SECTION 3: FORCE MAJEURE EVENTS

13.1 Definition of Force Majeure.

A "Force Majeure Event" shall mean any event or circumstance or combination of events or
circumstances (including the effects thereof) that is beyond the reasonable control of a Party and
that on or after the date of Financial Closing, materially and adversely affects the performance by
such affected Party of its obligations under or pursuant to this Agreement (including a Party's
ability to deliver or receive energy from the Complex): provided. however. that such material and
adverse effect could not have been prevented, overcome or remedied by the affected Party
through the exercise of diligence and reasonable care, it being understood and agreed that
reasonable care includes acts and activities to protect the Complex from a casualty or other event
that are reasonable in light of the probability of the occurrence of such event, the
probable effect of such event if it should occur, and the likely efficacy of the protection
measures. "Force Majeure Events" hereunder shall include each of the following events and
circumstances (including the effects thereof). but only to the extent that each satisfies the above
requirements:
(a) Following political events that occur inside or directly involve Pakistan:
(i) any act of war (whether declared or undeclared). invasion. armed conflict or act of foreign
enemy, blockade, embargo. revolution. riot. insurrection. civil commotion. or act or campaign of
terrorism:
(ii) any Lapse of Consent that (i) shall itself have existed for fifteen [151 consecutive Days or
more. (ii) together with any and all other Lapses of Consents that have occurred in the same
Agreement Year. shall have existed in the aggregate for thirty [30] Days or more in such
Agreement Year. or (iii) together with any and all other Lapses of Consents that have occurred in
the same and in the two immediately preceding Agreement Years, shall have existed. in the
aggregate. for sixty [60] Days or more;
(iii) radioactive contamination or ionizing radiation originating from a source in Pakistan or
resulting from a source outside Pakistan; or
(iv) strikes. works to rule. go-slows. or other industrial action such as. by way of example and
not limitation. labour actions associated with or directed against a Pakistan political party, or
those that are directed against the Company (or its contractors) or the Coal Supplier. which form
part of a national strike or general or widespread industrial unrest or dispute and are not confined
solely to the workers or employees of the
Party claiming the occurrence of a Force Majeure Event, its contractors. subcontractors. or
suppliers; or
B) Changes in Law
C) Other beyond the reasonable control of the affected party, including, but not limited to:
(I) uncontrollable events including, but not limited to:
a. Lightning, fire, earthquake, tsunami, flood, storm, cyclone, tornado or locusts;
b. Fire, explosion, or chemical contamination (other than resulting from an act referred to in
section XI. B(I))

c. Epidemic or plague

D) Force Majeure Events shall expressly not include the following conditions, except and to the
extent that they result directly from a Force Majeure Event:
(I) late delivery or interruption in the delivery of machinery, equipment materials, spare parts or
consumables (including fuel);
(ii) a delay in the performance of any Contractor;
(iii) normal wear and tear or random flaws in materials and equipment or breakdown in
equipment; or
(iv) changes in prices or maket conditions
Any event or circumstance or combination of events or circumstances affecting the performance
of a Contractor of a Party shall, when and to the extent it materially and adversely affects the
performance by such Party of its obligations under or pursuant to this Agreement. constitute a
Force Majeure Event of the affected Party hereunder if such event or circumstance or
combination of events or circumstances affecting such Contractor would constitute. rnutatis
mutandis. a Force Majeure Event (as defined herein) if it directly affected such Party.
13.2 Notification of Obligations
Notification of Obligations.
(a) If by reason of a Force Majeure Event a Party is wholly or partially unable to carry out its
obligations under. this Agreement, the affected Party shall (i) give the other Party notice of the
Force Majeure Event as soon as practicable, but in any event, not later than the later of fortyeight [48] hours after the affected Party becomes aware of the occurrence of the Force 'Majeure
Event or six [6] hours after the resumption of any means of providing notice between the
Company and the Coal Supplier, whichever is later, and (ii) give the other Party a second notice,
describing the Force Majeure Event in reasonable detail and, to the extent which can be
reasonably determined at the time of such notice, providing a preliminary evaluation of the
obligations affected, a preliminary estimate of the period of time that the affected Party shall be
unable to perform such obligations and other relevant matters as soon as practicable, but in any
event, not later than seven [7] Days after the initial notice of the occurrence of the Force Majeure
Event is given by the affected Party. When appropriate or when reasonably requested to do so by
the other Party. the affected Party shall provide further notices to the other Party more fully
describing the Force Majeure Event and its cause(s) and providing or updating information
relating to the efforts of the affected Party to avoid and/or to mitigate the effect(s) thereof and
estimates, to the extent practicable, of the time that the affected Party reasonably expects it shall
he unable to carry out any of its affected obligations due to the Force Majeure Event.
(h) The affected Party shall provide notice to the other Party of (i) with respect to an ongoing
Force Majeure Event. the cessation of the Force Majeure Event. and (ii) its ability to

