EXHIBIT 10.47
LEATHERS
FUNDING AGREEMENT
1. PARTIES: The Parties to this Funding Agreement ("Agreement") are
Leathers, L.P., a California limited partnership ("Seller") and Southern
California Edison Company ("Edison"), a California corporation, hereinafter
sometimes referred to individually as "Party" and collectively as "Parties."
2. RECITALS: This Agreement is made with reference to the following
facts, among others:
2.1 On April 16, 1985, Imperial Energy Corporation ("IEC") and Edison
executed a Power Purchase Contract to provide the terms and conditions for the
sale by IEC and the purchase by Edison of electrical power from an electrical
generating facility to be located at Niland, California.
2.2 On January 22, 1986, IEC assigned its rights, title, and interest
in the Power Purchase Contract to Magma Power Company ("Magma"), a Nevada
corporation to which assignment Edison consented on March 12, 1986.
2.3 On April 10, 1988, Edison and Magma amended the Power Purchase
Contract (Amendment No. 1).
2.4 On August 15, 1988, Magma assigned its rights, title, and
interest in the Power Purchase Contract to Seller, to which assignment Edison
consented on October 19, 1988.
2.5 Magma, on behalf of Seller, is a signatory to the Funding and
Construction Agreement ("Funding and Construction Agreement") among the
Imperial Irrigation District ("IID") and
independent power companies, listed as participants ("Participants") therein,
which was executed on June 29, 1987. Seller's capacity entitlement under the
Funding and Construction Agreement is sufficient to satisfy its capacity and
energy deliveries under the Power Purchase Contract.
2.6 Seller is, as of the date of execution of this Agreement, in full
compliance with the terms and conditions of the Power Purchase Contract, the
Qualifying Facilities Milestone Procedure ("QFMP"), and/or Edison's Tariff
Rule 21, as applicable.
2.7 Seller and Edison jointly agree that a transmission limit of 400
MW exists on the capacity of the existing transmission line between Edison's
Mirage Substation and its Devers Substation (the "Mirage/Devers Line") and
that construction of additional transmission facilities may, in Edison's sole
judgment, be required to allow delivery of Seller's electrical energy and
capacity over the portion of Edison's system between Edison's Mirage and
Devers Substations. Such facilities shall hereinafter be referred to as the
"Additional Transmission Facilities."
2.8 Six (6) Qualifying Facility projects identified in Appendix A,
Appendix B, and Appendix C attached hereto, have previously executed Funding
Agreements to pay a pro rata share of the Additional Transmission Facilities.
2.9 Seller acknowledges that, because of the transmission priority of
its project under the QFMP and/or Edison's Tariff Rule No. 21, it may not be
entitled thereunder to use the
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existing Mirage/Devers Line to deliver its power to Edison. Therefore, Seller
is willing to pay a portion of the cost of the Additional Transmission
Facilities which may be required to accommodate transmission of its electrical
energy and capacity, as further set forth herein.
2.10 On June 15, 1988, Magma, on behalf of Seller, and Edison entered
into a Funding Agreement (the "1988 Funding Agreement"). The terms and
conditions of the 1988 Funding Agreement shall be separate and apart from this
Funding Agreement. The terms and conditions of either this Funding Agreement
or the 1988 Funding Agreement shall not be construed to influence or impact
the terms and conditions of the other.
3. AGREEMENT: The Parties agree as follows:
4. TERM: This Agreement shall be effective upon execution by the Parties
and shall remain in effect until the earliest of (a) termination by agreement
of the Parties, (b) completion of the Additional Transmission Facilities, or
(c) January 1, 1995.
5. FUNDING ACCOUNT:
5.1 Within 30 days after the date of execution of this funding
agreement, Seller shall, in the amount determined pursuant to the formula set
forth herein, either (a) provide Edison with an irrevocable letter of credit
issued by a commercial lender acceptable to Edison in its sole judgment
allowing Edison to draw the funds for use consistent with the terms and
conditions of this Agreement, or (b) establish and fund an escrow account
governed by an escrow agreement in a form acceptable to Edison, consistent
with the terms and conditions of
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this Agreement. The escrow account or letter of credit so established shall
hereinafter be referred to as the "Funding Account." The dollar amount of
Seller's Funding Account shall be the amount specified in Appendix D hereto as
Seller's funding contribution, which is established as follows:
X = A x (B / C)
Where: X = Seller's Funding Account in dollars
A = Seller's MW capacity as specified in Appendix D
B = $3,150,000
C = 79 MW
Seller shall not be required to contribute any funds in excess of the amount
identified in Appendix D hereto as Seller's funding contribution.
