Attachment_1_Revised_Draft_PPA_2016_03_12.pdf

DATED ___ [Month] 2016

POWER PURCHASE AGREEMENT

In relation to a 10MWac Solar Power Generation Facility at Kandahar, Afghanistan

Between:

DA AFGHANISTAN BRESHNA SHERKAT, AS PURCHASER

and

[IPP PROJECT COMPANY], AS SELLER

TABLE OF CONTENTS

POWER PURCHASE AGREEMENT

RECITALS:

1. DEFINITIONS; INTERPRETATION

1.1 DEFINITIONS

1.2 RULES OF INTERPRETATION

1.3 ABBREVIATIONS

2. EFFECTIVE DATE; TERM AND AGREEMENTS OF THE PARTIES

2.1 EFFECTIVE DATE

2.2 TERM; POST-TERM ARRANGEMENTS

2.3 MAINTENANCE OF CONSENTS

2.4 APPOINTMENT OF OPERATING REPRESENTATIVES

2.5 APPOINTMENT OF THE ENGINEER

2.6 SELLER LETTER OF CREDIT

3. SALE AND PURCHASE OF NET DELIVERED ENERGY

3.1

4. CONSTRUCTION OF THE FACILITY; REPORTING REQUIREMENTS

4.1 CONSTRUCTION OF THE FACILITY

4.2 SUBMISSION OF REPORTS AND INFORMATION

4.3 DELIVERY OF ELECTRIC POWER TO THE FACILITY

4.4 PURCHASER OBSERVATION VISITS

5. CONTROL AND OPERATION OF FACILITY

5.1 OPERATION AND MAINTENANCE OF THE FACILITY

5.2 SELLER TO MAINTAIN FACILITY AVAILABILITY

5.3 FORECASTING OF NET DELIVERED ENERGY

5.4 DISPATCH INSTRUCTIONS

5.5 SCHEDULED OUTAGES AND MAINTENANCE OUTAGES

5.6 EMERGENCY PROCEDURES

5.7 EMPLOYMENT OF QUALIFIED PERSONNEL

5.8 MAINTENANCE OF OPERATING RECORDS

5.9 TAMPERING WITH THE METERING SYSTEM AND THE FACILITY MONITORING SYSTEM

5.10 CESSATION OF OPERATION OF THE FACILITY

5.11 FORCED OUTAGES

6. INTERCONNECTION FACILITIES

6.1 SELLER INTERCONNECTION FACILITIES

6.2 PURCHASER INTERCONNECTION FACILITIES

6.3 GRANTING OF RIGHTS-OF-WAY FOR PURCHASER INTERCONNECTION FACILITIES

6.4 CONSTRUCTION AND COMPLETION OF PURCHASER INTERCONNECTION FACILITIES

6.5 PROTECTIVE DEVICES

6.6 TESTING

7. METERING

7.1 METERING SYSTEM

7.2 INSTALLATION OF METERING SYSTEM

7.3 TESTING OF METERING SYSTEM

7.4 READING METERS

7.5 SEALING OF METERING SYSTEM

7.6 REPAIR, REPLACEMENT OR RECALIBRATION OF METERING SYSTEM

7.7 PROVISION FOR TELEMETERING

8. TESTING OF THE FACILITY

8.1 TESTING PROGRAM

8.2 TESTING OF THE SELLER INTERCONNECTION FACILITIES

8.3 COMMISSIONING TESTS; RELIABILITY RUN TEST

8.4 COPIES OF TEST RESULTS AND CERTIFICATES

8.5 SCHEDULING AND ACCOMMODATION OF ADDITIONAL TESTS

8.6 PAYMENT FOR NET DELIVERED ENERGY DURING TESTING

9. COMPENSATION; PAYMENT AND BILLING

9.1 ENERGY PAYMENT

9.2 PASS-THROUGH ITEMS; SUPPLEMENTAL TARIFFS

9.3 LIQUIDATED DAMAGES

9.4 BILLING

9.5 PAYMENT

9.6 PURCHASER PAYMENT SECURITY

9.7 PAYMENT DISPUTES

9.8 SUPPORTING DATA

10. LIABILITY

11. INDEMNIFICATION

11.1 INDEMNIFICATION

11.2 ASSERTION OF CLAIMS TO EXCEED MINIMUM INDEMNIFICATION AMOUNT

11.3 INDEMNIFICATION FOR FINES AND PENALTIES

11.4 DEFENCE OF CLAIMS

11.5 NOTICE OF CLAIMS

12. INSURANCE

12.1 MAINTENANCE OF INSURANCE POLICIES

12.2 MAINTENANCE OF “OCCURRENCE” FORM POLICIES

12.3 POLICY ENDORSEMENTS

12.4 CERTIFICATES OF INSURANCE

12.5 INSURANCE REPORTS

13. REPRESENTATIONS, WARRANTIES AND COVENANTS

13.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER

13.2 CERTIFICATES

13.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER

14. TAXES

14.1 TAXES APPLICABLE TO THE SELLER

14.2 TAXES APPLICABLE TO PURCHASER

14.3 NOTICE OF CHANGES IN TAX

14.4 CONSEQUENCES FOR TAX COSTS OR TAX SAVINGS

14.5 DISPUTED TAXES

15. FORCE MAJEURE

15.1 DEFINITION OF FORCE MAJEURE

15.2 NOTIFICATION OBLIGATIONS

15.3 DUTY TO MITIGATE

15.4 DELAY CAUSED BY FORCE MAJEURE

15.5 PAYMENT DURING FORCE MAJEURE EVENT

15.6 RESTORATION FOLLOWING AFGHANISTAN POLITICAL EVENT

15.7 SUPPLEMENTAL TARIFFS

16. DEFAULT AND TERMINATION

16.1 SELLER EVENTS OF DEFAULT

16.2 PURCHASER EVENTS OF DEFAULT

16.3 TERMINATION NOTICE

16.4 OBLIGATIONS UPON TERMINATION

16.5 OTHER REMEDIES

17. COMPENSATION UPON CERTAIN TERMINATION EVENTS

17.1

18. RESOLUTION OF DISPUTES

18.1 RESOLUTION BY PARTIES

18.2 DETERMINATION BY EXPERT

18.3 ARBITRATION

18.4 SOVEREIGN IMMUNITY; JURISDICTION

19. MISCELLANEOUS PROVISIONS

19.1 NOTICES

19.2 AMENDMENT

19.3 THIRD PARTIES

19.4 NO WAIVER

19.5 RELATIONSHIP OF THE PARTIES

19.6 LANGUAGE

19.7 GOVERNING LAW

19.8 ENTIRETY

19.9 NO ASSIGNMENT; NO LIENS

19.10 CONFIDENTIALITY

19.11 SUCCESSORS AND ASSIGNS

19.12 NO LIABILITY FOR REVIEW

19.13 COUNTERPARTS

19.14 SEVERABILITY

19.15 PARTIAL INVALIDITY

SCHEDULE 1 - TARIFF

SCHEDULE 2 - DESCRIPTION OF THE FACILITY

SCHEDULE 3 - SELLER AND PURCHASER INTERCONNECTION FACILITIES AND

METERING

SCHEDULE 4 - FORM OF CONSTRUCTION REPORTS; PROJECT PROGRESS

REPORTING

SCHEDULE 5 - TECHNICAL LIMITS AND MINIMUM FUNCTIONAL REQUIREMENTS .. 91

SCHEDULE 6 - COMMISSIONING AND RELIABILITY RUN TESTS

