EXPANDED INVESTMENT MANAGEMENT CONTRACT

KNOW ALL MEN BY THESE PRESENTS:

This Contract (together with all Appendices attached hereto and forming an integral
part hereof, thereinafter called the “Contract”) is made this 24 September 2004, by and
between:

SUBIC BAY METROPOLITAN AUTHORITY, a government agency organized and

established under the laws of the Republic of the Philippines, specifically Republic Act
No. 7277, with office address at Building 229, Waterfront Road, Subic Bay Freeport Zone,
Philippines, represented herein by Senior Deputy Administrator for Support Services
ATTY. CHITO M. CRUZ, hereinafter referred to as the “Authority”;

-and-

SUBIC BAY SPORTS MANAGEMENT, INC., a corporation duly organized and existing
under the laws of the Republic of the Philippines, with office address at Subic Bay
International Tennis Center, Remy Field at Main Gate, Subic Bay Freeport Zone,
Philippines, represented herein by its President, VIRGILIO SISON, hereinafter referred to
as the “Property Manager”.

WITHNESSETH-

WHEREAS, the Authority is the owner of various properties, with all its equipment and
other improvements thereon (as described in Appendix “A” hereof), located within the
Subic Bay Freeport Zone area, hereinafter collectively referred to as the “Subic Bay
International Tennis Center”;

WHEREAS, as the full potential of the Subic Bay International Tennis Center may not
be realized if the Authority will manage the same due to its inherent restrictions as a
government agency and the various duties of governance which the Authority must attend
to aside from management of said Subic Bay International Tennis Center, the Authority
entered into a Management Contract with the Property Manager on April 2002 covering
the Center as approved by the Authority’s Board of Directors on 05 July 2002 (through
Board Resolution No. 02-07-2188);

WHEREAS, the establishment and operation of the Subic Bay International Tennis
Center is an integral part of the necessary amenities to promote and attract investors to
locate and operate, as well as improve and upgrade the quality of life within the Subic Bay
Freeport Zone;

WHEREAS, the Property Manager, in fact, during the effectivity of its Management
Contract dated 01 April 2002 with the Authority, has sufficiently promoted Subic Bay
Freeport Zone, Subic Bay International Tennis Center in particular, as the sports camp
capital and sports tourism mecca of the Philippines with the inception of its Youth Tennis
and Sports Camps and Pro-Am Events and its successful holding therat of annual tennis
tournaments such as the Philippine National Open Tennis Championships (3 rd year), the
Chairman’s Trophy Interclub Team Tennis Event and the 2nd Leg Philippine Professional
Tennis Circuit;

WHEREAS, with the intention of further upgrading the Subic Bay International Tennis
Center and its facilities, the Property Manager recently proposed to enter into an
“Expanded Investment Management Contract” with the Authority by the terms of which it
shall continue to manage the Subic Bay International Tennis Center and introduce/infuse
additional investments thereon in the form of improvements of the facilities;

WHEREAS, acknowledging the financial capability, experience, professional skill and

technical expertise of the Property Manager, the Authority’s Board of Directors approved
the said proposal of the Property Manager, which includes the extension of the term, of the
Property Manager’s right to manage the Subic Bay International Tennis Center and its
future improvements from ten (10) years to twenty five years (25) years, on 07 August
2003 and on 21 June (through Board Resolution Nos. 03-06-2916 and 04-06-3830,
respectively).

NOW, THEREFORE, for and in consideration of the following premises, the parties
hereby agree as follows:

1. GENERAL PROVISIONS

1.1Definitions
Unless the context otherwise requires, the following terms whenever used in this
Contract have the following meanings:

(a) “Facilities and Properties”, as hereafter used and referred to, shall mean the
facilities and properties listed in Appendix “A” and the facilities and properties undertaken
to be constructed by the Property Manager on the Subic Bay International Tennis Center
under Clause 3.3-A and Appendix “B” hereof which upon construction and completion,
automatically be included among the properties to be managed by the Property Manager
under this contract;

(b) “Applicable Law” means the laws and any other instruments having the force of
law in the Republic of the Philippines, as they may be issued and in force from time to
time;

(c) “Contract” means this Contract between the Authority and the Property Manager;

(d) “Effective Date” means the date on which this Contract comes into force and effect
pursuant to Clause 2.1 hereof;

(e) “Personnel” means persons hired by the Property Manager or by any Subcontractor
as employees and assigned to the performance of the Services or any part thereof;

(f) “Foreign Personnel” mean such persons who at the time of being so hired by the
Property Manager and/or any subcontractor had their domicile outside the Philippines;
(g) “Local personnel” mean such persons who at the time of being so hired by the
Property Manager and/or any subcontractor had their domicile within the Philippines;

(h) “Party” means the Authority or the property manager, as the case may be;

(i) “Services” means the work to be performed by the Property Manager pursuant to
this Contract, as described in Appendix “B” hereto attached and made an integral part
hereof;

(j) “Starting Date” means the date referred to in Clause 2.3 hereof;

(k) “Subcontractor” means any entity to which the Property manager subcontract any
part of the Services in accordance with the provisions of Clause 3.8 hereinafter; and

(l) “Third Party” means any person or entity other than the Government, the
Authority, the Property Manager or a Subcontractor.

(m) “Gross Revenue” for purposes of computing the percentage share of the Authority
under Clause 6 (6.1) hereof, shall refer to gross income derived from the operation of the
Subic Bay International Tennis Center of from any business activity arising from the
operation thereof before any deduction is made for administrative expenses or for salaries,
wages or labor expenses, office supplies, oil/gasoline, depreciation of equipment, tools,
kitchen, utensils, furniture and fixtures and other movable assets of the Property
Manager, utility charges, financing charges, license fees/taxes and all other operating
expenses. It shall include income derived by the Property Manager from Tennis Court
rentals, Trainers and Ball boys (net of their share/wage), Tennis School (fees actually
received), Venue Advertising & Rental, Equipment Rentals, Tennis Events (net of costs,
prizes, and fees: revenue actually received), Sales from Food and Beverage (less cost of
sales), and from Sports Shop (less cost of sales).

1.2 Relation between the Parties

Nothing contained herein shall be construed as establishing a relation of master and

servant or of agent and principal as between the Authority and Property Manager. The
Property Manager, subject to this Contract, has complete charge of personnel performing
the Services required under this Contract and shall be fully responsible for the Services
performed by them or on their behalf hereunder.

1.3 Law Governing the Contract

This Contract, its meaning and interpretation, and the relation between the parties
shall be governed by the Applicable Laws of the Republic of the Philippines.

1.4 Language

This Contract has been executed in the English Language, which shall be the binding
and controlling language for all matters relating to the meaning or interpretation of this
Contract.

1.5 Headings
 The headings shall not limit, alter or affect the meaning of this Contract.

1.6 Notices

1.6.1 Any notice, request or consent required or permitted to be given or made

pursuant to this Contract shall be in writing. Any such notice, request or consent shall be
deemed to have been given or made when delivered in person to an authorized
representative of the party to whom the communication is addressed, or when sent by
registered mail, telex, telegram or facsimile to such Party at the following address:

For the Authority:

SUBIC BAY METROPOLITAN AUTHORITY

Building 229, Waterfront Road,
Subic Bay Freeport Zone, Philippines

Attention: Atty. Chito M. Cruz

Senior Deputy Administrator for Support Services

Facsimile: +63-47-252-3014
Telephone: +63-47-252-4895

For the Property Manager:

SUBIC BAY SPORTS MANAGEMENT, INC.

Subic Bay Freeport Zone, Philippines

Attention: Virgilio Sison

President

Facsimile: +63 (0)47 – 252 2884

Telephone: +63 (0)47 – 252 2885 & 86

1.6.2 Notices will be deemed to be effective as follows:

(a) in the case of personal delivery or registered mail, on delivery;

(b) in the case of telexes, two (2) hours following confirmed transmission;

(c) in the case of telegrams, two (2) hours following confirmed transmission; and

(d) in the case of facsimiles, two (2) hours following confirmed transmission.

1.6.3 A Party may change its address for notice hereunder by giving the other
Party notice of such change pursuant to this Clause.

1.7 Location
 The Services shall be performed at such locations as are specified in Appendix B
hereto and, where the location of a particular risk is not so specified, at such locations, as
the Authority may direct and approve.

1.8 Authorized Representatives

Any action required or permitted to be taken, and any document required or

permitted to be executed:

(i) on behalf of the Authority by its Chairman, Felicito C. Payumo, and/or his
duly authorized representative;

(ii) on behalf of the Property Manager by its president, Virgilio Sison, and/or his
duly authorized representative.

1.9 Taxes and Duties

1.9.1 Taxation

The prices quoted by the property Manager shall include all taxes,
duties and other charges imposed on the production, manufacture, sale and transport of
the Property Manager’s equipment plant, materials and supplies to be used on or
furnished under the Contract, and for the Services performed under the Contract.

1.9.2 Local Taxation

The prices quoted by the Property Manager shall include the 10% VAT
and all customs and import duties as these are not applicable within the Subic Bay
Freeport Zone. However, such prices shall include all other business, income and other
taxes that may be levied in accordance with the Applicable Law in the Services performed
under the Contract.

1.9.3 Duties on Property Manager’s Equipment

Notwithstanding the provisions of Sub-clause 1.9.2 Property Manager’s

Equipment, Including essential spare therefore, imported by the Property Manager for the
sole purpose of executing the Contract shall be exempt from the payment of import duties
and taxes.

