department of Environment and Natural Resources.

"Design and Technical Specifications" means the design and technical specifications set out in Schedule 1 (Design and Technical Specifications) to be followed and complied with by the Company in the design, engineering, procurement, and construction of the Works.

["Design Timetable" means the timetable for submitting the detailed engineering designs and plans to the Agency specified in Schedule 2 (Design Timetable).]1

"Dispute" means any difference or disagreement of any kind whatsoever arising between the Parties in connection with, arising out of, or relating to the interpretation, implementation, breach, termination, or validity of this Agreement.

"Dollars", "US Dollars", and "US$" means the lawful currency of the United States of America.

"ECC" means the Environmental Compliance Certificate issued by the DENR for the Project.

"Effective Date" is defined in Section 2.1. (Conditions Precedent to the Effective Date).

"EIA" means the environmental impact assessment for the Project conducted or caused by the Company to be conducted in line with all applicable Legal Requirements.

"EPC Contract" means the turnkey engineering, procurement, and construction contract made or to be made between the Company and the EPC Contractor for the design, engineering, procurement, construction, rehabilitation, startup, testing, and commissioning of the Facilities.

"EPC Contractor" means the contractor or person engaged by the Company under the EPC Contract to undertake the Works, by itself or through a subcontractor acceptable to the Agency.

"Equity" means (i) the capital stock, of any class, the Company subscribed to by the Shareholders of the Company, and (ii) indebtedness of the Company given to it by a Shareholder or an Affiliate of any Shareholder that is subordinated to any indebtedness incurred by the Company under the Financing Agreements.

"Event of Default" is defined in Section 15 (Events of Default).

"Event of Loss" means any occurrence during the term of the Financing Agreements which results in all or a substantial portion of the Facilities being damaged, destroyed, or rendered unfit for normal operation in accordance with this Agreement.

"Expert Panel" is defined in Section 19.2.2 (Establishment and Operation of Expert Panel).

"Existing Facilities" means the existing urban mass rail facility of [line], including the existing depots, electrical and mechanical systems, railway vehicles, stations, tracks and other assets, as described in Schedule 1 (Design and Technical Specifications).

"Facilities" means the Existing Facilities and New Facilities.

"Fare" is described in Schedule 17 (Fares).

"Financial Model" means the financial base case for the Project as reflected in the computer model prepared by the Company and submitted and agreed to by the Lenders, which model incorporates the forecast cash flow statements of the Company including all expenditure, revenues, taxation and financing of the Project together with the projected income statements and balance sheets for the Company over the Operating Period, and details of all assumptions, calculations and methodology used in the compilation thereof, as amended from time to time in accordance with the Financing Agreements.

"Financing Agreements" means the agreements or instruments that make available or extend loans, credit, notes, bonds, subordinated debt, letters of credit, credit security, swaps, derivatives, hedging instruments, and other documents relating to the financing or refinancing of the Project provided by any Lender, including any amendments, supplements, extensions, and renewals of that financing or refinancing.

"Force Majeure Event" is defined in Section 13.1.1 (Definition of Force Majeure Event).

"Government Authority" means any government, department, commission, board, bureau, agency, regulatory body, instrumentality, fiscal, legislative, judicial, or administrative, national or local, having jurisdiction or authority over the matter in question.

"Government Performance Undertaking" is defined in Section 2.1(r) (Conditions Precedent to Effective Date).

"ICC" means the Investment Coordination Committee of the National Economic and Development Authority.

"Independent Verifier" means the person appointed by the Parties to review the detailed engineering designs and plans and to monitor the rehabilitation and construction of the Facilities pursuant to Section 5.4 (Independent Verifier) hereof.

"Initial Shareholders" means all of the Shareholders of the Company as of the Signature Date, the names of which are set out in Schedule 21 (Company Shareholders).

"Intellectual Property Rights" means all rights of ownership recognized by law in inventions, technology, copyrighted material, computer software, and firmware, including (a) patents, trade marks, service marks, rights in designs, trade names, copyrights, rights to trade secrets, proprietary information, and know-how in each case whether registered or not; (b) applications for their registration; (c) rights under licenses and consents in relation to any of them; and (d) all forms of protection of a similar nature or having equivalent or similar effect to any of them which may subsist anywhere in the world.

"Legal Requirements" means all laws, statutes, orders, decrees, injunctions, Consents, agreements, EIAs, and regulations of any Government Authority having jurisdiction over the matter in question.

"Lender" means any person providing loans or other financing or refinancing to the Company under the Financing Agreements, including its successors, assignees, agents and trustees, but not including any Shareholder or Affiliate of a Shareholder with respect to any indebtedness of the Company that constitutes Equity in the Company.