SCHEDULE 7 - INSURANCE

SCHEDULE 8 - FORM OF SELLER LETTER OF CREDIT

SCHEDULE 9 - PROTOCOL FOR CALCULATION OF NON-PROJECT MISSED VOLUME

SCHEDULE 10 - COMPENSATION AMOUNTS

SCHEDULE 11 - FORM OF SITE LEASE

This POWER PURCHASE AGREEMENT is made at [__________] on ______________ 2015 (the

“Agreement”) between:

(1) DA AFGHANISTAN BRESHNA SHERKAT (“DABS”), a company incorporated in

Afghanistan (registered number [ ]) whose registered office is at [ ] (the “Purchaser);

and

(2) [__________________________] [of [ country ] [incorporation details], licensed to do business in Afghanistan under [license details]] [OR] [a company incorporated in Afghanistan (registered number [ ])], whose registered office is at [ ] (the “Seller”).

The Purchaser and the Seller are referred to individually as a “Party” and collectively as the

“Parties.”

RECITALS:

(A) WHEREAS the Seller, by its offer dated [xxx] has proposed to design, build, finance, commission, operate, and maintain an approximately ten (10) MWAC solar powered electric generation facility (the “Facility”, as hereinafter defined) to be located at the Site (as hereinafter defined) near Kandahar City, Province of Kandahar, Afghanistan, and sell all Net Delivered

Energy (as hereinafter defined) to the Purchaser;

(B) WHEREAS the Purchaser, has accepted the Seller’s offer pursuant to a Letter of Award, and desires to purchase all of the Net Delivered Energy (as hereinafter defined) generated by the

Facility and delivered to the Interconnection Point (as hereinafter defined) on and pursuant to the terms and conditions contained herein; and

(C) WHEREAS, the United States Agency for International Development Mission in Afghanistan

(“USAID”) has committed to make certain funds available to facilitate the construction of the

Facility, which funds are to be made available under an agreement (the “USAID Contract” between USAID and Seller, and the terms of the USAID Contract are a key inducement to the

Seller’s willingness to enter into this Agreement.

NOW, THEREFORE, in view of the foregoing premises and in consideration of the mutual benefits contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:

1. DEFINITIONS; INTERPRETATION

1.1 Definitions

“Abandonment” — The Seller’s voluntary cessation of operation of the Facility, and the withdrawal of all, or substantially all, personnel from the Site for reasons other than (i) a breach or default by the

Purchaser under this Agreement; (ii) a breach or default by the Purchaser under the Site Lease; (iii) a

Force Majeure Event; or (iv) an Emergency where the Purchaser requests or approves Seller’s cessation of operation of the Facility or Seller’s withdrawal of its personnel from the Site in accordance with any

Emergency procedures in effect.

“Affiliate” — Any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with another Person.

“Afghanistan Political Event” – The meaning ascribed thereto in Section 15.1(a).

“Afghanistan Political Event Compensation Period” shall mean a period following the Commercial

Operations Date beginning with the onset of an Afghanistan Political Event (unless a timely notice was not given under Section 15.1(a) in which case from the time such notice was given) and ending on the last

Day of a Restoration Period.

“Agreement Year” — A period of twelve (12) consecutive months commencing on the Commercial

Operations Date and each consecutive anniversary of the Commercial Operations Date and ending as of the end of the Day preceding the next anniversary of the Commercial Operations Date; provided, however, that each Agreement Year shall automatically be extended day for day by the occurrence of a

Force Majeure Event declared by the Seller within such Agreement Year for the period for which it was unable to generate Net Delivered Energy due to such Force Majeure Event and the number of days such

Force Majeure Event subsisted; provided further that in the event of such extension, the immediately following Agreement Year shall commence on the Day following the last Day of such extended

Agreement Year and end after a period of twelve (12) consecutive months, and each Agreement Year thereafter shall have a period of twelve (12) consecutive months, in each case subject to any extension for

Force Majeure Event(s) declared by the Seller.

“Agreement” — This Power Purchase Agreement, together with all of the Schedules attached hereto, dated as of the date first written above, between the Purchaser and the Seller, as may be amended by the

Parties from time to time.

