EXECUTION COPY
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.
Dated as of
September 15, 1992
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
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1.1 Defined Terms....................................................... 2
1.2 Other Definitions................................................... 23
ARTICLE II
FORMATION AND CONTINUATION OF PARTNERSHIP
2.1 Formation of Partnership; Name...................................... 24
2.2 Purpose; Business of the Partnership................................ 24
2.3 Authorizations...................................................... 24
2.4 Principal Office; Offices; Addresses................................ 26
2.5 Further Filings..................................................... 26
2.6 Term................................................................ 26
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Partners and Contributions.......................................... 27
3.2 Interest on Capital Contributions................................... 27
3.2 Withdrawal of Initial Limited Partner............................... 27
ARTICLE IV
DISTRIBUTIONS
4.1 Distributable Cash.................................................. 28
4.2 Distributions Prior to the Second Capital Contribution Date......... 28
4.3 Distributions After the Second Capital Contribution Date
and Prior to the Flip Date..................................... 28
4.4 Distributions Subsequent to the Flip Date........................... 29
4.5 Arrears Account..................................................... 29
4.6 Tax Indemnity....................................................... 29
4.7 Net Cash From Sales or Refinancing.................................. 30
4.8 Special Event....................................................... 31
4.9 Failure to Make Second Capital Contribution......................... 31
4.10 Debt Service Account Interest....................................... 31
ARTICLE V
ALLOCATION OF CERTAIN PROFITS AND LOSSES
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FOR BOOK AND TAX PURPOSES
5.1 Intentionally Omitted........................................... 31
5.2 Operating Profits............................................... 31
5.3 Operating Losses................................................ 33
5.4 Depreciation.................................................... 34
5.5 Gains........................................................... 35
5.6 Losses.......................................................... 36
5.7 Qualified Income Offset......................................... 36
5.8 Minimum Gain Chargeback......................................... 36
5.9 Allocation of Organizational Expenses............................ 37
5.10 Partner Nonrecourse Deductions.................................. 37
5.11 Curative Allocations............................................ 37
5.12 Tax Allocations................................................. 37
5.13 Property Subject to 704(c) and 704(b)........................... 37
5.14 Gross Income Allocation......................................... 37
5.15 Debt Service Account Interest................................... 38
5.16 Limitations..................................................... 38
5.17 Ordering Rules.................................................. 38
ARTICLE VI
BOOKS OF ACCOUNT, RECORDS, REPORTS AND TAX MATTERS
6.1 Books and Records............................................... 38
6.2 Information Kept by Managing General Partner.................... 39
6.3 Fiscal Year..................................................... 39
6.4 Partnership Funds............................................... 39
6.5 Income Tax Elections/Return Preparation......................... 40
6.6 Tax Accounting Matters.......................................... 40
6.7 Financial Statements............................................ 41
6.8 Computations.................................................... 43
6.9 Taxes and Tax Controversies..................................... 44
6.10 Inspection; Reports to Regulatory Authorities................... 45
ARTICLE VII
MANAGEMENT
7.1 Appointment; Powers of the Managing General Partner............. 45
7.2 Certain Management Duties and Responsibilities of the Managing
General Partner................................................ 48
7.3 Restrictions on Powers of the Managing General Partner.......... 55
7.4 Fee............................................................. 58
7.5 Limitations on Liability of Managing General Partner............ 59
7.6 Partnership Information Meetings................................ 60
7.7 Limitations on the Partners..................................... 60
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7.8 Cooperation Regarding Permits and Power Purchase Agreement...... 60
7.9 Time Devoted to Partnership..................................... 60
7.10 Other Business Activities....................................... 61
7.11 Special Indemnity............................................... 61
ARTICLE VIII
CALLS FOR AND PAYMENT OF FUNDS.................... 61
ARTICLE IX
CONDITIONS PRECEDENT
9.1 Conditions to the Contributions on the Initial Capital
Contribution Date............................................. 61
9.2 Conditions to the Contributions on or Prior to the Second
Capital Contribution Date...................................... 61
ARTICLE X
TRANSFER AND ENCUMBRANCE
10.1 Transfer of Partnership Interest; General Provisions............ 62
10.2 Additional Partners............................................. 63
10.3 Revisions to this Agreement Upon Transfer or Encumbrance........ 64
10.4 Amendment to Certificate of Limited Partnership.................. 64
10.5 Voluntary Withdrawal by Limited Partners........................ 64
ARTICLE XI
OPTIONS TO PURCHASE
11.1 Fair Market Sales Value Purchase Options........................ 66
ARTICLE XII
NOTICES
12.1 Notices......................................................... 68
12.2 Addresses....................................................... 68
ARTICLE XIII
WITHDRAWAL.............................. 69
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ARTICLE XIV
SPECIAL EVENTS AND DISSOLUTION; LIQUIDATION; TERMINATION
14.1 Special Events...................................................... 69
14.2 Certain Remedies Following Special Event............................ 75
14.3 Events of Dissolution............................................... 78
14.4 Procedure in Dissolution and Liquidation............................ 78
14.5 Disposition of Documents and Records................................ 79
14.6 Termination......................................................... 80
ARTICLE XV
RIGHTS AND OBLIGATIONS OF LIMITED PARTNER
15.1 Management of the Partnership....................................... 80
15.2 Limitation on Liability of Limited Partners......................... 80
15.3 Limitation on Liability of Owner Trustee............................ 80
ARTICLE XVI
MISCELLANEOUS
16.1 Further Assurance................................................... 81
16.2 Amendments and Waivers.............................................. 81
16.3 Successors and Assigns.............................................. 82
16.4 Indemnification..................................................... 82
16.5 Incorporation By Reference.......................................... 82
16.6 Severability........................................................ 82
16.7 Headings and Table of Contents...................................... 83
16.8 Counterparts........................................................ 83
16.9 Submission to Jurisdiction; Waivers................................. 83
16.10 GOVERNING LAW....................................................... 83
16.11 Entire Agreement.................................................... 83
16.12 Arbitration of Gas Purchase Plan Disputes........................... 84
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Schedules
Schedule 1 Name; Addresses; Capital Contributions
Schedule 2 Tax Assumptions
Schedule 3 Permits
Schedule 4 Site
Schedule 5 Calculation of Distributions
Schedule 6 Spare Parts Inventory
Schedule 7 Distribution Table
Schedule 8 Insurance
Schedule 9 Termination Expense (Benefit)
Schedule 10 Certain Provisions Relating to Special Events
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AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
COGEN TECHNOLOGIES LINDEN VENTURE, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement") of COGEN TECHNOLOGIES LINDEN VENTURE, L.P. (the "Partnership") is
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made and entered into as of the 15th day of September, 1992 by and among ("Cogen
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Linden", the "General Partner" or the Managing General Partner"), XXXXXX X.
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XxXXXX (the "Initial Limited Partner") and STATE STREET BANK AND TRUST COMPANY
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OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity but as
trustee (in such capacity, the "Owner Trustee" or the "Preferred Limited
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Partner", or the "Common Limited Partner", as applicable) under a Trust
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Agreement, dated as of December 28, 1990 (as amended, supplemented or otherwise
modified from time to time, the "Trust Agreement"), between the Owner Trustee
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and Linden Owner Partnership, a Delaware partnership ("Linden Owner
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Partnership").
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W I T N E S S E T H:
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WHEREAS, Xxxxx Xxxxxx and the Initial Limited Partner are parties to a
Limited Partnership Agreement dated as of December 4, 1989 (as heretofore
amended, supplemented, restated or otherwise modified, the "Original Partnership
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Agreement") and Xxxxx Xxxxxx and the Initial Limited Partner desire to amend and
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restate in its entirety the Original Partnership Agreement in order to make the
Owner Trustee the sole limited partner of the Partnership and Xxxxx Xxxxxx the
sole general partner of the Partnership; and
WHEREAS, pursuant to the Original Partnership Agreement, Xxxxx Xxxxxx
contributed $50 to the capital of the Partnership in exchange for its General
Partnership Interest (as hereinafter defined) in the Partnership and the Initial
Limited Partner contributed $50 to the capital of the Partnership in exchange
for its limited partner interest in the Partnership; and
WHEREAS, pursuant to the Original Partnership Agreement, Xxxxx Xxxxxx
may admit additional limited partners to the Partnership and upon such admission
the Initial Limited Partner shall withdraw from the Partnership; and
WHEREAS, pursuant to the Capital Contribution Agreement (as
hereinafter defined), the Owner Trustee has agreed, subject to the terms and
conditions set forth herein, to make a capital contribution to the Partnership
on the Initial Capital Contribution Date (as hereinafter defined) in exchange
for the Common Limited Partnership Interest (as hereinafter defined), and,
subject to the terms and conditions set forth therein, to make additional
capital contributions to the Partnership on or
before the Second Capital Contribution Date (as hereinafter defined) in respect
of the Common Limited Partnership Interest and in exchange for the Preferred
Limited Partnership Interest (as hereinafter defined); and
WHEREAS, on the Initial Capital Contribution Date, upon return of his
capital contribution to the Partnership and immediately following the admission
of the Owner Trustee as a limited partner of the Partnership, the Initial
Limited Partner shall withdraw from the Partnership;
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings contained herein, the parties hereto hereby agree that as of the
Initial Capital Contribution Date, the Initial Limited Partner shall cease to be
a Partner, the Partnership shall be continued between the General Partner and
the Owner Trustee and the Original Partnership Agreement shall be amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
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1.1 Defined Terms. Terms used but not defined herein shall have
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their respective meanings in the Construction Loan Agreement (as hereinafter
defined) (after giving effect to any waiver or amendment thereof with the
consent of the Preferred Limited Partner and notwithstanding the termination or
expiration thereof) and the following terms shall have the following meanings:
"Adjusted Capital Account Deficit" shall mean, with respect to any
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Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant fiscal year, after giving effect to the
following adjustments:
(i) credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentence of Regulations Section 1.704-2(g) (1) and 1.704-
2(i) (5);
(ii) debit to such Capital Account the items described in
Regulations Sections 1.704-1(b) (2) (ii) (d) (4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b) (2) (ii) (d)
and shall be interpreted consistently therewith.
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"Affiliate" shall mean, with respect to any Person, (a) any Person which,
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directly or indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person, or (ii) to direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise; provided that for purposes of
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this definition, the Limited Partner (unless and until it exercises its rights
to become Managing General Partner under subsection 14.2 or 14.3) shall not be
deemed to be an Affiliate of the Partnership.
"Agent" shall mean GEPFC, as agent for the lenders parties to the
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Construction Loan Agreement, or any entity acting as successor agent under the
Construction Loan Agreement.
"Agreement" shall mean this Amended and Restated Agreement of Limited
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Partnership, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"Applicable Laws" shall mean all applicable laws, ordinances, judgments,
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decrees, injunctions, writs and orders of any Governmental Authority and rules,
regulations, orders, interpretations, licenses and permits of any federal,
state, county, municipal, regional or other Governmental Authority.
"Appraisal Procedure" shall mean a procedure whereby two independent
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appraisers, one chosen by the Managing General Partner and one by the Preferred
Limited Partner (or, if only the Common Limited Partnership Interest is the
subject of the appraisal, the Common Limited Partner or, if both Limited
Partnership Interests are the subject of the appraisal, both the Preferred
Limited Partner and the Common Limited Partner), shall agree upon the
determinations then the subject of appraisal. The Managing General Partner or
such Limited Partner, as the case may be, shall deliver a written notice to the
other appointing its appraiser within 15 days (5 days in the case of subsection
14.2(g) (iii) hereof and subsection 11 (b) of the Capital Contribution
Agreement) after receipt from the other of a written notice appointing its
appraiser. Each appraiser then shall prepare a written appraisal with respect to
the determinations which then are the subject of appraisal. If within 30 days
(20 days in the case of subsection 14.2(g) (iii) hereof and 10 days in the case
of subsection 11 (b) of the Capital Contribution Agreement) after appointment of
the two appraisers they are unable to agree upon the amount in
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question, a third independent appraiser shall be chosen within 10 days (5 days
in the case of subsection 14.2(g) (iii) hereof and subsection 11(b) of the
Capital Contribution Agreement) thereafter by the mutual consent of such first
two appraisers or, if such first two appraisers fail to agree upon the
appointment of a third appraiser, such appointment shall be made by the American
Arbitration Association, or any organization successor thereto, from a panel of
arbitrators having experience in the business of operating a cogeneration
facility and a familiarity with equipment used or operated in such business. The
decision of the third appraiser so appointed and chosen shall be given within 30
days (20 days in the case of subsection 14.2(g) (iii) hereof and 10 days in the
case of subsection 11(b) of the Capital Contribution Agreement) after the
selection of such third appraiser. If three appraisers shall be appointed and
the determination of one appraiser is disparate from the median by more than
twice the amount by which the other determination is disparate from the median,
then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and
conclusive on the Managing General Partner and such Limited Partner; otherwise
the average of all three determinations shall be binding and conclusive on the
Managing General Partner and such Limited Partner. If the Managing General
Partner or such Limited Partner shall appoint an appraiser and the other Person
shall fail to appoint an appraiser in the manner specified herein, the
determination of the appraiser so appointed shall be binding and conclusive on
the Managing General Partner and such Limited Partner. The expenses of the
appraisal procedure shall be borne solely by the Partnership.