2. COMMENCEMENT, COMPLETION, MODIFICATION AND

TERMINATION OF CONTRACT

2.1 Effectivity of Contract

This Contract shall be effective for a term of twenty-five (25) commencing

on 01 April 2002 unless sooner terminated pursuant to clauses 4.1, 4.2, 4.3, 4.4 and
4.5 hereof.

2.2 Commencement of Services

 The property Manager shall begin carrying out the Services not later than ten
(10) days after the signing of the Contractor or on such date as the Parties may agree in
writing.

2.3 Expiration of Contract

Unless terminated earlier pursuant to Clause 4 hereof, this Contract shall expire
on March 31, 2027, unless extended by herein parties due to the exigencies of the
services needed and/or the Contract is renewed by herein Parties for another twenty-five
(25) years as mutually agreed upon by herein Parties. In case of renewal of the Contract,
the Authority must provide the property Manager a written notice at least thirty (30) days
prior to the expiration date of the Contract of its intention to renew the Contract provided
that the Property Manager shall have complied with all the terms and conditions of this
Contract to the satisfaction of the Authority.

2.4 Entire Agreement

This Contract contains all covenants, stipulations and provisions agreed by the
Parties. No agent or representative of either Party has Authority to make, and the Parties
shall not be bound by or be liable, for any statement, representation, promise or
agreement not set forth herein.

2.5 Modification

Modification of the terms and conditions of this Contract, including any

modification of the scope of the Services, may only be made by written agreement between
the Parties. Pursuant to Clause 7.2 hereof, however, each Party shall give due
consideration to any proposals for modification made by the other Party.

2.6 Force Majeure

2.6.1 Definition

(a) For the purposes of this Contract, “Force Majeure” means an event which
is beyond the reasonable control of a Party, and which makes a Party’s
performance of its obligations hereunder impossible or so impractical as
reasonably to be considered impossible in the circumstances, and includes, but
is not limited, to war, riots, civil disorder, earthquake, fire, explosion, storm,
flood or other adverse weather conditions, strikes, lockouts or other industrial
action (except where such strikes, lockouts or other industrial action are within
the power of the Party invoking Force Majeure to prevent), confiscation or any
other action by government agencies.

(b) Force Majeure shall not include (i) any event which is caused by the
negligence or intentional action of a Party or such Party’s subcontractor or
agents or employees, nor (ii) any event which is diligent Party could reasonably
have been expected to both (A) take into account at the time of the conclusion
of this Contract and (b) avoid or overcome in the carrying of its obligations
hereunder.
 (c) Force Majeure shall not include insufficiency of funds or failure to make
any payment required hereunder.

2.6.2 No Breach of Contract

The failure of a party to fulfill any of its obligations hereunder shall not
be considered to be a breach of, or default under, this contract insofar as such
inability arises from an event of Force Majeure, provided that the Party affected
by such an event has takes all reasonable precautions, due care and reasonable
alternative measures, all with the objective of carrying out the terms and
conditions of the Contract.

2.6.3 Measures to be Taken

(a) A Party affected by any event of Force Majeure shall take all reasonable
measures to remove such Party’s inability to fulfill its obligations hereunder
with minimum of delay.

(b) A Party affected by an event of Force Majeure shall notify the other Party
of such event as soon as possible, and in any event not later than fourteen (14)
days of such event, and shall similarly give notice of the restoration of normal
conditions as soon as possible.

(c) The Parties shall take all reasonable measures to minimize the
consequences of any event of Force Majeure.

2.6.4 Extension of Time

Any period within which a Party shall, pursuant to this Contract,

complete any action or task, shall be extended for a period equal to the time
during which such Party was unable to perform such action as a result of Force
majeure.

2.6.5 Consultation

Not later than thirty (30) days after the Property Manager, as the result
of an event of Force Majeure, has become unable to perform a material portion
of the Services, The Parties shall consult with each other with a view of
agreeing on appropriate measures to be taken in the circumstances.

3. Suspension

The Authority may, by written notice of suspension of the Property Manager,

suspend all payments to the property Manager hereunder if the Property Manager fails to
perform any of their obligations under this Contract, including the carrying out of the
Services, provided that such notice of suspension (i) shall specify the nature of the failure,
and (ii) shall request the Property Manager to remedy such failure within a period of not
exceeding thirty (30) days after receipt by the property manager of such notice of
suspension.
4. Termination

4.1 By the Authority

The Authority may, by not less than thirty (30) days written notice of
termination to the Property Manager terminate this Contract, such notice to be given after
the occurrence of any of the events specified in paragraphs (a) through (d) of Clause 4.1:

(a) if the Property Manager fails to remedy a failure in the performance of

their obligation’s hereunder, as specified in an appropriate written notice,
as per Clause 3 herein above, from the Authority within thirty (30) days of
receipt may have subsequently approved in writing;

(b) if the Property Manager becomes insolvent or bankrupt or enter into any
agreement with their creditors for relief of debt or take advantage of any
law for the benefit of debtors or go into liquidation or receivership
whether compulsory or voluntary;

(c) if the Property Manager fails to comply with any final decision reached as
a result of arbitration proceedings pursuant to Clause 10.2 hereof,

(d) if the Property Manager submits to the Authority a statement which has a
material effect on the rights, obligations or interest of the Authority and
which the Property Manager knows to be false:

4.2 By the Property Manager

The Property Manager may, by not less than thirty (30) days written notice
to the Authority, terminate this Contract, such notice to be given after the occurrence of
any of the events specified in paragraphs (a) trough (d) of this clause 4.2:

(a) if the Authority fails to pay any money due to the Property Manager
pursuant to this Contract within forty-five (45) days after receiving written
notice from the property Manager that such is overdue;
(b) if the Authority is in material breach of its obligations pursuant to this
Contract and has the same within thirty (30) days (or such longer period as
the Property Manager may have subsequently approved in writing) following
the receipt by the
Authority of the Property Manager’s notice specifying such breach;

(c) if the Client to comply with any final decision reached as result of
arbitration pursuant to Clause 10.2 hereof

(d) the Property Manager is unable to perform a material portion of the

Services for a period of more than ninety (90) days; or

It is understood that termination effected either by the Authority or by the

Property Manager based on the grounds enumerated in Clauses 4.1 and 4.2 hereof does
not require prior judicial action or determination or prior consent, order or decision.
 4.3 Cessation of Rights and Obligations

Upon termination of this Contract pursuant to Clauses 4.1 or 4.2 hereof

or upon expiration of this Contract pursuant to Clause 2.3 hereof, all rights and
obligations of the parties hereunder shall cease except:

(i) such rights and obligations as may have accrued on the date of
termination or expiration, (ii) the Property Manager’s obligation to
permit inspection, copying and auditing of their account and records, and
(iii) any right which a Party may have under the Applicable Law.

4.4 Cessation of Services

Upon termination of this Contract by notice of either Party to the other

pursuant to Clause 4.1 or 4.2 hereof, the Property Manager shall, immediately upon
dispatch or receipt of such notice, take all necessary steps to bring the Services to a close
in prompt and orderly manner and shall make every reasonable effort to keep
expenditures for this purpose to a minimum.

4.5 Dispute about Event of Termination

If either dispute whether an event specified in paragraphs (a) through (e) of

Clause 4.1 or in Clause 4.2 hereof has occurred, such Party may, within forty-five (45)
days after receipt of notice of termination from the other Party, refer the manner to
arbitration pursuant to Clause 10 hereof, and this Contract shall not be terminated on
account of such event except in accordance with the terms of any resulting arbitral award.

3. OBLIGATION OF THE PROPERTY MANAGER

3.1 General

3.1.1 Standard of Performance

The Property Manager shall perform the Services and carry out their
obligation hereunder with all the due diligence, efficiently and economy, in accordance
with the highest professional standard recognized by international professional bodies,
and shall observe sound management, and technical and engineering practices, and
employ appropriate advanced technology and safe and effective equipment, machinery,
materials and methods. The Property Manager shall always act, in respect of any matter
relating to this Contract in good faith and shall at all times support and safeguard the
Authority’s legitimate interest in dealings with subleases, subcontractors or third parties.

3.1.2 Law Governing Services

The Property Manager shall perform the Services in accordance with the
Applicable Law and shall take all practicable steps to ensure that any Subcontractors, as
well as the Personnel and agents of the Property Manager and subcontractors comply with
the Applicable Law.

3.2 Scope of Services

3.2.1 Management Of Subic Bay Freeport International Tennis Center

The Property Manager shall manage and operate the Subic Bay Freeport
Tennis Center in accordance with the Scope of Services as specified in Appendix “B”
hereof.

In the event of any modification, addition or reduction or amendment in the

Scope of Services agreed upon in Appendix “B” hereof, the parties shall notify or
communicate in writing to each other the intent or desire to effect the said
modification, addition, reduction or amendment. Within thirty (30) days or at the
earliest possible time form receipt of the said notice or communication, the parties
shall meet to negotiate the desired changes in the scope of work. Any agreement
forged in the process shall be reduced in writing to form an integral part hereof.

3.2.2 Procurement Rules

If the Property Manager, as part of the Services, has the responsibility of

advising the Authority on or undertaking in behalf of the Authority any
procurement of goods, works or services, the Property Manager shall comply with
any applicable procurement guidelines as provided for by law and shall at all times
exercise such responsibility in the best interest of the Authority.