“Ambient Site Conditions” — The climatic conditions at the Site that have an impact on the Net

Electrical Output of the Facility, including solar irradiation, temperature, and rainfall, as measured by the

Meteorological Station.

“Array” — Each group of photo-voltaic panels constituting a part of the Facility, and the inverter associated therewith.

“Back-Up Metering System”— All meters and metering devices (including any remote terminal units and an electronic data recording system) installed by the Seller and thereafter owned and maintained by the Seller as back-up to the Metering System.

“Business Day”— Any Day on which banks are legally permitted to be open for business in Kabul and

Kandahar, Afghanistan.

“Certificate of Facility Commissioning” — The certificate to be issued by the Engineer to the Seller and the Purchaser under Section 8.3 stating that, in the professional opinion of the Engineer, the Facility has successfully completed the Commissioning Tests.

"Certificate of Readiness for Synchronization" – The certificate to be issued by the Engineer to the

Seller and the Purchaser under Sections 8.3 stating that the Facility is ready for and capable of synchronization with the Grid System.

“Change in Law” — Means:

(a) the adoption, promulgation, repeal, modification or re-interpretation after the date of this

Agreement by any Public Sector Entity of any Law of Afghanistan (including a final, binding and non-appealable decision of any Public Sector Entity);

(b) the imposition by a Relevant Authority of any material term or condition in connection with the issuance, renewal, extension, replacement or modification of any Seller Consent after the date of this

Agreement; or

(c) the imposition by a Relevant Authority of any additional Seller Consent, that in the case of each of clause (a), (b), or (c) hereinabove establishes either a material change in cost

(other than a Change in Tax) or in revenue, or any requirement for the design, construction, financing, ownership, operation, maintenance, or transfer of the Facility that is more restrictive than the most restrictive requirements (i) in effect as of the date of this Agreement, and (ii) specified in any applications, or other documents filed in connection with such applications, for any Seller Consents filed by the Seller on or before the Commercial Operations Date.

“Change in Tax Assessment” — The meaning ascribed thereto in Section 14.3.

“Change in Tax Notice” — The meaning ascribed thereto in Section 14.3.

“Change in Tax” — After the date hereof, the adoption, enactment, promulgation, coming into effect, repeal, amendment, re-interpretation, change in application, change in interpretation or modification by any Public Sector Entity of any Law of Afghanistan relating to any Tax or Taxes.

“Commercial Operations Date” — The Day on which Seller delivers the Certificate of Facility

Commissioning to Purchaser.

“Commissioning Tests” — The tests (including the Reliability Run Test) and successful completion criteria for such tests, specified in Schedule 6, that Seller is to carry out on the Facility pursuant to

Sections 8.1 and Schedule 6 to achieve the Commercial Operations Date.

“Consents”– The Seller Consents and the Purchaser Consents.

“Construction Contract” – The contract between the Seller and the construction contractor pursuant to which the Facility will be designed, constructed, and commissioned.

“Construction Report”— The reports to be submitted by the Seller pursuant to Section 4.2, which shall address the matters identified in, and shall be substantially in the form set forth in Schedule 4.

“Construction Start” — The date the ‘notice to proceed’ is issued by the Seller under the Construction

Contract, which date shall be within three (3) Business Days of Financial Closing.

“Contract Capacity”— The peak instantaneous capacity of the Facility, at maximum daily Ambient Site

Conditions, that the Seller will demonstrate for the Facility as part of the Commissioning Tests, which shall be at least ten (10) MWAC, but not to exceed twelve (12) MWac.

“Customs Duties” — All duties and taxes applicable on or relating to the import into or export from

Afghanistan of plant, machinery and equipment, and levied by any Public Sector Entity.

“DABS” — Da Afghanistan Breshna Sherkat a company incorporated in Afghanistan; the Purchaser.

“Day” — A period of twenty-four (24) hours, commencing at 12:00 midnight of each day, and “Daily” shall be construed accordingly.

“Degraded Output Threshold” – For each Agreement Year the minimum amount of the sum of Net

Electrical Output and NPMV that the Facility is expected to produce, which shall be nineteen thousand five hundred megawatt hours, (19,500MWh).

“Delayed Payment Rate” — LIBOR plus (7%) per annum, calculated for the actual number of Days that the relevant amount remains unpaid on the basis of a three hundred and sixty-five (365) Day year.

“Despatch Instructions” – The original, successive, or revised instructions of the System Operator for

Despatch (including but not limited to revision on the basis of information provided by the Seller).

“Despatch” - The actions of the Seller to decrease, increase, or cease the generation and delivery of Net

Delivered Energy to the Interconnection Point in accordance with the Technical Limits and the then prevailing Ambient Site Conditions, in response to Despatch Instructions, and “Despatched” shall be construed accordingly.

“Dispute” — Any dispute or disagreement or difference arising under, out of, in connection with or relating to this Agreement, including any dispute or difference concerning the existence, legality, validity or enforceability of this Agreement or any provisions hereof, or the obligations or performance of a Party in accordance with any provision hereof.

“Dollar” or “$” or “US$”— The lawful currency of the United States of America.

“Due and Payable Date” — The meaning ascribed thereto in Section 9.5.

“Effective Date”— The meaning ascribed thereto in Section 2.1(a).

“Emergency” — An event or circumstance affecting the Grid System which:

(i) is described as an emergency and contingency event in the Grid Operations Practices; or

(ii) materially and adversely affects (as determined solely by the Purchaser) the availability of the

Grid System, or the ability of the Purchaser to maintain safe, adequate and continuous electrical service to its customers, having regard to the then-current standard of electrical service provided to its customers; or

(iii) presents a physical threat to persons or property or the security, integrity or reliability of the Grid

System; or

(iv) which the Purchaser reasonably expects to have the effects specified in clauses (i), (ii) or (iii) hereinabove.

