Republic of the Philippines

Department of Energy
Energy Center, Fort Bonifacio, Taguig City
Metro Manila, Philippines

GEOTHERMAL RENEWABLE ENERGY (RE) SERVICE CONTRACT

GRESC No. ___________

This Geothermal Renewable Energy (RE) Service Contract (hereinafter referred to as the
“Contract”) made and entered into this ____ day of ___________, 20____ in
_____________________ by and between:

THE GOVERNMENT OF THE REPUBLIC OF THE

PHILIPPINES, hereinafter referred to as the “Government”,
acting through the DEPARTMENT OF ENERGY, with principal
office at Energy Center, Merritt Road, Fort Bonifacio, Taguig
City 1201, Metro Manila, in this act represented by the Secretary
of Energy, HONORABLE_______________________, hereinafter
referred to as the “DEPARTMENT”;

and

__________________________, a corporation organized and

existing under the laws of the Philippines, with principal office
address at ____________________________, in this act
represented by its
______________________________________hereinafter referred to
as the “RE DEVELOPER’’;

In the implementation of this Contract, the Government shall act through and be
represented by the DEPARTMENT. The DEPARTMENT and the RE DEVELOPER are
hereinafter referred to individually as “Party”, and collectively as “Parties”.

WITNESSETH; That

WHEREAS, all Geothermal Resources in public and/or private lands in the Philippines,
whether found in, on or under the surface of dry lands, creeks, rivers, lakes, or other
submerged lands within the waters of the Philippines belong to the State, inalienable
and imprescriptible, and their exploration, development and exploitation are governed
by the provisions of Presidential Decree No.1442 (An Act To Promote The Exploration
And Development Of Geothermal Resources), hereinafter called the “PD No.1442" and
Republic Act No. 9513 otherwise known as the Renewable Energy Law of 2008,
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hereinafter referred to as “RA No. 9513”;

WHEREAS, under PD No.1442 and RA No. 9513, the Government may enter into
Geothermal RE Service Contracts for the exploration, development and exploitation of
geothermal Resources;

WHEREAS, the RE DEVELOPER desires to enter into such Geothermal RE Service

Contract for financial, technical, or other forms of assistance with the Government
covering the Contract Area hereinafter defined; and

WHEREAS, the RE DEVELOPER has agreed to furnish the necessary services,

technology and financing for the Geothermal Operations hereinafter defined;

NOW, THEREFORE, in view of the foregoing premises, the Parties hereby stipulate
and agree to enter into this GEOTHERMAL RE SERVICE CONTRACT subject to the
following terms and conditions:

SECTION I

SCOPE

1.1 This Contract refers to Geothermal RE Service Contract entered into pursuant to
Section 1 of the PD No. 1442 and Section 2 of the RA No. 9513 with all necessary
services, technology and financing to be furnished by the RE DEVELOPER in
accordance with the provisions herein contained. The RE DEVELOPER shall
undertake and execute the Geothermal Operations contemplated herein under the
full control and supervision of the DEPARTMENT in accordance with this
Contract.

1.2 The RE DEVELOPER shall be responsible to the DEPARTMENT for the execution
of the Geothermal Operations in accordance with the provisions of this Contract,
and is hereby appointed and constituted the exclusive Party to conduct
Geothermal Operations on behalf of the Government for the Contract Area. The
DEPARTMENT shall have the right to require performance of any or all
obligations of the RE DEVELOPER under this Contract against any or all of the
companies comprising the RE DEVELOPER.

1.3 The RE DEVELOPER shall assume all financial risks under this Contract such that
if no Geothermal Resources in Commercial Quantity is discovered and produced,
the RE DEVELOPER shall not be entitled to reimbursement for any expense
incurred in connection with this Contract.

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 SECTION II

DEFINITION OF TERMS

The words and terms under this Contract, unless otherwise specified herein, shall have
meaning in accordance with the following definitions:

2.1 Accounting Procedures - refers to the set of procedures, guidelines and

arrangement between the Parties, as may be amended by the Parties from time to
time, to govern the recording and proper entry of expenses, costs and income,
attached as Annex “B” of this Contract.

2.2 Additional Investments – refers to investments of the RE DEVELOPER relating

to improvements, modernization, or rehabilitation duly registered with the
DEPARTMENT, which may or may not result in increased capacity, subject to
the conditions to be determined by the DEPARTMENT, such as, but not limited
to the following:

a. Identification of the phases/stages of production scheduled for

modernization/rehabilitation; and

b. Improvements such as reduced production/operational costs,

increased production/operational efficiency, and better product
quality of the RE facilities.

2.3 Affiliate - means (a) a company in which the RE DEVELOPER holds directly or
indirectly at least fifty percent (50%) of its outstanding shares entitled to vote; or
(b) a company which holds directly or indirectly at least fifty percent (50%) of the
RE DEVELOPER’s outstanding shares entitled to vote; or (c) a company in which
at least fifty percent (50%) of its shares outstanding and entitled to vote are
owned by a company which owns directly or indirectly at least fifty percent
(50%) of the shares outstanding and entitled to vote of the RE DEVELOPER.

2.4 By-Product - means any non-condensable gases, mineral or minerals (exclusive

of oil, hydrocarbon gas and helium) which are found in solution or inherently
associated with geothermal fluids.

2.5 Calendar Year - means a period of twelve (12) consecutive months commencing
with January and ending on the following December 31, according to the
Gregorian calendar.

2.6 Commercial Operations - refers to the phase wherein the RE DEVELOPER has
completed the commissioning and test operations and is able to sell or apply the
produced energy and other by-products, as confirmed by the DEPARTMENT;

2.7 Contract - refers to this Geothermal RE Service Contract.

2.8 Contract Area - means, at any time, the area which is the subject of this Contract
covering a total area of _______________ located in ________________________.
The Contract Area is outlined and more particularly described in a map with its

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 technical description attached herein as Annex “A” and made an integral part of
this Contract.

2.9 Contract Year - means a period of twelve (12) consecutive months counted from
the Effective Date of this Contract and, thereafter, from the anniversary of such
Effective Date.

2.10 Corporate Income Tax - refers to the tax imposed under the National Internal
Revenue Code of the Philippines (“NIRC”), as amended by the Act, upon net
taxable income. After availing of the Income Tax Holiday (ITH), the RE
DEVELOPER shall be subject to a Corporate Income Tax Rate of ten percent
(10%).

2.11 Cost of Goods Sold – refers to all business expenses directly incurred to produce
the merchandise to bring them to their present location and use, consistent with
Section 27, Paragraph A(7) of the NIRC of 1997, as amended by Republic Act No.
9337.