3.3 Capitalization

The Property Manager shall infuse an initial capital in the amount of TWO
MILLION PESOS (P2,000,000.00), which shall be reflected in its financial books/records,
upon the effectivity of this Contract to be used as follows:

(a) FIVE HUNDRED THOUSAND PESOS (P500,000.00) as initial working

capital;

(b) ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00)

for improvements, pre-operating expenses, inventory, kitchen equipment,
furnishings, food and beverage outlets necessary operate the
Subic Bay Freeport International Tennis Center; and

(c) Such additional working capital as maybe required in the operation of the
Center as mutually determined by the parties:

3.3-A Development Commitment

The Property Manager shall infuse an estimated investment of THIRTY SEVEN

MILLION TWO HUNDRED SEVENTY ONE THOUSAND THREE HUNDRED PESOS
(P37,271,300.00) in the form of capital improvements on the SUBIC BAY INTERNATIONAL
TENNIS CENTER to commence on 2004 and to be completed 2014.
 The minimum costs of the improvements and the Property Manager’s committed time
frame (in parenthesis) of completing the development and construction are shown as
follows:

1. Four (4) additional tennis courts (by October 2005): P12,450,700.00

- lighting, additional fences (Oct. 2005)
- bleachers, spectator stands (Oct. 2005)
- practice hitting walls (2006)
- all-round sports equipment for youth (2006)
- integrated mini-basketball court, covered (2006)
- 1-2 integrated paddle tennis courts (2007)

2. Six (6) to Eight (8) Badminton Courts (2004-05): P1,350,000.00

- with additional coverings, windbreakers (July 2005)
- floorings, and scoring equipment (Sept. 2005)

3. New Sports Restaurant & Entertainment Facility P7,880,000.00

(a) Sports Bar at 2nd floor Clubhouse (2004)
- multi-TV, speakers, cable & satellite (2004)
- Bar furnishings, bar equipment (2004)
- interior decoration, patio improvements, etc. (2005)

(b) Restaurant and Garden Café on ground floor (2005-06)

- furnishings, garden setting, umbrellas
- kitchen equipment, grills, oven, etc.
- hardscaping and additional fences
- mini-putting (2 holes) green

4. Renovation of Annex Building (by 2010 - 20014) P4,390,600.00

(located between Covered and new Outdoor Courts –
currently used as a men’s and women’s locker room)
- building extension/expansion to accommodate the following:
> a pizza parlor with a patio
> recovery spa: athletic/sports massage, foot and back massage
> mini-shop: sundry and all-sports mini-sports shop
> information center for SBMA tourism and sports.

5. Fitness Gym: Bldg.494: (2004-2006) P7,000,000.00

(located behind Basketball gym)
- Provision and supply of gym and fitness equipment
such as: Weight room equipment, floor matting;
- Sports medicine tools and equipment:
- Upgrade of interior design of building
- Air-conditioning, TV and computer.

6. Projected Maintenance Expense:

P 840,000.00/year P4,200,000.00/ 5 years

Total Investment: P 37,271,300.00

 All improvements that shall be constructed or introduced by the Property Manager
on the Subic Bay International Tennis (and Sports) Center shall, upon the termination of
this contract, automatically be owned by the Authority without any obligation on the part
of the Authority to pay or refund its value or cost to the Property Manager.

3.4 Pricing/Schedule of Fees

In the formulation of the pricing and/or fixing or increasing the prices or

fees chargeable by the Property Manager to its customers in the use or operations of the
Subic Bay Freeport International Tennis Center, the Property Manager shall adopt
reasonable and competitive rates based on the demands of the market and/or interplay of
the free market forces both locally and internationally to ensure the viable operation of the
Tennis Center.

The Property Manager shall furnish the Authority (SBMA’s Accounting

Department and Internal Audit Services Department) of its Schedule of Fees/Pricing Policy
or any changes or modifications thereof in the use or operations of the Center within five
(5) days from the adoption thereof. Sport-shop and Food and Beverage items are excluded
from this clause. Discounts or lower promotional pricing do not require prior notice.

However, insofar as the Schedule of Fees/Pricing Policy or any changes or

modifications thereof applicable only to Officers/Employees of the Authority in the use of
the Tennis Center is concerned, the same shall be subject to the written approval of the
Authority prior to its implementation.

3.5 Confidentiality

The Property Manager, their subcontractors and the Personnel of either of

them shall not, either during the term or after the expiration of this Contract, disclose any
proprietary or confidential information relating to the Services, this Contract or the
Authority’s business or operations without the prior written consent of the Authority.

3.6 Liability of the Property Manager

The Property Manager shall be liable to the Authority for the performance of
the Services in accordance with the provisions of this Contract and for any loss suffered by
the Authority as a result of a default of the Service in such performance, provided;
however, that the Property Manager shall not be liable for any damage or injury caused by
or arising out of the act, neglect, default or omission of any persons other than the
Property Manager, its Subcontractors or the Personnel of either of them.

3.7 Indemnification of the Authority by the Property Manager

The Property Manager shall keep the Authority, both during and after the
term of this Contract, fully and effectively indemnified against all losses, damages,
injuries, deaths, expenses, actions, proceedings, demands, costs and claims, including but
not limited to legal fees and expenses, suffered by the Authority or any Third
Party, where such loss, damage, injury or death is the direct and proximate result of its
negligence or breach of this Management Contract.
 3.8 Insurance to be taken out by the Property Manager

The Property Manager (i) shall take out and maintain, and shall cause any
Subcontractors to take out and maintain, at their (or the Subcontractors, as the case may
be) own cost but on terms and conditions approved by the Authority, insurance against
the risks, and for the coverage, set forth below and (ii) at the Authority’s
request, shall provide evidence to the Authority showing that such insurance has been
taken out and maintained and that the current premiums therefore have been paid:

(a) Third Party motor vehicle liability insurance in respect of motor vehicles
operated in the Philippines by the Property Manager or their Personnel or any
Subcontractors or their Personnel, the amount required under the Applicable Law;

(b) Employer’s liability and workers compensation insurance in respect of its

employees in accordance with the relevant provisions of the Applicable Law, as well
as, Personnel, any such life, health, accident, travel or other insurance as may be
appropriate.

3.9 Accounting, Inspection and Auditing

The Property Manager (i) shall keep accurate and systematic accounts and
records in respect of the Services hereunder, in accordance with generally accepted
accounting principles and in such form and detail as will clearly identify all relevant
revenues and charges, and the bases thereof, and (ii) shall permit the Authority or its
designated representative periodically, and up to three (3) years from the expiration or
termination of this Contract, to inspect the same and make copies thereof and/or demand
production of audited by auditors appointed by the Authority.

3.10 Property Manager’s Actions requiring Authority’s Approval

The Property Manager shall obtain the Authority’s prior approval in writing
before entering into a subcontract for the performance of any part of the Services, it being
understood (i) that the selection of the Subcontractor and the terms and conditions of the
subcontract shall have been approved in writing by the Authority prior to the execution of
the subcontract, and (ii) that the Property Manager shall remain fully liable for the
performance of the Services by the Subcontractor and its Personnel pursuant to this
Contract.

3.11 Reporting Obligations

The Property Manager shall submit to the Authority the reports and
documents specified in Appendix “B” hereto, in the form, in the numbers and within the
time periods set forth in the said Appendix.

3.12 Equipment and Materials Furnished by the Authority

Equipment and materials made available to the Property Manager by the

Authority or purchased by the Property Manager with funds provided by the Authority,
shall be the property of the Authority and shall be marked accordingly. Upon termination
or expiration of this Contract, the Property Manager shall make available to the Authority
an inventory of such equipment and materials and shall dispose of such equipment and
materials in accordance with the Authority’s instructions. Unless the Authority already
insures such equipment and materials, the Property Manager shall, while in possession of
such equipment and materials, insure them at the expense of the Property Manager in an
amount equal to their full replacement value.

4. PROPERTY MANAGER’S PERSONNEL

4.1 No Employer – Employee Relationship

The Property Manager shall employ and provide such qualified and
experienced personnel as are required to carry out or perform the Services (Appendix B). It
is understood that there shall be no employer-employees relationship between the
Authority and the Property Manager.

4.2 However, if the Authority finds that any of the personnel employed by the
Property Manager has committed serious misconduct or has been charged with having
committed a criminal action or the Authority has reasonable cause to be satisfied with the
performance of any of the said personnel, then the Property Manager shall, at the
Authority’s written request as a replacement a person with qualifications and experience
acceptable to the Authority.

Any claim for separation pay, service incentive leave pay, back-wages, or any
benefits or for whatever damages, if any arising from the said termination and/or
replacement of personnel shall be solely borne by the Property Manager and the latter
warrants and holds the Authority free from the said liability.

5. OBLIGATIONS OF THE AUTHORITY

5.1 Assistance

The Authority use its best efforts to ensure that the Government shall:

(a) provide the Property Manager, with work permits and such other
documents, as shall be necessary to enable the Property Manager, to
perform the Services; and

(b) issue to officials, agents and representatives of the Government all such
instructions as may be necessary or appropriate for the prompt and
effective implementation of the Services;

5.2 Facilities and Property of the Authority

The Authority shall provide or make available to the Property Manager the
Facilities and Properties described in Appendix “A” for purposes of rendering its Services
under Appendix “B” or for purposes of Managing and operating the Subic Bay Freeport
International Tennis Center.

