EXHIBIT 10.34
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
---------------------------------
BY AND BETWEEN
CALENERGY OPERATING COMPANY,
a Delaware corporation
AND
LEATHERS, L.P.,
a California limited partnership
TABLE OF CONTENTS
PAGE
1. Definitions .............................................2
2. Ordinary Services .......................................3
3. Extraordinary Services ..................................3
4. Subcontracting ..........................................3
5. Administration Fee ......................................3
6. Reimbursement and Other Compensation for
Extraordinary Services ..................................4
7. Term and Termination ....................................5
8. Disclaimer of CEOC's Liability ..........................6
9. Non-Waiver of Breach ....................................6
10. Arbitration .............................................6
11. Attorneys' Fees .........................................7
12. Force Majeure ...........................................7
13. Invalid Provision .......................................8
14. Assignment ..............................................8
15. Governing Law ...........................................8
16. Entire Agreement - Amendments ...........................9
17. Communications ..........................................9
18. Counterparts ............................................9
19. Exhibits ................................................9
20. Third Party Beneficiaries ..............................10
21. Headings ...............................................10
TABLE OF SCHEDULES
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Section
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Schedule "Z" Schedule of Defined Terms 1.1
AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT
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PREAMBLE
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THIS AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT
(the "Agreement") is made as of June 17, 1996, by and between CALENERGY
OPERATING COMPANY, a Delaware corporation ("CEOC"), and LEATHERS, L.P., a
California limited partnership ("Owner").
RECITALS
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A. Owner owns the Leathers Facility located in the Salton Sea Known
Geothermal Resource Area ("SSKGRA").
B. Owner intends to operate the Leathers Facility under the
following operating agreements: (i) an Operating and Maintenance Agreement by
and between Owner and CEOC pursuant to which CEOC will operate the Leathers
Facility on behalf of Owner; (ii) a Technology Transfer Agreement by and
between Owner and Magma Power Company, a Nevada corporation ("Magma") pursuant
to which Magma will provide Owner with the nonexclusive right to use certain
"Technology" and "Know-How" in connection with the operation of the Leathers
Facility; (iii) a Ground Lease by and between Owner, as lessee, and Magma, as
lessor, pursuant to which Magma will lease to Owner the real property upon
which the Leathers Facility is located; (iv) an Easement Grant Deed and
Agreement Regarding Rights for Geothermal Development by and between Owner and
Magma pursuant to which Magma will supply Owner with the right to extract
Geothermal Brine and use geothermal brine-derived steam which is necessary to
operate the Leathers Facility; and (v) a Power Purchase Contract by and
between Owner and Southern California Edison Company.
C. Owner desires to exploit CEOC's administrative and management
resources, and to that end Owner desires to employ, hire or otherwise retain
the administrative and management services of CEOC, in addition to the
Services provided pursuant to the Operating and Maintenance Agreement, for
purposes of administering the functions of the Leathers Facility.
D. Owner and CEOC desire to enter into this Agreement pursuant to
which CEOC, for a fee and in addition to the Services provided pursuant to the
Operating and Maintenance Agreement, will provide day-to-day administrative
and management services as more fully described herein, which administrative
and management services shall include normal day-to-day administrative and
management services and shall not include services which, although occurring
in the ordinary course of Owner's business, are not of a nature ordinarily
occurring on a day-to-day basis. In consideration
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for services not of a day-to-day nature provided by CEOC hereunder, Owner
shall compensate CEOC for, among other things, all costs and expenses actually
incurred by CEOC in providing such services, as more particularly described
herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements set forth herein, the parties hereto agree
as follow:
AGREEMENT
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1. Definitions.
1.1 Unless the context shall otherwise require, capitalized terms used
and not otherwise defined herein shall have the respective meanings assigned
thereto in Schedule Z hereto, which shall be incorporated by reference herein.
1.2 In addition to the terms defined pursuant to Section 1.1 hereof,
the following definitions shall apply for purposes of this Agreement:
"CPI" means the Consumer Price Index of the Bureau of Labor Statistics
of the Department of Labor for All Urban Consumers, All Items, for the Los
Angeles-Anaheim-Riverside Metropolitan Area. In the event the compilation
and/or publication of the CPI shall be transferred to any other governmental
department or bureau or agency or shall be discontinued, then the index most
nearly the same as the CPI shall be deemed to be the CPI for purposes of this
Agreement. In the event that Owner and CEOC cannot agree on such alternative
index, then the matter shall be submitted for decision by an arbitrator or
arbitrators in accordance with Section 10 hereof.
"CPI Adjustment" means an amount equal to $800,000 multiplied by a
fraction, the numerator of which shall be the CPI for August of the year for
which the calculation is to be made, and the denominator of which shall be the
CPI for August of 1988, but in no event shall such CPI Adjustment be less than
$800,000.