2.12 Development Area - means an area within the Contract Area where the
Geothermal Resource has been identified and delineated for development and
production

2.13 Date of Commencement of Commercial Production – means the date of

commencement of production of Geothermal Resources as jointly determined by
the Parties in accordance with the provisions of Section VI hereof, after
completion of development operations as provided in the Overall Development
Program for the Geothermal Field.

2.14 DEPARTMENT - means the Department of Energy of the Government, or its

successor.

2.15 Discovery - is the first proof that a geothermal prospect has been fully explored
including exploratory drilling and that can be commercially developed and
utilized for energy purposes.

2.16 Effective Date - means the date of the execution of this Contract by the Parties.

2.17 Expatriate Employee – means an alien who is a permanent resident of a foreign

country and is legally employed by the RE DEVELOPER or Sub-contractor(s) for
the Geothermal Operations within the scope of this Contract.

2.18 Filipino Personnel – means any citizen of the Republic of the Philippines
employed by the RE DEVELOPER and/or Sub-contractor(s) involved in
Geothermal Operations under this Contract.

2.19 Fiscal Year - means each period of twelve (12) consecutive months.

2.20 Force Majeure - refers to events beyond the reasonable control of the affected
Party. It also refers to earthquakes, typhoons, landslides, floods, or fires; war,
hostilities, invasion, or acts of foreign enemies; insurrection, revolution,

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 rebellion, or acts of terrorism; riot, commotion, disorder, or other civil
disturbances; strikes, lockouts or other labor disturbances; accidents; only as to
the RE DEVELOPER, any action or aggregation of actions or failure to act by the
Government or its duly authorized agency; and, only as to the RE DEVELOPER,
the adoption, enactment, interpretation, or application of laws, rules, regulations,
judgments and orders by the Government or its duly authorized agencies or
instrumentalities.

2.21 Foreign Exchange – means any currency other than Philippine currency which is
freely convertible into gold or other currencies eligible to form part of the
country‘s international reserves and is acceptable to both Parties.

2.22 Generation Facility - refers to a facility for the production of electricity and/or
thermal energy such as, but not limited to, steam, hot or cold water;

2.23 Geothermal Field - is an area where the existence of Geothermal Resources has
been proven.

2.24 Geothermal Operations - shall include geothermal exploration, development

and production. Geothermal exploration consists of surface exploration and
subsurface exploration. Surface exploration deals primarily with reconnaissance
to detailed activities, studies and geoscientific investigations. Subsurface
exploration refers mainly to drilling activities for the purpose of making
discovery and delineating the reservoir.

Geothermal development refers to the drilling of appraisal, development and

reinjection wells, and geoscientific activities related thereto for the purpose of
exploiting the delineated Geothermal Reservoir. This includes the installation of
wellhead equipment, collecting pipes and pressure vessels for steam extraction.

Geothermal production is the set of activities which involves the actual

extraction of geothermal fluid for commercial utilization, which may include the
installation, operation, and maintenance of facilities to convert Geothermal
Resources to electrical energy and the transmission of such electrical energy
and/or other non-electrical uses.

2.25 Geothermal Reservoir - is a geologic environment where the geothermal fluid

accumulates and circulates due to the combination of structural, stratigraphical,
lithological, hydrological, and thermodynamic conditions.

2.26 Geothermal Resources - shall refer to mineral resources, classified as renewable

energy Resources, in the form of:

a. all products of geothermal processes, embracing indigenous steam, hot

water, and hot brines;
b. steam and other gases, hot water, and hot brines resulting from water, gas,
or other fluids artificially introduced into geothermal formations;
c. heat or associated energy found in geothermal formations; and
d. any by-product derived from a, b and c above

2.27 Geothermal Resources in Commercial Quantity - means Geothermal Resources

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 which can be economically developed and produced as determined by the RE
DEVELOPER and approved by the DEPARTMENT, after taking into
consideration the location of the Geothermal Resources, the depths and number
of wells required to be drilled, and the facilities and technologies needed to
produce such Geothermal Resources that has been discovered.

2.28 Government - means the Government of the Republic of the Philippines.

2.29 Government Share - refers to the amount due the National Government and
Local Government Units from the exploration, development and utilization of RE
resources. The Government Share on existing and new geothermal development
projects shall be equal to one and a half percent (1.5%) of gross income. For
purposes of determining the government share, the gross income of the RE
DEVELOPER shall include the proceeds resulting from the sale of RE produced
and such other income incidental to and arising from RE generation,
transmission, and sale of electric power.

2.30 Gross Income refers to income derived from business shall be equivalent to
gross sales less sales returns, discounts and allowances, and Cost of Goods Sold,
as prescribed in the National Internal Revenue Code (NIRC) of 1997, as amended
by Republic Act No. 9337, which is more particularly described in Annex “B”;

2.31 Net Book Value refers, for purposes of special realty tax rates under the Act, to
the amount determined by applying normal depreciation on the Original Cost
based on the estimated useful life.

2.32 Original Cost refers to the lower of:

a. the tangible cost of construction of the Generation Facility component of

the operations, or of any improvement thereon, regardless of any
subsequent transfer of ownership of such Generation Facility; or
b. the assessed value prevailing at the time the Act took into effect or at the
time of the completion of the Generation Facility after the effectivity of the
Act, as the case may be, and in any case assessed at a maximum level of
eighty percent (80%);

2.33 Overall Development Program – means a plan prepared by the RE DEVELOPER

for the development of a Geothermal Field which has been reviewed and
approved by the DEPARTMENT and such plans shall include, but shall not be
limited to, power generating capacity, development well pattern, master design,
production profile, economic analysis and time schedule of the development
operations.

2.34 Production Area – means that portion of the Contract Area where Geothermal
Resources in Commercial Quantity are delineated by the RE DEVELOPER with
the approval of the DEPARTMENT.

The Production Area shall include areas for fluid collection and reinjection
system, power plant, transmission facilities and other purposes necessary for
production operations.

2.35 Project - refers to the RE DEVELOPER’s particular Geothermal Operations

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 within the Contract Area.

2.36 Proprietary Information - refers to information from which the owner derives
independent economic value, actual or potential, not being generally known to,
and not being ascertainable through proper means, by the public and disclosure
of which would result in competitive harm to, or jeopardize the commercial
position of the owner; Provided, that the owner has taken measures to keep such
information confidential.

2.37 RE Contract – shall mean this Contract.

2.38 RE DEVELOPER - means the RE DEVELOPER specified in the introduction of

Parties hereto, including assignees in accordance with Section XVI hereof.

