JOINT VENTURE AGREEMENT
California Energy Company, Inc. ("CE") and Kiewit Diversified Group
Inc. and Kiewit Construction Group Inc. (collectively one Party hereunder
and referred to as "Kiewit") each recognize the unique strengths of the
other Party and hereby form a Joint Venture to develop, construct, own and
operate power projects internationally as follows:
Strengths: CE brings power project development expertise,
power project financing expertise, financial
wherewithal, power project operational expertise,
broad knowledge of the international power markets
and knowledge of the specific international power
project opportunities available.
Kiewit brings extensive power project construction
expertise, EPC turnkey contract capability, bonding
and performance and completion guarantee
capability, vendor relationships, infrastructure
development expertise, financial wherewithal, coal
mining expertise, and a broad knowledge of the
power markets internationally.
Power Projects: Each Party has the right of first refusal to pursue
through this Joint Venture, all build, own and
operate or build, own, operate and transfer power
projects identified by the other Party or its
affiliates outside of the United States except
those in which (i) the Joint Venture could not
acquire a controlling interest in the equity, (ii)
bid constraints would effectively prevent Kiewit's
or CE's participation, (iii) participant,
contractor or partner constraints would
effectively prevent Kiewit's or CE's participation,
or (iv) the power project location is in the
Caribbean, South America or that part of Central
America south of Mexico and such project is subject
to the right of Distral, S.A. to be developed with
CE under a CE/Distral Joint Venture Agreement
("Distral Projects"); provided that, with respect
to Distral Projects, CE shall offer Kiewit the
opportunity to bid on civil construction or coal
supply or (if CE has the right to acquire more than
50% of the equity in such Distral Projects), to
participate with CE in the development funding and
equity, on a 50/50 basis, in each case pursuant to
the terms of CE's Joint Venture Agreement with
Distral, S.A.
Each Party shall notify the other Party of any
power project subject to the right of refusal as
soon as such Party believes that such project may
be subject to the right of refusal. If the Joint
Venture does not promptly elect to pursue the
identified power project, either Party may pursue
the power project separately.
Development Manager
& Development Costs: The Parties shall share all project development
costs equally. Development costs shall only be
incurred by, or at the direction of, CE as the
Joint Venture Development Manager and shall include
all development costs incurred after a power
project has been identified and offered to the
Joint Venture until a Party declines to participate
in such project or a Party or the Joint Venture or
a Project Entity abandons or transfers its interest
in a project or a Party is otherwise required to
discontinue its participation in a project.
Development costs include out-of-pocket, third
party expenses incurred by the Parties in
furtherance of development of a power project as
well as the actual cost associated with employees
of the Parties who perform work to develop a power
project, in each case at the direction of the
Development Manager.
In no event shall the reimbursable costs for
employees be credited in excess of the actual
fully burdened cost (as mutually agreed by the
Parties) for the actual time period involved by
such staff in Joint Venture development activities.
It is anticipated that CE employees will perform a
majority of the development activities. Kiewit
shall have the ability, however, to dedicate up to
one full-time equivalent employee to Joint Venture
activities, subject to agreement by the Parties as
to appropriate time commitment and cost
reimbursement arrangements with respect thereto.
Each Party shall submit bills (and provide all
reasonably requested supporting documentation) for
such development costs on a monthly basis and each
Party's share of such costs shall be payable within
30 days of submission of such bills .
Semiannually, the Parties shall review and
reconcile any development costs incurred hereunder.
Verified development costs shall be recovered at
project financial closing unless converted to
equity or subordinated debt in the projects.
Management
Committee: The Parties shall establish a management committee
to be comprised of two representatives of each of
CE and Kiewit, who shall act as agents of the
parties appointing them, to oversee and direct
Joint Venture management level decisions.
Management committee decisions shall be made by
majority vote. In the event of a deadlock
regarding a particular project under development
which cannot be resolved by the good faith
negotiations of the Parties, (including the failure
to reach agreement on a turnkey construction
contract) either Party shall have the right by 15
days prior written notice to trigger a mandatory
discontinuance of both Parties with respect to the
particular project, in which case the
discontinuance provision below shall apply and CE
shall have the exclusive right to pursue such
project independently; provided however, that the
Parties shall negotiate mutually acceptable
deadlock resolution and buyout provisions, which
may vary from the foregoing provision as part of
the organizational documents for each Project
Entity. Each management committee shall have
meetings not less often than quarterly. The
Development Manager shall prepare, and the
management committee shall approve, and review as
necessary, annual budgets for Joint Venture
activities. Day to day operational decisions
relating to the Joint Venture, as well as
individual projects and Project Entities shall be
made by the Development Manager.