“Engineer” — The firm of engineering consultants to be appointed and hired by the Seller with the approval of the Purchaser prior to the Effective Date, as provided in Section 2.1(a)(iv), to monitor the construction of the Facility and Commissioning and to deliver the related certificates to the Seller and the

Purchaser and to carry out all of the Engineer’s responsibilities specified in this Agreement, including certifying to the Purchaser and the Seller the results of the Commissioning Tests.

“Environmental Standards” —All environmental requirements and occupational health and safety standards established by a relevant Public Sector Entity.

“Escrow” — the escrow arrangement provided in Article 9.6.

"Escrow Account" - The revolving stand-by letter of credit or similar facility established by the

Purchaser for the benefit of the Seller, pursuant to Article 9.6, for the payment of amounts owed to the

Seller under this Agreement.

"Escrow Agreement" - The agreement between the Purchaser, the Seller, and the Escrow Agent controlling the automatic replenishment of the Escrow Account by the Purchaser.

"Escrow Agent" - A bank acceptable to the Seller in Afghanistan with which the Purchaser establishes the Escrow Account.

“Expert” — The meaning ascribed thereto in Section 18.2.

“Facility”— The electric power generation facility including Arrays of solar photo-voltaic modules and associated equipment, together comprising the Contract Capacity to be located at the Site, and the Seller

Interconnection Facilities and other equipment, that will be designed, engineered, constructed, owned, operated, maintained and insured by the Seller during the Term, whether completed or at any stage in its construction, which Facility is further described in Schedule 2.

"Facility Monitoring System"- The system comprising the cloud-based monitoring system which shall be installed and operated by the Seller in accordance with the minimum technical and functional specifications (including agreed parameters for the data) prescribed in Schedules 2 and 5.

“Financial Closing” — The execution and delivery of the Financing Documents that (together with equity commitments) evidence sufficient financing for the construction, testing, completion of the Facility and Commissioning and evidence of commitments for such equity as is required by the Seller to satisfy the requirements of the Lenders.

“Financing Documents” — The financial arrangements, [including the USAID Contract,] entered into by Seller for the initial and long-term financing of the Facility, including all related notes, indentures, security agreements, guarantees, notices, and schedules of disbursements as amended from time to time, but excluding any loan, financing, and security agreements and related instruments entered into by the

Seller with any Lenders for working capital following the Commercial Operations Date or similar short-term credit facilities.

“Force Majeure Event” — The meaning ascribed thereto in Section 15.

“Forced Outage” — From and after the Commercial Operations Date, a total or partial interruption of the Facility’s generating capability that is not the result of:

(i) a request by the Purchaser in accordance with this Agreement,

(ii) a Scheduled Outage or a Maintenance Outage,

(iii) a Force Majeure Event,

(iv) a Non-Project Event,

(v) a condition caused solely by the Purchaser or the Grid System, or

(vi) an Afghanistan Political Event.

“Generation License” — Generation license No. [_______], dated __ ________2016, issued (or to be issued before the Effective Date) by MEW to the Seller allowing for the generation, delivery, and sale of electricity by the Seller from the Facility in accordance with its terms.

“GOA” — The Government of the Islamic Republic of Afghanistan.

“Grid Operations Practices” – The standards, codes, and practices that Purchaser uses to construct and operate the Grid System, and which establish, inter alia, requirements for interconnection with the Grid

System, as may be revised from time to time.

“Grid System” – The transmission facilities owned or operated by Purchaser on Purchaser’s side of the

Interconnection Point.

“Interconnection Point” — The physical point that the Facility and the Grid System are to be connected, as agreed between the Parties and specified in Schedule 3, at which point the Purchaser shall receive the Net Delivered Energy.

“Interconnection Works Schedule” — The schedule for carrying out the Seller Interconnection Works and the Purchaser Interconnection Works as described in Schedule 3, and as may be adjusted in accordance with Article 6.

“International Electrotechnical Commission” or “IEC” — The International Electrotechnical

Commission (Commission Électrotechnique Internationale), a non-profit, non-governmental international standards organization with its headquarters in Geneva, that prepares and publishes international standards for all electrical, electronic and related technologies, collectively known as "electrotechnology".

“Lapse of Consent” — Any Seller Consent (a) ceasing to remain in full force and effect and not being renewed or replaced within the time-period prescribed by the applicable Laws of Afghanistan for renewal or replacement of such Seller Consent or, where a time-period is not prescribed by the applicable Laws of

Afghanistan, within sixty (60) Days of such Seller Consent ceasing to be in full force and effect; or (b) not being issued upon application having been properly and timely made and diligently pursued within the time-period prescribed by the applicable Laws of Afghanistan or, where a time-period is not prescribed by the applicable Laws of Afghanistan, within sixty (60) Days of proper application being made for such Seller Consent; or (c) being made subject, upon renewal or otherwise, to any terms or conditions that materially and adversely affect the Seller’s ability to perform its obligations under any document included within the Project Agreements in each of the above instances, despite such party’s compliance with the applicable procedural and substantive requirements as applied in a “non-discriminatory” manner.

“Laws of Afghanistan” — The laws of Afghanistan, and all orders, rules, regulations, statutory regulatory orders, decrees, judicial decisions, notifications, executive orders, or other similar directives pursuant thereto issued by any Public Sector Entity that in each case have the effect of law and are enforceable under law, including the Environmental Standards, as any of them may be amended, re-promulgated, substituted or replaced from time to time.

“Lenders” — The financial institutions party to the Financing Documents, or subsequent financial institutions that become parties to the Financing Documents, together with their respective successors and assigns.