6. PAYMENT OF THE AUTHORITY

 6.1 Payment

In consideration of the right to manage the Facilities and Properties, the

Property Manager shall pay the Authority a percentage of the Gross Revenue derived from
the operation of the Subic Bay Freeport International Tennis Center in accordance with
the following schedule:

YEAR PERCENTAGE OF GROSS REVENUE

1 3 %
2 8 %
3 10 %
4 15 %
5 15 %
6 through the 25th year 20 %

“Gross Revenue” as used above shall be understood as defined in Clause 1.1 (1) of
the Contract.

6.2 Place and Mode of Payments

The Property Manager shall pay the percentage fee in-favor of the Authority as
stipulated in Clause 6.1 above on a monthly basis within TWELVE (12) days after the end
of any given month without the need of any demand. All percentage fee payments or other
amount owed by the Property Manager shall be paid in cash, by certified check, by wire
transfer for the Authority’s account or other means approved by the Authority. All
payments to the Authority must be made at:

SUBIC BAY METROPOLITAN AUTHORITY

Treasury Department
Building 229, Waterfront Road,
Subic Bay Freeport Zone, Philippines 2222

6.3 Late Payments

Failure of the Property Manager to pay the percentage fee as above stipulated
within TWELVE (12) after the end of every month, an amount equal to TWENTY FOUR
(24%) PERCENT of the amount of any Overdue Payment or portion thereof shall be
charged as penalty during the period in which any Overdue Payment shall remain unpaid.

7. ASSIGNMENTS AND SUBLETTING

No assignment, transfer, mortgage, sublease, encumbrance, or other transfer of

the “Facilities and Properties” shall be valid without the prior written approval of the
Authority and shall not relieve Property Manager of any of its obligations under this
Contract. Any assignment, transfer, mortgage, sublease or encumbrance of this Contract
or any portion thereof shall be conditioned on an agreement that the transferee shall abide
by all terms and conditions of this Contract.
 The Authority shall receive a fixed percentage of TWENTY PERCENT (20%) of all
gross income before deduction of costs and expenses from any assignment, sublease or
transfer of rights collected by the Property Manager over and above its percentage share of
the Gross Income as provided in Clause 6.1 and subject further to
Clause 6.2 and Clause 6.3 thereof.

8. FACILITIES AND PROPERTIES

8.1 Care of Facilities and Properties

The Property Manager shall, at its own expense, maintain at all times the
FACILITIES AND PROPERTIES in a clean and sanitary condition free from noxious odors
and substance, disturbing noises or other nuisances. The Property Manager, agents or
representatives shall not in any manner damage or deface any part of the FACILITIES AND
PROPERTIES.

The Property Manager shall comply with any and all rules and safety
regulations which may be promulgated from time by the Authority, together with all the
rules and regulations, ordinance or laws made by the duly constituted authorities, by the
national or city government, arising from or regarding the use, occupancy and sanitation
of the Facilities and Properties.

8.2 General Maintenance, Repairs and Safety

The cost of general maintenance and upkeep of the Facilities and Properties
shall be for the account of the Property Manager. The Property Manager shall keep the
Facilities and Properties in a clean, safe and sanitary condition and introduce all the
needed repairs at all times. The property manager shall dispose all its garbage, waste and
other pollutants in accordance with the rules and regulations promulgated by the
Authority.

In case of damage to the Facilities and Properties or any portion thereof, or its
appurtenances by fire , earthquake, volcanic eruption, war or any unforeseen cause, the
Property Manager shall give immediate notice to the Authority. If due to the reasons
stated above, then the Authority is liable and must repair the facilities within a reasonable
amount of time. In the event that the Property Manager through its own fault or
negligence or that of its employees, agents or representatives, damages the Facilities
Properties, and the Property Manager fails to repair the damage within a reasonable time,
then the Property Manager shall be liable to Authority for liquidated damages in an
amount equivalent to four (4) months percentage fee as stipulated in Clause 6.1 hereof
without prejudice to such other amounts as may be due to the Authority under this
Contract and/or the law.

The Property Manager shall comply strictly with all Occupational Health,
Safety, and Sanitation Standards as duly imposed or adopted by the Authority.

8.3 Fire Hazard, Noise and Obnoxious and Hazardous Substances

The Property Manager shall not introduce, keep, deposit or store in the
Facilities and Properties any obnoxious and hazardous substance or flammable material
or substance that might constitute a fire, safety and environmental hazard without the
prior written consent of the Authority. The Property Manager shall also not install within
the Facilities and Properties any apparatus, machinery or equipment which may cause
obnoxious tremors or noises nor store newspapers, cartons, wood, or other articles of light
nature which may expose the Facilities and Properties to fire or increase the fire hazard of
the Facilities and Properties or change its insurance rate and/or insurable value.

8.4 Fire Protection Features

The Installation, restoration, repair and maintenance and upgrading of the Fire
Protection devices, equipment, or systems shall be for the account of the Property
Manager. The portable Fire Extinguisher, Fire Alarm System, Automatic Sprinkler
System, Stand Pipe, Hose Cabinet, Kitchen Hood and all other Fixed Fire Protection
Systems shall be kept in good serviceable conditions.

8.5 Fire Safety Code and Standards

The LESSEE shall comply with the Fire Code and Standards imposed by the
Authority. The Property Manager also warrants that it shall hold fire drills and exercises
among its employees within the Leased premises once every year. It shall also promote fire
protection awareness among its employees.

8.6 Insurance

The Authority shall obtain insurance coverage for the Facilities and Properties,
inclusive of all the improvements therein, against all insurable risks in an amount equal to
the maximum insurable value of the Facilities and Properties as determined by the
inclusive of the improvements therein. In case of complete or substantial loss or damage
to the Facilities and Properties, and/or improvements therein, during the term if this
lease, the Authority shall have the option to reconstruct or restore the lost or damaged
Facilities and Properties, and/or the improvements therein, to their original condition or to
consider this lease automatically terminated. In case of damage in part, any and all
payment obligations herein shall be reduced in proportion to the remaining tenantable or
useable area.

8.7 Security

The Property Manager shall comply with all Applicable Laws Rules and
Regulations adopted by the Government of the Republic of the Philippines and the Subic
Bay Metropolitan Authority relating to security of the Facilities and Properties and any
other rules and regulations relating thereto from time to time imposed by Authority and
cooperate in securing the Facilities and Properties so as to prevent or deter unauthorized
access to, and criminal or other disruptive activity on the Facilities and Properties. The
Property Manager shall only employ, at its expense, security personnel provided by the
SBMA or its subsidiaries.

The Property Manager agrees that neither its employees nor its contractors or
other occupants and invitees shall be allowed to carry firearms and/or any deadly weapon
considered as deadly without prior written consent of the Authority.
 8.8 Return of Premises

Upon the cancellation, expiration or termination of this Contract for any reason
whatsoever, pursuant to the provisions of this Contract, the Property Manager shall
peacefully and immediately vacate the Facilities and Properties and return possession
thereof to the Authority in good and condition, devoid of all occupants, equipment and
effects of any kind except those that belong to the Authority. Failure of the Property
Manager to return the Facilities and Properties as provided herein shall make it liable to
pay liquidated damages to the authority in an amount equivalent to the last Four (4)
months percentage fees which Clause 6.1 hereof immediately preceding the termination of
the Contract without prejudice to such other sums as may be due to the Authority under
this Contract and/or under the law.

In case of delinquency in the payment of any sums due hereunder (including

liability to pay damages), the Property Manager agrees that the Authority has the right to
sell personal properties belonging to the Property Manager found within the Facilities in a
public auction or any other manner that the Authority deems it proper to dispose said
properties and applying the proceeds thereof to any unpaid rentals, utility charges, cable
television, and solid waste management, damages and other amounts due the Authority
under this Contract and/or under the law, without need of prior judicial determination.
The Property Manager also agrees that such sale of the properties does not preclude any
right of action on the part of the Authority for the further collection of such unpaid
rentals, unpaid utilities, damages and other amounts due to the Authority under this
Contract and/or under the law.

9. MISCELLANEOUS

9.1 Utilities

All expenses for water, gas, electricity, telephone, cable television, sanitation,
solid waste management, sewerage and other public utility services and the installation
thereof shall be for the account of the Property Manager; Provided, that such installation
shall be under the control and supervision of the Authority and the latter has the right to
indicate, whenever necessary, the locations of the meter connections.

9.2 Improvements

The Property Manager shall not make any structural changes, alterations,
additions or improvements of the Facilities and Properties without the prior written
consent of the Authority. Before beginning any construction, alteration, improvement or
repair, Property Manager shall submit to the Authority for the Authority’s approval the
application for building permit, detailed drawings and specifications of the proposed work.
All such construction, alterations, improvements and repair shall be completed in
accordance with the plans, drawings or specifications approved by the Authority prior to
the commencements of such works.

Upon completion of this work, the Property Manager shall submit to the
Authority the Certificate of Completion together with the as-built plan and specification
which are the basis of the original building permit. A joint and final inspection of the
facility shall be conducted by the Authority’s concerned departments for conformity with
the approved plans and specifications and with the provisions of the National Building
Code and its implementing rules and regulations and the Authority Rules and Regulations
prior to the issuance of the Certificate of Occupancy.

Any alterations or improvements made or introduced by the Property Manager

on the Facilities and Properties with the written consent of the Authority shall, upon the
termination of this Contract, automatically be owned by the Authority without any
obligation on the part of the Authority to pay or refund its value or cost to the
property Manager.