"Arrears Account" shall mean an account maintained with respect to the
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Preferred Limited Partnership Interest that (i) is increased by the excess, if
any, at the end of each quarter after the Second Capital Contribution Date of
the amount specified in subsection 4.3(a) to the distributed with respect to the
Preferred Limited Partnership Interest in such quarter over the amount actually
distributed pursuant to such subsection with respect to the Preferred Limited
Partnership Interest in such quarter, (ii) is increased each quarter by the
Implicit Rate, compounded quarterly, times the amount described in clause (i)
and (iii) is decreased at the end of each quarter after the Second Capital
Contribution Date by distributions during such quarter with respect to the
Preferred Limited Partnership Interest pursuant to subsection 4.5 hereof.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
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on which commercial banks in New York City or Linden, New Jersey are authorized
or required by law to close.
"Capital Account" shall mean, with respect to any General Partner or
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Limited Partner, the Capital Account maintained for such Partner in accordance
with the following provisions:
(i) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of
Operating Profits, Gains and any items in the nature of income or gain
which are specially allocated pursuant to subsections 5.7, 5.8, 5.11, 5.14
and 5.15 hereof.
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any property (other than money)
(net of any liabilities assumed by such Partner or to which the property is
subject) distributed to such Partner pursuant to any provision of this
Agreement, and such Partner's distributive share of Operating Losses,
Depreciation, Losses, Organizational Expenses and any items in the nature
of deductions or losses which are specially allocated pursuant to
subsections 5.10 and 5.11 hereof.
(iii) In the event all or a portion of an interest in the Partnership
is transferred in accordance with the terms of this Agreement in a
transaction that does not result in a termination of the Partnership under
Code Section 708(b) (1) (B), the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred
interest.
(iv) In determining the amount of any liability for purposes of
clause (i) and clause (ii) hereof, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and the
Regulations.
(v) Each Partner's Capital Account shall in all other respects be
maintained in accordance with the provisions of Regulations Section 1.704-
1(b).
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations.
"Capital Contribution" shall mean, with respect to any Partner, the amount
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of money and the initial Gross Asset Value of any property (other than money)
(net of any liabilities assumed by the Partnership or to which the property is
subject) contributed to the Partnership with respect to any partnership interest
held by such Partner pursuant to the terms of this Agreement.
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"Capital Contribution Agreement" shall mean the Capital Contribution
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Agreement dated as of February 15, 1990, among the Partnership, Xxxxx Xxxxxx,
the Agent, GEPFC and the Owner Trustee, as amended, supplemented, restated or
otherwise modified from time to time.
"Cash Equivalents" shall mean (a) obligations of, or guaranteed as to
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interest and principal by, the United States of America or any agency thereof,
in each case maturing within one year from the date of acquisition thereof, (b)
open market commercial paper of any corporation incorporated under the laws of
the United States of America or any state thereof and not an Affiliate of the
Partnership or the General Partner maturing no more than one year from the date
of creation thereof which paper is rated "prime-2" or its equivalent by Xxxxx'x
Investors Service Inc. or "A-2" or its equivalent by Standard & Poor's
Corporation, (c) certificates of deposit issued by any domestic commercial bank
of recognized stature having capital and surplus in excess of $500,000,000 or
any domestic branch of any foreign commercial bank of recognized stature having
capital and surplus in excess of $500,000,000 in each case maturing within one
year from the date of acquisition thereof, (d) repurchase agreements fully
collateralized by obligations described in clause (a) above in each case
maturing within one year from the date of acquisition thereof, or (e) a money
market fund registered under the Investment Company Act of 1940, the portfolio
of which is limited to obligations described in clause (a) above; provided,
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however, that the aggregate amount at any one time so invested (A) in open
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market commercial paper issued by any corporation shall not exceed $5,000,000
and (B) in certificates of deposit issued by any one bank shall not exceed
$10,000,000.
"Certificate of Limited Partnership" shall mean the Certificate of Limited
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Partnership of the Partnership, dated December 4, 1989, filed with the Secretary
of State of the State of Delaware on December 6, 1989, and all amendments
thereto and restatements thereof.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
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amended from time to time, or any corresponding provisions of succeeding law.
"Common Limited Partner" shall mean the Limited Partner that is the owner
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of the Common Limited Partnership Interest and is shown as such on the books and
records of the Partnership.
"Common Limited Partnership Interest" shall mean the limited partner
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interest in the Partnership that has the rights and privileges granted to such
interest in this Agreement.
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"Commonly Controlled Entity" shall mean an entity, whether or not
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incorporated, which is under common control with the Managing General Partner
within the meaning of Section 4001 of ERISA or is part of a group which includes
the Managing General Partner and which is treated as a single employer under
Code Section 414.
"Con Ed" shall mean Consolidated Edison Company of New York, a New York
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corporation.
"Construction Loan Agreement" shall mean the Construction Loan Agreement
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dated as of February 15, 1990, among the lenders parties thereto, the
Partnership and the Agent, as amended, supplemented, restated or otherwise
modified from time to time.
"Contractual Obligation" shall mean, as to any Person, any provision of any
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security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Contribution Dates" shall mean, collectively, the Initial Capital
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Contribution Date and the Second Capital Contribution Date.
"Cost Portion" shall have the meaning specified in subsection 7.4 hereof.
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"CTI" shall mean Cogen Technologies, Inc., a Texas corporation.
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"Debt Service Account Interest" shall mean the interest and other income
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earned on the funds in the Debt Service Account (as defined in the Security
Deposit Agreement).
"Depreciation" shall mean, for each fiscal year or other period, an amount
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equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to the tangible and intangible assets of the Partnership
for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that
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if the federal income tax depreciation amortization or other cost recovery
deduction for such year is zero, Depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method elected by the
Managing General Partner.
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"Discounted Value" shall mean, at the date of determination thereof, the
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amount calculated by discounting 99% of all remaining scheduled distributions
pursuant to Section 4.3(a) hereof (taking into account all amounts previously
distributed to the Limited Partners pursuant to Sections 4.3(b), (c) and (d) for
purposes of determining such remaining distributions) from their scheduled
distribution dates, in accordance with accepted financial practice and at a
discount factor (applied on a quarterly basis) equal to the Treasury Yield.
"Distributable Cash" shall mean the excess of gross cash proceeds from
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Partnership operations less the portion thereof used to pay or establish
reserves (including, without limitation, any additions to the Operation and
Maintenance Account) for all Partnership operating, maintenance and improvement
expenses (excluding any such expenses required to be paid out of the Operation
and Maintenance Account), taxes (other than income taxes) and payments in lieu
of taxes, insurance premiums, any other similar amount payable by the Managing
General Partner or the Partnership under any Project Document, payments due
under contracts which are permitted under the terms of the Operative Documents
to which the Partnership is a party, payments required by FERC and any other
governmental entity, fees and expenses of trustees, security agents and escrow
agents and other reasonable expenses incurred in connection with the Project,
and the Cost Portion of the Management Fee (including, without limitation, costs
incurred in connection with the procurement of gas for the Facility), and
exclusive of any Net Cash from Sales or Refinancing and any Debt Service Account
Interest (but Distributable Cash shall include the interest and other income
earned on, prior to the Second Capital Contribution Date, the Accounts and,
thereafter, the Escrow Accounts (each as defined in the Security Deposit
Agreement)). For purposes of Article IV, Distributable Cash shall be determined
(i) for the first 144 months after the Second Capital Contribution Date, without
giving effect to any reduction in respect of the Profit Portion, (ii)
thereafter, until the Flip Date (x) for purposes of subsections 4.3(a) and
4.3(b), without giving effect to any reduction in respect of the Profit Portion,
and (y) for purposes of subsections 4.3(c) and 4.3(d), by giving effect to any
such reduction, and (iii) after the Flip Date, (x) for purposes of subsections
4.4(a), 4.4(b) and 4.4(c), without giving effect to any reduction in respect of
the Profit Portion, and (y) for purposes of subsection 4.4(d), by giving effect
to any such reduction. "Distributable Cash" shall not be reduced by
depreciation, amortization, cost recovery deductions or similar allowances.
"Environmental Discharge" shall mean any discharge or release of pollutants
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or effluent or emissions of any kind in violation of any Relevant Environmental
Law.
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"Equity Letters of Credit" shall mean, collectively, (a) the Irrevocable
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Letter of Credit to be issued by GECC pursuant to the Reimbursement Agreement in
favor of Con Ed for the account of the Partnership, (b) any letter of credit
issued by GECC pursuant to the Reimbursement Agreement in favor of Elizabethtown
Water for the account of the Partnership and (c) any letter of credit issued by
GECC pursuant to the Reimbursement Agreement in replacement of any letter of
credit issued by GECC pursuant to the Construction Loan Agreement in favor of
Con Ed, PSE&G, Exxon or Elizabethtown Water for the account of the Partnership,
in each case, as amended, supplemented, restated or otherwise modified from time
to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
"Escrow Agent" shall have the meaning specified in the Security Deposit
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Agreement.
"Fair Market Sales Value" shall mean, with respect to any interest in the
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Partnership or any portion thereof, the cash price that would be obtained in an
arm's - length transaction between an informed and willing buyer and an informed
and willing seller, both under no compulsion, respectively, to buy or sell, and
neither of which is related to, or an Affiliate of, the Partnership, the General
Partner or any Limited Partner, giving due consideration, in the determination
of such fair market sales value, to the Partnership's rights at such time to use
the Project, together with the right to sell the steam and electricity therefrom
and to use the necessary ancillary rights and to obtain the necessary services
and materials in connection with the operation of the Facility. The Managing
General Partner and the Limited Partner may agree upon a determination of Fair
Market Sales Value, provided, that in the event that they are unable to agree
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upon such a determination, such Fair Market Sales Value shall be determined in
accordance with the Appraisal Procedure.
"FERC" shall mean the Federal Energy Regulatory Commission.
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"FERC Order" shall mean the certification issued by FERC with respect to
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the status of the Project as a Qualifying Facility.
"Financing Lease" shall mean (a) any lease of property, real or personal,
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if the then present value of the minimum rental commitment thereunder should, in
accordance with GAAP, be capitalized on a balance sheet of the lessee, and (b)
any other such lease the obligations under which are capitalized on a balance
sheet of the lessee.
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"Flip Date" shall mean the earlier of (i) the date, after the Second
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Capital Contribution Date, at the end of the Quarterly Period during which the
Preferred Limited Partner has received an aggregate amount of Limited Partner
Benefits with respect to the Preferred Limited Partnership Interest equal to the
Preferred Limited Partner's Return of and on Equity and (ii) the date which is
twenty-two years and six months after the Second Capital Contribution Date
(unless at such time a Special Event has occurred and is continuing).
"Floating Rate" shall mean LIBOR or LIBOR (Reference Banks), as applicable.
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"GAAP" shall mean generally accepted accounting principles in the United
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States of America in effect from time to time.
"Gains" and "Losses" shall mean the gain or loss resulting from any
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disposition of Partnership property with respect to which gain or loss is
recognized for federal income tax purposes; provided, however, that such gain or
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loss shall be computed by reference to Gross Asset Value rather than adjusted
tax basis of such property.
"GECC": General Electric Capital Corporation, a New York corporation, or
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its successors or assigns.
"General Partner" shall mean Xxxxx Xxxxxx, its permitted successors and
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assigns, and any other Person properly holding a General Partnership Interest
pursuant to this Agreement, when acting in such capacity.
"General Partnership Interest" shall mean the interest of a General
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Partner in the Partnership.
"GEPFC" shall mean General Electric Power Funding Corporation, a Delaware
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corporation, or its successors or assigns.