2.39 Subcontractor – means any person or entity contracted by the RE DEVELOPER

to provide goods or services for the purpose of this Contract.

2.40 Third Party – means any individual or entity except the DEPARTMENT and the
RE DEVELOPER.

2.41 Work Program – means all types of plans and programs and related activities
formulated for the performance of the Geothermal Operations, including plans
for exploration, development and production.

SECTION III

EFFECTIVITY

This Contract shall come into effect on the Effective Date.

SECTION IV
TERM

4.1 The pre development stage under this Contract shall be two (2) years, extendible
for two (2) years and further extendible for one (1) year from the Effective Date
provided that the RE DEVELOPER (a) has not been in default in its exploration,
financial and other work commitments and obligations; and (b) has provided a
Work Program for the extension period acceptable to the DEPARTMENT after
which time this Contract shall automatically terminate unless Discovery has been
made before the end of the fifth (5th) year.

4.2 Where Geothermal Resources in Commercial Quantity is discovered during the

pre development stage or any extension thereof, this Contract shall, as to any
Production Area delineated pursuant to Section V, remain in force for the
remainder of a period of twenty five (25) years reckoned from the Effective Date.
Provided, that if the RE DEVELOPER has not been in default in its obligations
under this Contract, the DEPARTMENT may grant an additional extension of
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 twenty five (25) years, provided further that the total term of this Contract shall
not exceed fifty (50) years from Effective Date.

SECTION V
EXCLUSION OF AREAS

5.1 On or before the end of year 2 of the pre-development stage, the RE

DEVELOPER shall surrender twenty-five (25%) percent of the initial Contract
Area.

5.2 On or before the end of the pre-development stage, the RE DEVELOPER shall
surrender an additional area equal to twenty-five (25%) percent of the initial
Contract Area.

5.3 In the event the RE DEVELOPER has delineated any Production Area, as
approved by the DEPARTMENT, pursuant to Section 7.1 (d), the extent of such
Production Area shall be deducted from the initial Contract Area for the purpose
of determining the size of the area that must be surrendered pursuant to Sections
5.1 and 5.2 above.

5.4 If Geothermal Resources In Commercial Quantity is discovered during the pre-

development stage or any extension thereof, the RE DEVELOPER may retain
only twelve and one-half percent (12-1/2%) of the initial Contract Area for
further exploration and development, in addition to the delineated Production
Area/s. Provided, that the RE DEVELOPER shall provide an annual Work
Program and corresponding budget for the area to be retained that is acceptable
to the DEPARTMENT. Failure of the RE DEVELOPER to implement the Work
Program as approved by the DEPARTMENT in any Contract Year will cause the
automatic surrender of the retained area to the DEPARTMENT. Provided
further, that the RE DEVELOPER shall pay after exploration period as annual
rentals to the DEPARTMENT on such twelve and one-half percent (12-1/2%)
retained area of Forty Pesos (PhP40.00) per hectare or fraction thereof; and
Provided finally, that such rentals shall be offset by the amount spent by the RE
DEVELOPER for exploration on such retained area during the Contract Year.
Failure of the RE DEVELOPER to implement the Work Program, as approved by
the DEPARTMENT, in the twelve and a half percent (12-1/2%) retention area in
any Contract Year will cause the automatic surrender of the retained area to the
DEPARTMENT.

5.5 The RE DEVELOPER shall have the right, within at least thirty (30) days to
submit written notice to the DEPARTMENT, to surrender or abandon the entire
Contract Area without liability or cost and be relieved from any work and

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 expenditure commitments thereon; Provided, that if the RE DEVELOPER
surrenders or abandons the entire Contract Area prior to satisfying its minimum
work and expenditure commitments for any of the Contract Year, it shall pay the
DEPARTMENT the amount it should have spent, but did not, for pre-
development work during the concerned unfinished Contract Year as specified
under Section VII. The performance guarantee posted by the RE DEVELOPER, in
accordance with Section 8.1(i) of this Contract, shall be answerable for any such
deficiency.

5.6 The RE DEVELOPER shall have the right, within at least thirty (30) days, to
submit written notice to the DEPARTMENT, to surrender or abandon any
portion of the Contract Area. Any portion surrendered shall be credited against
that portion of the Contract Area, which the RE DEVELOPER is next required to
surrender under the provisions of Sections 5.1 and 5.2 hereof.

5.7 With respect to the exclusion of areas referred to in Sections 5.1, 5.2, 5.3 and 5.4,
the RE DEVELOPER shall give at least thirty (30) days prior notice to the
DEPARTMENT of the area to be surrendered or retained. The Contract Area
retained shall be of such size and shape as will not prejudice the conduct of
Geothermal Operations thereon.

SECTION VI

MINIMUM WORK COMMITMENT AND MINIMUM EXPECTED PRE-

DEVELOPMENT EXPENDITURES

6.1 The RE DEVELOPER shall fulfill the minimum work program and
corresponding financial commitment during the first two(2) years of the
Contract in accordance with the following provisions:

a) During the first contract year of the pre-development stage covering the
Contract, the RE DEVELOPER shall perform _______________________ with
expected equivalent total minimum expenditures of
_______________________________________.

b) During the second contract year of the pre-development stage, the RE

DEVELOPER shall perform __________________________ with expected
equivalent total minimum expenditures of
____________________________________________.

The aforesaid commitment wells of the pre-development stage shall reach the primary

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reservoir targets proposed by the RE DEVELOPER as approved by the DEPARTMENT.
In the event any commitment well fails to reach the primary reservoir targets due to
operational constraints as agreed by the Parties, the RE DEVELOPER shall be deemed
to have fulfilled such commitment well.

6.2 Before the end of each contract year of the pre-development stage, the RE
DEVELOPER has the following options in accordance with the terms of this
Contract to:

a) proceed and continue exploration upon prior approval by the DEPARTMENT;

or

b) conduct only appraisal Work Program in the Geothermal Resources discoveries

and/or development operations as approved by the DEPARTMENT, provided
that the minimum obligations during the current contract year have been
fulfilled and the areas under Section V hereof have been relinquished; or

c) terminate the Contract.

The RE DEVELOPER shall notify the DEPARTMENT in writing of its option at least
thirty (30) days before the end of each contract year.