“Letter of Award” — The Letter of Award, dated __ _________ 2016, issued by the Purchaser to the

Seller regarding the Project.

“Lien” — Any mortgage, pledge, lien, security interest, conditional and instalment sale agreement, encumbrance, claim or charge of any kind.

“Loss” — Any loss, damage, cost, liability, payment and obligation (excluding any indirect or consequential loss, damage, liability, payment or obligation), and all expenses (including, without limitation, reasonable legal fees).

“Maintenance Outage” — An interruption or reduction of the generation capability of the Facility scheduled by the Seller in consultation with the Purchaser in accordance with Section 5.5 for the purpose of performing work on specific components, which, considering the Technical Limits and Prudent Utility

Practices, should not, in the reasonable opinion of the Seller, be postponed until the next Scheduled

Outage.

“Meteorological Station” – One or more stations in the Facility that will monitor and measure the

Ambient Site Conditions, the design, components, installation, performance capabilities, and testing of which shall be in accordance with the requirements of Schedule 6.

“Metering System” — All meters and metering devices (including, if applicable, any remote terminal units and electronic data-recording and telemetry system) to be procured, installed and tested by the Seller and transferred to the Purchaser, and thereafter owned and maintained by the Purchaser and used to measure the Net Delivered Energy.

“MEW” — The Ministry of Energy and Water of Government of Afghanistan, or its successor entity.

“Minimum Indemnification Amount” — The amount, equal to ten thousand Dollars ($10,000), that a

Party's claims for indemnification pursuant to Article 11 must exceed in the aggregate during an

Agreement Year before that Party will be entitled to indemnification.

“Month” — A calendar month according to the Gregorian calendar beginning at 12:00 midnight on the last Day of the preceding month, and ending at 12:00 midnight on the last Day of that month, and

“Monthly” shall be construed accordingly.

“Net Delivered Energy” — The net electric energy expressed in kWh generated by the Facility and delivered at the Interconnection Point, as measured by the Metering System and/or the Back-Up Metering

System (as the case may be).

“Non-Project Event”— Each of the following events or circumstances:

(i) constraints on or the unavailability of the Grid System,

(ii) variations in Grid System frequency outside the Technical Limits,

(iii) Grid System voltage outside the Technical Limits,

(iv) an Emergency, or

(v) a Despatch Instruction, in each case:

(i) as announced or confirmed by the System Operator, or as otherwise identified by the

Facility Monitoring System and thereafter confirmed by the System Operator;

(ii) being the proximate and direct cause of cessation or reduction of the generation of Net

Delivered Energy, and

(iii) not caused by:

(A) a Forced Outage, a Scheduled Outage, a Maintenance Outage or the operating conditions (including the Ambient Site Conditions) at the Facility; or

(B) a fault or failure of any equipment or safety device comprised in the Facility.

“Non-Project Missed Volume" or "NPMV” — The volume of electric energy expressed in kWh, not delivered by the Facility at the Interconnection Point due solely to a Non-Project Event, calculated and recorded pursuant to the NPMV Protocol.

"NPMV Protocol" – The protocol for calculating and recording NPMV set out in Schedule 9.

“Operating Representative” — The representatives (and alternates, if any) appointed by each Party to serve as a “point of contact” for coordination of activities under this Agreement, as provided in Section

2.4.

“Operating Procedures” — The procedures for the operational interfaces between the Facility and the

Grid System to be delivered by Seller to the Purchaser in accordance with Section 5.1.

“Party” — Each of the Purchaser and the Seller, and the “Parties” means both of them.

“Pass-Through Items” — Certain costs or charges identified as Pass-Through Items under this

Agreement which shall be payable by the Purchaser to the Seller on the basis of actual necessary cost reasonably incurred as agreed between the Parties, or failing agreement, as determined by the Expert.

“Person” — Any person, including without limitation any firm, company, corporation, society, government, state or agency of a state (including any Public Sector Entity), or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing.

“Project” - Each of the following activities:

(a) the ownership and possession of the Facility;

(b) the design, construction, financing, ownership, operation, and maintenance (including any

Restoration), and insurance of the Facility;

(c) the procurement, importation, temporary exportation (for remedying defects, repair, maintenance, or refurbishing) and contracting for goods, equipment, and services for the Facility;

(d) the generation and sale of Net Delivered Energy;

(e) the recruitment, employment, and training of staff for the Facility; and

(f) any other activities reasonably incidental or related to any of the above.

“Provincial Authorities” — The Government authorities of the Province of Kandahar.

“Prudent Utility Practices” — Those practices, methods and procedures conforming to safety and legal requirements which are attained by exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced generator of electricity or operator of an electricity transmission and distribution system, engaged in the same or a similar type of undertaking or activity under the same or similar circumstances and conditions to those pertaining in Afghanistan, and satisfying the health, safety and environmental standards of reputable international electric generation, transmission, or distribution companies. Prudent Utility Practices are not limited to optimum practices, methods or acts to the exclusion of all others, but rather, where not expressly catered for in the Grid Operations Practices, are a spectrum of possible practices, methods and acts that could be expected to accomplish the desired result at reasonable cost consistent with reliability and safety applicable with reference to the relevant activity.

“Public Sector Entity” — (a) The GOA, the Provincial Authorities, any sub-division of either, or any local governmental authority with jurisdiction over the Seller, the Project, or any part thereof; (b) any department, authority, instrumentality or agency of the GOA, or any such Provincial Authority; (c) courts and tribunals in Afghanistan; or (d) any commission or independent regulatory authority, agency or body having jurisdiction over the Seller, the Project or any part thereof.

“Purchaser Consents” — All approvals, consents, authorizations, notifications, concessions, acknowledgements, licences, permits, decisions or similar items issued by a Relevant Authority, and which the Purchaser or any of its contractors is required to obtain from any Relevant Authority and thereafter to maintain to fulfil its obligations under this Agreement.

