CZP Draft 05.02.

03

INDEMNITY AGREEMENT

This Indemnity Agreement (the “Agreement”) is entered on ____________

by and among:

__________________, a corporation duly organized and

validly existing under Philippine laws, with principal office
______________ (the “Surety”),

___________________, a corporation duly organized and

validly existing under Philippine laws, with principal office at
_____________ (“Power Corp.”),

_________________, a corporation duly organized and

validly existing under Philippine laws, with principal office at
________________ (“Energy Corp.”),

_____________________, a corporation duly organized and

validly existing under Philippine laws, with principal office at
_______________ (“Bank”),

_______________, a corporation duly organized and validly

existing under Philippine laws, with principal office at
______________ (“Invest Corp.”),

and

____________________, a corporation duly organized and

validly existing under Philippine laws, with principal office at
_____________ (“PM”, and together with Energy Corp., Bank, and
Invest Corp., the “Stockholders”).

WHEREAS, the Surety, upon application by Power Corp. and the

Stockholders, has issued Surety Bond No. _________ dated __________ (the
“Bond”) in the amount of U.S. Dollars _______________ (US$_______) in favor of
the __________ (“Company A”) and ___________ (“Company B”) to secure
payment of the indemnities and other financial obligations (the “Secured
Obligations”) of Power Corp. under the _________ Agreement dated
___________ (the “SPA”) among Company A, Company B and Power Corp.;
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WHEREAS, the parties have agreed that the Stockholders shall undertake
to indemnify the Surety upon the terms and conditions hereof for certain
liabilities which the Surety may incur under the Bond;

For and in consideration of these premises and the covenants herein

contained, the parties agree as follows:

1. Premium and Indemnity. The Stockholders bind themselves to

perform the following obligations in favor of the Surety:

(a) Upon execution of this Agreement, each of the Stockholders

will pay the Surety the sum set forth below opposite their name as
premium, documentary stamps and other charges due on the Bond:

Stockholder Amount

Energy Corp. PhP

Bank

Invest Corp.

PM

TOTAL PhP

(b) Subject to the limits set forth in section 5, each of the

Stockholders shall indemnify the Surety, and keep it indemnified for, and
hold and save it harmless from, any and all damages, payments,
advances, losses, costs, stamps, taxes, penalties, charges, attorney’s fees,
expenses and other liabilities of whatever kind and nature that the Surety
may at any time sustain or incur as a consequence of having become a
surety under the Bond, and to pay, reimburse and make good to the
Surety, its successors and assigns all sums of money which the Surety
shall pay or cause to be paid by virtue of the Bond; and

(c) If the Surety receives notice of any claim action or

proceeding for which it may seek indemnification under this Agreement,
the Surety shall promptly notify the Stockholders in writing and upon
receipt of such written notification, the Stockholders shall assume the
defense thereof; provided, however, the Surety may retain, at the expense
of the Stockholders, separate counsel from counsel for the Stockholders
and from any other party if the Surety reasonably determines a conflict of
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interest exists. The Surety shall co-operate fully with the Stockholders in
connection with any such litigation or proceeding the defense of which the
Stockholders has assumed. Notwithstanding anything herein to the
contrary, the Stockholders shall not, in connection with any one legal
proceeding or claim or separate but similar or related proceedings or
claims arising out of the same general allegations or circumstances, be
liable to the Surety under any of the provisions of this Agreement for the
fees or expenses of more than one separate firm of attorneys in each
jurisdiction in which legal action is being taken or reasonably may be
taken at any time, which firm shall be selected by the Surety. The Surety
may not consent to entry of any judgment or enter into any settlement of
any claim, action or proceeding that would give rise to any liability of the
Stockholders hereunder without the Stockholders’ prior written consent,
which consent may not be unreasonably withheld or delayed.

2. Due Date and Several Liability. The Surety, Power Corp. and the
Stockholders agree that:

(a) The indemnities and other obligations pursuant to this

Agreement shall be due and payable to the Surety upon demand by the
Surety, provided that with respect to the cash collateral which Energy
Corp. shall deposit with the Surety pursuant to Section 6 (a) below, the
Surety shall apply said cash collateral as provided herein by mere written
notice to Energy Corp. of the application thereof to the indemnities and
other obligations due hereunder;

(b) The Surety may grant extensions to the Stockholders, or to

accept in any case and at Surety’s entire discretion payment in full or in
part from the Stockholders of the indemnities and obligations due the
Surety;

(c) The duties, obligations and liabilities of each of the

Stockholders hereunder are intended to be several and not [deletion]
solidary, and each Stockholder shall be liable solely for its obligations
under this Agreement.