"Floor" means the minimum annual Administration Fee which, for the
years indicated below, shall be an amount calculated as follows:
Year Calculation
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1989 $66,667 multiplied by the
number of months in 1989
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following and including the
month on which that certain
Construction Management and
Asset Transfer Agreement
dated as of August 15, 1988,
as amended, between Magma
and Owner terminated in
accordance with its terms.
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For each of The greater of (a) the Floor
1990 for the year immediately
through the preceding the year for which
end of the the calculation is being
term of made and (b) the CPI
this Adjustment for the year in
Agreement. which the calculation is
being made.
2. Ordinary Services. In consideration of the payment by Owner to
CEOC of the Administration Fee as provided in Section 5 hereof, CEOC agrees to
perform during the term of this Agreement those functions normally considered
part of the day-to-day administrative and management activities for facilities
similar to the Leathers Facility as determined by Owner which are not within
the scope of Services to be provided by CEOC to Owner pursuant to the
Operating and Maintenance Agreement. The Ordinary Services to be provided
hereunder include, without limitation, (i) general bookkeeping and financial
accounting, (ii) general legal services (but not legal services of an
extraordinary nature including, without limitation, legal services in
connection with litigation or administrative proceedings), (iii) personnel
administration and payroll services, (iv) cash management services, (v) energy
production oversight and the determination of output levels; (vi) consulting
services with respect to geothermal electrical energy production and (vii)
assisting Owner in obtaining any franchises, permits, licenses, easements or
rights-of-way necessary for continued operation of the Leathers Facility.
3. Extraordinary Services. In consideration of the compensation of
CEOC by Owner as provided in Section 7 hereof, CEOC agrees to perform during
the term of this Agreement, as Extraordinary Services, any administrative and
management services that may be needed in connection with the operation of the
Leathers Facility and (a) which are not included in the scope of the services
delineated in Section 2 hereof or (b) which are not included in the scope of
the Services delineated in the Operating and Maintenance Agreement.
4. Subcontracting. In connection with CEOC's providing of the
Ordinary Services and Extraordinary Services contemplated by this Agreement,
CEOC may subcontract with or otherwise retain the services of other Persons
including, but not limited to, Magma and other Affiliates of CEOC, and Owner
hereby consents to such subcontracting for purposes of Section 14 hereof. For
purposes of this Agreement, any Ordinary Services or Extraordinary Services
performed by such Persons shall be deemed to have been performed by CEOC.
5. Administration Fee. In consideration of the provision of Ordinary
Services by CEOC as contemplated by
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Section 2 hereof, Owner shall pay CEOC the Administration Fee. The
Administration Fee shall be payable in the manner and in the amount calculated
as follow:
(i) For each year, the Administration Fee shall be
3% of the Total Electricity Revenues earned by Owner in such year,
but in no event shall such Administration Fee be less than the Floor
for such year. The Administration Fee in each such year shall be paid
monthly in arrears on the last day of each month in an amount equal
to one-twelfth (1/12) of the Floor for the preceding year; provided,
however, that on December 31 of each year (or as soon thereafter as
is practicable, but in no event later than March 31 of the next
succeeding year), in addition to the amounts otherwise payable to
CEOC under this Section 5(i), Owner shall pay to CEOC the greater of
(a) the amount by which 3% of the Total Electricity Revenues earned
by Owner in such year exceeds the Floor for the preceding year or (b)
the amount by which the CPI Adjustment for the year in which the
calculation is being made exceeds the Floor for the preceding year.
In the event this Agreement terminates other than on December 31 of
the calendar year in which it terminates, the Administration Fee for
such year shall be prorated as provided in Section 7.4(i) hereof.
Notwithstanding anything contained herein that may be construed to
the contrary, and solely for purposes of making the calculations in
this Section 5(i), the Floor for the year preceding 1990 shall be
deemed to equal $800,000.
6. Reimbursement and Other Compensation for Extraordinary Services.
1. In consideration of the provision by CEOC to Owner of the
Extraordinary Services contemplated by Section 3 hereof, within thirty (30) days
after Owner has received an invoice from CEOC specifying the Extraordinary
Services rendered to Owner by CEOC and the amount to be paid to CEOC therefor,
Owner shall pay to CEOC such specified amount. In charging Owner for
Extraordinary Services under this Section 6, CEOC shall have the right to charge
Owner an amount which shall enable CEOC to (a) recoup the actual costs and
expenses incurred by CEOC in rendering the Extraordinary Services plus (b) earn
a reasonable profit for the Extraordinary Services so rendered including,
without limitation, a reasonable rate of return on CEOC's invested capital used
in connection with the provision by CEOC of the Extraordinary Services, taking
into consideration factors including the extent to which CEOC can reasonably
expect to earn a return on its invested capital by utilizing CEOC's equipment
and materials for providing services other than to
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the Leathers Facility. As used in this Section 6.1, "actual costs and
expenses incurred by CEOC" includes, without limitation, (a) the actual cost
to CEOC of goods and materials used by CEOC in rendering Extraordinary
Services, (b) the pro rata cost to CEOC of personnel providing labor or
services in the course of CEOC's provision of Extraordinary Services and (c)
the actual cost to CEOC of retaining another Person, whether Magma or another
Affiliate of CEOC or otherwise, in connection with the provision of
Extraordinary Services. In the event CEOC subcontracts with any Person,
including, without limitation, Magma or another Affiliate as provided in
Section 4 hereof, any payment to CEOC under this Section 6.1 on account of the
Extraordinary Services so subcontracted shall be made to CEOC only to the
extent of the amount charged CEOC by such Person and shall not include any
amounts representing a mark-up by CEOC over the amount so charged.