The ownership of improvements, furnishings, equipment and fixtures that are

constructed or installed on the Facilities and Properties by Property Manager shall be
determined as follows: Title to all removable furniture, furnishings, fixtures, articles,
objects, machinery or equipment installed by the Property Manager and which may be
removed without causing destruction to the Facilities and Properties and to the permanent
improvements thereon remains vested in the property Manager at all times during the
term of this Contract, the Property Manager shall remove such non-permanent
improvements. Property Manager shall be liable for the cost of removal and repair.
Property Manager shall undertake repairs for any damage caused by the removal of the
non-permanent improvements at its expense. If not removed within Thirty (30) days after
termination or expiration of this Contract, all removable furniture, furnishings, fixtures
and equipment will become the property of the Authority.

9.3 Sanitation Permit

The Property Manager agrees that it shall not be allowed to operate and/or
occupy the Facilities and Properties without securing a sanitary permit from the Authority
Health and Welfare Department. This permit shall be valid for one (1) year from the time
of its issuance. Sanitation fees to be determined by the Department of Health and Welfare
shall be paid by the property Manager.

9.4 Signs and Advertisements

The Property Manager shall install, erect or affix upon the Facilities and
Properties, and along the main road leading to such premises, signs or advertisements as
may be necessary to promote and/or advertise the business in which it is engaged; or to
direct visitors to its offices (i.e. streamer, banner) in accordance with the rules and

regulations of the Authority and with its written consent. Temporary advertisement (i.e.
posters, streamers) including special promotions, etc. shall be approved in writing by the
Authority and display thereof shall conform to the guidelines in effect at that time.

9.5 Right of Entry

The Property Manager shall permit the Authority or its representatives to enter
and to inspect the Facilities and Properties at any time to : (a) perform its obligations
and/or exercise its rights hereunder; (b) conduct verifications of the Property Manager’s
compliance with this Contract and all Applicable Laws; and (c) respond emergency
situations.

9.6 Non-Waiver

The failure of the Authority to insist upon a strict performance of any of the
terms, conditions and covenants hereof shall not be deemed a relinquishment or waiver of
any of the rights or remedies that the Authority may have, nor shall it be construed as a
waiver of any subsequent breach or default of its terms, conditions and covenants which
shall continue to be in full force and effect. No waiver by the Authority of its rights under
this Contract shall be deemed to have been made unless expressed in writing and signed
by the Authority. No payment by Property Manager or receipt by Authority of a lesser
amount than the payments herein stipulated as due shall be deemed to be other than a
partial payment. No endorsement or statement on any check or letter accompanying a
check shall be deemed an accord and satisfaction, and no acceptance of rent with
knowledge of breach shall constitute a waiver of the breach.

10. FAIRNESS AND GOOD FAITH

10.1 Good Faith

The parties undertake to act in good faith with respect to each other’s rights
under this Contract and to adopt all reasonable measures to ensure the realization of the
objectives of this Contract.

10.2 Operation of the Contract

The parties recognize that it is impractical in this Contract to provide for every
contingency which may arise during the life of the Contract, and the Parties hereby agree
that it is their intention that this Contract shall operate fairly as between them, and
without detriment to the interest of either of them, and that id during the term of this
Contract either Party believes that this Contract is operating unfairly, the Parties will use
their best efforts to agree on such action as may be necessary to remove the cause or
causes of such unfairness, but no failure to agree on any action pursuant to this Clause
shall give rise to a dispute subject to arbitration in accordance with the
Clause 8 hereof.

11. SETTLEMENT OF DISPUTES

11.1 Amicable Settlement

The parties shall use their best efforts to settle amicably all disputed arising
out of or in connection with this Contract or the interpretation thereof.

11.2 Right of Arbitration

 Any dispute between the Parties as to matters arising pursuant to this Contract
which cannot be settled amicably within (30) days after receipt by one party of the other
Party’s request for such amicable settlement may be submitted by either Party to
arbitration in accordance with the Applicable Law.

11.3 Miscellaneous

In any arbitration proceedings hereunder:

(a) proceedings shall, unless otherwise agreed by the Parties, be held at Subic
Bay Freeport Zone, Philippines; and
(b) the English language shall be the official language for all purposes.

12. SUBSTITION OF THE MANAGEMENT CONTRACT

This EXPANDED MANAGEMENT CONTRACT between the Authority and the

Property Manager shall take effect on August 07 2003 and shall substitute their
Management Contract dated 01 April 2002 effective 07 August 2003. However, all rights
and liabilities that accrued in favor or against either parties arising from the terms of their
Management Contract dated 01 April 2002, if any, shall stand or not be affected in any
manner by this Contract.

IN WITNESS WHEREOF, the Parties hereto have set their hands and affixed their
signatures as of the day and year first above written.

SUBIC BAY METROPOLITAN SUBIC BAY SPORTS

AUTHORITY MANAGEMENT, INC.
(Authority) (Property Manager)

BY: BY:

ATTY. CHITO M. CRUZ VIRGILIO SISON

Senior Deputy Administrator President
for Support Services

SIGNED IN THE PRESENCE OF:

_________________________________ ________________________________

A C K N O W LE D G M E N T
REPUBLIC OF THE PHILIPPINES)
OLONGAPO CITY, ZAMBALES ) S.S.

BEFORE ME, a Notary Public for and in the City of Olongapo, Province of
Zambales, this_____ day of ________________ personally appeared the following persons:

Name Com. Tax Certificate No. Date

/Place/Issue

ATTY. CHITO M. CRUZ

In his capacity as Senior Deputy
Administrator for Support Services
of Subic Bay Metropolitan Authority

VIRGILIO SISON
In his capacity as President of
Subic Bay Sports Management, Inc.

all known to me known to be the same persons who executed the foregoing instrument,
which is captioned EXPANDED MANAGEMENT CONTRACT consisting of eighteen (18)
pages including this page where this Acknowledgment is written, and they acknowledged
before me that the same is their free act and voluntary deed as well as the free act and
voluntary deed of the corporation/agency represented herein.

WITNESS MY HAND AND SEAL on the date and place first above written.

DOC. NO.:
PAGE NO.:
BOOK.:
Series of 2004
Appendix “A”
Property Owned by Subic Bay Metropolitan Authority
The Subic Bay International Tennis Center

Project Phase 1
Appendix A1: Panoramic View/Photo &
- Subic Bay Sports Complex Development Plan
Appendix A2: Internal Audit Report
Total Cost as of May 30, 2004, net book value: P 37,967,369.53
by SBMA Internal Audit Service (attached)
Panoramic View/Photo
One (1) Clubhouse Building at Remy Field No. 6
Ground Floor
- with locker rooms – men’s and ladies with aircon.
- kitchen – bar with aircon
- reception – office room with 2 aircons
Upper floor
- upper floor bar indoor with 2 aircon
- bar/kitchen with cabinet and aircon
- with men’s and ladies toilet
- office space with aircon
- outdoor patio/lounge
One 1 Center Tennis Court Stadium – Outdoor No. 7
- with lights
- permanent bleachers with roofing
- fence
Two (2) Show Tennis Courts – Outdoor No. 4
- with lights
- fence
Four (4) Covered Tennis Courts – No. 3
- with lights
- bleachers
- fence
Annex (1) Building for No. 2
- Men’s and Ladies Locker room
- Men’s and Ladies CR/Toilets

Appendix A3:
Part of Project Phase II
Bldg. 494: Fitness Gym No. 8
(behind Basketball gym )
- Squash courts (2)
- Weigh-training Area
- Taekwondo / Boxing gym area
- Upper and Lower Level Rooms

by SBMA Internal Audit Service, July 22, 2004

Cost of building without improvement: P6,323,000
Cost of improvement by SBMA: P2,936,000
Total Cost P 9,259,000.00
APPENDIX “B”
Page 1 of 6: “SERVICES”

The Proposal:
Subic Bay Sports Management, Inc. (SBSMI)
SBSMI shall provide the following products and services:

1. Furnish an experienced team of experts to provide operations management in the

administration of the tennis facility and clubhouse, including but not limited to the Pro-
Shop, Food and Beverage operation, Events, etc.
1. a. Shall relocate staff from Manila to run the tennis facility
2. Provide a General Manager at SBSMI’s expense
3. Run Marketing Programs (Sports Tourism) for all sports such as
Tennis, Basketball, Badminton, Swimming, Track & Field, etc. SBSMI has prior
experience
4. Bring in International Students, Tour Groups, Camps,
Tie-in with other activities: Subic Tours, English classes, scuba-diving, etc.
5. Manage the Food & Beverage operations of the clubhouse SBSMI has prior
experience
6. Create and Run International Events and find Sponsors SBSMI has prior
experience
7. Create and Run Local Events and find Sponsors SBSMI has prior
experience
8. Find Investors to finance special operations & events SBSMI has prior
experience
9A. Create publicity and market to the A-B Manila Market SBSMI has prior
experience
9B. Create publicity and market to the A-B Regional Markets SBSMI has prior
experience
9C. Create publicity and market to the International Market SBSMI has prior
experience
10. Tie-ins with International and Local Associations SBSMI has prior
experience
11. Liaison with and collection of revenues from the Tennis Academy
12. Provide the SBMA with the following General Management Functions: SBSMI has prior
experience
a. Give the SBMA Board of Directors periodic and timely reports
b. Set up Management, Accounting and Purchasing Procedures & Controls
c. Hire and fire employees, provide training and profit sharing plans
Although local area hire is our first priority, we ask that the SBMA does not dictate
or seek to influence SBSMI’s choice of personnel.
d. Deal with vendors and sub-contractors
e. Run the Facilities and Maintenance Departments
13. INFUSE CAPITAL FUNDING AND INVESTMENT
The Subic Bay Sports Management Inc. shall be investing an estimated amount of
THIRTY SEVEN MILLION in Philippine pesos (P37,271,300.00) for capital
improvements of SUBIC BAY INTERNATIONAL TENNIS AND SPORTS CENTER
between 2004 and 20014.