"Governmental Authority" shall mean any nation or government, any state or
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other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Gross Asset Value" shall mean, with respect to any asset, the asset's
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adjusted basis for federal income tax purposes, except as follows:
(i) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
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(ii) the Gross Asset Value of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined
by the Managing General Partner (provided, however, that the adjustments
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that occur upon the admission of the Owner Trustee shall be made pursuant
to Schedule 2 hereof), as of the following times: (1) the acquisition of an
additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis Capital Contribution; (2) the
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distribution by the Partnership to a General Partner or a Limited Partner
of more than a de minimis amount of property as consideration for an
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interest in the Partnership if the Managing General Partner reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative economic interests of the General Partner and the Limited Partner
in the Partnership; and (3) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b) (2) (ii) (g);
(iii) the Gross Asset Value of any Partnership asset distributed to
any General Partner or Limited Partner shall be the gross fair market value
of such asset on the date of distribution; and
(iv) the Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b) (2) (iv) (m);
provided, however, that Gross Asset Values shall not be adjusted to the
-------- -------
extent the Managing General Partner determines that an adjustment pursuant
to clause (ii) of this definition is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment pursuant to
clause (iv) of this definition. If the Gross Asset Value of an asset has
been determined or adjusted pursuant to clauses (i) and (ii) of this
definition or clause (iv) of this definition, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect
to such asset.
"Hazardous Materials" shall mean asbestos and any toxic or hazardous
-------------------
substances, materials, wastes or contaminants, medical wastes, infectious
wastes, polychlorinated biphenyls ("PCB's"), paint containing lead and urea
formaldehyde foam insulation, as any of such terms is defined from time to time
in or for the purposes of any Relevant Environmental Law.
12
"Implicit Rate" shall mean, with respect to each month during the period
-------------
from the Second Capital Contribution Date to the Flip Date, a rate per annum
equal to 8.383%
"Indebtedness" of a Person, shall mean, at a particular date, the sum
------------
(without duplication) at such date of (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(other than obligations under agreements for the purchase of goods and services
in the normal course of business which are not more than 90 days past due), or
which is evidenced by a note, bond, debenture or similar instrument, (b) all
obligations of such Person under Financing Leases, (c) all obligations of such
Person in respect of letters of credit, acceptances, or similar obligations
issued or created for the account of such Person, (d) all liabilities secured by
any lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof and (e) any
obligation of such Person or a Commonly Controlled Entity to a Multiemployer
Plan.
"Initial Capital Contribution Date" shall have the meaning specified in the
---------------------------------
Capital Contribution Agreement.
"Initial Limited Partner" shall mean Xxxxxx X. XxXxxx.
-----------------------
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"LIBOR" shall mean, with respect to any one month period, the rate per
-----
annum determined on the basis of the offered rates for deposits in U.S. dollars
for such period which appear on the Reuters Screen LIBO Page as of 11:00 a.m.,
London time, on the day that is two Working Days prior to the beginning of such
period. If at least two such offered rates appear on the Reuters Screen LIBO
Page, the rate in respect of such period will be the arithmetic mean of such
offered rates. If fewer than two offered rates appear, the rate in respect of
such period will be determined as if the parties had specified "LIBOR (Reference
Banks)" as the applicable Floating Rate.
"LIBOR (Reference Banks)" shall mean, with respect to any one month period,
-----------------------
a rate per annum equal to the arithmetic mean of the rates quoted by Bankers
Trust Company and Chemical Bank (or, if either Bankers Trust Company or Chemical
Bank shall cease to exist, Barclays Bank PLC shall be substituted for the bank
which cease to exist, or if both Bankers Trust Company and Chemical Bank shall
cease to exist, Barclays Bank PLC and National Westminster Bank PLC shall be
substituted for such banks) in New York City at approximately 11:00 a.m., New
York City time, on the first day of such period for loans in U.S. dollars to
prime banks
13
in the London interbank market for a period equal to the number of days in such
period and in an amount substantially equal to the amount of Distributable Cash
anticipated to be distributed during such period.
"Lien" shall mean any mortgage, deed of trust, security interest, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any Financing Lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction).
"Limitation Partner" shall mean, with respect to either the Preferred
------------------
Limited Partnership Interest or the Common Limited Partnership Interest, the
Owner Trustee or any of its designees or assignees that has been admitted to the
Partnership as a limited partner of the Partnership pursuant to subsection 10.1
hereof, and any other Person properly holding a Limited Partnership Interest
pursuant to this Agreement, and admitted to the Partnership as a limited partner
of the Partnership and shown as such on the books and records of the
Partnership, when acting in such capacity; provided, however, that after the
-------- -------
Flip Date, the term "Limited Partner" shall not include the Preferred Limited
Partner.
"Limited Partner Benefits" shall mean, with respect to each Limited
------------------------
Partnership Interest, the sum of the following, determined at the end of each
Quarterly Period: (i) the cumulative cash distributions with respect to such
Limited Partnership Interest made by the Partnership after the Initial Capital
Contribution Date, plus (ii) 38% of the net taxable losses of the Partnership
allocated (and not subsequently reallocated to the General Partner) for income
tax purposes with respect to such Limited Partnership Interest after the Initial
Capital Contribution Date through the end of such Quarterly Period, plus (iii)
income tax credits of the Partnership to the extent properly allocable (and not
subsequently disallowed) to such Limited Partnership Interest after the Initial
Capital Contribution Date through the end of such Quarterly Period, but only to
the extent that the Limited Partner holding such Limited Partnership Interest
actually realizes a current income tax benefit with respect to such credit (the
ability of such Limited Partner to currently utilize a tax credit shall be
determined by the independent accountants of such Limited Partner, who shall
certify such determination to the General Partner, minus (iv) 38% of the net
taxable income allocated with respect to such Limited Partnership Interest (or
realized with respect to a distribution on such Limited
14
Partnership Interest that is treated for federal income tax purposes as other
than a distribution under Code Section 731) after the Initial Capital
Contribution Date through the end of such Quarterly Period.
"Limited Partner's Return of and on Equity" shall mean, with respect to
-----------------------------------------
each Limited Partnership Interest separately, the aggregate Limited Partner
Benefits with respect to such Limited Partnership Interest that would be
required to provide a return of and on the aggregate Capital Contributions made
or to be made with respect to such Limited Partnership Interest at an annual
rate (calculated quarterly) equal to (a) in the case of the Preferred Limited
Partnership Interest, the Minimum Rate, and (b) in the case of the Common
Limited Partnership Interest, (X) the Minimum Rate (the "First Level Return of
---------------------
and on Equity"), (Y) the Minimum Rate plus 100 basis points (the "Second Level
------------- ------------
Return of and on Equity") or (Z) the Minimum Rate plus 200 basis points (the
-----------------------
"Third Level Return of and on Equity").
-----------------------------------
"Limited Partnership Interest" shall mean, as the context may require, the
----------------------------
Preferred Limited Partnership Interest or the Common Limited Partnership
Interest; provided, that, after the Flip Date, the term, "Limited Partnership
--------
Interest" shall not include the Preferred Limited Partnership Interest.
"Linden Owner Partnership" shall have the meaning ascribed thereto in the
------------------------
Preamble hereto.
"Management Fee" shall mean the management fee to be paid to the Managing
--------------
General Partner pursuant to subsection 7.4 hereof.
"Managing General Partner" shall mean Xxxxx Xxxxxx as the initial managing
------------------------
general partner of the Partnership or any substitute managing general partner
appointed pursuant to subsection 14.2 hereof and shown as such on the books and
records of the Partnership.
"Managing General Partner Group" shall have the meaning specified in
------------------------------
subsection 7.5 hereof.
"Minimum Rate" shall mean 6.338% per annum.
------------
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a) (3) of ERISA.
15
"Net Cash From Sales or Refinancing" shall mean the net cash proceeds from
----------------------------------
all sales and other dispositions (excluding dispositions in the ordinary course
of business or in the case of any involuntary conversion of assets having an
aggregate book value not exceeding $500,000, but including, without limitation,
(i) the proceeds of insurance received by the Partnership or the Managing
General Partner from any insurer pursuant to the insurance maintained under
subsection 7.2(f) hereof and subsection 6.5 of the General Partner Credit
Agreement and (ii) all awards and proceeds of a Taking with respect to the
Project) and all refinancing of Partnership property, less any portion thereof
used to establish reserves or to pay the cost of renewing, repairing, rebuilding
or otherwise replacing damaged or destroyed or lost property in respect of which
insurance proceeds or awards or proceeds of a Taking were received in accordance
with subsection 4.05(d) of the Security Deposit Agreement. "Net Cash From Sales
or Refinancing" shall include only principal payments with respect to any note
or other obligation received by the Partnership in connection with sales and
other dispositions (other than in the ordinary course of business or in the case
of any involuntary conversion of assets having an aggregate book value not
exceeding $500,000) of Partnership property.
"Nonrecourse Deductions" shall have the meaning set forth in Regulations
----------------------
Section 1.704-2(b) (1). The amount of Nonrecourse Deductions for a Partnership
fiscal year equals the net increase, if any, in the amount of Partnership
minimum gain during that fiscal year, determined according to the provisions of
Regulations Section 1.704-2(d).
"Operating Profits" and "Operating Losses" shall mean, for each monthly
----------------- ----------------
period, an amount equal to the Partnership's taxable income or loss for such
month, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a) (1) shall be included in taxable income or
loss), with the following adjustment:
(i) income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Operating Profits or
Operating Losses pursuant to this definition shall be added to such taxable
income or loss;
(ii) any expenditures of the Partnership described in Code Section
705(a) (2) (B) or treated as Code Section 705(a) (2) (B) expenditures
pursuant to Regulations Section 1.704-1(b) (2) (iv) (i), and not otherwise
taken into account in computing Operating Profits or Operating Losses
pursuant to this definition shall be subtracted from such taxable income or
loss; and
16
(iii) notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to subsections 5.4, 5.5, 5.6, 5.7,
5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 5.14 and 5.15 hereof shall not be taken
into account in computing Operating Profits or Operating Losses.
"Operating Budget" shall have the meaning specified in subsection 6.7(b).
----------------
"Operation and Maintenance Account" shall mean the Operation and
---------------------------------
Maintenance Account established pursuant to the Security Deposit Agreement.
"Operative Documents" shall mean collectively, this Agreement, the
-------------------
Capital Contribution Agreement, the Security Deposit Agreement, the Equity
Letters of Credit, the Reimbursement Agreement, the Recognition Agreements
and the Project Documents.
"Organizational Expenses" shall mean organizational expenses as defined
-----------------------
under Code Section 709.
"Partner" shall mean Xxxxx Xxxxxx and the Owner Trustee so long as they
-------
hold a General Partnership Interest or Limited Partnership Interest and any
other General Partner(s) or Limited Partner(s); collectively, the "Partners".
--------
"Partner Nonrecourse Deductions" shall have the meaning specified in
------------------------------
Regulations Section 1.704-2(i).
"Partnership" shall mean the limited partnership governed by this
-----------
Agreement formed under and pursuant to the Partnership Act and known as
"Cogen Technologies Linden Venture, L.P.", as it may from time to time be
constituted.
"Partnership Act" shall mean the Delaware Revised Uniform Limited
---------------
Partnership Act, 6 Del. Code (S) (S) 17-101, et seq., as it may be amended
---- ---- -- ----
from time to time, and any successor to said Partnership Act.
"Partnership Business" shall have the meaning specified in subsection
--------------------
2.2.
"Partnership Fuel Component" shall have the meaning specified in
--------------------------
subsection 6.7(b) (viii).
"PBGC" shall mean the Pension Benefit Guarantee Corporation.
----
"Permits" shall mean all material permits and licenses necessary for
-------
construction and operation of the Project, a list of which is attached hereto
as Schedule 3.
17
"Permitted Indebtedness" shall have the meaning specified in subsection
----------------------
7.3(a) (iv).
"Permitted Liens" shall mean (i) Liens created by the Collateral Security
---------------
Documents (as defined in the General Partner Credit Agreement); (ii) Liens in
favor of any Person (other than the General Partner, the Initial Limited
Partner or any Affiliate of any such Person) which arise in the ordinary
course of business of the Partnership (including, without limitation,
materialmen's, mechanics', workers', repairmen's and employees' Liens and
similar Liens which arise in connection with any tax, assessment,
governmental charge or levy) but not (unless otherwise permitted by this
Agreement) in connection with any Indebtedness or Guarantee Obligation and
which do not in the aggregate materially impair the use and value of the
Partnership's property or assets in the conduct of its business; provided,
--------
that if any such Lien arose in connection with any tax, assessment,
governmental charge or levy or any claim referred to in subsection 7.2(a) or
7.2(b) or any charge or claim of a mechanic or a materialman referred to in
subsection 7.2(1), the Managing General Partner shall be diligently
contesting the same in accordance with, and subject to, the provisions of
subsection 7.2(a), 7.2(b) or 7.2(1), as the case may be; and provided,
--------
further, that any such Lien arose out of transactions relating to the
-------
Project; (iii) Liens arising out of judgments or awards which are bonded or
with respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith and for the payment of which adequate cash reserves
shall have been provided; (iv) mineral rights, utility easements, any other
easements, and any covenants running with the land relating to the Site or
any similar deed restrictions, the existence and use of any of which do not
materially interfere with the use and enjoyment of the Facility or the Site;
(v) any exceptions to title which are contained in the title insurance policy
delivered pursuant to the Capital Contribution Agreement; (vi) the rights of
Exxon under the Site Lease Agreement; and (vii) Liens in favor of the Limited
Partner as contemplated by subsections 10.5 and 14.2(g) hereof.
