EXHIBIT 10.45
Joint Venture Agreement
California Energy Company, Inc. ("CE") and Distral S.A.
("Distral") each recognize the unique strengths of the other
company and in consideration of the mutual covenants and
agreements herein contained and for other good and valuable
consideration, the parties hereby form a Joint Venture to
develop, construct, own and operate power projects (including
all development, acquisition, repowering and privatization
opportunities) in Central America, South America and the
Caribbean as follows:
Strengths: CE brings power project development
expertise, power project financing
expertise, financial wherewithal, vendor
relationships, power project operational
expertise, broad knowledge of the
international power markets and, through
its relationship with Peter Kiewit
Sons', Inc. ("Kiewit"), civil
construction and coal mining expertise.
Distral brings extensive construction
experience throughout Central and South
America, financial capability, vendor and
utility relationships, substantial knowledge
of the customs and commercial practices
throughout Central and South America, and a
broad knowledge of the power markets in
Central and South America as well as
knowledge of the specific power project
opportunities available in that region.
Power Projects: The Joint Venture shall have the right
of first refusal with respect to all
power projects identified by the Joint
Venture, CE, Distral or their affiliates
(including all members of the Lancaster
Distral Group of companies but excluding
Kiewit) in the Caribbean, South America
and that part of Central America south
of Mexico. CE, Distral and their
affiliates shall promptly notify the
Joint Venture and the other Party of any
power projects in such countries after
such power project becomes known by it.
If the Joint Venture's management
committee does not elect to pursue the
identified power projects, either Party
may pursue the power project separately.
Development Costs: The Parties shall share all project
development costs equally. Development
costs shall include all costs and fees
(but unless otherwise agreed, not equity
contributions provided for below)
incurred by the Parties pursuant to
management committee approval after a
power project has been identified and
offered to the Joint Venture until the
Joint Venture or Project Company
abandons or transfers the Project.
Expenditures include out-of-pocket,
third party expenses incurred by a Party
and their affiliates in furtherance of
development of a power project as well
as expenditures for the cost associated
with employees of a Party who are
assigned to a power project, which costs
must be approved by the management
committee. In no event shall
expenditures for employees be credited
to a Party in excess of $50 per hour for
more than 40 hours during any week. The
Parties shall reconcile development
costs quarterly to balance the cost
sharing borne by each Party. Verified
development costs shall be recovered at
project financial closing unless
converted to equity, subordinated debt
or other income streams.
Project Company: After a power project has reached an
appropriate stage of development as
determined by the management committee,
the Parties shall endeavor to create a
Project Company (e.g., corporation,
limited liability company, partnership)
to undertake the development of the
power project.
EPC: Distral shall have the right of first
refusal to negotiate a mutually
acceptable contract to supply equipment,
boilers and transportation, field
erection, project construction
management and engineering services for
all or any part of a power project (to
the extent appropriate and consistent
with the paragraph below on Civil
Construction) developed by the Joint
Venture or a Project Company. Distral
shall provide appropriate security (e.g.
guarantee, bond) required by lenders or
other third parties to secure
performance of such contractual
obligations.
Performance Guarantees
and Bid Bonds: If so required by each project's
lenders, CE shall use its reasonable
efforts to arrange any "wrap-around"
credit support undertakings or
completion and performance guarantees
from Kiewit or other third parties.
Distral shall be responsible to CE for
Distral's scope of equipment supply, EPC
participation and related performance.
Both Parties recognize that bid bonds or
other financial security or O&M
guarantees may be required to pursue
projects and that it will be necessary
for both Parties to make suitable and
mutually acceptable bonding and other
such arrangements for projects they
determine to pursue.
Fuel, Technology Systems
& Vendor Selection(s): At the outset of each project, the
Joint Venture shall perform
preliminary feasibility studies to
determine the optimum
technical/systems to be utilized
taking into account market
conditions and project financing
requirements. Vendor equipment
shall be competitively bid unless
the management committee decides to
negotiate otherwise.
Operations and
Maintenance: CE and Distral shall have a first right
of refusal to negotiate a mutually
acceptable contract to jointly operate
and maintain each project on a long term
basis. In connection with the joint
operation and maintenance, CE shall
provide overall supervision, management
and related support systems including
accounting expertise and Distral shall
provide local qualified labor and
undertake all maintenance and overhaul
services not directly supplied by any
contracted vendor.
Coal Supply: Where reasonably practicable the Joint
Venture shall initially negotiate with
Kiewit or an affiliate thereof with
respect to the opportunity to
participate in coal supply for a coal-
fired power project on terms acceptable
to both Parties.
Civil Construction: Where reasonably practicable the
Joint Venture shall initially
negotiate with Kiewit or an
affiliate thereof with respect to
the opportunity to participate in
civil engineering and construction
of any power project on terms
acceptable to both Parties.
Capital Contributions: CE shall provide a minimum capital
contribution of at least 50% of the
equity required for financing a
power project developed by the
Joint Venture or a Project Company.
Distral shall provide a capital
contribution of up to 50% of the
equity required for financing a
power project developed by the
Joint Venture or Project Company.
Distral may elect to provide less
than 50% of such required equity in
which event, CE shall be required
to provide any required equity not
so contributed by Distral. If
agreed by the Parties and
acceptable to project lenders,
equity contributions may be made in
the form of equipment supplied or
construction or other services
performed. Development costs
incurred by the Parties may be
considered equity contributions to
the extent agreed by the Parties
and permitted by the applicable
project lender. Either Party's
commitment to invest equity is
conditioned upon obtaining
acceptable rates of return and
other acceptable provisions.
