THIS FUEL MANAGEMENT SERVICES AGREEMENT (the "Agreement") is made as of
March ___, 1999, by and between EL PASO ENERGY MARKETING COMPANY, a Delaware
corporation ("El Paso"), and CE GENERATION, LLC, a Delaware limited liability
company ("Owner").
RECITALS
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A. Owner indirectly owns certain geothermal electric generating facilities
located in the Salton Sea Known Geothermal Resource Area ("SSKGRA") in
Imperial County, California, certain gas-fired electric generating
facilities located in Yuma, Arizona, Big Spring, Texas, North East,
Pennsylvania, and Plattsburg, New York, and certain related facilities
(referred to collectively herein as the "Facilities") all through
non-recourse project companies ("Project Companies") and three (3)
holding companies (the "Holding Companies" and collectively with the
Project Companies, the "Companies") namely Magma Power Company,
California Energy Development Corporation and Falcon Seaboard
Resources, Inc.
B. Owner desires to exploit El Paso's energy trading, fuels management,
natural gas and fuel oil marketing and risk management resources, and to
that end Owner desires to employ, hire or otherwise retain the energy
trading, fuels management, natural gas and fuel oil marketing and risk
management services of El Paso for purposes of administering the
functions of its business, as more fully described herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
1. Services. In consideration of the payment by Owner to El Paso as
provided in Section 3 hereof, El Paso agrees to perform during the term of this
Agreement those functions as approved in advance by the Board which are normally
considered part of the day-to-day management, trading, scheduling, dispatching
and marketing for businesses similar to the businesses undertaken by the
Companies (the "Services") The Services to be provided hereunder may include,
without limitation, (i) energy marketing, (ii) the purchase and sale of natural
gas, fuel oil and transportation, (iii) scheduling, dispatch and accounting of
fuel deliveries, (iv) risk management services, (v) consulting services with
respect to fuel supply alternatives and opportunities and (vi) consulting
services with respect to other commercial energy optimization opportunities.
Such Services shall be further described and defined in Attachments to this
Agreement ("Operating Procedures") which will be numbered, dated and signed by
representatives from El Paso and Owner.
2. Subcontracting. Without limiting the obligations of El Paso to
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Owner hereunder, in connection with El Paso's providing of the Services
contemplated by this Agreement, El Paso may subcontract with or otherwise retain
the services of other Persons including, but not limited to, Affiliates of El
Paso (but only at a rate equal to actual costs and expenses of such Affiliate),
with the consent of Owner, which consent shall not be unreasonably withheld. For
purposes of this Agreement, any Services performed by such Persons shall be
deemed to have been performed by El Paso.
3. Reimbursement of Services. The following shall be paid:
3.1 In consideration of the provision by El Paso to Owner of the
Services, within thirty (30) days after Owner has received an invoice from El
Paso specifying the Services rendered to Owner by El Paso and the amount to be
paid to El Paso for the actual costs and expenses incurred by El Paso in
rendering the Services. As used in this Section 3.1, "actual costs and expenses
incurred by El Paso" includes, without limitation, (a) the actual cost to El
Paso of procuring goods and materials used by El Paso in rendering Services, (b)
the fully burdened, pro rata cost to El Paso of personnel providing labor or
services in the course of El Paso's provision of Services and (c) the actual
cost to El Paso of retaining another Person, whether El Paso or another
Affiliate of El Paso or otherwise, in connection with the provision of Services.
In the event El Paso subcontracts with any Person, including, without
limitation, an Affiliate as provided in Section 2 hereof, any payment to El Paso
under this Section 3.1 on account of the Services so subcontracted shall be made
to El Paso only to the extent of the amount charged El Paso by such person and
shall no include any amounts representing a xxxx-up by El Paso over the amount
so charged.
3.2 With respect to any calculation of actual costs and expenses
or any allocation of costs contemplated by Section 3.1 hereof, Owner shall be
bound by El Paso's determination thereof so long as such determination is
reached in a manner consistent with GAAP and El Paso's existing practices with
respect to the Facilities.