6.3 If the RE DEVELOPER fails to comply with work obligations in each contract
year entered into, it shall pay to the DEPARTMENT the amount it should have
spent but did not, in direct prosecution of its work obligations. If the RE
DEVELOPER elects to terminate the Contract before the end of each contract
year entered into and there are unfulfilled work obligations, the RE DEVELOPER
shall pay the value of the unfulfilled balance of the minimum exploration work
commitment for the contract year entered into in U.S. Dollars after it has been
converted into a cash equivalent using the method provided in Annex “B”
Accounting Procedures hereto. Should the RE DEVELOPER fail to pay the
assessed financial deficiency within the period prescribed by the
DEPARTMENT, the DEPARTMENT may cause the cancellation of this Contract
and enforce the collection thereof against the performance guarantee posted by
the RE DEVELOPER. However, if the minimum work commitment for the
contract year is fulfilled while its expected corresponding minimum
expenditures are not fulfilled, the unspent part shall be deemed as a saving and
shall not be paid to the DEPARTMENT.

6.4 Subject to the approval of the DEPARTMENT, the RE DEVELOPER may

commence any pre-development activities earlier than scheduled provided that
the work commitments for the preceding contract year have been fulfilled. If the

10
 pre-development work actually fulfilled by RE DEVELOPER exceeds the
minimum work commitment for the said contract year the excess part may be
credited against the minimum work commitment for the next pre-development
contract year.

SECTION VII

RIGHTS AND OBLIGATION OF RE DEVELOPER

7.1 The RE DEVELOPER shall have the following obligations:

a) Perform all Geothermal Operations in accordance with the Work Program

and provide all necessary services, technology, and financing in connection
therewith;

b) Be subject to the provisions of applicable laws relating to labor, health, safety,

environment ecology and indigenous peoples rights;

c) Provide environment guarantee fund as required under existing

environmental regulations to adequately cover/answer for any operational
incidents which may cause pollution and/or damage to the environment;

d) Upon discovery of Geothermal Resources in quantities that may be

commercial as determined jointly by the DEPARTMENT and the RE
DEVELOPER, delineate the reservoir in consultation with the DEPARTMENT
in a prudent and diligent manner and in accordance with good geothermal
field practices within six (6) months or such additional period as the RE
DEVELOPER demonstrates to be needed. If after such delineation, it is
determined that the reservoir contains Geothermal Resources in Commercial
Quantity, the area so delineated shall constitute a Production Area;

e) Once a Production Area has been established, the RE DEVELOPER shall

operate the Production Area in accordance with accepted good geothermal
industry practices and pursuant to an efficient and economic program of
operation, using modern and scientific methods to enable maximum
economic production of Geothermal Resources. The RE DEVELOPER shall
use its best efforts to avoid hazards to life, health and property, pollution of
air, land and waters;

f) Allow representatives authorized by the DEPARTMENT, at all reasonable

times upon prior written notice, full access to accounts, books, and record
relating to Geothermal Operations hereunder for tax and other fiscal
purposes;

g) Provide reasonable transportation, meals, and hotel / housing

accommodations for the DEPARTMENT personnel’s monitoring activities to
be arranged and paid for by the RE DEVELOPER with prior notice of 5
working days;

h) Give priority in employment to qualified personnel (as determined by the RE

DEVELOPER) in the municipalities or provinces where the Geothermal

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 Operations are located;

i) Within sixty (60) days after the Effective Date of this Contract or succeeding
Contract Year to post a bond or any other guarantee of sufficient amount but
not less than the minimum expenditure commitment for that particular
Contract Year of the production period, in favor of the Government from
DEPARTMENT-accredited insurance and surety companies and with surety
or sureties satisfactory to the DEPARTMENT, conditioned upon the faithful
performance by the RE DEVELOPER of any or all of the commitments and
obligations under and pursuant to this Contract. Upon the request of the RE
DEVELOPER, the amount of a guarantee or a bond for each Contract Year
may be subsequently reduced based on the RE DEVELOPER’s performance
of its work and expenditure commitments.

j) Include in the Overall Development Program, submitted to the

DEPARTMENT for approval, a provision for abandonment and payment of
abandonment costs. It shall provide that beginning on the Date of
Commencement of Commercial Production the estimated abandonment and
decommissioning cost of the Geothermal Fields and related facilities in the
Contract Area shall be determined ( with annual reviews and adjustments
thereafter) annually. In this regard, the RE DEVELOPER shall be responsible
in the proper abandonment and rehabilitation of all sites affected by its
Geothermal Operations. For this purpose, the RE DEVELOPER shall establish
a sinking fund sufficient to cover proper abandonment of wells and
rehabilitation of abandoned areas. The amount of contribution to the sinking
fund shall take into consideration any other insurance or guarantee fund
established or imposed by law or by any government agency for such similar
purpose.

k) Apply the appropriate and advanced technology and financial experience in

performing the Geothermal Operations reasonably, economically and
efficiently in accordance with internationally accepted geothermal industry
practices;

l) Submit a five (5) year Work Program upon Discovery of Geothermal

Resource in Commercial Quantity and every five (5) years thereafter
provided that the RE DEVELOPER may revise the same at any time within
the relevant period, subject to the approval of the DEPARTMENT, which
approval shall not be unreasonably withheld;

m) Be responsible for procurement of installations, equipment and supplies and

enter into subcontracts related to the Geothermal Operations, in accordance
with the approved Work Program and budget;

n) Maintain complete and accurate accounting records of all the costs and
expenditures for the Geothermal Operations in accordance with the
provisions of Annex “B” (Accounting Procedures) hereto and to secure the
accounting books of accounts in good order;

o) Make necessary preparation for regular meetings of Parties, and to submit in

advance to the Parties necessary information related to the matters to be
reviewed and approved by the Parties;

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p) Give preference to local companies/ agencies in entering into subcontracts on
projects or services which are required in the Geothermal Operations but are
not carried out by the RE DEVELOPER, provided that these
companies/agencies are competitive and the services required are locally
available;

q) Inform all sub-contractor/s which render services for the Geothermal

Operations and all the Expatriate Employees of the operator and of Sub-
contractors who are engaged in the Geothermal Operations in the Philippines
that they shall be subject to the laws and decrees of the Government, and
other rules and regulations of the DEPARTMENT;

r) Report regularly to the DEPARTMENT its work accomplishment and actual

expenditure relative to Section VI hereof;

s) Handle the information, samples or reports in accordance with the following

provisions:

i. Provide the DEPARTMENT with various information and data in

accordance with Section VIII and Section XIV hereof; Furnish the
DEPARTMENT promptly with geological and other information, data and
reports relative to the Geothermal Operations except for proprietary
techniques used in developing said information, data and reports.

ii. Furnish the DEPARTMENT in a timely manner with reports on safety,

environmental protection and accidents related to the Geothermal
Operations and financial reports prepared in accordance with the
provisions of Annex “B” (Accounting Procedures) hereto; and

iii. Furnish the DEPARTMENT with the following:

(a) procurement plans for equipment and materials, inquiries offers,

orders and service contracts, etc.;

(b) manuals, technical specifications, design criteria, design documents

(including design drawings), construction records and information,
consumption statistics, equipment inventory spare parts inventory,
etc. ;

(c) technical investigation and cost analysis reports;

(d) representative sample (cutting and core) of any deep exploratory

well activity within the Contract Area upon submission of drilling
completion report;

(e) other information relating to the Geothermal Operations already

acquired by the RE DEVELOPER in the performance of this
Contract.

t) Abide by the laws and decrees of the Government and other rules and
regulations of the DEPARTMENT with respect to environmental protection
and safety of the Geothermal Operations and shall endeavor in accordance
with the internationally accepted geothermal industry practices to:

i. prevent the damage and destruction to the natural environment;

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 ii. control blowouts promptly and prevent or avoid waste or loss of
Geothermal Resources discovered in or produced from the Contract Area;

iii. avoid activities that would adversely affect existing Geothermal Reservoir
or other Geothermal Fluid-bearing formation; and

iv. prevent damage and destruction to crops, buildings, and other

installations.

u) Maintain detailed technical records and accounts of Geothermal Operations;

v) Conduct coordination meetings with the DEPARTMENT;

w) Conform to the Government regulations regarding, among others, safety,

non-interference with the rights of other geothermal, mineral, and natural
resources operators;

x) Maintain all meters and measuring equipment in good order and, upon
proper notification from an inspection group, allow access to these as well as
to the exploration and production sites to inspectors authorized by the
DEPARTMENT;

y) Be subject to Philippine Income Tax under the provisions of the National

Internal Revenue Code, as amended;

z) The RE DEVELOPER, acting as reasonably prudent operator following

internationally accepted geothermal industry practices, shall at all time exert
best efforts to ensure the performance of its obligations hereunder;

aa) Be responsible in securing the geothermal facilities including wells, pipelines,

power facilities and all other equipment installed which are necessary for the
Geothermal Operations.

bb) Refrain from issuing press releases, media statements and interviews on any
geothermal Discovery, estimated geothermal reserves and any well drilling
operations, tests, and/or results except with prior consent of the
DEPARTMENT. The DEPARTMENT shall have the exclusive right to make
any such press releases or interviews on the mentioned
activities/information;

cc) Organize Information, Education, and Communication (“IEC”) Campaign on

benefits to host communities and Local Government Unit(s) where the Project
is located pursuant to Section 18 of the DEPARTMENT’s Circular No.
DC2009-07-0011;

7.2 The RE DEVELOPER shall have the following rights:

a) To be granted fiscal and non-fiscal incentives and privileges under the Act,
the IRR, and all other existing laws which are not otherwise modified or
repealed by the Act;

b) Receive assistance from the DEPARTMENT, viz.:

i. In obtaining all applicable fiscal and non-fiscal incentives, including

registration with the Board of Investments;

14
 ii. In securing access to lands and/or offshore areas within the Contract
Area where geothermal energy resources shall be harnessed; and

iii. In securing permits from government entities related to the project;

c) Exclusive right for the construction of a geothermal power plant in the

Contract Area;

d) Exemption, upon approval by the DEPARTMENT, from laws, regulations

and/or ordinances restricting the exportation of machinery, equipment, spare
parts and materials which are imported solely for RE DEVELOPER’s
Geothermal Operations when no longer needed therefore;

e) Right to enter into an agreement for the disposition of the Geothermal

Resources produced from the Contract Area with any Third Party;

f) Entry, upon the sole approval of the DEPARTMENT, which approval shall
not be unreasonably withheld, of alien technical and specialized Personnel
(including the immediate members of their families), who may exercise their
professions solely for the Geothermal Operations of the RE DEVELOPER;
Provided, That if the employment or connection of such alien with the RE
DEVELOPER ceases, the applicable laws and regulations on immigration
shall apply to him and his immediate family; Provided further, That Filipinos
shall be given preference to positions for which they have adequate training
and experience (as determined by the RE DEVELOPER); Provided finally,
That the RE DEVELOPER shall adopt and implement a training program for
Filipinos along technical or specialized lines, in accordance with the
provisions of Section XVII hereof;

g) Have at all times the right of ingress to and egress from the Contract Area
and to and from facilities wherever located;

h) Have free and unimpeded use of Geothermal Resource within the Contract
Area including Additional Investments therein relative to its Geothermal
Operations, in regard of which the GOVERNMENT shall ensure that rights,
privileges and other authorizations it may grant to Third Parties will not
defeat or impair such use;

i) Subject to regulations of the Bangko Sentral ng Pilipinas, be entitled to:

i. repatriate over a reasonable period the capital investment and all costs
and expenses actually spent on or brought into the country in Foreign
Exchange or other assets and registered with the Bangko Sentral ng
Pilipinas;

ii. retain abroad all Foreign Exchange representing proceeds arising from
exports accruing to the RE DEVELOPER and/or its designated Operator
over and above: (a) the Foreign Exchange to be converted into pesos in an
amount sufficient to cover the costs of the Geothermal Operations payable
in Philippine currency; and, (b) revenues due to the Government on such
Geothermal Resources;

iii. convert into Foreign Exchange and remit abroad at prevailing rates no less
favorable to the RE DEVELOPER than those available to any other
purchaser of foreign currencies, any excess balances of the RE
DEVELOPER’s peso earnings from Geothermal Operations and sale over
15
 and above the current working capital they require; and

iv. convert Foreign Exchange into Philippine currency for all purposes in
connection with its Geothermal Operations at prevailing rates no less
favorable to the RE DEVELOPER than those available to any other
purchaser of such currency;

j) Exemption from publication requirements under Republic Act No. 5455; and
the provisions of Republic Act No. 6173 with respect to the exploration,
production, sale or disposition of Geothermal Resources discovered and
produced in the Philippines.

SECTION VIII

WORK PROGRAM AND BUDGET

8.1 The Two-Year Work Program and budget for Pre-development Stage shall set
forth the Geothermal Operations which the RE DEVELOPER proposes to carry
out from the Effective Date until end of the second Contract Year.