Profit/Loss/Distributions,
Development Fees and
EPC Contingencies: All profits, losses and distributions
(other than reimbursements incurred by
the Parties, the Joint Venture or a
Project Company) shall be allocated in
accordance with each Party's equity
contribution or according to the
provisions of the Project Company's
organizational documents. Any
development fees shall be shared on a
50/50 basis regardless of the Parties'
equity contributions. Any turnkey
construction contract contingency
available to the Parties shall be
allocated in accordance with each
Parties' equity contributions.
Assignment: Except for assignments to wholly owned
subsidiaries and Lancaster Steel Co.,
Inc. and Distral Termica C.A., neither
Party may sell, transfer, assign or
otherwise encumber any portion of its
interest in the Joint Venture or a
Project Company without the other
Party's prior written consent; provided,
however, that CE may assign up to 50% of
its equity interest in any power project
or Project Company (but not the Joint
Venture) to Kiewit or an affiliate
thereof.
Accounting: The records of the Joint Venture and
each Project Company shall be accurate
in all material respects and shall
fairly present the position and results
of the Joint Venture and each Project
Company and shall be prepared on an
accrual basis in accordance with U.S.A.
generally accepted accounting principles
consistently applied, although, if
applicable, the Joint Venture shall also
prepare financial statements for a
particular Project Company in the manner
mandated by local law in the country in
which the project is located.
Management: The Joint Venture shall be governed by a
management committee consisting of 4 senior
executive members including the President of
each Party, 2 selected by CE and 2 selected
by Distral. Each Project Company shall be
governed by a management committee, board of
directors or such other body as is
appropriate consisting of members selected
roughly on the basis of each Party's
proportionate ownership. The management
committee, board or other governing body
shall transact business on the basis of the
vote of a majority of its members. The
management committee shall appoint one person
as the project manager to oversee the
development and one person as the project
manager to oversee the construction of each
power project; provided, however, that no
person or Party may bind the Joint Venture or
the other Party without the prior written
consent of the management committee.
Prompt and Informed
Decisions: The Parties agree to use all reasonable
efforts to act promptly on project
proposals and to make Management
Committee decisions to pursue or reject
particular projects within 10 business
days of receiving reasonably detailed
and adequate information regarding a
particular project. The Parties
understand that certain local laws and
regulations (and certain regulations and
requirements of international financing
entities) cannot be modified and
therefore the Parties agree to use all
reasonable efforts to clearly understand
the implications of such laws,
regulations and requirements (and
otherwise properly inform themselves)
prior to their management committee
representatives making a decision to
pursue a particular project.
Both Parties agree to use all reasonable
efforts so that any necessary decisions of
their Boards of Directors will be obtained in
a prompt and expeditious manner so as to
avoid disrupting any near pending proposals
and/or negotiations.
Additional Participants: To the extent the bid qualification
requirements of a power project
require participation by entities
having certain categories of
expertise or experience not
available to a Party, the Parties
will use their reasonable efforts
to bring in additional joint
venture participants having such
expertise or experience under
mutually acceptable terms.
Term: The initial term of the Joint Venture
shall be 3 years, but shall extend
automatically for successive terms of
one year, but only for the sole purpose
of considering identified power projects
not yet rejected or pursuing power
projects already accepted for
development by the management committee.
The term of each Project Company 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. This Joint Venture agreement
shall terminate upon a party becoming
insolvent or making any assignment for
the benefit of its creditors, or in any
way becoming the subject of a petition
in bankruptcy or the appointment of a
trustee or receiver.
Discontinuance: Except for binding obligations under
executed construction, operations, or
equipment supply agreements with respect
to any power project, either Party may
elect to discontinue its participation
in the Joint Venture or any project or
Project Company by notifying the other
Party of its intent to so discontinue;
provided that such discontinuance shall
not disrupt any near term pending
proposals and/or negotiations such that
the remaining Party cannot continue with
the proposal/negotiations. Upon
delivery of such notice the Parties
shall, for no additional consideration,
execute appropriate assignment,
assumption and release documents which
evidence the termination of the Joint
Venture or the discontinuing Party's
project or Project Company
participation, as applicable, and
thereafter each Party shall be free to
pursue power projects independently,
known or unknown, without limitation.
Such notice of discontinuance shall be
effective as a termination of the Joint
Venture or the discontinuing Party's
participation in a project or Project
Company; however, the discontinuing
Party shall pay its proportionate share
of expenses incurred by the Joint
Venture or Project Company on or before
the date of such discontinuance as such
expenses come due in the ordinary course
of events. The discontinuing Party
shall receive repayment of all
development costs incurred and paid by
it prior to the date of discontinuance
by such Party at the time the Joint
Venture or a Project Company is entitled
to draw on construction or project
financing with respect to such power
project.
The Parties acknowledge that after management
committee approval of a particular project
proposal, they shall each use all reasonable
efforts to ensure that discontinuance by a
Party of participation in a project shall
only be made for good business reasons and
the Parties further acknowledge that a change
in the top management structure of either
Party or its affiliates shall be considered a
good business reason for discontinuance of
participation in this Joint Venture or any
project.
Cooperation: The Parties shall attempt to cooperate
in other power projects located
throughout the world including the
United States which are not subject to
this agreement. Such cooperation shall
be non-exclusive, but where reasonably
practical each Party will discuss
potential joint development or other
participating relationships with respect
to world wide power project
opportunities. Except for power
projects in the Caribbean, South America
and that part of Central America south
of Mexico, each Party shall have the
right to independently engage in the
development of power projects without
consulting the Joint Venture or the
other Party.
Compliance with Law: In performing their respective
activities hereunder, each Party agrees
to comply with all applicable United
States, Columbian 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 or a Project
Company in connection with the work
performed hereunder.
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
Distral S.A. California Energy
Company, Inc.
By: By:
Algis Didziulis, President David L. Sokol, President