4. Term and Termination.
4.1 Unless terminated as provided in Sections 9, 11 or 13 hereof,
or as hereinafter provided in this Section 4, this Agreement shall remain in
effect until, and shall terminate on the date which is, one year following the
date first written above, and shall automatically renew from year to year unless
one party hereto notifies the other of its intent to terminate at least 60 days
prior to the end of the then expiring term.
4.2 In the event of a material default by either party in the
performance of its duties, obligations or undertakings under this Agreement, the
other party shall have the right to give written notice to the defaulting party
advising such party of the specific default involved and, if within thirty (30)
days after such notice the defaulting party shall not have remedied or commenced
diligently to remedy the default, the other party shall have the right, in
addition to any other rights and remedies it may have, to terminate this
Agreement upon ten (10) days' written notice to the defaulting party.
4.3. Notwithstanding any other provision of this Agreement, and in
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addition to any other right it may have, El Paso shall have the right to
terminate this Agreement, (a) effective immediately, if, at any time, Owner is
adjudged bankrupt or insolvent, or files a petition in bankruptcy or an answer
admitting the material facts recited in such a petition filed by another, or is
put or decides to go into dissolution or liquidation (other than in connection
with a merger, consolidation or amalgamation), or otherwise discontinues
business, makes an assignment for the benefit of its creditors or any other
general arrangement with its creditors, becomes insolvent or unable to meet its
current payments, or has a receiver or other custodian or any kind appointed to
administer any substantial amount of its property, or otherwise seeks to take
advantage of any bankruptcy or insolvency statue now or hereafter in effect and
(b) upon ninety 90 days notice, within twelve (12) months of foreclosure of the
Facilities by the Project Lender and on each anniversary of such foreclosure.
4.4. If this Agreement is terminated prior to the expiration of
its terms as provided in section 4.1 hereof, Owner shall pay El Paso all Service
Fees and other amounts due and payable to El Paso under Section 3 hereof as of
the date the Agreement is effectively terminated.
5. Standard of Care; Sole Remedy.
5.1 El Paso agrees to perform the Services with a standard of care
equal to that it exercises in the administration of its own separate business
activities. El Paso does not warrant that the Services will be error free or
accomplish a particular result.
5.2 Except in the case of gross negligence or willful misconduct,
the sole remedy for a breach of the foregoing standard of care shall be
reperformance of the Services.
6. Limitations on Liability.
6.1 Owner agrees that notwithstanding any other provision in this
Agreement to the contrary, neither El Paso nor its agents, contractors, vendors
or their employees, shareholder, officers or directors, shall be liable to Owner
for incidental, consequential, punitive or indirect loss or damage, including,
but not limited to, cost of reperformance of services by third parties, damage
to property or injury to person, loss of profit, loss of use, loss of revenue,
loss of opportunity, increased costs, cost of capital, or loss of goodwill.
6.2 Owner agrees that as between the parties in no event shall the
liability of El Paso hereunder for any breach of this agreement exceed the total
amount payable to El Paso under Section 3 hereof for the calendar year prior to
the claim giving rise to such liability, or, if the first calendar year has not
yet been completed, the first 12 months from the effective date of this
Agreement.
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7. Indemnification. Except to the extent that such liability, claim,
damage, loss or expense is attributable to the gross negligence or willful
misconduct of El Paso, to the maximum extent permitted by law, Owner (i) shall
defend, indemnify and hold El Paso and its agents, contractors, vendors and
their employees, shareholders, officers or directors harmless from and against
any and all liabilities, claims, damages, losses and expenses, including
attorney's fees and costs and expenses of litigation or arbitration, of every
kind and nature payable to third parties to the extent they arise out of the
course of performance of this Agreement by El Paso or from the business of Owner
and (ii) shall, upon request of El Paso or other indemnified party, defend all
suits arises out of or resulting from the performance of this Agreement by El
Paso or the business of Owner. Without limiting the generality of the foregoing,
Owner shall indemnify and hold El Paso and its agents and employees harmless
from and against any and all liabilities, fines and penalties arising under laws
or regulations with regard to protection of the environment conditions.