recommence performance of its obligations under this Agreement as soon as possible and in any
event not later than seven [7] Days after the occurrence of each of clause (i) and (ii) above.
(c) Failure by the affected Party to give written notice of a Force Majeure Event to the other
Party within the forty-eight [48] hour period or six [6] hour period required by Section 13.2 (a)
shall not prevent the affected Party from giving such notice at a later time; provided, however,
that in such case the affected Party shall not be excused pursuant to Section 13.4 for any failure
or delay in complying with its obligations under or pursuant to this Agreement until such notice
has been given. If such notice is given within the forty-eight [48] hour or six [6] hour period
required by Section 13.2 (a). the affected Party shall be excused for such failure or delay
pursuant to Section 13.4 from the date of commencement of the relevant Force Majeure Event.
13.3 Duty to Mitigate.
The affected Party shall use all reasonable efforts (or shall ensure that its Contractors use all
reasonable efforts) to mitigate the effects of a Force Majeure Event, including. but not limited to.
the payment of reasonable sums of money by or on behalf of the affected Party (or such
Contractor), which sums are reasonable in light of the likely efficacy of the mitigation measures
in any jurisdiction to the giving of any relief or the issue of any process in connection with such
proceedings (including the making. enforcement or execution against or in respect of any assets
whatsoever irrespective of their use or intended use).
13.4 Delay Caused by Force Majeure.
So long as the affected Party has at all times since the occurrence of the Force Majeure Event
complied with the obligations of Section 13.3and continues to so comply then (a) the affected
Party shall not be liable for any failure or delay in performing its obligations (other than an
obligation to make a payment or provide security) under or pursuant to this Agreement during
the existence of a Force Majeure Event, including, without limitation, in the case of the Coal
Supplier. the Coal Supplier's obligation to deliver Coal up to the Daily Contract Quantity. and (h)
any performance deadline that the affected Party is obligated to meet under this Agreement.
including the Scheduled Commissioning Period Start Date and the Commercial Operations Date.
shall be extended; provided, however, that no relief, including the extension of performance
deadlines, shall be granted to the affected Party pursuant to this Section 13.4 to the extent that
such failure or delay would have nevertheless been experienced by the affected Party had the
Force Majeure Event not occurred. Other than for breaches of this Agreement by the other Party.
and without prejudice to the affected Party's right to indemnification pursuant to this Agreement,
the other Party shall not bear any liability for any loss or expense suffered by the affected Party
as a result of a Force Majeure Event.
13.5 Termination as a Result of Force Majeure.
In the event that a Force Majeure Event excuses the failure or delay of performance by a Party of
a material obligation under this Agreement for a period in excess of 365 Days. then the other
Party shall have the right to terminate this Agreement without any liability or obligation by
delivering written notice thereof to the Party which has been excused by such Force Majeure

Event: provided. however. that the Coal Supplier may not terminate this Agreement unless the
Implementation Agreement is terminated along with this Agreement in accordance with the terms
of the Implementation Agreement.
13.6 Payment of Coal delivered prior to Force Majeur Event not excused
Notwithstanding anything contained in this Section, the Company will not be excused on account
any Force Majeur event from making payment to the Coal Supplier against Coal already
delivered to the Company prior to the notification of the Force Majeur Event in accordance with
section 13.2