Turnkey Construction: Where the ability to select the turnkey contractor
is within the Joint Venture's control, CE on
behalf of the Joint Venture shall provide a
preferential opportunity to Kiewit or an affiliate
thereof to negotiate a turnkey construction
contract with CE acting on behalf of the Joint
Venture for each such project. Kiewit shall
provide completion and performance guarantees and
appropriate security (e.g. letter of credit,
guarantee, bond) reasonably required by project
finance lenders or other third party project
participants to secure performance of its
contractual obligations. Prior to entering into
the turnkey contract, CE and Kiewit shall jointly
(i) agree upon the technical/ systems/vendors to
be utilized, taking into account market conditions
and project financing requirements and (ii) price
and select items of equipment whose value exceeds
$250,000. CE and Kiewit shall jointly select the
engineering firm to be used by Kiewit for the
turnkey pricing and contract; provided that, to the
extent capable, The Ben Holt Co. will be given a
preferential opportunity to negotiate such an
engineering role in the turnkey contract for each
such project.
Project Entity: After a power project has reached an appropriate
stage of development, CE shall endeavor to create a
Project Entity (e.g., corporation, limited
liability company, partnership), which shall be
reasonably acceptable to both Parties, to undertake
the financing of such power project. The Project
Entity organizational documents shall reflect the
equity participation of the Parties and the fact
that CE shall act as the managing general partner
or in an analogous operating or managing role for
such Project Entity, subject to mutually acceptable
management or shareholder approval rights in favor
of Kiewit. The provisions set forth in this Joint
Venture Agreement relating to the terms and
conditions of each Project Entity may be varied by
mutual agreement of the Parties; in the event of
any conflict between this Agreement and any
agreement relating to a Project Entity, the
agreement relating to the Project Entity shall
control.
Capital Contributions: Unless otherwise negotiated by the Parties, CE and
Kiewit shall each provide 50% of the equity or
other sponsor-provided funding required from the
Parties for financing a power project developed by
the Joint Venture or a Project Entity. If agreed
by the Parties and acceptable to project lenders,
equity contributions may be made in the form of
construction or engineering or other services
performed. Development costs may be considered
equity contributions of the Parties to the extent
agreed by the Parties and permitted by the
applicable project lender. The Parties acknowledge
that any commitment by either Party to invest
equity will be conditioned upon obtaining
acceptable rates of return and other acceptable
provisions.
Profit/Loss/
Distributions: All profits, losses and other distributions
(including fees and other similar compensation)
arising from Joint Venture or Project Entity
activities after repayment of development costs
(other than profits and losses arising under
separate construction and operation and maintenance
contracts) shall be allocated 50/50 to CE and
Kiewit or otherwise in accordance with each Party's
equity contribution.
Operations &
Maintenance: CE shall serve as operator of all power projects
developed by the Joint Venture or a Project Entity under
an agreement acceptable to the Parties and project
lenders which provides reasonable oversight to the
Parties over operational expenses and activities. CE
shall provide appropriate security (e.g. letter of
credit, guarantee, bond) reasonably required by lenders
or other third parties to secure performance of its
contractual obligations as operator.
Accounting: As Development Manager, CE shall maintain, on behalf of
the Joint Venture, records of development costs and such
other matters as are reasonably required in connection
with Joint Venture activities. The records of the
Development Manager and each Project Entity shall be
accurate in all material respects and shall fairly
present the position and results of the Joint Venture and
each Project Entity and shall be prepared on an accrual
basis in accordance with U.S.A. generally accepted
accounting principles consistently applied.
Discontinuance: Except for binding obligations under executed contracts
including construction or operation and maintenance
agreements, with respect to any project, either Party
may elect to discontinue its participation in the Joint
Venture or any project or Project Entity by delivering
written notice to the other 15 days in advance of its
discontinuance provided that the discontinuing party
shall use all reasonable efforts to ensure that such
discontinuance shall not be made in a manner which would
disrupt any near term pending proposals and/or
negotiations such that the remaining Party is injured and
cannot continue with the proposal/negotiations. Upon
delivery of such notice, the Parties shall for no
additional consideration, execute appropriate assignment,
assumption, indemnity and release documents which
transfer, as of the date of the date of discontinuance,
to the remaining Party (or an affiliate thereof as
designated by such remaining Party) all obligations and
rights in the respective project or Project Entity or in
all power projects identified to the Joint Venture, but
not yet transferred to a Project Entity, whichever is
applicable. Such discontinuance by a Party shall be
immediately effective as an assignment of its interest in
any power project; however, the discontinuing Party shall
pay its share of development costs incurred by the Joint
Venture or Project Entity on or before the date of
discontinuance, although such expenses may come due
later. The discontinuing Party shall be entitled to be
repaid its share of the development costs with respect to
any discontinued project out of the construction or
project financing therefor, but only after repayment to
the remaining party (and any new equity participants) of
all development costs incurred with respect to the
Project.