Details of estimated costs and time frame (in parenthesis) of development and
completion are as follows:

1. Four (4) additional tennis courts (by October 2005): P12,450,700.00

- lighting, additional fences (Oct. 2005)
 - bleachers, spectator stands (Oct. 2005)
- practice hitting walls (2006)
- all-round sports equipment for youth (2006)
- integrated mini-basketball court, covered (2006)
- 1-2 integrated paddle tennis courts (2007)

2. Six (6) to Eight (8) Badminton Courts (2004-05): P1,350,000.00

- with additional coverings and windbreakers (July 2005)
- floorings, and scoring equipment (Sept. 2005)

3. New Sports Restaurant & Entertainment Facility P7,880,000.00

(a) Sports Bar at 2nd floor Clubhouse (2004)

- multi-TV, speakers, cable & satellite (2004)
- Bar furnishings, bar equipment (2004)
- interior decoration, patio improvements, etc. (2005)

(b) Restaurant and Garden Café on ground floor (2005-06)

- furnishings, garden setting, umbrellas
- kitchen equipment, grills, oven, etc.
- hardscaping and additional fences
- mini-putting (2 holes) green
APPENDIX “B”
Page 2 of 6: “SERVICES”

4. Renovation of Annex Building (by 2010 - 20014) P4,390,600.00

(located between Covered and new Outdoor Courts –
currently used as a men’s and women’s locker room)
- building extension/expansion to accommodate the following:
> a pizza parlor with a patio
> recovery spa: athletic/sports massage, foot and back massage
> mini-shop: sundry and all-sports mini-sports shop
> information center for SBMA tourism and sports.

5. Bldg. 494 Fitness Gym (located behind Basketball gym): (2004-2006) P7,000,000.00
- Provision and supply of gym and fitness equipment
such as: Weight room equipment, floor matting;
- Sports medicine tools and equipment:
- Upgrade of interior design of building
- Air-conditioning, TV and computer.

5. Projected Maintenance Expense:

P 840,000.00/year P4,200,000.00/ 5 years

Total Investment: P 37,271,300.00

d. Others:
INVESTMENT IN RIGHTS, SANCTION FEES, BRANDING RIGHTS:
software
Furthermore, Subic Bay Sports Management Inc. will continue to spend for
the rights / branding rights, sanction fees and organizing costs for the
following program of activities held at the Subic Bay International Tennis and
Sports Center.

SOFTWARE: Advertising Value

(estimated)
1. National Open Tennis Championships 04–08 P10,500,000 / year
(3rd year at SBITC) Sponsorship fees
Sanction Rights: Philippine Tennis Association
Estimated Cost: P 2,350,000.00

2. South East Asian Games Tennis Event 2005 P25,000,000 /year

Rights: Philippine Olympic Committee
Philippine Tennis Association
Estimated cost: P 6,500,000.00

3. Wimbledon Champion Pat Cash P12,000,000.00 / year

Cash-Hopper International Tennis Academy
SBITC named as the High-Performance and
Training Center for South East Asia
Est. Cost of Fees and Expenses: P 2,500,000.00

4. Tennis and Youth Sports Camps P 9,000,000.00 / year

Nike Tennis Camps: P 700,000.00
 Adidas Camp Basketball: P 1,500,000.00
Swimming Clinics: P 500,000.00
Badminton clinics: P 600,000.00

5. “Australian Open” Training Programs

- Coaching Program
- “Ballkids” Program
Sanctioned by: International Tennis Federation
and Asian Tennis Federation
Est. Cost and Fees: P 3,200,000.00 P20,000,000.00 / year

6. Website: Development and Maintenance 4,000,000.00 / year

www.subicbaytennis.com (existing)
P 450,000.00 / year

Total Estimated Cost: Total Adv. Value

P 18,300,000 : P 70,500,000.00

APPENDIX “B”
Page 3 of 6: “SERVICES”

Company Profile: Subic Bay Sports Management Inc (SBSMI)

Sports Club Operations Management and Programming:

SBSMI’s President, Virgilio Sison, has managed sports club operations and provided programs for
leading sports and tennis facilities in Switzerland and the Philippines, including the Basel Lawn
Tennis Club and Sports Center Paradise (Switzerland), Manila Polo Club, Rockwell Land, Makati
Sports Club, Philippine Tennis Association and other institutions.

Special Events Promotion and Marketing:

SBSMI managers have promoted and marketed several high profile events such as Adidas Tennis
Challenge (1997-98), ATP Tour / CNN Smash Tennis in Manila, Coca-Cola Tennis Championship:
2002 (PHILTA-Group 1 Event), The Pangaea Cup International (Baseball) Tournament (1996-2001),
etc. and helped promote international brand sports equipment such as Prince, Slazenger, Head,
Wilson, Adidas and many others. Other staff projects include the promotion of the U. S. Major
Baseball League (MBL) and the National Basketball Association (NBA) products and brands.

Manpower Training: Player / Athlete Development:

SBSMI’s President has provided training programs for sports institutions’ manpower and player
development in Switzerland and the Philippines.  Various programs have been implemented for the
Swiss Youth and Sports administration, the Swiss Tennis Federation, the Philippine Tennis
Association, and in leading sports clubs in Manila.

SBSMI TEAM

Virgilio “Beeyong” Sison, President :

The only Filipino to have played in all the 4 Grand Slams - Wimbledon, French, the U.S. and
Australian Open as a professional touring player of the Association of Tennis Players (ATP Tour)
where he was a ranking member. He reached the French Open Doubles Quarterfinals in 1981.
Beeyong has both played and served as Captain for the Philippine Davis Cup team. Beeyong's
teaching experience include 15 years of Tennis Club Operations in Switzerland as a Head Pro of
Basel Lawn Tennis Club where world ranked players grew up and played, including Wimbledon
Champion Roger Federer, Martina Hingis, Marc Rosset, and Patty Schnyder. Beeyong was Certified
by the Swiss Tennis Federation as “Professeur de Tennis” in 1985 and was subsequently named
Swiss National Assistant Coach in 1987.

James V. Obannon, Director:

Jim is schooled at UCLA – class valedictorian. His expertise lies in planning, design, construction
project management. His projects include a P300 million plant, a P500 million condominium, two
86 million peso animation studios, a P37 million tennis, basketball and clubhouse facility, and
dozens of others.  

Jean Henri Lhuillier, Director:

General Manager of Lhuillier Group of Companies involved in financial services, IT, Hotels and
Sports Programs. A philanthropist, JH sponsors the following organizations: Phil. National
Basketball Team; Team Manager of the Philippine Davis Cup Team, Lhuillier Men’s Tennis Circuit:
Sponsor of  Patrick John Tierro and SBITC Junior Touring Squad.

George Zahorsky, Tennis Academy Director

A USPTA Certified Pro who has been directing successful tennis programs for juniors and adults for
the past 28 years in the U.S. and Asia. George is also the president of Sports Development Asia, the
company that has successfuly brought Nike Sports Camps to Subic Bay for three years now.

Martin F. Misa, Events Coordinator and Youth Development Officer

One of the distinguished RP Davis Cup and Fed Cup team coaches, Martin is Certified by
International Tennis Federation (ITF) in England for Youth Tennis Development. He also serves as
SBITC Events Director

Francis Factura, Tennis Director

An ITF Certified Pro and former RP No.1 Junior player. Francis was internationally ranked junior
player in the ITF Junior Circuit. He is also the SBITC Manager.
APPENDIX “B”
Page 4 of 6: “SERVICES”

RULES, REGULATIONS, PROCEDURES AND SERVICES

FOR SUBIC BAY INTERNATIONAL TENNIS CENTER

A. PURPOSE AND APPLICABILITY

The Subic Bay Sports Management Inc. (SBSMI) promulgates these Regulations for the purpose of providing
fair and reasonable rules for the orderly and uniform conduct of usage of the Subic Bay International Tennis
Center (SBITC) and its facilities as mandated by Subic Bay Metropolitan Authority (SBMA) to the Management
(SBSMI). These Regulations shall be applicable to all persons, groups, teams, clubs, organizations, and
institutions who shall be using or renting the tennis courts and engaging its services.