8. Survival of Terms. Owner agrees that the limitations on liability,
waivers and disclaimers of liability, indemnities, releases from liability, sole
remedy provisions and in this Agreement shall survive termination or expiration
of this Agreement, and shall apply for the benefit of El Paso and its agents,
contractors, vendors and their employees, shareholders, officers or directors,
whether in contract, equity, tort or otherwise, even in the event of the fault,
negligence, including sole negligence, strict liability, or breach of warranty.
9. Non-Waiver of Breach. Either party hereto may specifically waive any
breach of this Agreement by the other party, but no such waiver shall be deemed
to have been given unless such waiver is in writing, signed by the waiving party
and specifically designates the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
10. Arbitration. All disputes arising under this Agreement shall be
settled by binding arbitration in accordance with the Commercial Arbitration
Rules of the AAA then pertaining, unless the parties mutually agree otherwise.
The party desiring such arbitration shall give written notice to that effect to
the other party and in such notice shall appoint as an arbitrator a
disinterested person of recognized competence in the area at issue. Within
fifteen (15) days thereafter, the other party shall, by written notice to the
originating party, appoint a second person similarly qualified as the second
arbitrator, and such three arbitrators shall as promptly as possible determine
such matter with the parties, each being entitled to present evidence and
argument to the arbitrators; provided, however, that:
(i) if the second arbitrator shall not have been appointed as
aforesaid, the first arbitrator shall determine such matter; and
(ii) if the two arbitrators appointed by the party shall be unable
to agree upon the appointment of a third arbitrator within fifteen
(15) days after the appointment of the second arbitrator, they shall
give written notice of such failure
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to agree to the parties, and, if the parties fail to agree upon the
selection of such third arbitrator within fifteen (15) days
thereafter, then within ten (10) days thereafter, either of the
parties upon written notice to the other party may apply for such
appointment to the Federal District Court or District Court in Omaha,
Nebraska.
The arbitrator or arbitrators shall only interpret and apply the terms
and provisions of this Agreement and shall not change any such terms or
provisions or deprive either party of any right or remedy expressly or impliedly
provided for in this Agreement.
The determination of the majority of the arbitrators or the sole
arbitrator, as the case may be, shall, to the extent permitted by law, be
conclusive upon the parties. The arbitrator or arbitrators shall give written
notice to the parties stating their determination, and shall furnish to each a
copy of such determination signed by them. In the event of the failure, refusal
or inability of any arbitrator to act, a new arbitrator shall be appointed in
his stead, which appointment shall be made in the same manner as hereinbefore
provided for the appointment of the arbitrator so failing, refusing or unable to
act.
11. Attorney Fees. If either party hereto commences litigation or
arbitration for the judicial or other interpretation, enforcement, termination,
cancellation or rescission hereof, or for damages for the breach hereof, the
prevailing party in any such action, trail, arbitration or appeal thereon shall
be entitled to its reasonable attorneys' fees and court, arbitration and other
costs incurred, to be paid by the losing party as fixed by the court or
arbitrator in the same or a separate suit, and whether or not such action is
pursued to decision or judgment.
12. Force Majeure.
12.1 Neither Owner nor El Paso shall be liable in damages to the
other for any act, omission or circumstance ("Event of Force Majeure")
occasioned by or in consequence of any acts of God, act of the public enemy,
wars, blockades, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fires, storms floods, civil disturbances, explosions, sabotage, the
binding order of any court or governmental authority which has been resisted in
good faith by all reasonable legal means, Federal, State or local laws, or other
event or circumstance not within the control of such party preventing such party
from performing its obligations hereunder, whether caused or occasioned by, or
happening on account of, the act or omission of one of the parties, not within
the control of the party claiming suspension and which by the exercise of due
diligence such party is unable to prevent or overcome.