"Person" shall mean an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" shall mean at a particular time, any employee benefit plan which
----
is covered by ERISA and in respect of which the Managing General Partner or a
Commonly controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined
in Section 3(5) of ERISA.
18
"Power Purchase Agreement" shall mean the Power Purchase Agreement, dated
------------------------
April 14, 1989, between Con Ed and CTI, as assigned to the Partnership, as
amended, supplemented, restated or otherwise modified from time to time.
"Preferred Limited Partner" shall mean the Limited Partner that is the
-------------------------
owner of the Preferred Limited Partnership Interest and is shown as such on
the books and records of the Partnership.
"Preferred Limited Partnership Interest" shall mean the limited partner
--------------------------------------
interest in the Partnership that has the rights and privileges granted to
such interest in this Agreement.
"Premium" shall mean, with respect to the Common and the Preferred
-------
Limited Partnership Interests, an amount equal to (i) the excess, if any, of
the Discounted Value over (ii) the Unamortized Investment. The Premium shall
in no event be less than zero.
"Profit Portion" shall mean, with respect to any month commencing with
--------------
the first calendar month after the Second Capital Contribution Date, the
portion of the Management Fee equal to the excess of (1) 1.5% of gross
revenues of the Project for such month over (ii) the Cost Portion for such
month.
"Project" shall mean the 614 megawatt combined cycle cogeneration
-------
facility constructed by the Partnership on the Site pursuant to the EPC
Contracts, and all real and personal property, transmission lines, easements,
leasehold interests, licenses, permits and contract rights now owned or
hereafter acquired by Xxxxx Xxxxxx or the Partnership in connection
therewith, other than the interest of any Partner hereunder.
"Project Documents" shall mean the collective reference to the Power
-----------------
Purchase Agreement, the Site Lease Agreement, the Steam Sale Agreement, the
Water Supply Commitment, the Gas Transportation and Swing Supply Agreement,
the Operation and Maintenance Agreement, the Easement Agreement and, so long
as any of the provisions thereof are in effect, the Turnkey Contract and the
Equipment Supply Contract.
"Prudent Utility Practice" shall mean, at a particular time, those
------------------------
practices, methods, acts and omissions applicable to the operation and
maintenance of the Facility as are in accordance with standards of prudence
applicable to the electric utility industry for cogeneration facilities
located in the Northeastern United States known at the time the decision in
question is made, which would have been expected to accomplish the desired
result at a reasonable cost consistent with reliability, safety and
expediency.
19
Prudent Utility Practice is not intended to be limited to the optimum
practice, method, act or omission, at the exclusion of all others, but rather
is a spectrum of possible practices, methods, acts and omissions which could
have been expected to accomplish the desired result at a reasonable cost
consistent with reliability, safety and expediency.
"PUC" shall mean the Board of Public Utilities of the State of New Jersey
---
or similar regulatory authority of any other jurisdiction.
"Public Utility Status" shall have the meaning specified in subsection
---------------------
10.5(a) hereof.
"Purchase Notice" shall mean an irrevocable written notice delivered by
---------------
the Managing General Partner or the General Partner to the Limited Partner
pursuant to subsection 11.1 or 14.2, evidencing the Managing General
Partner's or the General Partner's intent to exercise any purchase option
provided for therein.
"Quarterly Period" shall mean any three month period, commencing with the
----------------
Initial Capital Contribution Date.
"Regulations" shall mean the temporary, proposed and final regulations
-----------
under the Code and any successor provisions thereto.
"Reimbursement Agreement" shall mean the Letter of Credit and
-----------------------
Reimbursement Agreement, to be entered into by the Partnership and GECC on or
prior to the Second Capital Contribution Date, substantially in the form of
Exhibit D to the Capital Contribution Agreement, as amended, supplemented,
restated or otherwise modified from time to time.
"Relevant Environmental Law" shall mean, as to any Person, any law,
--------------------------
treaty, rule or regulation, or any determination of an arbitrator or a court
or other Governmental Authority, relating to the handling, treatment, storage
or disposal of Hazardous Materials, the occurrence or remediation of any
Environmental Discharge, environmental protection or any other environmental
matter, in each case applicable to or binding upon such Person or any of its
properties or to which such Person or any of its properties is subject, the
violation of which or series of related violations of which, or which
determination, creates a material likelihood that such Person will be subject
to penalties, fines or remediation costs in excess of $250,000 or to
injunctive or similar relief.
"Reorganization" shall mean, with respect to any Multiemployer Plan, the
--------------
condition that such Plan is in
20
reorganization within the meaning of such term as used in Section 4241 of
ERISA.
"Reportable Event" shall mean any of the events set forth in Section
----------------
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, 19, or .20 of PBGC
Reg. 2615.
"Requirement of Law" shall mean, as to any Person, (a) the Certificate of
------------------
Incorporation and By-Laws or partnership agreement or other Organizational or
governing documents of such Person, (b) any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority
(other than any Relevant Environmental Law), in each case applicable to or
binding upon such Person or any of its properties or to which such Person or
any of its properties is subject and the violation of which, or which
determination, could reasonably be expected to (i) have a material adverse
effect on the business, operations, properties, condition (financial or
otherwise) or prospects of such Person or (ii) materially adversely affect
the ability of such Person to perform its obligations under the Operative
Documents to which it is a party and (c) any Relevant Environmental Law.
"Responsible Officer" of a Person, shall mean the chief executive officer
-------------------
of such Person or of the general partner of such Person, or with respect to
financial matters, the chief financial officer of such Person or of the
general partner of such Person.
"Second Capital Contribution Date" shall have the meaning specified in
--------------------------------
the Capital Contribution Agreement.
"Securities Act" shall mean the Securities Act of 1933, or any similar
--------------
Federal statute, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, all as the same shall be in effect at the
time.
"Security Agent" shall mean Midlantic National Bank or any bank acting as
--------------
successor security agent under the Security Deposit Agreement.
"Security Deposit Agreement" shall mean the Security Deposit Agreement,
--------------------------
dated as of February 15, 1990, among the Partnership, the Agent and the
Security Agent, as the same may be amended, supplemented or otherwise
modified to the Second Capital Contribution Date, and as the same will be
amended and restated by the Amended and Restated Security Deposit Agreement,
to be entered into by the Partnership, the Limited Partner, the General
Partner, the lender under the General Partner Credit Agreement, the Escrow
Agent and the Security Agent on or prior to the Second Capital
21
Contribution Date, substantially in the form of Exhibit J to the Capital
Contribution Agreement as further amended, supplemented, restated or
otherwise modified from time to time.
"Single Employer Plan" shall mean any Plan which is covered by Title IV
--------------------
of ERISA, but which is not a Multiemployer Plan.
"Site" shall mean the land described in Schedule 4.
----
"Special Event" shall have the meaning specified in subsection 14.1.
-------------
"Stipulated Redemption Value" shall mean, at any time, with respect to
---------------------------
each Limited Partnership Interest separately, an amount which, together with
the Limited Partner Benefits received as of such time in respect of such
Limited Partnership Interest (taking into account any gain or loss recognized
by the Limited Partner on such sale), would equal (a) in the case of the
Preferred Limited Partnership Interest, the Preferred Limited Partner's
Return of and on Equity and (b) in the case of the Common Limited Partnership
Interest, the Common Limited Partner's Third Level Return of and on Equity.
"Subsidiary" shall mean, as to any Person, a corporation of which shares
----------
of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person, or a
limited partnership of which such Person or any of its Subsidiaries is a
general partner or a business trust in which such Person holds a majority
interest (comparable to that for a corporation as described above).
"Tax Indemnity Amount" shall mean, with respect to each of the Common
--------------------
Limited Partner and the Preferred Limited Partner, the sum of (i) the Tax
Loss Amount, plus (ii) from the date of the Tax Indemnity Event, the Implicit
Rate, compounded quarterly, times the Tax Loss Amount, plus (iii) the amount
of all income taxes payable by such Limited Partner as a result of the
allocation of income to such Limited Partner in connection with the
distribution required by subsection 4.6 with respect to the Tax Indemnity
Amount (which allocation will take into account all of the elements of the
Tax Indemnity Amount, including the calculation required pursuant to this
clause (iii)), minus (iv) distributions to such Limited Partner pursuant to
subsection 4.6 hereof.
22
"Tax Indemnity Event" shall mean (i) any act or omission of the General
-------------------
Partner not specifically required or permitted under this Agreement that
results in any loss of or delay in realization of or inability to claim the
full tax depreciation deductions with respect to the Project or the
Organizational Expenses with respect to the Partnership shown on Schedule 2
by the Limited Partner, (ii) any federal tax election made by the Partnership
that has an adverse impact on the Limited Partner (with respect to the tax
depreciation deductions with respect to the Project or the Organizational
Expenses with respect to the Partnership shown on Schedule 2) and with
respect to which election the General Partner either (x) fails to consult
with the Limited Partner or (y) fails to follow the request of the Limited
Partner with respect to such election, and (iii) any failure by the
Partnership to make a tax election specifically requested by the Limited
Partner, but only if the making of such tax election would not have an
adverse impact on the General Partner.
"Tax Loss Amount" shall mean, with respect to either the Common Limited
---------------
Partner or the Preferred Limited Partner, an amount equal to the present
value as of the date of the Tax Indemnity Event, using a discount rate equal
to the Implicit Rate, of the sum of (i) the aggregate net additional taxes
payable by such Limited Partner as a result of a Tax Indemnity Event (offset
by any net additional savings of such Limited Partner as a result of such Tax
Indemnity Event) from time to time computed on the basis of a 38% tax rate,
plus (ii) the amount of any net interest thereon, plus (iii) any penalties or
additions to tax payable as a result of a Tax Indemnity Event.
"Tentative Purchase Notice" shall mean a written notice delivered by the
-------------------------
Managing General Partner or the General Partner to the Limited Partner
pursuant to subsection 11.1 or 14.2, evidencing the Managing General
Partner's or the General Partner's interest in exercising any purchase option
provided for therein.
"Termination Expense (Benefit)" shall mean, in connection with (i) any
-----------------------------
purchase of any Limited Partnership Interest pursuant to Section 10.5(a) or
14.2(g), (ii) any sale or refinancing of the Facility, or (iii) any Special
Event, any net loss or expense (or any net income or gain) resulting from the
prepayment or termination of any fixed rate debt (including any funding of
the equity investments of the partners in the Linden Owner Partnership)
incurred to finance such Limited Partnership Interest and any net loss or
expense (or any net income or gain) resulting from the cancellation or
termination of any interest rate hedging arrangement entered into for the
purpose of fixing or limiting the interest rate on any floating rate debt
(including any funding of the equity investments of the partners in the
Linden Owner Partnership) incurred to
23
finance such Limited Partnership Interest. A net loss or expense shall be a
positive number and net income or gain shall be a negative number.
Termination Expense (Benefit) shall be calculated in accordance with the
provisions set forth in Schedule 9.
"Texas Eastern" shall mean the collective reference to Texas Eastern
-------------
Transmission Corporation, Houston Center Corporation and Texas Eastern
Cryogenics, Inc.
"Texas Eastern Letter Agreement" shall mean that certain letter dated
------------------------------
June 18, 1991 from Cogen Technologies, Inc. to Texas Eastern regarding the
possibility of pursuing the feasibility of transmitting electrical power from
Staten Island, New York to Linden, New Jersey.
"TMP" shall have the meaning specified in subsection 6.9.
---
"Treasury Yield" shall mean the yield to maturity implied by the Treasury
--------------
Constant Maturity Series yields reported (for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
date on which the General Partner shall purchase the Limited Partnership
Interests pursuant to Section 11.1 in Federal Reserve Statistical Release
H.15(519) (or any successor publications of the Federal Reserve Board)) for
actively traded U.S. Treasury Securities having a constant maturity equal to
the average remaining life of the Unamortized Investment as shown on Schedule
7 as of such date.