5.2 Interest which may be paid to the Funding Account shall accrue to
the Funding Account and shall contribute to the principal when earned. Seller
shall not have any right to make withdrawals of accrued interest unless and
until the Funding Account is released to Seller pursuant to Section 5.6 of
this Agreement.
5.3 Edison shall have sole drawing rights on the funds contained in
the Funding Account. Edison may use those funds for payment of the costs
actually incurred by Edison to construct the Additional Transmission
Facilities determined necessary by Edison in its sole discretion to accept the
electric capacity and energy of Seller pursuant to the Power Purchase Contract
and to pay any
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taxes levied on those funds as contributions in aid of construction.
5.4 Seller shall maintain the Funding Account in effect until the
termination of this Agreement pursuant to Section 4 hereof. Failure to do so
shall cause Seller to lose its rights to transmission capacity under this
Agreement and shall cause Edison's obligation to accept Seller's power
pursuant to Sections 6.1 and 6.2 of this Agreement to terminate.
5.5 In the event of termination of this Agreement, Edison shall not
be obligated to reimburse Seller for any funds withdrawn from the Funding
Account in accordance with the terms and conditions of this Agreement.
5.6 In the event that this Agreement has terminated pursuant to
Section 4 hereof prior to the commencement of construction of the Additional
Transmission Facilities, Edison shall promptly release Seller's Funding
Account to Seller. Seller shall have no other right to terminate or withdraw
funds from the Funding Account.
6. OBLIGATIONS OF EDISON:
6.1 As long as Seller is in compliance with all of the terms and
conditions of this Agreement, and subject to Section 6.2, Edison shall accept
power from Seller pursuant to Seller's Power Purchase Contract on the date of
Firm Operation (as that term is defined in the Power Purchase Contract) in the
amount specified in Appendix D hereto, under the terms and conditions of
Section 6.2 of this Agreement. Purchases from Seller shall be made pursuant to
the Power Purchase Contract for energy and
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capacity delivered to Edison's Mirage Substation (a) during the term of this
Agreement and (b) following termination of this Agreement only if terminated
pursuant to Section 4.
6.2 For that period of time between establishment of the Funding
Account pursuant to Section 5.1 of this Agreement and completion and placing
in service of the Additional Transmission Facilities, Seller's access to
transmission capacity between Edison's Mirage and Devers substations, pursuant
to this Agreement, shall be on an as-available and interruptible basis. Upon
completion and placing in service of the Additional Transmission Facilities,
Seller's access to such transmission capacity shall be firm for the balance of
the term of Seller's Power Purchase Contract.
6.3 In the event that Edison enters into an agreement with a
developer other than those listed in Appendix A, Appendix B, Appendix C, or
Appendix D, which requires the use of capacity on the Additional Transmission
Facilities, Edison shall require such developer to pay a portion of the costs
of the Additional Transmission Facilities. Such payment shall be in accordance
with the formula specified in Section 5.1 of this Agreement. Such payment
shall not affect Seller's funding contribution as specified in Appendix A or
Appendix D.
7. OWNERSHIP: Edison shall own and operate any Additional
Transmission Facilities which may be constructed or installed to fulfill
Edison's obligations pursuant to this Agreement.
8. TAXES:
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8.1 Edison shall pay ad valorem taxes and other taxes properly
attributed to the Additional Transmission Facilities.
8.2 Edison may, at its sole discretion, use funds from the Funding
Account to pay taxes levied on contributions in aid of construction. However,
Seller shall not be required to pay any tax, or provide any funds for the
payment of any tax, in excess of its funding contribution as set forth in
Appendix A or Appendix D of this Agreement.
8.3 If requested by any taxing authority, Seller or Edison, as the
case may be, shall provide information in its possession concerning the
Additional Transmission Facilities to such taxing authority.
9. NONDEDICATION OF FACILITIES: Neither Party, by this
Agreement, dedicates any part of its facilities to the public or
to the service provided under the Power Purchase Contract, and
such service shall cease upon termination of the Power Purchase
Contract.
10. NOTICE: All notices pertaining to this Agreement shall be
in writing and shall be sufficient if delivered in person or sent
by certified mail, postage prepaid, return receipt requested, to
Seller or to Edison at the following address:
If to Seller: Leathers, L.P.
c/o Red Hill Geothermal, Inc.