"Lien" means any mortgage, pledge, lien, security interest, option agreement, claim, charge, or encumbrances of any kind.

"Lock-in Period" is defined in Section 18.3.2 (Restriction on the Transfer of Capital of Company).

"Maintenance Schedule" is defined in Section 6.5 (Planned Downtime; Maintenance Program and Schedule).

"NEDA" means the National Economic and Development Authority.

"New Facilities" means the new electrical and mechanical systems, railway vehicles, stations, tracks and other assets described in Schedule 1 (Design and Technical Specifications).

"Non-Political Force Majeure Event" is defined in Section 13.1.3 (Non-Political Force Majeure Event).

"Notice of Agency Event of Default" is defined in Section 20.1.1(c) (Termination Procedure).

"Notice of Company Event of Default" is defined in Section 20.1.1(b) (Termination Procedure).

"Operating Period" means the period commencing on the Provisional Operations Start Date and ending on the Termination Date.

"Operating Procedures" means the plans, manuals, methods and procedures for operating the Facilities developed by the Company pursuant to Section 6.2 (Operating Procedures) and Schedule 14 (Operating Procedures).

"Operating Security" is defined in Section 6.3 (Operating Security).

"Operations Start Date" means the Day on which a final acceptance certificate for the Facilities is issued by the Agency to the Company in accordance with Section 5.6.2 (Final Acceptance).

"Party" means the Agency or the Company, as the case may be, and "Parties" means both the Agency and the Company.

"Penalty Rate" means [●] percent ([●]%) per annum.

"Performance Security" is defined in Section 5.7 (Performance Security).

"Performance Security Issuer" means (i) if the Performance Security is in the form of an irrevocable standby letter of credit, a universal or commercial bank reasonably acceptable to the Agency whose issuer credit rating or long-term unsecured debt obligations are rated at least PRS A by PhilRatings, or (ii) if the Performance Security is in the form of a surety bond callable on demand, a reputable surety company reasonably acceptable to the Agency which is duly licensed and ranked by the Insurance Commission in its latest official publication to be among the top ten (10) surety firms in the Philippines in terms of net worth.

"Peso", "P", and "PHP" mean the lawful currency of the Republic of the Philippines.

"Philippines" means the Republic of the Philippines.

"Planned Downtime" means any normal maintenance, replacement or servicing of equipment, or other work that is planned or scheduled pursuant to Section 6.5 (Planned Downtime; Maintenance Program and Schedule).

"Planned Downtime Period" is defined in Section 6.5(b) (Planned Downtime; Maintenance Program and Schedule).

"Political Force Majeure Event" is defined in Section 13.1.2 (Political Force Majeure Event).

"Project" means:

(a) the carrying out and financing of the Works;

(b) the operation, maintenance, renewal and financing of the integrated Facilities during the Operating Period;

(d) the carrying out and financing of Commercial Development; and

(e) the transfer of the integrated Facilities to the Agency at the Termination Date,

all in accordance with the terms and conditions of this Agreement and all Legal Requirements.

"Project Agreements" means:

(a) this Agreement;

(b) the EPC Contract;

(d) the Financing Agreements; and

(e) any other material agreement entered into by the Company pursuant to the agreements listed in sub-clauses (a) through (d) above, for the purposes of the implementation of the Project, including any agreement or subcontract for the rehabilitation, construction, management, operation and maintenance, and provision of technical assistance for the Project.

"Project Land" means all lands and land rights required for carrying out the Project as described in Schedule 8 (Land Rights).

"Project Milestones" means:

(a) the Effective Date;

(b) the Continuous Construction Date;

(d) the Operations Start Date; and

(e) the transfer of Facilities to the Agency upon termination of this Agreement.

"Project Milestone Schedule" means the timetable or required dates for completing all the Project Milestones set out in Schedule 5 (Project Milestones Schedule), as may be amended from time to time in accordance with this Agreement.

"Project Report" is defined in Section 9.2 (Project Report).

"Provisional Operations Start Date" means the Day on which a provisional acceptance certificate is issued to the Company after successful testing and commissioning of the New Facilities and the rehabilitated Existing Facilities following the testing procedures provided in Schedule 13 (Testing and Commissioning).