B. GENERAL
1. Open to the General Public; No Discrimination;
2. Operating Hours: The tennis courts are open daily from 6:00 a.m. to 11:00 pm;
3. Tennis Court Dress Code: 3.a. For safety and health reasons, players are required to be
attired properly while playing tennis;
4.a Registration of Players: Court Usage and Rental: “All” Players willing to use the tennis courts must first
register
by signing their name at the Players List at the Clubhouse:

4.b. Daily Use Pass: Available for purchase are Passes on a Daily, Monthly, and Yearly usage
scheme. All rates are on a per person basis. All passes are non-transferable:
4.b.1. Rules on Pass Holders:
4.b.1.1 “First come, first serve basis”
4.b.1.2. Singles Play (2 players) – during peak hours:45 minutes;
4.b.1.3. Doubles Play (4 players) – during peak hours: a 60 minutes;
4.b.1.4. Special Rules During Peak Hours for Pass Card Holders: (refer to booklet);
4.c. Regular Rates: Players paying based on the regular rates may sign in and play on a first come first
serve basis:
4.c.1. Rules On Regular Rates:
4.c.1.1. Advanced Payment
Players shall be billed according to the published rates. The full hour court fee shall be
payable before playing and shall be provided a receipt to be surrendered to the court checker
if demanded;
4.c.1.2. Excess Playing Time
Players who wish to continue playing after the hour, shall be billed at increments payable
after play at the Administration Office:
For doubles: court fee usage shall be charged at 30-minute increments;
For singles: at 15-minute increments.
During peak hours, players must vacate the courts promptly after the full hour. Players must
sign-in again at and must wait for the next open court.
5. Tennis Court Reservations
5.a. Reservations on Regular Rates: Reservations shall be confirmed only after fulfilling the following
requirements:
5.a.1 Reservations must be paid in full in advance:
5.a.2 Forfeiture of Court: a 15 minute grace period shall be granted after which the reserved court
shall be deemed forfeited and shall be given to the next set of players in waiting on a first come, first
serve basis;
5.a.2.1. Late arrival – Players who reserved and whose court was defaulted due to late
arrival (after 15 min. grace period) may be given credit and shall be allowed to use the
next open court on a first come first serve basis without extra charge;
5.a.2.2 No Show, No Refund - Payment shall not be refunded if players who reserved do
not show up on the day of reservation;

5.a.2.3 Cancellations: Cancellations may be made by contacting the Administration Office:

- 48 hours before reserved time = 100% refund
- 24 hours before reserved time = 50% refund
- 6 hours before reserved time = 25% refund
Note: Reservations are Transferable. Players may assign the court to another party;
5.b. Reservations for Pass Holders: Reservations shall be made and confirmed by fulfilling the following
requirements:
 5.b.1. Reservation fee of P100: Reservations on Pass Holders may be granted by the management
upon registration along with a payment of P100 prior to the desired appointed schedule. There shall
be no refund even if cancelled before appointed time;
5.b.2. Reservations shall be allowed three (3) days before the desired time schedule. No
reservations further in advance shall be accepted;
5.b.3 Forfeiture of Court: a 15 minute grace period shall be granted after which the reserved court
shall be deemed forfeited and shall be given to the next set of players in waiting on a first come, first serve
basis:
5.b.3.1. Late arrival: Players who reserved and whose court was forfeited due to late arrival (after 15 min. grace
period) shall automatically lose their reserved court. There shall be no refund;
5.b.4. One (1) Hour Reservation per Pair or Group Only: there shall be no double reservation allowed or
double booking. Reservations shall not be accepted for those who reserve for a particular court time
using his or her name for the first hour, then partners for the next court time. Rule 4.b.1.4 shall also
be applied;
5.b.5. No Cancellation, No Refund for Pass Holder Reservation: There shall be no refund on the
cancelled reservation. However, reservations may be transferable.

6. Lights Usage
If lights are used regardless of the time, the published rates for lighted courts apply. Due to the high cost of
light start-up, lights shall be charged in 30 minute increments.

C THE MANAGEMENT

1. Jurisdiction
The Subic Bay International Tennis Center is under the jurisdiction of the Board of Directors of Subic Bay Sports
Management, Inc., as mandated by the Subic Bay Metropolitan Authority to operate, manage and maintain the
tennis courts, the club house facilities and supervise tennis school programs, food and beverage services and
special events such as camps, tournaments and other competitive events.
2. Operations Manager and Staff
SBSMI has employed an Operations Manager and a staff to operate the tennis facilities. The operational part
includes and is not restricted to:
a. Adherence to and enforcement of the established tennis court rules, regulation, and procedures;
b. Collection of payments for Court Fees, Pass Cards, Tennis Lessons, Tennis Programs, Ball Boys Fee, Goods
and Services Delivered from Pro Shop, and Food and Beverage outlet.
c. Preparing and maintaining the courts for play according to established maintenance procedures;
d. Ascertaining the availability of Tennis Pros (Instructors), Hitting Partners and Ball Boys.
3. Rights of the Management
Subic Bay Sports Management, Inc. (SBSMI) reserves the right to refuse entry, ban, or to eject players from
the premises for the following reasons:
a. Rowdy and abusive behavior; drunkenness; or fighting;
b. Refusal to follow management rules and regulation;
c. Refusal to pay for goods and services delivered; and
d. Littering and causing damage to the premises and its equipment.
- SBSMI decision on this matter is final. Penalized players may appeal any decision to SBSMI.

D THE PROFESSIONAL TEACHING STAFF AND ASSOCIATES

The Management (SBSMI) has accredited and engaged the services of a team of teaching professionals
(coaches) and instructors who are certified using the Beeyong Sison International Tennis School Teaching
Method and Philosophy (ITS Systems)
1 SBITC Pros: Availability by Appointment – Priority Court Reservation
The Staff and Associates are available to all players willing to engage their services for a fee. Engagement of
services by the Teaching Staff is by appointment only. Tennis lessons whether Private or Group Lessons shall
have priority tennis courts reservation.
2 Fees
All fees are established, approved and published by the Management. Teaching fees and other fees may be
changed with out prior notice.
3 Accredited Pros and Associates
Teaching Pros, Instructors, Hitting Partners and Ball boys not accredited by the Management (SBSMI) shall
not be allowed to perform services or conduct private lessons and/or group instructions at the Tennis Center
(SBITC).
4. Hitting Partners and Court Attendants (Ball Boys).
Hitting partners and Ball boys follow a time schedule established by the Management and may be also engaged
for a fee and subject to availability.
5 Use of Training balls, and Ball baskets
The use of multiple training balls and ball baskets shall be limited to accredited pros only for safety reasons and
to protect other players playing on adjacent courts from injury due to stray balls. Players shall not be allowed to
 carry a basket full of balls or on the court without an Accredited Pro accompanying them. Ball baskets may
damage court surfaces if improperly used. Allowable maximum number of balls to be used per court shall be as
follows: (hitting-partners shall also fall under this category):
Covered courts: 10 balls per court
Show Courts: 10 balls per court
Center Court: 12 balls per court.

E PRIVATE LESSONS
1. Registration and Reservation
Interested participants must fill-out the Tennis Program Registration Form available at the Administration
Office. Students may directly contact the Teaching Pro of their choice and make the necessary arrangements.
Upon completion of required information, the Form must be submitted to Subic Bay Sports Management Inc. at
the Subic Bay International Tennis Center at Remy Field, Subic Bay Freeport Zone. Participants may call in for
more information at (047) 252-2884 and (047) 252-2885 or through email: subicbaytennis@asia.com .
2. Tuition Fees and Rates
All fees and rates shall be established and published by the Management and are subject to change without
prior notice. All fees are in Philippine Peso.
3. Mode of Payment
Fees are payable upon registration at the Administration Office in cash or in checks payable to Subic Bay Sports
Management Inc..
a) Single Lessons: Fees must be paid before each lesson
b) Packaged or Multiple Lessons – must be paid in advance and completed within 12 weeks from the start of
the first lesson. All Private Lesson fees do not include, court rent and Ball Boy fees.
4. Cancellations
Registered participants must announce in writing, by phone, fax or email to the Administration Office if they
wish to cancel or re-schedule a tennis lesson. Students may also contact the Pro directly for any cancellations.
Court reservation shall be automatically reserved. Cancellation of appointed time with a Pro shall fall under the
following conditions:
a) 24 hours before appointed time = no charge
b) 6 hours before appointed time = 50%
c) No show, no announcement = full charge.
5. Suspension Due to Rain:
When rain suspends play:
- Before or within 30 minutes = ½ the cost of lesson; - After 30 minutes = full charge.

F TENNIS SCHOOL: GROUP CLASSES: COURSES, CAMPS AND CLINICS;

1. Registration
Interested participants must fill-out the Tennis Program Registration Form available at the Administration
Office. Upon completion of required information, the Form must be submitted to Subic Bay Sports Management
Inc. at the Subic Bay International Tennis Center at Remy Field, Subic Bay Freeport Zone. Participants may call
in for more information at (047) 252-2884, 252-2885 or through email: info@subicbaytennis.com
2. Tuition Fees and Rates
All fees and rates shall be established and published by the Management and are subject to change without
prior notice. All Published Fees and Rates of the Group Program include Pro Fees, court rent, training balls, and
Ball Boys. All fees are in Philippine Peso.
3. Mode of Payment
Fees are payable upon registration at the Administration Office in cash or in checks payable to Subic Bay Sports
Management Inc.
4. Cancellations
Registered participants must announce in writing, by phone, fax or email if they wish to cancel the program:
a) 5 days before the start of a program = no charge
b) After the start of the program = 50% of the cost of program
c) No announcement = full charge
Absences: There shall be no refund or make-up lessons for students who fail to attend due to personal
constraints, injury or sickness.
5. Use of Covered Courts: The Tennis School shall always make one (1) to two (2) tennis courts at the covered
courts available during rainy season and peak hours for the benefit of other players waiting to play.