SECTION 14: ASSIGNMENT AND SECURITY

14.1 Assignment
No assignment or transfer by a Party of this Agreement or such Party's rights or obligations
hereunder shall be effective without the prior written consent of the other Party, except by the
Company or the Coal Supplier as provided in Section 14.2 or Section 14.3.
14.2 Creation of Security.
a) Notwithstanding the provisions of Section 14.1. for the purpose of financing the construction
of the Complex. the Company may, pursuant to the Financing Documents. assign to, or create a
security interest in favor of, the Lenders in the Company's rights and interests under or pursuant
to this Agreement. so long as the Lenders assume in writing fbr the benefit of the Coal Supplier
all of the obligations of the Company under this Agreement.
b) Except as expressly provided in this Agreement, the Lenders shall have no rights or
obligations to the Coal Supplier under this Agreement until such time as the Lenders or the Agent
succeed to the Company's interest under this Agreement, whether by exercise of their rights or
remedies under the Financing Documents, in which case the Lenders or the Agent shall assume
liability for all of the Company's obligations under this Agreement and shall assume in writing
for the benefit of the Coal Supplier all of the obligations of the Company under this Agreement.
including payment of any amounts due and owing to the Coal Supplier fbr payment defaults by
the Company under this Agreement (other than. so long as the liability insurance required by
Section 0 has been and is in effect, liabilities incurred by the Company under Section 0. arising
during the period prior to the Lenders' or such Agent's succession to the Company's interest in
and under this Agreement; Notwithstanding the foregoing, the Coal Supplier shall not be
prevented from terminating this Agreement in respect of any liability of the Company arising
under this Agreement, including without limitation under Section 15.1 (b). that is not assumed
and satisfied by the Lenders or the Agent as and when required herein. Except as otherwise set
forth in the immediately preceding sentence. none of the Lenders or the Agent shall be liable for
the performance or observance of any of the obligations or duties of the Company under this
Agreement. nor shall the assignment by the Company of this Agreement to the Lenders give rise

to any duties or obligations whatsoever on the part of any of the Lenders owing to the Coal
Supplier.
c) Upon delivery by the Lenders or the Agent to the Coal Supplier of notice of the occurrence
and continuance of an event of default under the Financing Documents and the succession of the
Lenders to the Company's interests in and under this Agreement. the Lenders shall have the right,
among others, to (i) take possession of the Complex and. prior to the Commercial Operations
Date, complete construction of the Complex and operate the same and. after the Commercial
Operations Date, operate the same, and (ii) cure any continuing Company Event of Default under
this Agreement as provided in Section 15.1. Without the requirement of obtaining any further
consent from the Coal Supplier, upon the exercise by the Lenders or the Agent of any of the
remedies set forth in the Financing Documents. the Lenders may assign their rights and interests
and the rights of the Company under this Agreement to a Transferee (as hereinafter defined) so
long as such Transferee shall assume in writing for the benefit of the Coal Supplier all of the
obligations of the Company under this Agreement. Upon such assignment and assumption. the
Lenders shall be relieved of any obligations assumed by them under this Agreement arising after
such assignment and assumption.
d) As used herein, a "Transferee" shall be a Person who (i) either is an experienced power plant
operator or shall have agreed to engage the services of a person who is an experienced power
plant operator, (ii) shall have paid all amounts, if any, then due and payable to the Coal Supplier
under this Agreement, (iii) shall have expressly assumed in writing for the benefit of the Coal
Supplier the obligations of the Company under this Agreement. and (iv) constitutes a company
organized under the Laws of Pakistan.
e) At the request of the Company, delivered to the Coal Supplier not less than 30 Days in
advance. the Coal Supplier shall execute and deliver at the Financial Closing. all such
acknowledgments to the Lenders or their designees of any security created pursuant to this
Section 14 as are reasonably requested by the Company and the Lenders to give effect to the
foregoing.
f) Notwithstanding the foregoing, the Coal Supplier shall have the right to assign this Agreement
to any entity or entities assuming all or part of the Coal Supplier's rights and obligations in
connection with the transmission or distribution of Coal to the Delivery Point: provided.
however, that the GOP without interruption guarantees the performance of such other succeeding
entity or entities on the same terms and conditions as the Guarantee or such other commercial
security is provided for the obligations of the succeeding entity or entities that in the reasonable
business judgment of the Company provides an adequate alternative to the Guarantee and all of
the Coal Supplier's obligations under this Agreement are assigned pursuant to law to or
contractually assumed, through a novation. by one or more entities. each of which has the legal
capacity and appropriate commercial function to perform such obligations.
14.3 Assignment to the GOP. Notwithstanding the provisions of Section 14.1. the Company may
assign this Agreement and the Company's rights and obligations hereunder to the GOP. as the
case may be, in the event of a transfer of the Complex to the GOP in accordance with Article