3. Interest and Liquidated Damages. Subject to the limits set forth in

section 5, in case the Stockholders delay in the payment of indemnities and
obligations due under this Agreement in favor of the Surety, the Stockholders
agree to pay the Surety (a) interest on said indemnities and obligations at the rate
of ________ percent (___%) per month computed and compounded monthly
from the date of delay until full payment and (b) in addition to said interest,
liquidated damages equal to thirty percent (30%) of all amounts due and
demandable under this Agreement, including said interest.
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4. Payments Made by the Surety. The parties agree and understand that
the Bond, this Agreement and the Surety’s involvement with the SPA are the
result of Power Corp.’s negotiations with Company A and Company B.
Accordingly, Power Corp. shall have the sole and absolute discretion whether to
pay the Secured Obligations under the Bond. Any payment or disbursement
made by the Surety on account of the Bond shall be made only with Power
Corp.’s prior written consent, and shall thereafter be final and binding on the
Stockholders, provided that the Surety need not obtain Power Corp.’s prior
written consent if the Surety makes the payment or disbursement in compliance
with a final and executory award (a) by the arbitral tribunal as provided in the
penultimate paragraph of the terms and conditions of the Bond or (b) by any
court having jurisdiction over the Surety.

5. Limits of Liabilities. The parties acknowledge and agree that

notwithstanding any provision in this Agreement to the contrary, (a) the
maximum liability of Energy Corp. under this Agreement shall in no event
exceed the sum of U.S. Dollars ______________ and [pro rata share of Energy
Corp. in cap to indemnity to be agreed upon] and (b) the Stockholders shall pay
the indemnities and other obligations due and payable under this Agreement to
the Surety in accordance with the following proportion:

Stockholder Share in Payment of

Indemnities and Other
Obligations Due Surety

Energy Corp.

Bank

Invest Corp.

PM

TOTAL

Upon recovery by the Surety of the said amount from Energy Corp., the Surety
shall no longer proceed against Energy Corp. to recover any other payment of
the indemnities and obligations due under this Agreement and shall limit
recovery of the balance of such indemnities and obligations only from Bank,
Invest Corp. and PM.
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6. Security. To secure payment by the Stockholders of their

obligations hereunder, the Stockholders shall provide the Surety the following
collaterals or securities upon signing hereof:

(a) Energy Corp. shall deposit with the Surety a cash collateral
in the amount of U.S. Dollars _______________ (US$___________); and

(b) Bank, Invest Corp. and PM shall each execute in favor of the
Surety a Joint and Several Undertaking in such form and substance
acceptable to the Surety.

If, upon the later of (i) the termination of this Agreement, (ii) the
termination of the Bond or the Surety’s liability thereunder, or (iii) the passage of
nine (9) months from the consummation of the Closing of the SPA, Surety has
not paid any claim by Company A or Company B, then Surety shall return the
cash collateral to Energy Corp..

7. Joinder in Actions. By executing this Agreement, Power Corp. and

the Stockholders irrevocably authorize the Surety to join Power Corp. and the
Stockholders as party defendants in any action, regardless of venue, against the
Surety on account of the Bond, and to enforce the obligations hereunder directly
against the relevant parties as provided herein.