8.2 Before the end of 10th month of the last Contract Year of the Work Program, and
should extension of Contract is warranted, the RE DEVELOPER shall submit
and present to the DEPARTMENT for review and approval of its Work Program
and budget for the next two (2) or one (1) Contract Years, as the case may be.
Within forty-five (45) days following the receipt of the annual Work Program
and budget, the DEPARTMENT shall notify the RE DEVELOPER in writing of its
approval or suggest modifications thereto with its detailed reasons. If the
DEPARTMENT requests any modifications on the aforesaid annual Work
Program and budget, the Parties shall promptly hold meetings to discuss
modifications and all suggested modifications will be respectively considered by
the RE DEVELOPER. Any modifications agreed upon by the Parties shall be
effected immediately. In case the DEPARTMENT fails to act on the proposed
annual Work Program and budget within forty-five (45) days from receipt, the
proposed annual Work Program and budget shall be deemed to have been
approved by the DEPARTMENT. The RE DEVELOPER shall perform the
Geothermal Operations in accordance with the approved or modified Work
Program and budget.

8.3 The RE DEVELOPER may, in accordance with the following provisions, incur
excess expenditures or expenditures outside the budget in carrying out the Work
Program and budget, provided that the objectives in the approved Work
Program and budget are not changed.

a) In carrying out an approved budget for a single item, such as the drilling of
well, the RE DEVELOPER may, if necessary, incur excess expenditures of not

16
 more than ten percent (10%) of the budgeted amount. The RE DEVELOPER
shall inform the DEPARTMENT in writing of such possible excess of
aggregate amount ten (10) days prior to incurring such expenditures and
explain the need for such expenditures.

b) For the efficient performance of the Geothermal Operations, the RE

DEVELOPER shall immediately inform the DEPARTMENT through any
means of communication for undertaking certain cases of emergency works
which are not included in the Work Program and budget even without the
DEPARTMENT’s prior approval. However the RE DEVELOPER shall submit
to the DEPARTMENT a written report on such emergency works within
fifteen (15) days after such expenditures are incurred.

c) In the event that the aggregate of excess expenditures under Section 8.3(a)
herein and expenditures under Section 8.3(b) herein in a Calendar Year
cause the total expenditures of that Calendar Year to exceed the approved
annual budget, such excess shall not exceed five percent (5%) of the
approved annual budget for that Calendar Year. If the aforesaid excess is
expected to be in excess of five percent (5%) of the annual budget, the RE
DEVELOPER shall present its reasons therefore to the DEPARTMENT in
writing and also meet with the DEPARTMENT to discuss the expenditures
for approval prior to incurring such expenditures.

SECTION IX

GOVERNMENT SHARE

9.1 The RE DEVELOPER shall pay the Government Share equivalent to one and a
half percent (1.5%) of the Gross Income from the sale of geothermal steam
produced and such other income incidental to and arising from generation,
transmission, and sale of electric power generated from geothermal energy
within the Contract Area in accordance with Accounting Procedures attached
hereto as Annex “B.”

9.2 The RE DEVELOPER shall within sixty (60) days following the end of each
calendar quarter remit to the DEPARTMENT an amount equal to one and a half
percent (1.5%) of the Gross Income. Provided, that any unremitted amount shall
carry an interest of ten percent (10%) per annum reckoned from the day
immediately following end of the calendar quarter.

9.3 The RE DEVELOPER shall account for its Gross Income in accordance with
Annex “B”.

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 SECTION X

INCOME TAXES

10.1 The RE DEVELOPER shall be liable each taxable year for Corporate Income Tax
on its net taxable income from Geothermal Operations in accordance with the
provisions of the Act and as determined under the provisions of the NIRC, as
amended by RA 9337.

10.2 The RE DEVELOPER shall pay a Corporate Income Tax of 10% after availment of
income tax holiday pursuant to the Act.

SECTION XI

PAYMENTS BY RE DEVELOPER

11.1 All payments made by the RE DEVELOPER under this Contract shall be made
directly to the DEPARTMENT. All such payments shall be translated at the
applicable exchange rates as defined in the Accounting Procedures attached
hereto as Annex “B”.

11.2 In consideration of the execution of this Contract, the RE DEVELOPER shall pay
the DEPARTMENT signature bonus in the amount of Five Hundred Thousand
Pesos (PhP 500,000).

SECTION XII

ASSETS AND EQUIPMENT

12.1 The RE DEVELOPER shall acquire for the Geothermal Operations, only such
assets and equipment as are reasonably estimated to be required in carrying out
the Geothermal Operations and approved in the Work Program and budget.

12.2 The RE DEVELOPER may also utilize in the Geothermal Operations, equipment
owned and made available by the RE DEVELOPER. Charges to the Geothermal
Operations account for the use of such equipment shall be made as provided in
Annex “B” (Accounting Procedures) hereto.

12.3 All materials, equipment, plants and other installations erected or placed
on the Contract Area by the RE DEVELOPER shall remain the property of the
RE DEVELOPER throughout the term of this Contract and after termination thereof.

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 The RE DEVELOPER shall be given one (1) year to remove the steamfield facilities,
otherwise shall be vested in the Government.

12.4 The ownership of all data, records, samples, and other technical data obtained in
the course of performing the Geothermal Operations shall be vested to the
DEPARTMENT.

SECTION XIII

TECHNICAL DATA AND REPORTS SUBMISSION

13.1 All technical data and reports, except for proprietary techniques used in
developing such technical data and reports, must be submitted by the RE
DEVELOPER to the DEPARTMENT within sixty (60) days after such technical
data and reports become available. The technical data and reports to be
submitted by the RE DEVELOPER shall include, but not limited to, the
following:

a) Annual Progress Report (containing the summary of all the activities, i.e.
exploration, drilling or infrastructure development, done within the year
with relevant comments and recommendation on any technical findings).

b) Drilling Completion Report and Well Testing Completion Report

(exploratory, production or reinjection drilling).

c) Evaluation Reports:

i. Reconnaissance survey of the geothermal area (includes physiography,

petrology and stratigraphy, regional and local structural features, volcano-
magmatic history, hydrology, physico-chemical characteristic of thermal
manifestation and other relevant technical information, accompanied with
maps and pertinent figures)

ii. Detailed Geoscientific Survey

1. Geological, structural and hydrological report of the prospect

(accompanied with maps and pertinent figures).

2. Geophysical report of the resistivity, gravity, magnetic and other

geophysical survey done in the area, with geophysical maps and cross
sections including raw and processed data.

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 3. Temperature gradient drilling and heat flow measurement report (if any),
accompanied with heat flow map and computation of the total heat
budget of the prospect.

4. Resources Assessment Report (based on the interpreted geological,

geochemical, geophysical and thermal gradient measurement results,
accompanied with maps and pertinent figures).