“Purchaser Event of Default” — The meaning ascribed thereto in Section 16.2.

“Purchaser Interconnection Facilities” — The facilities and equipment to be designed, constructed or installed by or on behalf of the Purchaser on the Purchaser’s side of the Interconnection Point, as described in Schedule 3.

“Purchaser Interconnection Works” — Those works and activities described in Schedule 3 to be undertaken by or on behalf of the Purchaser for the design, engineering, construction, installation and commissioning of the Purchaser Interconnection Facilities in accordance with this Agreement.

“Purchaser”- DABS, a [public] limited company incorporated under the laws of Afghanistan, with its principal office located at [.], Afghanistan, and its successors and permitted assigns.

“Relevant Authority” — The department, authority, instrumentality, agency or other relevant entity from which a Seller Consent is to be obtained and any authority, body or other Person having jurisdiction under the Laws of Afghanistan with respect to the Project, the Purchaser and this Agreement, as the case may be.

“Reliability Run Test” — The part of the Commissioning Tests carried out on the Facility in accordance with Section 8.3 and Schedule 6 to demonstrate the reliable operation of the Facility.

“Required Commercial Operations Date”— The date that is [ten (10) months] following [the Effective

Date], as such date may be extended by reason of a Force Majeure Event, any breach or default by the

Purchaser of or under this Agreement or under the Site Lease, or any Non-Project Event.

“Restoration Cost Estimate” —The meaning ascribed thereto in Section 15.6.

“Restoration Period” —The period of restoration established in the Restoration Schedule and as defined in Section 15.6.

“Restoration Schedule” —The meaning ascribed thereto in Section 15.6.

“Restoration” — The meaning ascribed thereto in Section 15.6.

“SCADA System” — A supervisory control and data acquisition system.

“Scheduled Commercial Operations Date” — The date reasonably estimated by the Seller as the

Commercial Operations Date based on the then-existing construction schedule, as notified to the

Purchaser as of the Effective Date, as such date may be modified by the Seller from time to time in the

Construction Reports or in other written notices from the Seller to the Purchaser.

“Scheduled Outage” — A planned interruption of the Facility’s generating capability or any material part thereof that has been scheduled by the Seller in consultation with the System Operator in accordance with Section 5.5 for inspection, testing, preventive maintenance, corrective maintenance, repairs, replacement or improvement of the Facility or any material part thereof.

“Seller” — [Name of Company], a [public/private limited] company incorporated under the laws of

[Afghanistan,] with its registered office at _____________, ___________, Afghanistan, and its permitted successors and permitted assigns and any permitted transferee and includes its contractors and sub-contractors integrally involved in the Project.

“Seller Consents” — All approvals, consents, authorizations, notifications, concessions, acknowledgements, licenses (including the Generation License), permits, decisions or similar items issued by a Relevant Authority or a Public Sector Entity and which the Seller are required to obtain from any

Relevant Authority or Public Sector Entity and, thereafter, to maintain for fulfilling its obligations under this Agreement; provided, however, that in no event shall the Seller Consents include any concessions or exemptions from the Laws of Afghanistan unless they are expressly granted.

“Seller Event of Default” — The meaning ascribed thereto in Section 16.1.

“Seller Interconnection Facilities” — The facilities and equipment designed or to be designed, constructed, and installed by or on behalf of the Seller on the Seller’s side of the Interconnection Point, as described in Schedule 3, including any telemetering equipment, transmission lines, and associated equipment, transformers and associated equipment, relay and switching equipment, telecommunications devices, data interface for the SCADA System and the Facility Monitoring System, protective devices, and safety equipment.

“Seller Interconnection Works” — Those works and activities described in Schedule 3 to be undertaken by or on behalf of the Seller to design, build, finance, own, Commission, and operate the Seller

Interconnection Facilities in accordance with this Agreement.

“Seller Letter of Credit” — An unconditional, irrevocable, direct-pay, divisible, and transferable on demand bank guarantee in favour of the Purchaser in the form of bank guarantee or letter of credit set out in Schedule 8, issued or to be issued by a bank or other financial institution reasonably acceptable to the

Purchaser, that provides for draws by the Purchaser in immediately available funds on a Monthly basis upon presentation at a bank in Kabul, Afghanistan, which shall be delivered by the Seller to the Purchaser in the amount of US Dollars Six Hundred Thousand Dollars, only (US$ 600,000).

“Shortfall Energy” – For any Agreement Year, shortfall of Net Electrical Output and NPMV against the

Degraded Output Threshold, for which liquidated damages are due, as calculated pursuant to Section 9.3.

“Site” — The land subject to the Site Lease, on which the Facility is to be located.

“Site Lease” — The Land Lease Agreement for the Site, entered or to be entered into by and between the Purchaser as the lessor and the Seller as the lessee, as may be amended by the Parties from time to time, substantially in the form attached as Schedule 12.

“Specifications” — The technical specifications of the Facility, including any warranties and performance guarantees, and the simulation report and other technical and functional specifications of the

PV modules, inverters, protection devices and balance of system comprising the Facility, as set forth in

Schedule 2 and in the respective manufacturers’ product data sheets that are attachments to Schedule 2.

“Supplemental Tariff” — Additional compensation payable by the Purchaser to the Seller as provided in Section 9.2, Section 15.7 and Schedule 1.

“System Operator” — Purchaser, acting in its capacity as the owner and operator of the Grid System in accordance with the provisions of the Grid Operations Practices, or any substitute or successor entity with the legal competence to assume the responsibilities with respect to the issuance of Despatch Instructions hereunder and which entity has generally the responsibility for despatch of the electric generation facilities delivering electric energy into the Grid System, and its successors and assigns.

“Tariff”— The Tariff payable for Net Delivered Energy under this Agreement, appended herewith as

Schedule 1.