8. Notices. Any notice to be given hereunder shall be in writing in

English and may be delivered by hand (including, without limitation, by
international express courier against written receipt) or sent by prepaid first class
registered letter or post or (where subsequently confirmed by letter) by facsimile
copy to the persons and addresses specified below (or such other person or
address as the relevant party may have previously notified the other party in
writing for that purpose). A notice shall be deemed to have been served when
delivered by hand to that address or received by facsimile copy, or if sent by post
as aforesaid, ten (10) days after it was posted. In proving service by registered
post, it shall be sufficient to prove that the letter containing the notice was
properly addressed and stamped and posted. The names and addresses for the
service of notices referred to in this Section are:

If to Bank: If to Surety:

________________ ________________
________________ ________________

Telephone: _________ Telephone: _________

Facsimile: _________ Facsimile: _________
Attention: President Attention: President
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If to Invest Corp.: If to PM:

________________ ________________
________________ ________________

Telephone: _________ Telephone: _________

Facsimile: _________ Facsimile: _________
Attention: President Attention: President

If to Energy Corp.: If to Power Corp.:

________________ ________________
________________ ________________

Telephone: _________ Telephone: _________

Facsimile: _________ Facsimile: _________
Attention: President Attention: President

9. Waiver of Compliance. Any failure by any party to comply with any

obligation, covenant, agreement or condition herein may be waived by the other
parties only by a written instrument signed by the party or parties granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.

10. Termination. This Agreement shall terminate automatically upon

the earlier to occur of termination of the Bond.

11. Venue. Any and all suits arising out of or in connection with this
Agreement and its terms and conditions shall be filed only with the court of
competent jurisdiction in Makati City, Philippines.

12. Miscellaneous. (a) Confidentiality. Except as appropriate or

necessary to obtain consents from the relevant third parties, the parties to this
Agreement agree that the terms and conditions of this Agreement shall be kept
confidential in all respects and shall not be disclosed to any other person or
entity without the prior written approval of the other parties. No confidential
information shall be reproduced, published or disclosed to any third party
without the prior written consent of the other parties, except as may be otherwise
required by law.
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(b) Publicity. Except as required by any applicable law, rules or

regulation, each party shall make, and shall cause its affiliates to make, any
public announcement or filing with or notification to any governmental
authority regarding the other parties, the Bond, Power Corp. or this Agreement
only with the other parties’ prior written consent. If a party or its affiliate is
required to make such an announcement, filing or notification pursuant to any
applicable law, rule or regulation, it shall, to the fullest extent possible in light of
such requirements, provide the other parties advance notice of such
announcement, filing or notification and a copy of same, and shall entertain in
good faith suggestions from the other parties regarding the announcement, filing
or notification

(c) Governing Law. Philippine law shall govern this Agreement.

(d) Entire Agreement. This Agreement constitutes the entire

agreement of the parties hereto in connection with the subject matter hereof.
This Agreement supersedes all prior representations, arrangements,
understandings, and agreements, oral or written, inconsistent herewith among
the parties relating to the subject matter hereof.

(e) Further Assurances. Each party shall take all additional actions
and shall execute all other and further instruments and documents as are
necessary or appropriate to give full effect to the provisions of this Agreement.

(f) No Further Relationship. The parties agree that no party is the

agent of any other party and no such person is authorized to take any action on
behalf of the other, except as expressly provided in this Agreement.

(g) Binding Effect; Assignment. All the terms of this Agreement shall
be binding on and inure to the benefit of the parties, their permitted successors-
in-interest and permitted assigns.

(h) Amendment. An amendment or modification of this Agreement

shall be effective or binding on the parties only if it is in writing and signed by all
the parties.

(i) No Third-Party Beneficiaries. Except as provided herein, this

Agreement is solely for the benefit of the parties and their respective permitted
successors and permitted assigns, and this Agreement shall not otherwise be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.

(j) Severability. If any of the provisions of this Agreement are held to

be invalid or unenforceable under the applicable law of any jurisdiction, the
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remaining provisions shall not be affected, and any such invalidity or

unenforceability shall not invalidate or render unenforceable that provision in
any other jurisdiction. In that event, the parties agree that the provisions of this
Agreement shall be modified and reformed so as to effect the original intent of
the parties as closely as possible with respect to those provisions that were held
to be invalid or unenforceable.

(k) Counterparts. This Agreement may be executed in two or more

counterparts, each of which shall be deemed an original, but all of which
constitute but one agreement.

(l) Drafting Interpretation. Preparation of this Agreement has been

a joint effort of all the parties and the resulting document shall not be construed
more severely against one of the parties than against the others.

(m) Titles. Titles or captions of Sections or Articles contained in this

Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the intent
of any provision hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement on the

date written above.

(parties)
(witnesses)
(acknowledgment)