2. With respect to any calculation of actual costs and expenses or
any allocation of costs contemplated by Section 6.1 hereof, Owner shall be
bound by CEOC's determination thereof unless the same is clearly erroneous.
7. Term and Termination.
1. Unless terminated as provided in Section 13 hereof, by written
agreement between Owner and CEOC as provided in Section 16 hereof, or as
hereinafter provided in this Section 7, this Agreement shall remain in effect
until, and shall terminate on August 15, 2020.
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.
3. Notwithstanding any other provision of this Agreement, and in
addition to any other right it may have, CEOC shall have the right to
terminate this Agreement, 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
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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.
4. If this Agreement is terminated prior to the expiration of its
terms as provided in Section 7.1 hereof, Owner and CEOC shall have the
following rights, remedies and obligations in addition to any other rights,
remedies and obligations they may have:
(i) Owner shall pay CEOC, immediately upon termination,
the entire Administration Fee for the year in which the
Agreement is effectively terminated, prorated for the number
of months in such year prior to and including the month in which
the Agreement is effectively terminated, less the amount of the
Administration Fee which is theretofore paid during such year.
(ii) Owner shall pay CEOC all amounts due and payable to
CEOC under Section 6 hereof as of the date the Agreement is
effectively terminated.
8. Disclaimer of CEOC's Liability. CEOC, in providing the Ordinary
Services and the Extraordinary Services provided for herein, shall use its
good faith efforts in providing such services, but CEOC shall not be liable to
Owner for damages arising out of or resulting from the provision of such
Ordinary Services and Extraordinary Services, except to the extent that such
damages arise out of or result from the gross negligence or willful misconduct
or CEOC, nor shall CEOC be liable to Owner for consequential damages under any
circumstances. CEOC shall have no responsibility for the ability of Owner to
effectively operate the Leathers Facility or the claims of third parties
arising with respect to the Leathers Facility. Owner shall indemnify and hold
harmless CEOC against all liability or responsibility to Owner or to others
for any failure in production, operation or otherwise of the Leathers
Facility. CEOC does not warrant and shall not be responsible for the quality
of services or any design, specification, drawing, blueprint, reproduced
tracing, formula, production process or other data or information furnished by
it to Owner in the course of fulfilling its obligations under this Agreement,
but shall furnish such in good faith to the best of CEOC's knowledge and
ability.
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
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such waiver constitute a continuing waiver of similar or other breaches.
10. Arbitration. All disputes arising under this Agreementshall be
settled by arbitration. 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 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.
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11. Attorneys' 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.
1. Neither Owner nor CEOC 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.
2. Such Events of Force Majeure shall not relieve Owner or CEOC 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
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.
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13. Invalid Provision.
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 Sections 2, 3, 5, 6, or 7 hereof are held invalid or
unenforceable by any court or other relevant authority, Owner and CEOC 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 CEOC do not reach agreement within this period, CEOC
shall have the right to terminate this Agreement, effective immediately.
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 4 hereof, neither Owner nor CEOC
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 California. 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. Without limiting the generality of the foregoing, from and after the
date hereof, the terms of the Administrative Services Agreement dated as of
March 14, 1988 (the "Original Administrative
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Services Agreement") between Owner and CEOC shall be amended to read in their
entirety as set forth in this Agreement and the terms of this Agreement shall
govern and control the rights and obligations of the parties in and with
respect to the matters herein set forth, notwithstanding any conflict between
the terms of this Agreement and the terms of the Original Administrative
Services Agreement. 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 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 CEOC at:
CalEnergy Operating Company
302 South 36th Street
Suite 400-C
Omaha, Nebraska 68131
Attention: General Counsel
To Owner at:
Leathers, L.P.
302 South 36th Street, Suite 400-C
Omaha, Nebraska 68131
Attention: General Counsel
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, addressed to CEOC 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.
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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.
CEOC:
CALENERGY OPERATING COMPANY,
a Delaware corporation
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Senior Vice President
OWNER:
LEATHERS, L.P., a California limited
partnership
By: CALENERGY OPERATING COMPANY,
a Delaware corporation, as General
Partner
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Senior Vice President