"Unamortized Investment" shall mean as of any date the excess of (i)
----------------------
$500,000,000 over (ii) the sum of (X) an amount equal to (a) $500,000,000
multiplied by (b) the sum of the cumulative Monthly Equity Return Components
shown on Schedule 7 as of such date plus (Y) the sum of the accreted values
of all previous distributions to the Limited Partner pursuant to Sections
4.3(b), (c) and (d) (calculated by compounding quarterly each distribution at
the pre-tax equivalent of the Minimum Rate from the date of distribution to
the date of calculation).
"Working Capital Fund" shall have the meaning specified in the General
--------------------
Partner Credit Agreement.
"Working Capital Proceeds" shall mean the proceeds from any loan made by
------------------------
the General Partner to the Partnership for working capital purposes from
amounts on deposit in the Working Capital Fund.
1.2 Other Definitions. The words "hereof" and "hereunder" and words of
-----------------
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection,
24
schedule and exhibit references are to this Agreement unless otherwise
specified.
ARTICLE II
FORMATION AND CONTINUATION OF PARTNERSHIP
-----------------------------------------
2.1 Formation of Partnership; Name. By the Original Partnership
------------------------------
Agreement, the General Partner and the Initial Limited Partner agreed to form
the Partnership pursuant to the Partnership Act. The Partnership was formed on
December 6, 1989 by the filing of the Certificate of Limited Partnership. The
name of the Partnership is "Cogen Technologies Linden Venture, L.P." The
business of the Partnership shall be conducted under such name or Cogen
Technologies Linden Venture, Limited Partnership.
2.2 Purpose; Business of the Partnership. The Partnership was formed for
------------------------------------
the purpose of constructing, owning, developing, operating, maintaining,
repairing and disposing of the Project or any part thereof; constructing,
installing, leasing or otherwise acquiring, maintaining, repairing and disposing
of any additional improvements to the Project of any kind necessary or desirable
in connection therewith and, by means thereof, producing and selling steam and
electricity; constructing and operating the Exxon System; and any other purpose
necessary, incidental or ancillary to any of the foregoing. The foregoing
purposes, as effectuated pursuant to the provisions of subsection 2.3, are
herein referred to as the "Partnership Business".
2.3 Authorizations. (a) The Partnership is hereby authorized to engage
--------------
in all activities and transactions and to do all things and to hold all
interests in real, personal and mixed property, contract rights and other
property, necessary, appropriate, proper, advisable or desirable for, or
incidental or convenient to, the Partnership Business, including, but not
limited to, the power to enter into, make and perform any agreement, contract,
commitment, arrangement or undertaking (including, without limitation, the other
Operative Documents), to acquire, hold, purchase, lease, dispose of, mortgage,
pledge, hypothecate or assign, and to exercise all rights, powers, privileges
and other incidents of ownership or possession with respect to, any property,
whether real, personal or mixed, and to incur Permitted Indebtedness and to
secure the payment of any such Permitted Indebtedness of the Partnership by any
Permitted Lien.
(b) In furtherance of the Partnership's objects and purposes, the
Partnership shall have any and all powers necessary, convenient or incidental to
or for the accomplishment of its objects and purposes, alone or with others,
including, without limitation, the following:
25
(i) to design, plan, finance, construct, own, develop, maintain,
operate, lease and dispose of the Facility for the generation and
sale of electricity and the production and sale of steam, and
engaging in any and all activities necessary or incidental to the
foregoing;
(ii) to negotiate and enter into, and make, execute, deliver and perform,
all contracts, agreements and other undertakings, as the same may be
amended, restated, supplemented or otherwise modified from time to
time, and to grant liens, security interests in and other
encumbrances on, in and against the Partnership's properties, all as
may be necessary, convenient or incidental to carry out its objects
and purposes, including, but not limited to, the following:
(1) construction loan agreements;
(2) notes, including, but not limited to, pre-construction notes and
construction notes;
(3) capital contribution agreements;
(4) borrower indemnity agreements;
(5) collateral security documents, including, but not limited to,
mortgages, security agreements, security deposit agreements,
assignments regarding contracts and consents to assignments
regarding contracts;
(6) power sale agreements;
(7) equipment supply agreements;
(8) additional contracts, including, but not limited to, site lease
agreements, steam sale agreements, water supply commitments, gas
transportation agreements, gas sourcing agreements, gas purchase
agreements, turnkey contracts, operation and maintenance
agreements, butane agreements and easement agreements;
(9) reimbursement agreements; and
(10) recognition agreements regarding contracts; and
(iii) to have letters of credit issued for its account and on its behalf.
26
2.4 Principal Office; Offices; Addresses. (a) The principal office and
------------------------------------
place of business of the Partnership shall be located at the offices of the
Managing General Partner at 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
and the registered office of the Partnership in the State of Delaware shall be
the Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx,
Xxxxxxxx 00000; subject to subsection 7.2(c), either office may be changed to
such other place as the Managing General Partner may from time to time
designate. The registered agent of the Partnership for service of process on the
Partnership at such address in Delaware is The Corporation Trust Company.
(b) The Managing General Partner may also maintain solely for the conduct
of the Partnership Business an office or offices at another location or
locations and in connection therewith rent or acquire office space, engage
personnel, whether part-time or full-time, and do such other acts as it deems
necessary or advisable in connection with the maintenance and administration of
any such office. Any costs and expenses expected to be incurred in connection
with any such office shall be set forth in the Operating Budget delivered and
approved by the Preferred Limited Partner pursuant to subsection 6.7(b).
(c) The name and business or residence address of each Partner are set
forth in Schedule 1 hereto, as the same may be amended from time to time.
2.5 Further Filings. If at any time necessary or advisable, the Managing
---------------
General Partner shall promptly (a) register the Partnership under any assumed,
trade or fictitious name under the Partnership Act, or similar law, if any, in
force and effect in the State of Delaware and (b) qualify the Partnership to do
business in any jurisdiction in which the conduct of its business or the
ownership or leasing of its assets requires it to be so qualified. The Managing
General Partner shall make all filings and do all other things reasonably
possible (including publication or periodic filings of any certificate) that may
or hereafter be required for the perfection and continued maintenance of the
Partnership as a limited partnership, or to protect the limited liability of the
Limited Partner as a limited partner, under the laws of the State of Delaware.
2.6 Term. The term of the Partnership commenced on the date of filing of
----
the Certificate of Limited Partnership in the Office of the Secretary of State
of the State of Delaware and shall continue until termination of the Partnership
in accordance with Article XIV hereof.
27
ARTICLE III
CAPITAL CONTRIBUTIONS
---------------------
3.1 Partners and Contributions. The General Partner has made a
--------------------------
contribution of $50 in cash to the capital of the Partnership. Subject to the
terms and conditions of the Capital Contribution Agreement, the initial capital
contribution of the Limited Partner specified in Section 2(a) (i) thereof shall
be made on the Initial Capital Contribution Date. Subject to the terms and
conditions of the Capital Contribution Agreement, the Limited Partner shall make
the additional capital contributions specified in Section 2(a) (ii) thereof (a)
in respect of the Common Limited Partnership Interest, on or prior to the Second
Capital Contribution Date and (b) in respect of the Preferred Limited
Partnership Interest, on the Second Capital Contribution Date. The General
Partner shall contribute to the Partnership on the Second Capital Contribution
Date its $25,000,000 account receivable from the Partnership, and thereafter
shall contribute to the Partnership an amount equal to the excess of (i) all
costs of constructing the Project (including those reflected in the Completion
Budget) over (ii) the sum of (I) the balance in the Revenue Account as of the
Second Capital Contribution Date, (II) TO the extent included as a cost of
constructing the project, the $25,000,000 account receivable of the General
Partner referred to above and (III) $500,000,000. The Gross Asset Values of the
licenses, permits, contracts and other intangible assets of the Partnership will
be increased, pursuant to clause (ii) (1) of the definition of Gross Asset
Value, at the time of each contribution by the Limited Partner, by an amount
equal to one-half of the aggregate Limited Partner contributions at such time,
and the Capital Account balance of the General Partner will be increased by a
corresponding amount pursuant to the proviso at the end of subsection 5.5
hereof. The Limited Partner shall have no rights as a Preferred Limited Partner
until it has acquired the Preferred Limited Partnership Interest on the Second
Capital Contribution Date.
3.2 Interest on Capital Contributions. No Partner shall be entitled to
---------------------------------
interest on its Capital Contributions.
3.3 Withdrawal of Initial Limited Partner. The Initial Limited Partner
-------------------------------------
has made a contribution of $50 in cash to the capital of the Partnership. The
greater of such capital contribution or the Initial Limited Partner's capital
account balance will be distributed to the Initial Limited Partner immediately
following the making of the contributions by the Limited Partner to the
Partnership pursuant to the second sentence of subsection 3.1 hereof and the
admission of.the Owner Trustee as a limited partner of the Partnership, at which
time the Managing General Partner and the Limited Partner hereby consent to the
Initial Limited Partner's withdrawal of its capital contribution and at which
time the Initial Limited Partner shall withdraw as a limited partner of the
Partnership. The Managing General Partner and the Limited Partner hereby waive
28
and release the Initial Limited Partner from any liability and from any right,
claim or action that they or the Partnership may have against the Initial
Limited Partner for such withdrawal or as a result of his status as a Partner of
the Partnership. The Initial Limited Partner is not entitled to receive any
other amount or payment upon or by reason of the withdrawal of the Initial
Limited Partner from the Partnership or by reason of the Initial Limited Partner
having been a limited partner of the Partnership.
ARTICLE IV
DISTRIBUTIONS
-------------
4.1 Distributable Cash. Beginning with the first month following the
------------------
Second Capital Contribution Date, the Managing General Partner shall distribute
Distributable Cash to the Partners no less frequently than monthly in the manner
provided in this Article IV.
4.2 Distributions Prior to the Second Capital Contribution Date.
-----------------------------------------------------------
Distributable Cash prior to the Second Capital Contribution Date (i) shall be
distributed to the Initial Limited Partner in accordance with the Original
Partnership Agreement as in effect prior to this Agreement and (ii) after all
distributions thereunder have been made to the Initial Limited Partner in
accordance with the terms thereof, shall be transferred from the Revenue Account
to the Completion Account for application in accordance with the Security
Deposit Agreement.
4.3 Distributions After the Second Capital Contribution Date and Prior
------------------------------------------------------------------
to the Flip Date. Except as provided in subsections 4.5, 4.6 and 14.4(c),
----------------
Distributable Cash for each month after the Second Capital Contribution Date and
prior to the Flip Date shall be distributed within 15 days after the end of such
month as follows:
(a) First, 98% to the Preferred Limited Partner, 1% to the Common Limited
Partner and 1% to the General Partner, until the Partners have received
pursuant to this subsection 4.3(a) an aggregate amount in such month equal
to the amount calculated with respect to such month in Schedules 5 and 7
hereto.
(b) Second, 99% to the General Partner and 1% to the Common Limited
Partner until the General Partner and the Common Limited Partner have
received pursuant to this subsection 4.3(b) an aggregate amount in such month
equal to 200% of the amount calculated with respect to such month in
Schedules 5 and 7 hereto; provided, however, that in each of the first 144
--------- -------
months after the Second Capital Contribution Date, the amount to be
distributed to the General Partner pursuant to this subsection 4.3(b) shall
be reduced by the
29
Profit Portion of the Management Fee with respect to such month (whether such
Profit Portion is paid or not), but the distributions to the Common Limited
Partner pursuant to this subsection 4.3(b) shall be made as though such
reduction had not occurred.
(c) Third, 9% to the Common Limited Partner, 1% to the Preferred Limited
Partner and 90% to the General Partner until the Common Limited Partner has
received an aggregate amount of Limited Partner Benefits with respect to the
Common Limited Partnership Interest equal to the First Level Return of and on
Equity.
(d) Fourth, 9% to the Preferred Limited Partner, 1% to the Common Limited
Partner and 90% to the General Partner.
4.4 Distributions Subsequent to the Flip Date. Except as provided in
-----------------------------------------
subsections 4.6 and 14.4(c), after the Flip Date, Distributable Cash shall be
distributed as follows:
(a) First, 30% to the Common Limited Partner and 70% to the General
Partner until the Common Limited Partner has received an aggregate amount of
Limited Partner Benefits with respect to the Common Limited Partnership
Interest equal to the First Level Return of and on Equity.
(b) Second, 20% to the Common Limited Partner and 80% to the General
Partner until the Common Limited Partner has received an aggregate amount of
Limited Partner Benefits with respect to the Common Limited Partnership
Interest equal to the Second Level Return of and on Equity.
(c) Third, 10% to the Common Limited Partner and 90% to the General
Partner until the Common Limited Partner has received an aggregate amount of
Limited Partner Benefits with respect to the Common Limited Partnership
Interest equal to the Third Level Return of and on Equity.