XIX of the Implementation Agreement. Upon such assignment. the Company shall be released
from all obligations and liabilities arising under this Agreement from and after the date of such
assignment to the GOP.

SECTION 15: TERMINATION FOR DEFAULT

15.1 Company Event of Default.

Each of the following events shall be events of default by the Company (each a -Company Event
of Default"). which, if not cured within the time permitted (if any) by the Coal Supplier to cure.
shall give rise to the right on the part of the Coal Supplier to terminate this Agreement pursuant
to Section 15.3 ; provided, however, that no such event shall be a Company
Event of Default (i) if it results from a breach by the Coal Supplier of this Agreement or by the
GOP of the Implementation Agreement or the Guarantee, or (ii) if it occurs as a result of a Force
Majeure Event:

(a) except for the transfer of this Agreement to the GOP pursuant to the terms of the
Implementation Agreement. the assignment or transfer by the Company of this
Agreement or of the Company's rights or obligations hereunder in violation of Section
14;
(b) the failure by the Company to make any payment or to deposit the Coal Supply
Deposit required hereunder within three [3] Days of the due date therefor:
(c) except for the purpose of amalgamation or reconstruction that does not affect the
ability of the amalgamated or reconstructed entity to perform its obligations under this
Agreement and provided that the entity in question has unconditionally assumed such
obligations. the occurrence of any of the following events: (i) the passing of a resolution
by the shareholders of the Company for the winding up of the Company. (ii) the
appointment of a provisional liquidator in case of bankruptcy adjudged by a court of
competent jurisdiction, which appointment has not been set aside or stayed within ninety
[90] Days of such appointment. or (iii) the making of an order winding up the Company
by a court of competent jurisdiction:
o (d) except where this Agreement is assigned by the Company to [DISCOS] or the
GOP pursuant to Section14.3. the termination of the Implementation Agreement
due to a Company Event of Default (as defined in the Implementation Agreement)
thereunder:
o (e) any statement, representation or warranty made by the Company herein
proving to have been incorrect, in any respect, when made or when deemed to
have been made and the circumstances that cause such failure or incorrect
statement, representation or warranty to be incorrect having a material adverse

effect on the Company's ability to perform its obligations under this Agreement;
or
o (f) any material breach by the Company of this Agreement which is not remedied
within thirty [30] Days after notice from the Coal Supplier to theCompany, which
notice (i) states that a material breach of this Agreement has occurred and is
continuing which could result in the termination of this Agreement, (ii) identities
the breach in question in reasonable detail. and (iii) demands remedy thereof.
o 15.2 Coal Supplier Event of Default.
o Each of the following events shall be events of default by the Coal Supplier (each
a -Coal Supplier Event of Default"), which if not cured within the time period
permitted (if any) by the Company to cure, shall give rise to the right on the part
of the Company to terminate this Agreement pursuant to Section 15.3: provided,
however, that no such event shall be Coal Supplier Event of Default (i) if it results
from a breach by the Company of this Agreement or the Implementation
Agreement, or (ii) if it occurs as a result of a Force Majeure Event:

(a) any assignment or transfer of this Agreement or of the Coal Supplier's

rights or obligations hereunder in violation of Section 14;
(b) except for purposes of amalgamation, reorganization, reconstruction
or privatization of the Coal Supplier or its assets that does not affect the
ability of the resulting entity to perform its obligations under this
Agreement and provided that the entity in question has unconditionally
assumed such obligations. the occurrence of any of the following events:
(i) a decision by the shareholders of the Coal Supplier for the winding up
of the Coal Supplier, (ii) the appointment of a provisional liquidator in
case of bankruptcy adjudged by a court of competent jurisdiction. which
appointment has not been set aside or stayed within 90 Days of such
appointment. or (iii) the making of an order winding up the Coal Supplier
by a court of competent jurisdiction:
(c) the termination of the Implementation Agreement due to a
GOP Event of Default (as defined in the Implementation
Agreement) thereunder;
(d) any statement. representation or warranty made by the Coal
Supplier herein proving to have been incorrect, in any respect.
when made or when deemed to have been made and the
circumstances that cause such failure or incorrect statement.
representation or warranty to be incorrect having a material
adverse effect on the Coal Supplier's rights or obligations under
this Agreement; or
(e) the Coal Supplier's continuous failure. for [three] consecutive
months to tender such quantities of Coal for delivery to the

Company. as is required to be delivered. under this Agreement.

during each of the aforementioned [three] months.

co If liquidated damages actually payable by the Company to the Power

Purchaser for any Year due to Coal Supplier's default exceeds [10%] of the
Commodity Component value of the Annual Scheduled Quantity for that
Year.

(g) any material breach by the Coal Supplier of this Agreement which is
not remedied by the Coal Supplier within thirty [30] Days after notice
from the Company to the Coal Supplier. which notice (i) states that a
material breach of this Agreement has occurred and is continuing which
could result in the termination of this Agreement, (ii)identities the breach
in question in reasonable detail. and (iii) demands remedy thereof.

15.3

Termination

Notices:

Termination

(a) Upon occurrence of a Company Event of Default or a Coal Supplier

Event of Default, as the case may be, that is not cured within the
applicable period (if any) for cure, the non-defaulting Party may. at its
option. initiate termination of this Agreement by delivering a written
notice ("Notice of Intent to Terminate-) of its intent to terminate this
Agreement to the defaulting Party. The Notice of Intent to Terminate shall
specify in reasonable detail the Company Event of Default or the Coal
Supplier Event of Default, as the case may be. giving rise to the Notice of
Intent to Terminate.

(b) Following delivery of the Notice of Intent to Terminate, except in the

case of a Company Event of Default under Section 15.1 (d) or a Coal
Supplier Event of Default under Section 15.2 (c). the Party in default may
continue to undertake efforts to cure the Company Event of Default or the
Coal Supplier Event of Default, as the case may be, for a period of fortyfive [45] Days commencing on the delivery date of such notice in the case
of a failure by either Party to make payments, or for a period of 90 Days
commencing on the delivery of such notice in the case of any other
Company Event of Default or Coal Supplier Event of Default (other than a
Company Event of Default under Section 15.1 (d) or a Coal Supplier
Event of Default under Section 15.2 (c). as the case may be. (or such
longer period as the Parties mutually may agree) and if the default is cured
at any time prior to the delivery of a Termination Notice in accordance
with Section 15.3 (c) , then the non-defaulting Party shall have no right to
terminate this Agreement in respect of such cured Company Event of
Default or Coal Supplier Event of Default. as the case may be.

(c)Subject to the provisions of Section 15.3. as the case may be, upon
expiration of any cure period described in Section 15.3(b) and unless the
Parties shall have otherwise agreed or unless the Company Event of
Default or the Coal Supplier Event of Default, as the case may be, giving
rise to the Notice of Intent to Terminate shall have been remedied. the
Party having given the Notice of Intent to Terminate may terminate this
Agreement by delivering a Termination Notice to the other Party.
whereupon this Agreement shall immediately terminate.