12.2 Such Events of Force Majeure shall not relieve Owner or El
Paso of liability in the event of either part's concurring negligence or in the
event of either party's failure to use due diligence to remedy the situation and
to remove the cause in an adequate manner and with all reasonable dispatch, nor
shall such Events of Force Majeure relieve either party of liability unless such
party shall give notice and full particulars of the same in writing to the other
party within ten (10) days of the occurrence
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relied on. In no event, however, shall an Event of Force Majeure relieve Owner
from the obligation of making payments due under this Agreement at the time of
such occurrence. The parties agree that should any Event of Force Majeure remain
in existence for a period of six (6) months, this Agreement under such Event of
Force Majeure upon the giving of written notice by such party to the other;
provided, however, that such six (6) month period shall be extended for a
reasonable time so long as throughout such six (6) month period the party
claming suspension of this Agreement under the Event of Force Majeure has
diligently proceeded to terminate the Event of Force Majeure and continues to do
so throughout such extension.
13. Invalid Provision.
13.1 The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted; provided, however, that if any of the
provisions of Section 1 hereof are held invalid or unenforceable by any court or
other relevant authority, Owner and El Paso shall hold consultations over a
period of ninety (90) days, commencing immediately, in an effort to work out
satisfactory terms for continuation of this Agreement. If Owner and El Paso do
not reach agreement within this period, El Paso shall have the right to
terminate this Agreement, effective immediately.
13.2 In the event that any provision, term, condition or object of
this Agreement may be in conflict with any law, measure, ruling, court judgement
(by consent or otherwise), or regulation of the government of the United States
of America, and the legal counsel of either party shall advise that in their
considered opinion such conflict, or a reasonable possibility of such conflict,
exists, then either party may propose to the other appropriate modifications of
this Agreement to avoid such conflict. In such case, if an agreement of
modification is not reached within ninety (90) days from such proposal, the
party making such proposal, after sixty (60) days' written notice to the other
party, may terminate the agreement in its entirety as of a date subsequent to
such sixty (60) days, and which shall be specified in such notice.
14. Assignment. Subject to Section 2, neither Owner nor El Paso shall
grant, assign or otherwise convey any of their respective rights or delegate any
of their respective obligations under this Agreement with the prior written
consent of the other party which consent shall not be unreasonably withheld.
15. Governing Law. The existence, validity, construction, operation and
effect of this Agreement shall be determined in accordance with and governed by
the laws of the State of New York. This Agreement shall be construed equally as
against the parties hereto, and shall not be construed against he party
responsible for its drafting.
16. Entire Agreement - Amendments. This Agreement constitutes the
entire agreement of the parties and the provisions hereof shall supersede any
and all prior agreements or understandings relating to the same subject matter.
This Agreement may be amended only by a writing signed by a duly authorized
representative of both parties.
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17. Communications. All notices, requests, offers and other
communications required or permitted to be made under this Agreement shall be in
writing and shall be deemed to have been duly given and received, regardless of
when and whether received, either: (a) on the day of delivery, if delivered
To El Paso Power Services Company at:
El Paso Power Services Company
0000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Owner at:
CE Generation, LLC
000 Xxxxx 00xx Xxxxxx, Xxxxx 000-X
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as either party most recently may have designated in
writing to the other party for such purpose; or (b) on the day sent, when sent
by prepaid telex, telegram, cable or radiogram, and confirmed the same day by
period first-class registered airmail, or when sent by facsimile transmission
with telephone confirmation of receipt, addressed to El Paso or Owner, as the
case may be, at their respective addresses foresaid.
18. Counterparts. This Agreement may be executed in counterparts and
any number of counterparts signed in aggregate by the parties hereto shall
constitute a single original instrument.
19. Exhibits. All exhibits and schedules attached hereto are hereby
incorporated herein by this reference.
20. Third Party Beneficiaries. The covenants contained herein are made
solely for the benefit of the properties, parties and successors and assigns of
such parties as specified herein, and shall not be construed as having been
intended to benefit any third party not a party to the agreement.
21. Headings. The headings herein are for reference only and shall not
affect the construction of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
EL PASO POWER SERVICES COMPANY
A Delaware Corporation
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Title: President
CE GENERATION, LLC.
A Delaware limited liability company
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Executive Vice President
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