(d) Fourth, 1% to the Common Limited Partner and 99% to the General
Partner.
4.5 Arrears Account. In the event that the Arrears Account has a
---------------
positive balance at any time prior to the Flip Date, then notwithstanding
subsections 4.3(b), 4.3(c) and 4.3(d) hereof, Distributable Cash otherwise
distributable pursuant to subsection 4.3(b), 4.3(c) or 4.3(d), after application
of subsection 4.3(a), or amounts that would otherwise have been paid to the
General Partner as the Management Fee, shall instead be distributed 98% to the
Preferred Limited Partner, 1% to the Common Limited Partner and 1% to the
General Partner until the balance in the Arrears Account is zero.
4.6 Tax Indemnity. Notwithstanding anything else contained herein, if a
-------------
Tax Indemnity Event occurs, then an amount of Distributable Cash that would
otherwise have been distributed
30
to the General Partner under this Article IV, or amounts that would otherwise
have been paid to the General Partner as the Management Fee, for any month shall
instead be distributed to the Preferred Limited Partner or the Common Limited
Partner, as the case may be, until (i) the balance in the Tax Indemnity Account
equals zero or, at the election of the Managing General Partner, (ii) the
Preferred Limited Partner or the Common Limited Partner, as the case may be, has
received an amount of Distributable Cash in such period pursuant to this
subsection 4.6 equal to the amount of net additional taxes payable with respect
to such period plus the amount of all income taxes payable by such Limited
Partner as a result of the allocation of income to such Limited Partner in
connection with such distribution (which allocation will take into account all
of the elements of the Tax Indemnity Amount, including the calculation of income
taxes payable).
4.7 Net Cash From Sales or Refinancing. Except as provided in
----------------------------------
subsection 14.4(c), any Net Cash From Sales or Refinancing shall be distributed
as follows:
(a) First, to the Preferred Limited Partner in an amount sufficient
(taking into account the corresponding Gain or Loss allocated pursuant to
subsection 5.5 or 5.6) to provide the Preferred Limited Partner with its
Preferred Limited Partner's Return of and on Equity together with any
Termination Expense (Benefit) relating thereto.
(b) Second, to the General Partner until the General Partner has
received cumulative distributions pursuant to this subsection 4.7(b) equal
to 200% of the distributions received by the Preferred Limited Partner
pursuant to subsection 4.7(a).
(c) Third, 30% to the Common Limited Partner and 70% to the General
Partner, until the Common Limited Partner has received with respect to the
Common Limited Partnership Interest (taking into account the corresponding
Gain or Loss allocated pursuant to subsection 5.5 or 5.6) its First Level
Return of and on Equity together with any Termination Expense (Benefit), in
the case of the Common Limited Partner.
(d) Fourth, 20% to the Common Limited Partner and 80% to the General
Partner, until the Common Limited Partner has received with respect to the
Common Limited Partnership Interest (taking into account the corresponding
Gain or Loss allocated pursuant to subsection 5.5 or 5.6) its Second Level
Return of and on Equity together with any Termination Expense (Benefit), in
the case of the Common Limited Partner.
(e) Fifth, 10% to the Common Limited Partner and 90% to the General
Partner, until the Common Limited Partner has received with respect to the
Common Limited Partnership
31
Interest (taking into account the corresponding Gain and Loss allocated
pursuant to subsection 5.5 or 5.6) its Third Level Return of and on Equity
together with any Termination Expense (Benefit), in the case of the Common
Limited Partner.
(f) Sixth, 1% to the Common Limited Partner and 99% to the General
Partner.
4.8 Special Event. Notwithstanding anything else contained herein, if
-------------
a Special Event occurs and is continuing, Distributable Cash shall be
distributed in accordance with subsection 14.2.
4.9 Failure to Make Second Capital Contribution. If the conditions
-------------------------------------------
specified in Section 2(c) of the Capital Contribution Agreement are not
satisfied or waived and the Limited Partner does not make the additional capital
contributions specified in Section 2(a) (ii) of such Agreement on the Second
Capital Contribution Date, the Limited Partnership Interest held by the Limited
Partner after the Second Capital Contribution Date shall be converted into and
become an interest that is entitled to 1/30 (or such greater numerator over 30
if the Common Limited Partner has at such time already contributed more than
$1,000,000 of its $30,000,000 total capital contribution to the Partnership) of
the entitlements to Distributable Cash, items of taxable income, gain, loss and
deductions, and other entitlements of the Common Limited Partner under this
Agreement.
4.10 Debt Service Account Interest. Debt Service Account Interest
-----------------------------
shall be distributed monthly 100% to the General Partner in accordance with the
provisions of the Security Deposit Agreement.
ARTICLE V
ALLOCATION OF CERTAIN PROFITS AND LOSSES
----------------------------------------
FOR BOOK AND TAX PURPOSES
-------------------------
5.1 Intentionally Omitted.
5.2 Operating Profits. Operating Profits of the Partnership accuring
-----------------
after the Second Capital Contribution Date shall be allocated among the Partners
as follows:
(a) First, 98% to the Preferred Limited Partner, 1% to the Common
Limited Partner and 1% to the General Partner until the Preferred Limited
Partner has been allocated on a cumulative basis pursuant to this
subsection 5.2(a) an amount of Operating Profits equal to the aggregate
amount of Distributable Cash it has received over the term of the
Partnership pursuant to subsections 4.3(a) and 4.5 hereof; provided,
--------
however, that if any distribution in respect of
-------
32
the Preferred Limited Partnership Interest is treated for federal income
tax purposes as other than a partnership distribution under Code Section
731, no amount of Operating Profits shall be allocated to the Preferred
Limited Partner pursuant to this subsection with respect to such
distribution, but the Common Limited Partner and the General Partner will
nonetheless be allocated an amount of Operating Profits equal to the amount
they would have been allocated if this proviso had not been in effect.
(b) Second, to the extent Operating Losses have been allocated
pursuant to subsection 5.3(b) hereof, proportionately to the Preferred
Limited Partner and the Common Limited Partner to the extent of such
Operating Losses.
(c) Third, 100% to the Preferred Limited Partner or the Common
Limited Partner, as the case may be, until such Limited Partner has been
allocated an amount of Operating Profits pursuant to this subsection 5.2(c)
equal to the aggregate amount of Distributable Cash it has received over
the term of the Partnership pursuant to subsection 4.6.
(d) Fourth, 99% to the General Partner and 1% to the Common Limited
Partner until the General Partner has been allocated on a cumulative basis
pursuant to this subsection 5.2(d) an amount of Operating Profits equal to
the aggregate amount of Distributable Cash it has received over the term of
the Partnership pursuant to subsection 4.3(b) hereof; provided, however,
-------- -------
that if there is a reduction in the amount of Distributable Cash received
by the General Partner pursuant to subsection 4.3(b) by reason of the
proviso in such subsection, there shall be a corresponding reduction in the
allocation to the General Partner pursuant to this subsection 5.2(d), but
the allocation to the Common Limited Partner pursuant to this subsection
5.2(d) shall be made as though such reduction had not occurred.
(e) Fifth, 9% to the Common Limited Partner, 1% to the Preferred
Limited Partner and 90% to the General Partner until the Common Limited
Partner has been allocated on a cumulative basis pursuant to this
subsection 5.2(e) an amount of Operating Profits equal to the aggregate
amount of Distributable Cash it has received over the term of the
partnership pursuant to subsection 4.3(c); provided, however, that the
-------- -------
proviso in subsection 5.2(a) shall apply to this subsection 5.2(e) as well.
(f) Sixth, 9% to the preferred Limited Partner, 1% to the Common
Limited Partner and 90% to the General Partner until the Preferred Limited
Partner has been allocated on a cumulative basis pursuant to this
subsection 5.2(f) an amount of Operating Profits equal to the aggregate
amount of Distributable Cash it has received over the term of the
Partnership pursuant to subsection 4.3(d); provided,
--------
33
however, that the proviso in subsection 5.2(a) hereof shall apply to this
-------
subsection 5.2(f) as well.
(g) Seventh, 30% to the Common Limited Partner and 70% to the General
Partner until the Common Limited Partner has been allocated on a cumulative
basis pursuant to this subsection 5.2(g) an amount of Operating profits
equal to the aggregate amount of Distributable Cash it has received over
the term of the Partnership pursuant to subsection 4.4(a).
(h) Eighth, 20% to the Common Limited Partner and 80% to the General
Partner until the Common Limited Partner has been allocated on a cumulative
basis pursuant to this subsection 5.2(h) an amount of Operating Profits
equal to the aggregate amount of Distributable Cash it has received over
the term of the Partnership pursuant to subsection 4.4(b)
(i) Ninth, 10% to the Common Limited Partner and 90% to the General
Partner until the Common Limited Partner has been allocated on a cumulative
basis pursuant to this subsection 5.2(i) an amount of Operating Profits
equal to the aggregate amount of Distributable Cash it has received over
the term of the partnership pursuant to subsection 4.4(c).
(j) Tenth, to the extent the General Partner has received
Distributable Cash pursuant to subsections 4.3 and 4.4 in excess of the
amount of Operating Profits it has been allocated pursuant to this
subsection 5.2 ("Excess Cash"), 100% to the General Partner to the extent
------------
of such Excess Cash.
(k) Eleventh, 1% to the Common Limited Partner and 99% to the General
Partner;
provided, however, that with respect to the first taxable year to which
--------- -------
subsection 4.6 applies, the Common Limited Partner shall be allocated in the
aggregate an amount of Operating Profits no less than 10.01% of the total
Operating Profits with respect to such year; and provided further, that, with
-------- -------
respect to paragraphs (a) and (c) through (i) of this subsection 5.2, to the
extent that the Distributable Cash referred to in such paragraphs shall include
any proceeds from the sale of any assets, the Operating Profit allocation in
such subsection shall be reduced by an amount equal to the relevant Partners'
shares of the Gross Asset Values of such assets, as adjusted to date.
5.3 Operating Losses. Operating Losses of the Partnership accruing
----------------
after the Second Capital Contribution Date shall be allocated among the Partners
as follows:
(a) First, 100% to the General Partner until the Capital Account of
the General Partner equals zero.
34
(b) Second, pro rata between the Preferred Limited Partner and the
--- ----
Common Limited Partner (in proportion to their respective Capital Account
balances) until the Capital Accounts of the Preferred Limited Partner and
the Common Limited Partner equal zero.
(c) Third, 100% to the General Partner.
5.4 Depreciation. (a) Except as provided in subsection 5.4(b),
------------
Depreciation with respect to the tangible assets of the Project shall be
allocated as follows:
(i) First, 100% to the Common Limited Partner until the Capital
Account balance of the Common Limited Partner equals the remaining
amount of unamortized Organizational Expenses.
(ii) Second, 100% to the Preferred Limited Partner until the
Capital Account balance of the Preferred Limited Partner equals zero.
(iii) Third, 100% to the Common Limited Partner, to the extent of
the Nonrecourse Deductions or Partner Nonrecourse Deductions with
respect to the Project.
(iv) Fourth, 100% to the General Partner, to the extent that such
Depreciation does not constitute a Nonrecourse Deduction or Partner
Nonrecourse Deduction.
(b) All other Depreciation with respect to assets acquired subsequent
to the Second Capital Contribution Date shall be allocated in accordance with
Code Section 704(b) between the Partners based upon how the basis of the asset
was funded. For example, Depreciation with respect to an asset funded by a
contribution or a loan from a Partner shall be allocated to that Partner, and
Depreciation with respect to an asset funded from net income of the Partnership
shall be allocated between the Partners based upon their overall shares of the
net income of the Partnership for such period.
(c) Amortization with respect to the permits, contracts, licenses and
other intangible assets of the Partnership existing on the Second Capital
Contribution Date shall be allocated 100% to the General Partner.
(d) Notwithstanding paragraphs (a) and (c) of this subsection 5.4, if
the Gross Asset Value on the Second Capital Contribution Date (determined in
accordance with Schedule 2 hereto) of the tangible assets of the Project, or of
any of the permits, contracts, licenses and other intangible assets described in
paragraph (c), is attributable to either capital contributions of, or net income
allocated to, (i) in the case of the tangible assets of the Project, the General
Partner (determined after taking into account depreciation accrued prior to the
Second Capital Contribution Date), and (ii) in the case of
35
the intangible assets, the Common Limited Partner or the Preferred Limited
Partner, such Partner will be allocated an amount of the total Depreciation with
respect to such asset in each period based upon the ratio of (X) the portion of
the Gross Asset Value of such asset as of the Second Capital Contribution Date
attributable to its contributions or income described above to (Y) the total
Gross Asset Value of the asset as of the Second Capital Contribution Date, both
as adjusted from time to time by Depreciation deductions.