5. Geochemistry of the geothermal system of the prospect, including the

chemical analysis of the collected water samples, measurement of water
level and temperature in existing wells, in streams and in hot and cold
springs.

iii. Exploration Drilling Report

1. Petrology, well stratigraphy, borehole geology and subsurface geological

report of the well (with well location, core and drill cutting samples and
other pertinent well data).

2. Geochemistry of the well (discussing the downhole temperature,

discharge test result, type and nature of the discharging fluid and capacity
of the well, accompanied with location map and pertinent figures).

3. Geophysical and lithological report of the well

iv. Resources Evaluation Report (containing synthesized results of the surface

prospecting and drilling studies used in the modeling of the reservoir
with its geometry, boundary and characteristics, accompanied with maps,
cross sections, diagrams and other pertinent figures).

v. Resources Development and Management Plan (includes plan on the

location and number of wells to be drilled, either reinjection or
production, location of FCDS, power plants and pertinent infrastructures)

vi. Environmental Impact Statement Report

SECTION XIV

CONFIDENTIALITY

14.1 All documents, information, data and reports generated during Geothermal
Operations under this Contract which is herein referred as “Confidential
Information” shall be kept confidential, pursuant to this Section XIV for the
duration of the Contract, except in cases as provided for in Sections 14.2, 14.3
and 14.4 hereof.

14.2 Without the written consent of the DEPARTMENT, no company comprising the
RE DEVELOPER or any assignee shall disclose the Confidential Information to
20
 any Third Party and to any Affiliate not directly connected with the
implementation of the Contract except the Third Parties and Affiliates in Section
herein, and no Party shall otherwise transfer, present, sell or publish it in any
way within the confidentiality periods.

However, the DEPARTMENT has the right to furnish the following original
information and data or interpretation thereon with respect to the Contract Area to any
Third Parties:

a) raw and/or processed data and information generated and held by the RE
DEVELOPER for over two (2) years; and

b) interpretations of information and data generated and held by the RE

DEVELOPER for over five (5) years.

14.3 The RE DEVELOPER may, furnish necessary Confidential Information to the

following Third Parties and Affiliates

a) Banks or other credit institutions from which finance is sought by any

party to the Contract for the implementation of the Contract;

b) Third Parties and Affiliates which provide services for the Geothermal
Operations, including Subcontractors and other service contractors; and

c) A prospective assignee or assignees to whom rights and obligations

under the Contract are intended to be assigned.

14.4 Subject to the DEPARTMENT approval all necessary Confidential Information

may be furnished by the RE DEVELOPER to governments and stock exchanges
in accordance with the laws of the relevant countries.

14.5 The RE DEVELOPER when furnishing Confidential Information to Third Parties

and Affiliates as mentioned in Section 14.3 shall require them to assume the
confidentiality obligations as set forth herein.

SECTION XV

CONSULTATION AND ARBITRATION

15.1 Dispute, if any, arising between the DEPARTMENT and the RE DEVELOPER
relating to this Contract or the interpretation and performance of any of the
causes of this Contract, and which cannot be settled amicably, shall be settled by
21
 arbitration upon written demand of either Party, within thirty (30) days from
receipt of such demand. The DEPARTMENT and the RE DEVELOPER shall
each appoint an arbitrator and so advise the other Party and the two arbitrators
appointed by the Parties will appoint a third arbitrator.

If either Party fails to appoint an arbitrator within thirty (30) days after receipt
of a written request of the other Party to do so, such arbitrator shall, at the
request of the other Party, be appointed in accordance with the laws of the
Republic of the Philippines.

If the first two arbitrators appointed as aforesaid, fail to agree within thirty (30)
days following the appointment of the second arbitrator, the third arbitrator
shall be appointed, at the request of either Party, in accordance with the laws of
the Republic of the Philippines.

If an arbitrator fails or is unable to act, his successor will be appointed in the

same manner as the arbitrator whom he succeeds.

Unless the Parties agree otherwise, the Philippines shall be the venue of the
arbitration proceedings.

15.2 The decision of the majority of the arbitrators shall be final and binding upon the
Parties. Judgment upon the award rendered may be entered in any court having
jurisdiction or application may be made to such court for a judicial acceptance of
the award and an order of enforcement, as the case may be.

15.3 Except as provided in this Section, arbitration shall be conducted in accordance

with the laws of the Rules of Arbitration of the International Chamber of
Commerce, then in effect.

15.4 The right to arbitrate disputes under this Contract shall survive the termination
or cancellation of this Contract.

SECTION XVI

ASSIGNMENTS AND AUTHORIZATION

16.1 The RE DEVELOPER may assign part or all of its rights and/or obligations
under this Contract to its Affiliate with prior notice to the DEPARTMENT and in
accordance with the following provisions:

a) The RE DEVELOPER shall submit to the DEPARTMENT copies of a

22
 written agreement on the corresponding part of its rights and/or
obligations to be assigned;

b) The RE DEVELOPER shall guarantee in writing to the DEPARTMENT the

performance of the assigned obligations; and

c) No such assignment shall interfere with the performance of the

Geothermal Operations.

16.2 The RE DEVELOPER may assign part or all of its rights and/or obligations
under the Contract to any Third Party, provided that such assignment shall be
approved by the DEPARTMENT in advance and provided further that such
approval shall not be unreasonably withheld.

SECTION XVII

EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL

17.1 The RE DEVELOPER agrees to employ qualified Filipino personnel in the

Geothermal Operations and, after commercial production commences, will
undertake, upon prior approval of the DEPARTMENT, the schooling and
training of Filipino Personnel for labor and staff position, including
administrative, technical and executive management positions. The RE
DEVELOPER shall undertake upon approval of the DEPARTMENT a program
of training assistance for the DEPARTMENT’s personnel.

17.2 The RE DEVELOPER as directed by the DEPARTMENT shall provide assistance

in kind in the amount of Five Hundred Thousand Pesos (PhP 500,000.00).

17.3 The RE DEVELOPER shall provide assistance for training programs, conference
seminars and other similar activities for the DEPARTMENT’s personnel with a
total training commitment of Fifteen Thousand United States Dollars (US$
15,000.00) per year cumulative during pre development stage and Forty
Thousand United States Dollars (US$ 40,000.00) per year cumulative during the
development stage. The RE DEVELOPER shall pay the unutilized amount of the
training commitment prior to the expiry or termination of this Contract.

Training and institutional development assistance in the amount of Five

Hundred Thousand Pesos (PhP 500,000.00) will be granted to the residents as
determined by the host province in the form of scholarship as directed by the
DEPARTMENT under its geothermal energy development program in any State
University.