“Tax Costs” — An amount equal to the amount of any new or additional Tax or an increase in an existing Tax payable by the Seller in relation to the Project, as a result of a Change in Tax.

“Tax Savings” — An amount equal to the amount of any decrease or reduction in or elimination of a Tax payable by the Seller in relation to the Project as a result of a Change in Tax.

“Tax” or “Taxes” — Any tax, charge, cess, impost, tariff, duty, basis for assessing taxes (including the rates of or periods for depreciation of assets for tax assessment purposes), fiscal concession or allowance imposed by or payable to a Public Sector Entity, including any value added tax, water or environmental or energy tax, import or Customs Duties, withholding tax, excise tax, tax on foreign currency or foreign exchange transactions or property tax. The term “Tax” shall not include any fee or charge payable to a

Public Sector Entity as consideration for goods or services provided by such Public Sector Entity in relation to a commercial activity carried out by such Public Sector Entity.

“Technical Limits” — The limits and constraints in Schedule 5 (including the manufacturer’s product data sheets annexed to Schedule 5) relating to the operation of the Facility.

“Term” — The meaning ascribed thereto in Section 2.2.

“Termination Date” — The meaning ascribed thereto in Section 16.3.

“Termination Notice” — The meaning ascribed thereto in Section 16.3.

“Threshold Amount” — For any Afghanistan Political Event, the amount of United States Dollars Two

Million only (US$ 2,000,000/) any time during the first ten (10) Agreement Years or United States

Dollars One Million only (US$ 1,000,000/) after the first ten (10) Agreement Years, until the end of the

Term.

“USAID Contract” - The contract between USAID and Seller identified as XXX-360-16-C-000XXX, pursuant to which USAID will reimburse Seller for a portion of the capital costs of the Facility.

“Week” — Each period of seven (7) consecutive Days beginning at 12:00 midnight falling between a

Saturday and a Sunday.

“Year” — Each twelve (12) Month period commencing on 12:00 midnight on the 31st of December and ending on 12:00 midnight the following 31 st of December during the Term.

1.2 Rules of Interpretation

In this Agreement:

(a) headings are for convenience only and shall be ignored in construing this Agreement;

(b) other than where the context determines otherwise, the singular includes the plural and vice versa;

(c) references to Sections, Articles, Recitals and Schedules are, unless otherwise specified, references to Sections and Articles of, and Schedules and Recitals to, this Agreement;

(d) unless otherwise expressly provided herein, whenever a consent or approval is required by one Party from the other Party, or where a Party has a right to raise an objection, such consent or approval shall not be unreasonably withheld or delayed, and such objection shall be raised on reasonable grounds. Whenever under this Agreement a Party is required to exercise discretion by: (a) giving a decision, opinion or consent; (b) expressing a satisfaction or approval; or (c) otherwise taking actions which may affect the rights or obligations of the other Party, the Party exercising such discretion shall exercise such discretion fairly and reasonably;

(e) the words “include”, “including, and “in particular” shall not be construed as, nor shall they have the effect of limiting the generality of the preceding words to which they are related;

(f) references to a Party are references to a party to this Agreement, including that Party’s assigns or transferees permitted in accordance with the terms of this Agreement and its successors in title;

(g) in carrying out its obligations and duties under this Agreement, each Party shall have an implied obligation of good faith. Notwithstanding anything contained herein otherwise, the Parties acknowledge that any and all usage of the words “liquidated damages” in this

Agreement shall be construed as representing the Parties good faith reasonable estimate of the actual damages and/or losses for that particular event or occurrence;

(h) reference to any Laws of Afghanistan shall include reference to such Laws of

Afghanistan, as amended, re-promulgated, substituted or replaced from time to time;

(i) the Schedules (and if any schedules or tables thereto) to this Agreement form part of this

Agreement, and capitalized terms and abbreviations used in the Schedules (and if any schedules or tables thereto) which are not defined therein shall have the meanings given to them in Definitions of this Agreement; and

(j) except as otherwise indicated in this Agreement, references to time are references to time and dates are, and shall be construed to be, references to Afghanistan standard time.

1.3 Abbreviations

In this Agreement, the following abbreviations shall have the following meanings:

AC means alternating current of electrical energy;

C means degrees Celsius;

GWh means gigawatt hour or 1,000,000 kWh.

kV means kilovolt or 1,000 Volts;

kWAC means kilowatt or 1,000 Watts (alternating current);

kWh means kilowatt hour;

MWAC means megawatt or 1,000,000 Watts (alternating current);

Mvar means megavar or 1,000,000 vars;

MWh means megawatt hour or 1,000 kWh; and

PV means photo-voltaic production of electrical energy through light.

2. EFFECTIVE DATE; TERM AND AGREEMENTS OF THE PARTIES

2.1 Effective Date

(a) This Agreement shall become effective upon completion of the following Conditions

Precedent as evidenced by notice from Seller to Purchaser (the "Effective Date"):

(i) Seller has achieved Financial Closing.

(ii) The USAID Contract has been executed by Seller and USAID and has become effective.

(iii) Seller has delivered to Purchaser the Seller Letter of Credit.

(iv) The Engineer has been appointed.

(b) If the Seller does not give notice to Purchaser of the Effective Date within ninety (90) days of the date of execution of this Agreement, then the Purchaser may deliver written notice to the

Seller terminating this Agreement, which termination shall be effective immediately on delivery of such notice. From the date of such termination under this paragraph, the Letter of

Award shall be void and the Parties shall have no further rights against each other and shall be released from all further obligations under this Agreement and the Letter of Award, subject to any rights and obligations that may have accrued before the date of such termination.

2.2 Term; Post-Term Arrangements

(a) Unless terminated earlier in accordance with its terms, this Agreement shall continue in full force and effect for fifteen (15) Agreement Years (such period, the “Term”).