"Prudent Utility Practice" means applying, in relation to the manner in which the construction obligations and the performance of Services are rendered under this Agreement, the standards, practices, methods and procedures conforming to all Legal Requirements, and exercising that degree of skill, care, diligence, prudence and foresight that would reasonably and ordinarily be expected from a skilled and experienced person engaged in a similar type of undertaking under similar circumstances, including including taking reasonable steps to ensure that:

(a) adequate materials, resources, and supplies are available to meet the Facilities' needs under normal conditions and reasonably anticipated abnormal conditions;

(b) sufficient and duly licensed operating personnel (i) are available, (ii) are adequately experienced and trained to operate the Facilities properly and efficiently taking into consideration manufacturers' guidelines and specifications, and (iii) are capable of responding to abnormal conditions;

(c) preventive, routine, and non-routine maintenance and repairs (i) are performed on a basis that ensures reliable long-term and safe operation taking into account manufacturers' recommendations and (ii) are performed by knowledgeable, trained, and experienced personnel who are duly licensed and are using proper equipment, tools, and procedures;

(d) appropriate monitoring and testing is done to ensure the Facilities are functioning as designed and to provide assurance that infrastructure and equipment will function properly under both normal and abnormal conditions; and

(e) equipment is operated in a manner safe to workers, the general public, and the environment.

"Required Continuous Construction Date" means the date prescribed in the Project Milestone Schedule for the occurrence of the Continuous Construction Date, as such date may be changed from time to time in accordance with this Agreement.

"Required Effective Date" means the date prescribed in the Project Milestone Schedule for the occurrence of the Effective Date, as such date may be changed from time to time in accordance with this Agreement.

"Required Operations Start Date" means the date prescribed in the Project Milestone Schedule for the occurrence of the Operations Start Date, as such date may be changed from time to time following the terms of this Agreement.

"Required Provisional Operations Start Date" means the date prescribed in the Project Milestone Schedule for the occurrence of the Provisional Operations Start Date, as such date may be changed from time to time in accordance with this Agreement.

"Revenue" is defined in Section 8 (Revenues and Payments).

"Ridership Levels" means the number of passengers who travel on the Facilities.

"SEC" means the Philippine Securities and Exchange Commission.

"Security" means:

(a) the Performance Security;

(b) the Operating Security; and

"Services" means the operational services to be provided by or on behalf of the Company for the Agency as set forth in Section 7 (Supply of Services).

"Service Quality Requirements" is defined in Schedule 15 (Service Quality Requirements).

"Shareholder" means any person owning any of the outstanding capital stock, of any class, of the Company, including any of the Initial Shareholders.

"Signature Date" means the date of signing of this Agreement as indicated in the preamble.

"Site" is identified in Figure 1 in Schedule 3 (Site and Interface).

"Sponsor" means each of the Initial Shareholders and any transferee of the direct or indirect ownership of the outstanding capital stock of the Company.

"Tax" means any net income, gross income, gross receipts, sales, use, transfer, gains, ad valorem, franchise, profits, capital gains, license, value-added, withholding, payroll, employment, professional, business, excise, stamp, occupation, premium, property, environmental, windfall profit, documentary, registration, severance, custom duty, governmental fee, other like assessment or charge of any kind whatsoever imposed pursuant to the laws of any national, local, or foreign jurisdiction or by any political subdivision or taxing authority, together with any interest, penalty or other payment charged, and any liability for such amounts under all applicable laws as a result either of being a member of a combined, consolidated, unitary or affiliated group or of a contractual obligation to indemnify any person or other entity.

"Termination Date" means the date when any of the following events occurs first:

(a) termination of this Agreement pursuant to Section 2.3.1 (Termination due to Non- Occurrence of Effective Date);

(b) termination of this Agreement pursuant to Section 20.1 (Termination due to an Event of Default);

(d) on the [●] ([●]th) anniversary of the Provisional Operations Start Date.

"Termination Notice" is defined in Section 20.1.1(a) (Termination Procedure).

"Total Project Cost" has the meaning given to it in the BOT Law, which amount shall be calculated on the basis of information reasonably satisfactory to the Agency that may be provided by the Company.

"Unplanned Downtime" means any temporary loss of function of the Facilities that is not a Planned Downtime and is not the result of a breach by the Company or its subcontractors of any of its obligations under this Agreement.

"Unplanned Downtime Period" is defined in Section 6.6 (Unplanned Downtime).

"Warranty Bond" is defined in Schedule 23 (Termination Buy-Out and Transfer Provision).

"Works" means:

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

(b) the rehabilitation, replacement and upgrade of the Existing Facilities; and

all in accordance with the design and technical specifications provided in Schedule 1 (Design and Technical Specifications).

"Works Timetable" means the timetable for the Works specified in Schedule 6 (Works Timetable).2

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1 Delete all references to "Design Timetable if all detailed engineering designs and plans will be submitted prior to the Required Continuous Construction Start Date (See Section 5.5).

2 Delete all references to Works Timetable if Works will not be undertaken in phases.