15.4 Remedies.

(a) Remedies are cumulative, and, except as otherwise provided herein.

the exercise of or failure to exercise. one or more remedy by a Party shall
not impair. limit or preclude the exercise of or constitute a waiver of. other
remedies by that Party that are available to it at law or in equity.

(b) if this Agreement is terminated by the Coal Supplier as a result of a

Company Event of Default hereunder prior to the occurrence of the
Commercial Operations Date, the Company shall upon such termination
reimburse the Coal Supplier for all costs and expenses (including
reasonable overhead) incurred by the Coal Supplier in connection with the
design, engineering, construction and installation of the facilities at the
Loading Point along with mark-up at the rate of 18% per annum. This
obligation shall expressly survive any termination of this Agreement.

(c) If this Agreement is terminated by the Coal Supplier as a result of a

Company Event of Default following the occurrence of the Commercial
Operations Date. the Company shall upon such termination make payment
to the Coal Supplier of 120% of the Book Value of the Coal Supplier's
Fixed Assets. This obligation shall expressly survive any termination of
this Agreement.

(d) Notwithstanding the provisions of Section 15.4 (b) and 15.4(c). the
Parties agree that the Coal Supplier or the Company. as the case may be.
may be damaged in an amount that may be difficult or impossible to
determine in the event that this Agreement is terminated due to a Company
Event of Default or a Coal Supplier Event of Default, as the case may be,
hereunder. The Parties, therefore. have agreed that if this Agreement and
the Implementation Agreement are terminated by the Coal Supplier and
the GOP or the Company. as the case may be. due to a Company Event of
Default or a Coal Supplier Event of Default, as the case may be, and a
Company Event of Default and a GOP Event of Default, as the case may
be. under the Implementation Agreement and the Complex is transferred
to the GOP in accordance with Article [XIX] of the Implementation

Agreement and the consideration provided thereunder is paid to the

Company and the amount provided under Section 15.4 (b), if any. is paid
to the Coal Supplier, that such transfer and the payment of such
consideration and amount is reasonable and substantial and constitutes
liquidated damages to the Coal Supplier or the Company. as the case may
be. in either such event, and it is further azreed that such transfer and
payment of such consideration and such amount is in lieu of actual
damages for such occurrence and the transfer of the Complex and the
collection of such compensation and the termination of this Agreement
pursuant to Section 15.3 is the sole remedy of the Coal Supplier or the
Company. as the case may be. for such Company Event of Default or Coal
Supplier Event of Default and termination of this Agreement.

10

(e)Notwithstanding anything else contained in this Agreement, if this

Agreement is terminated by the Company due to a Coal Supplier Event of
Default then the Coal Supplier shall pay to the Company damages on the
same basis as set forth in Section 10.3(a) (if termination occurs prior to the
Commercial Operations Date) or Section 10.3(h) (if termination occurs
after the Commercial Operations Date). that (i) have accrued as of the
effective date of termination of this Agreement. and (ii) will accrue
thereafter for a maximum period of ninety (90) days or the remaining term
of the Power Purchase Agreement whichever is less, provided, however,
that the Company shall use its best efforts to expeditiously make
alternative arrangements for procuring Coal before the expiry of such
ninety (90) days and if the Company has made any such alternative
arrangements for procuring Coal before the expiry of such ninety (90) day
period. then the Coal Supplier shall be liable to pay damages only up to
the Day on which supplies are commenced to the Company under such
alternative arrangement.

15.5 Obligations Upon Termination. Upon expiration or termination of this

Agreement. the Parties shall have no further obligations or liabilities
hereunder except for those obligations and liabilities that (i) arose prior to
such expiration or termination and (ii) obligations and liabilities that arose
upon termination and expressly survive such termination. including the
obligation to pay any compensation and expenses payable under Section
15.40