5.5 Gains. Upon the sale, transfer or other disposition of any
-----
property the proceeds from which are distributed pursuant to subsection 4.7
hereof, any Gain realized by the Partnership shall be allocated as follows:
(a) First, 100% to the Preferred Limited Partner until the Capital
Account balance of the Preferred Limited Partner, plus the Limited Partner
Benefits received by the Preferred Limited Partner with respect to the
Preferred Limited Partnership Interest to that point (taking into account
the Gain allocated pursuant to this subsection 5.5(a)), equal its Limited
Partner's Return of and on Equity.
(b) Second, 100% to the General Partner until the Capital Account
balance of the General Partner, as adjusted by any losses allocated to the
General Partner pursuant to subsection 5.6 from the disposition of other
assets in the same transaction, equals twice the Capital Account balance of
the Preferred Limited Partner (as determined pursuant to subsection 5.5
(a)).
(c) Third, 30% to the Common Limited Partner and 70% to the General
Partner until the Capital Account balance of the Common Limited Partner,
plus the Limited Partner Benefits received by the Common Limited Partner
with respect to the Common Limited Partnership Interest to that point
(taking into account the Gain allocated pursuant to this subsection
5.5(c)), equal its First Level Return of and on Equity.
(d) Fourth, 20% to the Common Limited Partner and 80% to the General
Partner until the Capital Account balance of the Common Limited Partner,
plus the Limited Partner Benefits received by the Common Limited Partner
with respect to the Common Limited Partnership Interest to that point
(taking into account the Gain allocated pursuant to this subsection
5.5(d)), equal its Second Level Return of and on Equity.
(e) Fifth, 10% to the Common Limited Partner and 90% to the General
Partner until the Capital Account balance of the Common Limited Partner,
plus the Limited Partner Benefits received by the Common Limited Partner
with respect to the Common Limited Partnership Interest to that point
36
(taking into account the Gain allocated pursuant to this subsection
5.5(e)), equal its Third Level Return of and on Equity;
(f) Sixth, 1% to the Common Limited Partner and 99% to the General
Partner;
provided, however, that for purposes of determining the Capital Account balances
of the Partners at each Capital Contribution Date any Gain from the sale of the
permits, contracts, licenses or other intangible assets of the Partnership at or
prior to the Second Capital Contribution shall be allocated 100% to the General
Partner.
5.6 Losses. Upon the sale, transfer or other disposition of any
------
property the proceeds from which are distributed pursuant to subsection 4.7
hereof, or on the abandonment or other disposition of any tangible or intangible
asset with respect to which no proceeds are realized at a loss in excess of
$30,000, any Loss realized by the Partnership shall be allocated as follows:
(a) First, 100% to the General Partner until the Capital Account of
the General Partner equals zero.
(b) Second, pro rata between the Preferred Limited Partner and the
Common Limited Partner (in proportion to their respective Capital Account
balances) until the Capital Accounts of the Preferred Limited Partner and
the Common Limited Partner equal zero.
(c) Third, 100% to the General Partner.
5.7 Qualified Income Offset. Notwithstanding anything herein to the
-----------------------
contrary, in the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in paragraphs (b) (2) (ii) (d) (4), (5)
or (6) of Regulations Section 1.704-1, there shall be specially allocated to
such Partner such items of Partnership income and gain, at such times and in
such amounts as will eliminate as quickly as possible that portion of its
Adjusted Capital Account Deficit caused or increased by such adjustments,
allocations or distributions.
5.8 Minimum Gain Chargeback. Notwithstanding any other provision in
-----------------------
this Article V, if there is a net decrease in Partnership minimum gain
(determined in accordance with Regulation Section 1.704-2(d)) or a net decrease
in Partner Nonrecourse Debt minimum gain (determined in accordance with
Regulation Section 1.704-2(i)) during any Partnership taxable year, each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) equal to such Partner's share of the net
decrease in Partnership minimum gain and Partner Nonrecourse Debt minimum gain.
Each Partner's share of such net decreases shall be determined in accordance
with Regulation Sections 1.704-2(g)
37
and 1.704-2(i). The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(f) and 1.704-2(i). This subsection 5.8 is
intended to comply with the minimum gain chargeback requirements in such
Regulation Sections and shall be interpreted consistently therewith.
5.9 Allocation of Organizational Expenses. Organizational Expenses
-------------------------------------
shall be allocated 100% to the Common Limited Partner until the Capital Account
balance of the Common Limited Partner equals zero.
5.10 Partner Nonrecourse Deductions. Notwithstanding subsection 5.4
------------------------------
hereof, Partner Nonrecourse Deductions attributable to otherwise nonrecourse
debt with respect to which a Partner (or a related person within the meaning of
Regulations Section 1.752-4(b)) is the creditor or otherwise bears the "economic
risk of loss" under Regulations Section 1.752-2 ("Partner Nonrecourse Debt")
shall be allocated to such Partner.
5.11 Curative Allocations. The allocations set forth in subsections
--------------------
5.7 and 5.8 hereof are intended to comply with certain requirements of
Regulations Section 1.704-1(b). Notwithstanding any other provisions of this
Article V (other than subsections 5.7 and 5.8), allocations that have taken
place pursuant to subsections 5.7 and 5.8 shall be taken into account in
allocating other Operating Profits, Operating Losses, Depreciation and other
items, so that, to the extent possible, the net amount of such other allocations
and the subsections 5.7 and 5.8 allocations to each Partner shall equal the net
amount that would have been allocated to each Partner if the subsections 5.7 and
5.8 allocations had not occurred.
5.12 Tax Allocations. Except as provided in subsection 5.13 hereof,
---------------
for income tax purposes each item of income, gain, loss and deduction shall be
allocated in the same manner as the corresponding book item is allocated for
Capital Account purposes.
5.13 Property Subject to 704(c) and 704(b). In the case of any
-------------------------------------
Partnership asset the Gross Asset Value of which differs from its adjusted tax
basis, income, gain, loss and deduction with respect to such asset shall, solely
for tax purposes, be allocated in accordance with the principles of Code
Sections 704(b) and 704(c) to take account of such difference. Thus, for
example, income tax depreciation with respect to the income tax basis of any
asset that is funded (either directly or through repayment of a Partnership
borrowing) by a Limited Partner capital contribution shall be allocated to that
Limited Partner by reason of the allocation in subsection 5.4(d) of Depreciation
to that Limited Partner.
5.14 Gross Income Allocation. (a) To the extent all or any portion of
-----------------------
any payment to the General Partner or an Affiliate of the General Partner in any
year (other than a distribution made pursuant to Article IV hereof) is treated
as a
38
non-deductible distribution to such Partner or Affiliate, the General Partner
will be allocated an amount of gross income in such period (or in the next
succeeding periods to the extent there is insufficient gross income in such
period) equal to the amount of the payment.
(b) To the extent the General Partner has been allocated Depreciation
with respect to the Project pursuant to clause (iv) of subsection 5.4(a), the
General Partner will be allocated an amount of gross income in such period (or
in the next succeeding periods to the extent there is insufficient gross income
in such period) equal to the amount of Depreciation so allocated.
Notwithstanding the above, Depreciation with respect to the tangible assets of
the Project that is allocated to the General Partner pursuant to subsection
5.4(d) hereof because the General Partner prior to the Second Capital
Contribution Date has made capital contributions to the Partnership or has been
allocated net income shall not be matched with an allocation of gross income
pursuant to this subsection 5.14(b).
5.15 Debt Service Account Interest. All interest and other income
-----------------------------
attributable to Debt Service Account Interest shall be allocated 100% to the
General Partner.
5.16 Limitations. Notwithstanding anything to the contrary in this
-----------
Article V, no allocation under this Article V shall be made to a Partner that
would cause such Partner to have, or that would increase, an Adjusted Capital
Account Deficit.
5.17 Ordering Rules. For purposes of Article V hereof, the following
--------------
ordering rules shall apply:
(a) First, all distributions of Distributable Cash under Article IV
shall be deemed to have been made.
(b) Next, Operating Profits and Operating Losses and items other than
Gain and Loss shall be allocated in accordance with Article V hereof.
(c) Finally, Gain or Loss from the sale or other disposition of
Partnership property shall be allocated in accordance with this Article V.
ARTICLE VI
BOOKS OF ACCOUNT, RECORDS, REPORTS AND TAX MATTERS
--------------------------------------------------
6.1 Books and Records. Proper and complete records and books of
-----------------
account for the Partnership shall be kept by the Managing General Partner in
which shall be appropriately entered all transactions and other matters relative
to the Partnership's business as are usually entered into records and books of
account maintained by partnerships engaged in businesses of like character.
Except as otherwise provided in this Agreement, all
39
decisions regarding accounting and tax matters shall be made by the Managing
General Partner in its sole discretion taking into account such advice from the
Partnership's professional tax and accounting advisors as the Managing General
Partner deems appropriate, having given due consideration to the advice and
recommendations of the Limited Partner, the Limited Partner's tax counsel and
other advisors. The books and records shall at all times be made available at
the principal office of the Partnership and shall be open to the reasonable
inspection and examination of any Partner or its duly authorized representatives
during normal business hours for any purpose reasonably related to the interest
of such Partner as a partner in the Partnership. The Partnership will be on the
accrual method for both tax and accounting purposes.
6.2 Information Kept by Managing General Partner. The Managing
--------------------------------------------
General Partner shall keep at the principal office of the Partnership all the
following:
(a) A current list of the full name and last known business or
residence address of each Partner set forth in alphabetical order together
with the Capital Contribution of each Partner;
(b) a copy of the original Certificate of Limited Partnership and all
certificates of amendment thereto and restatements thereof, together with
executed copies of any powers of attorney pursuant to which any such
certificate has been executed;
(c) copies of the Partnership's federal, state and local income tax
or information returns and reports, if any, for the six most recent taxable
years;
(d) copies of this Agreement and all amendments hereto and
restatements hereof;
(e) financial statements of the Partnership for the six most recent
fiscal years;
(f) the Partnership's books and records as they relate to the
internal affairs of the Partnership for at least the current and past three
fiscal years; and
(g) all other material information received by the Managing General
Partner from or with respect to the Partnership.
6.3 Fiscal Year. The fiscal year of the Partnership shall end on
-----------
December 31st of each year.
6.4 Partnership Funds. The funds (other than Working Capital
-----------------
Proceeds) of the Partnership shall be deposited in the relevant accounts
maintained by the Escrow Agent (or, prior to the Second Capital Contribution
Date, the Security Agent)
40
pursuant to the Security Deposit Agreement, and be invested in such interest-
bearing or non-interest-bearing investments as are specified therein. All
withdrawals from any such accounts shall be made in accordance with the terms of
the Security Deposit Agreement. The Working Capital Proceeds shall be deposited
in a separate bank account of the Partnership, be invested from time to time
only in such Cash Equivalents as may be determined by the Managing General
Partner and be used solely for the working capital purposes of the Partnership.
Any funds withdrawn from the Revenue Account (as defined in the Security Deposit
Agreement) pursuant to Section 4.01(a) of the Security Deposit Agreement shall
be deposited in a separate bank account of the Partnership, be invested from
time to time only in such Cash Equivalents as may be determined by the Managing
General Partner and be used solely for the payment of expenses set forth in the
Operating Budget. Partnership funds shall not be commingled with those of any
other Person.
6.5 Income Tax Elections/Return Preparation. (a) Prior to the Flip
---------------------------------------
Date, the Managing General Partner shall not make any material federal income
tax elections affecting the depreciation deductions with respect to the Project
or the Organizational Expenses with respect to the Partnership shown on Schedule
2, or extend the statute of limitations for assessment OF tax deficiencies,
unless it has received the prior written consent of the Limited Partner.
However, the sole remedy available to the Limited Partner for the failure of the
General Partner to obtain the consent of the Limited Partner with respect to an
election described above shall be the creation of a Tax Indemnity Event.
(b) All tax returns and reports of the Partnership shall be prepared
and timely filed under the direction of the Managing General Partner, and,
except as otherwise provided in this Agreement, all tax audits and litigation
with respect thereto shall be conducted under the direction of the Managing
General Partner.
(c) Prior to the Flip Date, the Managing General Partner covenants
and agrees that, as early as reasonably possible prior to its filing of the
Partnership's federal and state income tax returns, it will provide the Limited
Partner with a proposed pro forma of such Partnership returns showing the tax
positions which it intends to reflect in the Partnership's returns, and will
provide the Limited Partner with reasonable opportunity fully to consult with
and/or advise the Managing General Partner with respect to all positions
intended to be reflected.