480 W. Sinclair Road
Calipatria, CA 92233
Attention: Secretary
If to Edison: Southern California Edison Company
Post Office Box 800
Rosemead, CA 91770
Attention: Secretary
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All notices sent pursuant to this Section 10 shall be effective when received,
and each Party shall be entitled to specify as its proper address any other
address in the United States upon written notice to the other Party.
11. PREVIOUS COMMUNICATIONS: This Agreement contains the entire agreement
between the Parties, their agents, and employees as to the Additional
Transmission Facilities, and merges and supersedes all prior agreements,
commitments, representations, and discussions between the Parties relating
thereto. No Party shall be bound to any other obligations, conditions, or
representations with respect to the subject matter of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
terminate, supersede or amend the Power Purchase Contract, except if, and only
to the extent, specifically set forth herein.
12. SUCCESSORS AND ASSIGNS: This Agreement shall not be assigned by Edison
without Seller's consent, which consent shall not be unreasonably withheld.
Seller may assign this Agreement with the written consent of Edison only if
such assignment is in conjunction with assignment of the Power Purchase
Contract. Any such assignment or delegation made without said written consent
shall be null and void. Edison's consent to such assignment shall not be
unreasonably withheld. Any assignment of this Agreement in conjunction with
assignment of the Power Purchase Contract shall be in full compliance with the
applicable terms and conditions of the Power Purchase Contract. Any assignment
of this Agreement
shall not relieve the Seller of its primary
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liability for any of its duties and obligations hereunder unless the assignee
expressly assumes those duties and obligations in writing.
13. UNCONTROLLABLE FORCE: Neither Party shall be considered to
be in default in the performance of any of its obligations under this
Agreement, except for obligations to pay money, when and to the extent failure
of performance shall be caused by an uncontrollable force. The term
"uncontrollable force" shall mean any cause beyond the control of the Party
unable to perform such obligations including, but not limited to, failure of
or threat of failure of facilities, flood, earthquake, storm, drought, fire,
pestilence, lightning and other natural catastrophes, epidemic, war, riot,
civil disturbance or disobedience, strike, labor dispute, labor or material
shortage, sabotage, government priorities, restraint by court order or public
authority (whether valid or invalid), and action or nonaction by or inability
to obtain or keep the necessary authorizations or approvals from any
government agency or authority, which by exercise of due diligence such Party
could not reasonably have been expected to avoid and which by exercise of due
diligence it has been unable to overcome. Nothing contained in this Section 13
shall be construed as to require a Party to settle any strike or labor dispute
in which it may be involved.
14. EFFECT OF SECTION HEADINGS: Section headings appearing in this
Agreement are inserted for convenience only, and shall not be construed as
interpretations of text.
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15. GOVERNING LAW: This Agreement shall be interpreted, governed, and
construed under the laws of the State of California as if executed and to be
performed wholly within the State of California.
16. SIGNATURES: IN WITNESS WHEREOF, the Parties hereto have
executed this Funding Agreement this 18 day of May, 1990.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/ Robert Dietch
Vice President
LEATHERS, L.P.
BY: RED HILL GEOTHERMAL, INC.
By /s/ Jon R. Peele
---------------------------------
Name Jon R. Peele
-------------------------------
Title Vice President
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APPENDIX A
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Western Power Imperial Resource 15 MW $ 598,101.27
Group Unit II, Recovery (QFID
Inc. No. 1043)
Earth Energy, Salton Sea II 20 MW $ 797,468.35
Inc. (QFID No. 3028)
Magma Power Leathers (QFID 38 MW $1,515,189.35
Company No. 3026)
Ormesa Ormesa 1E 6 MW $ 239,240.51
Geothermal (QFID No. 3010) ----- -------------
TOTAL APPENDIX A 79 MW $3,150,000.00
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APPENDIX B
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Colmac Energy, Colmac Energy, 25.8 MW $1,028,734.20
Inc. Inc.
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APPENDIX C
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Ormesa Ormesa Geothermal 6.5 MW $259,177.22
Geothermal (QFID No. 3010)
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APPENDIX D
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Magma Power Vulcan/BN 6 MW $239,240.52
Company Geothermal
(QFID No. 3006)
Magma Power Del Ranch, Ltd. 4 MW $159,493.68
Company (QFID No. 3004)
Magma Power Elmore, Ltd. 4 MW $159,493.68
Company (QFID No. 3009)
Magma Power Leathers, L.P.* 4 MW $159,493.68
Company (QFID No. 3026) ----- -----------
TOTAL APPENDIX D 18 MW $717,721.56
* Seller
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