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 SECTION XVIII

STABILIZATION

18.1 Rights and obligations under this Contract shall be deemed as essential
considerations for the conclusion hereof and shall not be unilaterally changed or
impaired.

18.2 This Contract shall not be annulled, amended or modified in any respect except
by the mutual consent in writing of the Parties hereto.

18.3 The RE DEVELOPER’s rights under this Contract shall not be impaired and its
obligations shall not be increased by: (1) any change in Philippine laws or
regulations; or, (2) any change in the manner of implementing any existing laws
or regulations; or (3) any introduction of new laws or regulations; or (4) any
cancellation of existing laws or regulations.

SECTION XIX

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION

19.1 In the performance of the Geothermal Operations, the RE DEVELOPER shall be

subject to the Philippine laws, decrees and regulations on environmental
protection, indigenous people rights and safety promulgated by the Government
and endeavor to make its best efforts to prevent pollution and damage to the
atmosphere, oceans, rivers, lakes, harbors and land, and secure the safety and
health of the operating personnel. The RE DEVELOPER shall use all reasonable
endeavors as are applicable to eliminate promptly any pollution occurring in the
performance of the Geothermal Operations and minimize its consequences.

19.2 When the Government assigns any person to inspect for environmental
protection and safety within the scope of the Geothermal Operations according
to relevant laws, decrees, rules and regulations, The RE DEVELOPER shall
provide such reasonable facilities and assistance as are applicable to enable the
inspectors to carry out such inspection smoothly. The RE DEVELOPER shall be
given reasonable notice of all such inspections.

SECTION XX

BOOKS OF ACCOUNTS AND AUDITS

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20.1 The RE DEVELOPER shall be responsible for keeping complete books of
accounts, in Philippine currency denomination, reflecting all transactions in
connection with Geothermal Operations in accordance with the Accounting
Procedures attached hereto as Annex “B.”

20.2 The DEPARTMENT shall have the right to inspect and audit the RE
DEVELOPER’s books of accounts directly relating to this Contract for any
Calendar Year within twenty-four (24) months following the end of each
Calendar Year. Any such audit shall be completed within twelve (12) months
after its commencement. Any exceptions must be made to the RE DEVELOPER
in writing within ninety (90) days following the completion of such audit. If the
DEPARTMENT fails to give such written exception within such time, then the
RE DEVELOPER’s books of accounts and statements for such Calendar Year
shall be established as correct and final for all purposes.

20.3 The DEPARTMENT, upon at least fifteen (15) calendar days advance written
notice to the RE DEVELOPER, is entitled to access during reasonable hours
without affecting Geothermal Operations all relevant joint accounts, records, files
and other information and may inspect such sites and facilities as necessary.

20.4 If the DEPARTMENT notifies the RE DEVELOPER of an exception to the RE

DEVELOPER’s books of accounts within the period specified in Section 20.2
above, the RE DEVELOPER shall within ninety (90) days from receipt of written
exception from the DEPARTMENT, question its validity, otherwise, the same
shall become final and binding on the RE DEVELOPER. If the Parties are not able
to agree on the exceptions or adjustments after ninety (90) days from the date of
receipt of the RE DEVELOPERS’s response to the DEPARYMENT’s exception
report, the parties shall resolve the dispute in accordance with the Section on
Arbitration.

SECTION XXI

OTHER PROVISIONS

21.1 Any notice required or given by either Party to the other Party shall be in writing
and shall be effective when a copy thereof is handed to or served upon the
Party’s duly designated representative or the person in charge of the office or
place of business, or when sent by registered mail, notice shall be effective upon
actual receipt by the addressee, but if he fails to claim his mail from the post
office within five (5) days from the date of the first notice of the postmaster,
service shall take effect at the expiration of such time. All such notices shall be
addressed, as follows:

To the DEPARTMENT
____________________________
The Director Renewable Energy Management Bureau
Department of Energy Merritt Road,

25
 Fort Bonifacio Taguig City,
Metro Manila, Philippines 1201
Telefax: (632) 840-2068

To the RE DEVELOPER
____________________________
____________________________
___________________________
___________________________
___________________________
___________________________
Telefax ____________________
Telephone Nos. ______________

Any Party may substitute or change such address on written notice thereof to the other
Party.

21.2 The laws of the Republic of the Philippines shall govern and apply to this
Contract

21.3 The obligations under this Contract maybe suspended based on the following
conditions:

a) Any failure or delay on the part of either Party in the performance of its
obligations or duties hereunder shall be excused to the extent attributable
to Force Majeure.

b) If Geothermal Operations are delayed, curtailed or prevented by such

causes, then the time for enjoying the rights and carrying out the
obligations hereunder shall be extended for a period equal to the period
thus involved; Provided, however, that if Geothermal Operations are
delayed, curtailed or prevented by Force Majeure for a continuous period
of three (3) months, this Contract may thereafter be terminated by either
Party at anytime that the Force Majeure condition still exists.

c) Force Majeure shall include Acts of God, unavoidable accidents, acts of

war or conditions arising out of or attributable to war (declared or
undeclared), riots, insurrections, strikes, lockouts, and other similar labor
disturbances, floods and storms.

d) The Party whose ability to perform its obligations is so affected shall

notify the other Party thereof in writing stating the cause and both Parties
shall do all reasonably within their power to remove such cause
26
21.4 Steam Pricing should be approved by the DEPARTMENT based on market price
or arm’s length negotiation with the Third Party.

SECTION XXII

TERMINATION

22.1 The DEPARTMENT shall have the power to terminate this Contract after
due notice in the event the RE DEVELOPER, without justifiable cause, commit
any of the following: a) failure to fulfill its work obligation in any Contract Year
of pre development or development stage; b) non-remittance of the government
share; c) failure to implement safety and environmental protection measures
required by the DEPARTMENT; d) non-submission of the reportorial
requirements; e) non-payment of the financial obligations agreed upon under
this Contract; f) non-compliance of obligations under the Renewable Portfolio
Standards Rules (as such term is used in the IRR and Guidelines), as applicable,
g) non-compliance with internationally-accepted renewable energy technical
design standards adopted by the DOE, h) tampering or plagiarizing of technical
design, feasibility study, generation and operation reports; or i) failure to post a
bond or any other guarantee within the period agreed upon provided for in
Section 7.1 (i).

IN WITNESS WHEREOF, the Parties hereto have executed this Contract as of the day
and year first above written.

GOVERNMENT OF THE
REPUBLIC OF THE PHILIPPINES
THROUGH THE __________________________________
DEPARTMENT OF ENERGY __________________________________

By: By:

HONORABLE ______________________ ___________________________________

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