Right of First Refusal:
Notwithstanding any provision of this Agreement to the
contrary, either Party ("Selling Party") may sell or
transfer its interest in , any project or Project Entity
(but not the Joint Venture) to a third party, provided it
first notifies the other Party ("Offeree Party") of the
identity of the prospective purchaser, assignee or
transferee and sends to the Offeree Party a copy of the
written offer, and provided further that the Selling
Party shall first offer to sell all its interest in , any
project or Project Entity to the Offeree Party for the
same price, and on the same terms as those being offered
to the Selling Party. The Offeree Party shall have 90
days after receiving such offer to accept it. If the
Offeree Party does not agree to purchase the Selling
Party's interest in , any project or Project Entity with
the 90 day period set forth above, the Selling Party may
sell its interest in , any project or Project Entity on
the terms first proposed in the written offer sent to the
Offeree Party; provided, however, that no Party may
transfer its interest in , any project or Project Entity
to another unless the transferee agrees in writing to be
bound by the same terms and conditions of this Agreement
(as it applies to such project or Project Entity) and
becomes a party hereto.
Compliance with Law:
In performing their respective activities hereunder, each
Party agrees to comply with all applicable United States,
and other applicable laws. In this regard, each Party
agrees that neither it nor its employees, agents or
subcontractors shall make any payment or give anything of
value to any government official to influence a
government decision, or to gain any other governmental
advantage for the Parties, the Joint Venture, any project
or a Project Entity in connection with the activities
performed hereunder.
Assignment: Except for assignments to affiliates and assignments to
lenders and others (which each Party agrees to make as
reasonably required for project financing) and
assignments pursuant to the Right of First Refusal set
forth above, neither Party may sell, transfer, assign or
otherwise encumber any portion of its interest in the
Joint Venture any project, or any Project Entity without
the other Party's prior written consent. For purposes of
this Agreement "Affiliate" of a Party shall mean a person
or entity controlling, controlled by or under common
control with the Party.
Nature of Joint Venture:
The Joint Venture shall not be considered, and this
Agreement shall not be considered to have formed, a
partnership or other legal entity. Except for CE's
rights to incur project development expenses and act on
behalf of the Joint Venture as Development Manager within
the scope of this agreement, unless otherwise agreed,
neither Party shall be the agent or representative of, or
have the power to legally bind, the other Party in
connection with the activities of the Joint Venture, and
each Party shall be severally liable for any obligations
to third parties incurred in connection with Joint
Venture activities.
Term: The initial term of the Joint Venture shall be 3 years;
but the term may be extended by mutual agreement of the
Parties. The Joint Venture shall extend automatically
successive terms of one year at the end of its term but
only for the sole purpose of considering identified power
projects not yet rejected or pursuing power projects for
which a Project Entity has not yet been formed. The term
of each Project Entity shall be as set forth in its
organizational documents which shall establish a term at
least as long as is required to complete the development,
construction and operation of its respective power
project. The term of the Right of First Refusal for any
identified project or Project Entity shall extend for a
term equal to the applicable Party's right to an equity
participation in such project or Project Entity.
Notwithstanding the foregoing, the term of this Joint
Venture shall terminate upon the bankruptcy or
dissolution of either Party.
Cooperation: Since this Joint Venture Agreement is expected to
continue for some time and both Parties recognize that
international power projects can present unique
challenges or require special arrangements, both Parties
will attempt in good faith to negotiate additional terms
or modifications to this Agreement in response to any
such unique circumstances which are encountered,
consistent with the intent of the Parties in forming this
Joint Venture.
This Joint Venture Agreement has been duly authorized and executed by
each Party and is intended to be a legally binding and enforceable
agreement under, and governed by, the laws of the state of New York,
U.S.A.
Dated as of: December 14, 1993
Kiewit Diversified Group Inc. California Energy Company, Inc.
By:/s/ Walter Scott, Jr., President By: /s/ David L. Sokol
Walter Scott, Jr., President David L. Sokol,
Chairman of the Board President and Chief
Executive Officer
Kiewit Construction Group Inc.
By:/s/ Kenneth E. Stinson
Kenneth E. Stinson, President
and Chairman of the Board