THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made as of
March 3, 1999, by and between CALENERGY COMPANY, INC., a Delaware corporation
("CalEnergy"), 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 CalEnergy's administrative and management
resources, and to that end Owner desires to employ, hire or otherwise retain the
administrative and management services of CalEnergy 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 CalEnergy as
provided in Section 3 hereof, CalEnergy 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 administrative and management
activities for businesses similar to the businesses undertaken by the Companies
(the "Services"). The Services to be provided hereunder may include, without
limitation, (i) financial accounting, budgeting and tax services (ii) general
legal and financial services, (iii) personnel administration and payroll
services, (iv) cash management services, (v) energy marketing, energy production
oversight and the determination of output levels; (vi) consulting services with
respect to electrical energy production and (vii) assisting Owner in obtaining
any franchises, permits, licenses, easements or rights-of-way necessary for
continued operation of the Facilities.
2. Subcontracting. Without limiting the obligations of CalEnergy to
Owner hereunder, in connection with CalEnergy's providing of the Services
contemplated by this Agreement, CalEnergy may subcontract with or otherwise
retain the services of other Persons including, but not limited to, Affiliates
of CalEnergy (but only at a rate equal to actual costs and expenses of such
Affiliate), with the consent of Owner, which consent shall not be
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unreasonably withheld. For purposes of this Agreement, any Services performed by
such Persons shall be deemed to have been performed by CalEnergy.
3. Reimbursement for Services. The following shall be paid:
3.1. In consideration of the provision by CalEnergy to Owner of
the Services, within thirty (30) days after Owner has received an invoice from
CalEnergy specifying the Services rendered to Owner by CalEnergy and the amount
to be paid to CalEnergy for the actual costs and expenses incurred by CalEnergy
in rendering the Services. As used in this Section 3.1, "actual costs and
expenses incurred by CalEnergy" includes, without limitation, (a) the actual
cost to CalEnergy of procuring goods and materials used by CalEnergy in
rendering Services, (b) the fully burdened, pro rata cost to CalEnergy of
personnel providing labor or services in the course of CalEnergy's provision of
Services and (c) the actual cost to CalEnergy of retaining another Person,
whether CalEnergy or another Affiliate of CalEnergy or otherwise, in connection
with the provision of Services. In the event CalEnergy subcontracts with any
Person, including, without limitation, an Affiliate as provided in Section 2
hereof, any payment to CalEnergy under this Section 3.1 on account of the
Services so subcontracted shall be made to CalEnergy only to the extent of the
amount charged CalEnergy by such Person and shall not include any amounts
representing a xxxx-up by CalEnergy 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 CalEnergy's determination thereof so long as such determination is
reached in a manner consistent with GAAP and CalEnergy'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 (1) 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
addition to any other right it may have, CalEnergy 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
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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 of any kind
appointed to administer any substantial amount of its property, or otherwise
seeks to take advantage of any bankruptcy or insolvency statute 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 CalEnergy all
Administration Fees and other amounts due and payable to CalEnergy under Section
3 hereof as of the date the Agreement is effectively terminated.
5. Standard of Care; Sole Remedy.
5.1 CalEnergy agrees to perform the Services with a standard of
care equal to that it exercises in the administration of its own separate
business activities. CalEnergy 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 CalEnergy nor its agents, contractors,
vendors or their employees, shareholders, 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 CalEnergy hereunder for any breach of this Agreement exceed the
total amount payable to CalEnergy 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.
7. Indemnification. Except to the extent that such liability, claim,
damage, loss or expense is attributable to the gross negligence or willful
misconduct of CalEnergy, to the maximum extent permitted by law, Owner (i) shall
defend, indemnify and hold CalEnergy and its agents, contractors, vendors and
their employees, shareholders, officers or directors
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harmless from and against any and all liabilities, claims, damages, losses and
expenses, including attorneys' 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 CalEnergy or
from the business of Owner and (ii) shall, upon request of CalEnergy or other
indemnified party, defend all suits arising out of or resulting from the
performance of this Agreement by CalEnergy or the business of Owner. Without
limiting the generality of the foregoing, Owner shall indemnify and hold
CalEnergy 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 or environmental 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 CalEnergy 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. The arbitrators thus appointed shall appoint a third person
similarly qualified as the third 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 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
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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, trial, 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 CalEnergy 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, acts 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
CalEnergy of liability in the event of either party'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 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 may be terminated by
the party not
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claiming suspension of the 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 claiming 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 CalEnergy 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 CalEnergy do
not reach agreement within this period, CalEnergy 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
judgment (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 CalEnergy shall
grant, assign or otherwise convey any of their respective rights or delegate any
of their respective obligations under this Agreement without 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 the 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.
17. Communications. All notices, requests, offers and other
communications required or permitted to be made under this Agreement shall be in
writing and
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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 CalEnergy Company, Inc. at:
CalEnergy Company, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 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
prepaid first-class registered airmail, or when sent by facsimile transmission
with telephone confirmation of receipt, addressed to CalEnergy or Owner, as the
case may be, at their respective addresses aforesaid.
18. Counterparts. This Agreement may be executed in counterparts and
any number of counterparts signed in the 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 this 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 this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
CALENERGY COMPANY, INC.
a Delaware corporation
By: /s/ Xxxxxx X. XxXxxxxx
----------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Executive Vice President
CE GENERATION, LLC,
a Delaware limited liability company
By: /s/ Xxxxxx X. XxXxxxxx
----------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Executive Vice President
i