(b) At or about the end of the twelfth (12th) Agreement Year the Parties shall meet to discuss in good faith whether it is in the mutual interest of the Parties to extend this Agreement, or to enter into any new or replacement power purchase agreement, site lease, and/or other contract(s) related to the Facility and the potential further operation of the Facility by the

Seller for delivery of electricity to Purchaser. The Parties acknowledge that the Tariff may be above or below the market value of electricity at the end of the Term, and that the condition of the Facility may or may not be conducive to further operations past the end of the Term.

(c) The Parties agree that should the Parties not achieve a further, mutually agreeable commercial arrangement for the period after the Term, then at the end of the Term and upon the expiration of the Site Lease the Seller shall transfer the Facility to the Purchaser at no cost to Purchaser. As part of any such transfer the Seller agrees that it shall, at Purchaser’s request, provide training to Purchaser’s employees regarding the operations and maintenance of the Facility, and Purchaser shall reimburse Seller for any additional costs of providing such training to Purchaser’s employees. Purchaser shall also reimburse all Seller’s reasonable out of pocket costs related to preparing the Facility for transfer to the Purchaser and effecting the transfer. Seller shall cooperate with Purchaser in good faith, in the event of any such transfer of the Facility under this Section 2.2(c), to ensure the Facility is in good condition, with all records, parts, and tools that should be available for a power station of its age, consistent with

Prudent Utility Practices.

2.3 Maintenance of Consents

(a) From the date of execution of this Agreement, the Seller shall, at its own cost and expense, apply for, procure, diligently pursue and, following receipt, maintain all Seller Consents.

(b) Upon receiving a written request from the Seller, the Purchaser shall take such actions as are reasonable and appropriate under the circumstances to assist the Seller in its efforts to procure or renew any Seller Consent not received despite proper application therefor; provided, however, that where the Seller makes any such request to the Purchaser, the Seller shall:

(i) provide the Purchaser with such assistance and information as the Purchaser may reasonably request in connection with the Seller’s request; and

(ii) be responsible for all reasonable out-of-pocket costs and expenses reasonably incurred by the Purchaser in relation to such request from the Seller.

(c) The Purchaser shall, in a timely fashion, at its own cost and expense, procure, diligently pursue, and thereafter maintain all Purchaser Consents.

2.4 Appointment of Operating Representatives

(a) Within three (3) Business Days of the Effective Date each Party shall nominate its Operating

Representative (and an alternate, if desired) to be the lead point of contact for that Party.

(b) Each Operating Representative (and alternate) shall have reasonable experience of working for undertaking the Operating Representative’s scope of work. Each Party may remove or replace its Operating Representative (or alternate) at any time upon notice to the other Party.

(c) The Operating Representatives shall coordinate as necessary and shall make themselves reasonably available by telephone, email, or in-person meetings promptly upon request of the other Operating Representative; the Operating Representatives may schedule regular meetings at the Site or elsewhere, and shall make themselves known to the Engineer, the any

Lenders’ representative, and to USAID.

(d) For the avoidance of the doubt, the Operating Representatives shall have authority to coordinate activities on behalf of their respective Parties, but in no event shall be considered to have authority to amend this Agreement, to incur any obligation on behalf of, or to waive any right of, either Party under this Agreement.

2.5 Appointment of the Engineer

(a) No later than fifteen (15) days following the execution date of this Agreement the Seller shall nominate to the Purchaser its slate of candidates to be the Engineer. Purchaser, following consultations with USAID, shall promptly give any comments on the Seller’s slate of candidates, which Purchaser shall duly consider. Seller shall then appoint the person or firm to carry out the duties of the Engineer specified in this Agreement in accordance with the highest professional standards and duty of care, both to the Seller and to the Purchaser. The

Seller shall not replace any Person appointed as the Engineer without the prior written consent of the Purchaser.

(b) The terms and conditions of appointment of the Engineer shall oblige the Engineer to act independently and impartially, on the basis of his expertise, experience and knowledge in relation to all matters referred to him pursuant to this Agreement, and in carrying out the other duties described under this Agreement. The costs and remuneration to which the

Engineer is entitled under its terms and conditions of appointment shall be borne by the

Seller.

2.6 Seller Letter of Credit

(a) The Seller shall deliver the Seller Letter of Credit to the Purchaser within three (3) Business

Days following Financial Closing. The Seller shall maintain in full force and effect the Seller

Letter of Credit in the then-required amount, from the date of issuance of the Seller Letter of

Credit until the date that is fifteen (15) Business Days following whichever shall first occur of:

(i) Completion of 3 rd

Agreement Year after the Commercial Operations Date, or

(ii) if this Agreement is terminated before the completion of 3 rd

Agreement year after

Commercial Operations Date has occurred, the date which is thirty (30) Days following the date on which the termination of this Agreement is effective;

provided that if the Seller is or is claimed to be liable to pay liquidated damages under

Section 9.3, then the Seller shall maintain the Seller Letter of Credit in an amount not less than the amount in dispute plus the Purchaser’s reasonable estimate of the Delayed

Payment Rate that will be payable thereon until any dispute in relation thereto has been finally resolved in accordance with this Agreement and all liabilities in relation thereto have been discharged in full.

(b) The Seller Letter of Credit shall be expressed to continue until the end of the period referred to in Section 2.1. The Purchaser shall return the Seller Letter of Credit to the Seller within fifteen (15) Business Days following the end of the period stipulated in Section 2.1. If the

Seller provides a replacement or substitute Seller Letter of Credit satisfactory to the

Purchaser, the Purchaser shall return the original Seller Letter of Credit within five (5)

Business Days after receipt by the Purchaser of such replacement.

(c) In the event that the Seller is required to pay liquidated…