G. Subic Bay Metropolitan Authority

All Board of Directors, officers and heads of departments and their management level personnel of the Subic
Bay Metropolitan Authority shall be welcome to use the tennis facilities, free-of-charge, on the Daily Use rates.
Employees of SBMA may avail of the discounted rates as published by SBSMI.
H. SPECIAL EVENTS AND TOURNAMENTS
Special Events and Tournaments calendar dates shall be published and announced periodically and shall be
given court allocation on the Outdoor courts. The covered courts may be used only during inclement weather
and shall use two courts out of the four courts for the benefit of other players willing to use the facilities

I. RIGHTS AND WAIVERS

1. Rights of SBITC Teaching Staff

The Teaching Staff reserves the right to:
a. Cancel or suspend classes due to unavoidable circumstances with prior notice;
b. Refuse persons from participating and / or expel players from the program for the following reasons:
b.1. Rowdy and abusive behavior;
b.2. Refusal to follow management rules and regulation;
b.3. Refusal to pay for goods and services delivered; and
b.4. Littering and causing damage to equipment.

2. Waiver
The participants of both Private and Group Classes agree to hold Subic Bay Sports Management Inc., its
officers, directors, managers, supervisors, Teaching Pros, Instructors, Ball boys, and representatives free from
any liabilities, claims and for injury, or damages in connection with or arising out of the above undertaking. The
players, students and participants shall assume full responsibility for the above undertaking as herein provided.

J. INQUIRIES, SUGGESTIONS AND COMPLAINTS

For inquiries, suggestions or complaints, players, students and participants may write to:
Mr. Virgilio D. Sison
President
Subic Bay Sports Management Inc.
Subic Bay International Tennis Center
Remy Field at Main Gate
Subic Bay Freeport Zone 2222
Telephone: (047) 252-2884 and (047) 252-2885
Email: info@subicbaytennis.com

ITEM:
1. Page 1, para.3: Change of company address of Property Manager:
from: “Suite 205, G/F Island Plaza, Salcedo, 105 Alfaro St., Salcedo Village,
Makati City, Philippines”
to: Subic Bay International Tennis Center, Remy Field at Main Gate, Subic
Bay Freeport Zone, Philippines

2. Page 1, para.6: added “as amended by Resolution No. 03-06-2916 dated August 7,
2003 (hereto attached as Annex “C”):
“WHEREAS, the Property Manager has applied as SBF Enterprises under
Republic Act No. 7227 and its implementing Regulations and has offered to
provide management services as defined hereunder (hereinafter called the
“Services” ) and the Authority, under the Resolution No. 02-07-2188 dated
July 5, 2002 of the Board of Directors as amended by Resolution No. 03-
06-2916 dated August 7, 2003 (hereto attached as Appendix “C”), has
approved the said application and accepted the offer based on the required
capabilities, professional skills, international experience and technical
resources of the officers/personnel of the Project Manager subject to the
terms and conditions set forth under this Contract;

3. Page 3, Item 1.6: added fax and telephone number of Property Manager:
ITEM:
3. Page 1, para.3: Change of company address of Property Manager:
from: “Suite 205, G/F Island Plaza, Salcedo, 105 Alfaro St., Salcedo Village,
Makati City, Philippines”
to: Subic Bay International Tennis Center, Remy Field at Main Gate, Subic
Bay Freeport Zone, Philippines

4. Page 1, para.6: added “as amended by Resolution No. 03-06-2916 dated August 7,
2003 (hereto attached as Annex “C”):
“WHEREAS, the Property Manager has applied as SBF Enterprises under
Republic Act No. 7227 and its implementing Regulations and has offered to
provide management services as defined hereunder (hereinafter called the
“Services” ) and the Authority, under the Resolution No. 02-07-2188 dated
July 5, 2002 of the Board of Directors as amended by Resolution No. 03-
06-2916 dated August 7, 2003 (hereto attached as Appendix “C”), has
approved the said application and accepted the offer based on the required
capabilities, professional skills, international experience and technical
resources of the officers/personnel of the Project Manager subject to the
terms and conditions set forth under this Contract;

3. Page 3, Item 1.6: added fax and telephone number of Property Manager:

SUBIC BAY SPORTS MANAGEMENT, INC.

Subic Bay Freeport Zone, Philippines
Attention: Virgilio Sison
President
Facsimile: +63 (0)47 – 252 2884
Telephone: +63 (0)47 – 252 2885 & 8

4. Page 4, Item 2.1: from “ten (10) years” to “twenty-five (25) years”:
2.1 Effectivity of Contract
This Contract shall come into force and effect for a term of Twenty-five (25)
years on the date of signing hereof unless sooner terminated pursuant to
clauses 4.1, 4.2, 4.3, 4.4 and 4.5 hereof.

5. Page 4, Item 2.3: from: “March 31, 2012” to “March 31, 2027” ; and
from “ten (10) years” to “twenty-five (25) years”
“Unless terminated earlier pursuant to Clause 4 hereof, this Contract shall
expire on March 31, 2027, unless extended by herein parties due to the
exigencies of the of the services needed and/or the Contract is renewed by
herein Parties for another twenty-five (25) years as mutually agreed upon
by herein Parties. “

6. Page 7-8, Item 3.3, C-1: ADDED

(c) INFUSE CAPITAL FUNDING AND INVESTMENT
The Subic Bay Sports Management Inc. shall be investing an estimated
amount of THIRTY SEVEN MILLION in Philippine pesos (P37,271,300.00)
for capital improvements of SUBIC BAY INTERNATIONAL TENNIS AND
SPORTS CENTER between 2004 and 20014.
 Details of estimated costs and time frame (in parenthesis) of development
and completion are as follows:

1. Four (4) additional tennis courts (2005):

P12,450,700.00
- lighting, additional fences (2005)
- bleachers, spectator stands (2005)
- practice hitting walls (2006)
- all-round sports equipment for youth (2006)
- integrated mini-basketball court, covered (2006)
- 1-2 integrated paddle tennis courts (2007)

2. Six (6) to Eight (8) Badminton Courts (2004-05):

P1,350,000.00
- with additional coverings and windbreakers (2005)
- floorings, and scoring equipment (2005)

3. New Sports Restaurant & Entertainment Facility

P7,880,000.00

(a) Sports Bar at 2nd floor Clubhouse (2004)

- multi-TV, speakers, cable & satellite (2004)
- Bar furnishings, bar equipment (2004)
- interior decoration, patio improvements, etc. (2005)

(b) Restaurant and Garden Café on ground floor (2005-06)

- furnishings, garden setting, umbrellas
- kitchen equipment, grills, oven, etc.
- hardscaping and additional fences
- mini-putting (2 holes) green

4. Renovation of Annex Building (by 2010 - 20014)

P4,390,600.00
(located between Covered and new Outdoor Courts –
currently used as a men’s and women’s locker room)
- building extension/expansion to accommodate the following:
> a pizza parlor with a patio
> recovery spa: athletic/sports massage, foot and back massage
> mini-shop: sundry and all-sports mini-sports shop
> information center for SBMA tourism and sports.

5. Fitness Gym (located behind Basketball gym): (2004-2006)

P7,000,000.00
- Provision and supply of gym and fitness equipment
such as: Weight room equipment, floor matting;
- Sports medicine tools and equipment:
- Upgrade of interior design of building
- Air-conditioning, TV and computer.

5. Projected Maintenance Expense:

 P 840,000.00/year P4,200,000.00/
5 years

Total Investment: P
37,271,300.00

7. Page 10, Item 6.1:

from: “6 through 10th year = 20% Gross Revenue share to SBMA”.
to: “6 through 25th year = 20% Gross Revenue share to
SBMA.

8. Page 14, Item 12: added:

“ REPEALING CLAUSE”
This agreement between the Authority and the Property Manager
repeals the previous agreement signed by both parties last December
13, 2002.

9. Added Appendix “A”: SBMA property: Subic Bay International Tennis Center

10. Appendix B: Added: Expanded capital funding and investment from 2004-
08
(refer back to Item 6, above.; and

INVESTMENT IN RIGHTS, SANCTION FEES, BRANDING RIGHTS:

software
Furthermore, Subic Bay Sports Management Inc. will continue to spend for
the rights / branding rights, sanction fees and organizing costs for the
following program of activities held at the Subic Bay International Tennis and
Sports Center.
SOFTWARE: Advertising Value
(estimated)
1. National Open Tennis Championships 04 – 08 P10,500,000 / year
(3rd year at SBITC) Sponsorship fees
Sanction Rights: Philippine Tennis Association
Estimated Cost: P 2,350,000.00
2. South East Asian Games Tennis Event 2005 P25,000,000 /year
Rights: Philippine Olympic Committee
Philippine Tennis Association
Estimated cost: P 6,500,000.00
3. Wimbledon Champion Pat Cash P12,000,000.00 / year
Cash-Hopper International Tennis Academy
SBITC named as the High-Performance and
Training Center for South East Asia
Est. Cost of Fees and Expenses: P 2,500,000.00
4. Tennis and Youth Sports Camps P 9,000,000.00 / year
Nike Tennis Camps: P 700,000.00
Adidas Camp Basketball: P 1,500,000.00
Swimming Clinics: P 500,000.00
Badminton clinics: P 600,000.00
5. “Australian Open” Training Programs
- Coaching Program
- “Ballkids” Program
 Sanctioned by: International Tennis Federation
and Asian Tennis Federation
Est. Cost and Fees: P 3,200,000.00 P20,000,000.00 / year
6. Website: Development and Maintenance P4,000,000.00 / year
www.subicbaytennis.com (existing)
P 450,000.00 / year

Total Estimated Cost: Total Adv. Value

P 18,300,000 : P 70,500,000.00

11. Added Appendix “C”

Board Resolution No. 03-06-2916 dated August 7, 2003