6.6 Tax Accounting Matters. (a) The Partnership's Capital Accounts
----------------------
and its books and records related thereto shall be maintained in accordance with
the accounting methods used in preparing the Partnership's federal income tax
return notwithstanding the fact that the Partnership shall also maintain books
and records in accordance with GAAP.
41
(b) All items of income and deductions recognized during a month
shall be allocated as of the end of each month, based on the facts and
circumstances existing as of the end of that month.
6.7 Financial Statements. (a) The Managing General Partner shall
--------------------
furnish to each other Partner:
(i) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Partnership and the Managing General
Partner, (A) a copy of the balance sheet of each of the Partnership and the
Managing General Partner as at the end of such fiscal year and the related
statements of income and partners' capital and changes in partners' capital
and cash flow for such fiscal year, setting forth, after fiscal year 1991,
in each case in comparative form the figures for the previous year,
reported on, without a qualification or exception as to the scope of the
audit, by independent certified public accountants of nationally recognized
standing reasonably acceptable to the Preferred Limited Partner, and (B)
prior to the Flip Date, if the Partnership shall construct and operate the
Exxon System, such other financial statements showing the Project as a
separate component as may be reasonably requested by the Limited Partner;
and
(ii) prior to the Flip Date, as soon as available, but in any event
not later than 60 days after the end of each of the first three quarterly
periods of each fiscal year of the Partnership and the Managing General
Partner, the unaudited balance sheet of each of the Partnership and the
Managing General Partner as at the end of each such quarter and the related
unaudited statements of income and partners' capital and changes in
partners' capital and cash flow of the Partnership and the Managing General
Partner for such quarter and the portion of the fiscal year through such
date, setting forth, after fiscal year 1991, in each case in comparative
form the figures for the previous year, certified by a Responsible Officer
of the Managing General Partner (subject to normal year-end audit
adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).
(b) Certificates: Other Information. Prior to the Flip Date, the
-------------------------------
Managing General Partner shall furnish to each other Partner:
(i) concurrently with the delivery of the financial statements
referred to in subsection 6.7(a) (i), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in
42
making the examination necessary therefor no knowledge was obtained of any
Special Event or of any event which, with the passage of time or the giving
of notice or both, would constitute a Special Event, except as specified in
such certificate;
(ii) concurrently with the delivery of the financial statements
referred to in subsections 6.7(a) (i) and (ii), a certificate of a
Responsible Officer of the Managing General Partner stating that, to the
best of such officer's knowledge, the Managing General Partner during such
period has observed or performed all of its covenants and other agreements,
and satisfied every condition contained in this Agreement and the other
Operative Documents, to be observed, performed or satisfied by it, and that
such officer has obtained no knowledge of any Special Event or of any event
which, with the passage of time or the giving of notice or both, would
constitute a Special Event, except as specified in such certificate;
(iii) not later than 30 days prior to the end of each fiscal year of
the Partnership, a copy of the monthly operating budget (which includes
revenues (including, without limitation, amounts to be deposited in the
Operation and Maintenance Account) and expenses), the capital expenditures
budget and the general and administrative budget (collectively, the
"Operating Budget") for the next fiscal year of the Partnership, and a copy
-----------------
of the projections by the Managing General Partner of the Operating Budget
and cash flow of the Partnership for the next five succeeding fiscal years,
such Operating Budget to be approved by the Preferred Limited Partner (which
approval shall not be unreasonably withheld or delayed) and such Operating
Budget and projections to be accompanied by a certificate of a Responsible
Officer of the Managing General Partner to the effect that such Operating
Budget and projections have been prepared in good faith on a reasonable
basis and that such officer has no reason to believe they are incorrect or
misleading in any material respect;
(iv) promptly after becoming available, but in any event within 30
days after the end of each calendar month (except the last month of each
quarter), a report, certified by a Responsible Officer of the Managing
General Partner, setting forth the power production and the revenues of the
Project during such month and setting forth any extraordinary items incurred
in connection with the Project but not included in the Operating Budget
delivered pursuant to subsection 6.7(b) (iii), together with a comparison of
the projected power production and revenues of the Project for such month;
(v) promptly after becoming available, but in any event within 30
days after the end of each calendar quarter, a report, certified by a
Responsible Officer of the Managing
43
General Partner, setting forth the year-to-date revenues, operating
expenses, general and administrative expenses and capital expenditures of
the Partnership, together with a comparison of the Operating Budget for
such period, and a projection of revenues and expenses for the remainder of
the Partnership's fiscal year;
(vi) upon the Limited Partner's request, quarterly and annual funds
flow statements detailed to its reasonable satisfaction;
(vii) upon request by the Limited Partner, which request shall not be
made more frequently than once in any twelve-month period, a revised plan
for the procurement of natural gas for the Facility for the next four years
demonstrating to the reasonable satisfaction of the Preferred Limited
Partner how the Partnership will comply with the provisions of subsection
7.2(m);
(viii) not later than 30 days after the end of each Annual Period (as
defined in the Power Purchase Agreement), commencing with the first Annual
Period after the first anniversary of the Second Capital Contribution Date
and ending on the last day of the Annual Period occurring immediately prior
to the Flip Date, a report, certified by a Responsible Officer of the
Managing General Partner setting forth a comparison of (a) the sum of all
costs incurred in such Annual Period by the Partnership with respect to Fuel
acquired for use at the Facility, including without limitation, the Fuel
commodity, transportation, storage costs and any costs related thereto (the
"Partnership Fuel Component") and (b) the Fuel Component Ceiling (as defined
--------------------------
in the Power Purchase Agreement) for such Annual Period, together with any
supporting data or explanation of the methodology used which the Preferred
Limited Partner may reasonably request; and
(ix) promptly, such additional financial and other information as
the Limited Partner may from time to time reasonably request for a purpose
which is reasonably related to the interest of such Partner as a partner in
the Partnership.
6.8 Computations. The Managing General Partner may rely upon, and
------------
shall have no liability to any other Partner if it relies upon, the opinion of
Xxxxxx Xxxxxxxx & Co. or any other independent nationally recognized accountant
and/or attorneys retained by the Partnership from time to time and reasonably
acceptable to the Limited Partner with respect to all matters (including
disputes with respect thereto) relating to computations and determinations
required to be made under this Article VI or under Articles IV or V hereof.
44
6.9 Taxes and Tax Controversies. For the purposes of receiving
---------------------------
notices from the Internal Revenue Service (the "IRS") on behalf of the Limited
---
Partner, keeping each Partner informed of all administrative and judicial
proceedings relating to the adjustment of Partnership items at the Partnership
level, and for all other relevant purposes, the Managing General Partner shall
hereby be designated the Tax Matters Partner (the "TMP"), with all of the
---
rights, duties, powers, and obligations provided for in Sections 6221 through
6232, inclusive, of the Code; provided, however, that, with respect to all
-------- -------
taxable years beginning on or before the Flip Date, without the consent of the
Limited Partner (or, if there shall be more than one Limited Partner, a majority
in interest of such Limited Partners), the TMP will not:
(a) take any action to extend any statute of limitations with respect
to the tax returns of the Partnership;
(b) make any decision on behalf of the Partnership, which will be
binding upon the Limited Partner, to contest in judicial proceedings any
adverse IRS decision related to a Partnership return of income, including
the decision of whether to contest in Tax Court or in district court or the
Court of Claims; or
(c) file any return or statement of income with respect to the
Partnership or any Partner, or take any position with any taxing authority,
other than in accordance with the tax assumptions set forth in Schedule 2
hereof; provided, however, if the IRS challenges the treatment of any item
--------- -------
on the Partnership's tax return filed in accordance with the tax assumptions
set forth on Schedule 2 hereof, the TMP shall not be required to file future
Partnership tax returns in accordance with such assumption unless (i) such
issue is being contested by the Partnership and (ii) the TMP receives an
opinion of tax counsel acceptable to the TMP to the effect that there is
sufficient authority in support of such position that the filing of future
Partnership tax returns in accordance therewith will not subject the General
Partner (as TMP and as a Partner in the Partnership) to any penalty,
interest or addition to tax as a result thereof or the Limited Partner
agrees to indemnify the General Partner for any such penalty, interest or
addition to tax.
Additionally, the TMP covenants to notify the Limited Partner promptly as to the
beginning of any audit or administrative or judicial proceedings with respect to
Partnership tax matters and as to all material developments in such matters, to
provide the Limited Partner with copies of all reports, notices and
correspondence relating to such matters and, with respect to taxable years
beginning on or before or including the Flip Date, to consult with the Limited
Partner with respect to the conduct on behalf of the Partnership of any audit or
administrative or judicial proceedings in which the Partnership is a party, and
to convey to the IRS all procedural requests made by the Limited
45
Partner. In the event of any audit or administrative or judicial proceeding,
with respect to taxable years beginning on or before or including the Flip Date,
that involves an issue that may have a material adverse impact on the Limited
Partner, the Limited Partner may, at its option and at the expense of the
Partnership, assume control of all or any portion of such audit or proceeding.
6.10 Inspection; Reports to Regulatory Authorities. The Partners and
---------------------------------------------
their respective authorized representatives may inspect the Project and the
books and records of the Managing General Partner relating to the Project during
normal business hours for any purpose reasonably related to the interest of the
Partners as partners of the Partnership and make copies and extracts therefrom,
and may discuss the Partnership's affairs, finances and accounts with the
employees and accountants of the Managing General Partner and the Partnership
(and by this provision the Managing General Partner authorizes such accountants
to discuss with each of the Partners and their respective authorized
representatives the affairs, finances and accounts of the Partnership), all at
such times and as often as may be reasonably requested. The Managing General
Partner shall furnish each of the Partners statements accurate in all material
respects regarding the condition and state of repair of the Project, all at such
times and as often as may be reasonably requested. None of the Partners shall
have any duty to make any such inspection or inquiry or incur any liability or
obligation by reason of not making any such inspection or inquiry. To the extent
permitted by Applicable Law, the Managing General Partner shall prepare and file
in timely fashion or, where any Partner shall be required to file, on reasonable
notice, the Managing General Partner shall prepare and deliver to such Partner
within a reasonable time prior to the date for filing, any report with respect
to the Project that shall be required to be filed with any Governmental
Authority. Each of the Partners shall notify the Managing General Partner at
least 30 days prior to any filing deadline if any such notice, application or
document is necessary on its behalf and if the Managing General Partner would
not reasonably be aware of the necessity of such filing.
ARTICLE VII
MANAGEMENT
----------
7.1 Appointment; Powers of the Managing General Partner. (a) The
---------------------------------------------------
General Partner and the Limited Partner hereby appoint Xxxxx Xxxxxx as the
initial Managing General Partner. Xxxxx Xxxxxx shall serve as the Managing
General Partner until it shall cease to be a General Partner or the Managing
General Partner pursuant to subsection 14.2 or otherwise with the consent of the
Limited Partner.
(b) The Managing General Partner, acting as such and subject to
subsection 7.3 and to any other specific limitations contained in this
Agreement, shall have full and exclusive power
46
and discretion to manage the day-to-day business and affairs of the Partnership,
including the construction, equipping, management, control, operation,
maintenance and repair of the Project, and to engage in all activities and
transactions and all other acts and things that in its judgment are necessary,
appropriate, proper, advisable or desirable to effect, or incidental or
convenient to, the furtherance of the Partnership Business, including, but not
limited to, the power to:
(i) Accounting Records. Maintain the accounting books and records of
------------------
the Partnership, and have charge and supervision over and care and custody
of all moneys, securities, and disbursements of the Partnership;
(ii) Contracts. Negotiate the terms of and make, enter into, execute,
---------
deliver and perform any and all agreements, contracts, commitments,
arrangements and undertakings, as the same may be amended, restated,
supplemented or otherwise modified from time to time, all as may be
necessary, convenient or incidental to carry out the Partnership's objects
and purposes, including, but not limited to, the following:
(1) construction loan agreements;
(2) notes, including, but not limited to, preconstruction notes and
construction notes;
(3) capital contribution agreements;
(4) borrower indemnity agreements;
(5) collateral security documents, including, but not limited to,
mortgages, security agreements, security deposit agreements,
assignments regarding contracts and consents to assignments
regarding contracts;
(6) power sale agreements;
(7) equipment supply agreements;
(8) additional contracts, including, but not limited to, site lease
agreements, steam sale agreements, water supply commitments, gas
transportation agreements, gas sourcing agreements, gas purchase
agreements, turnkey contracts, operation and maintenance
agreements, butane agreements and easement agreements ;
(9) recognition agreements regarding contracts;
(10) reimbursement agreements;
47
(11) the granting, on behalf of the Partnership, of security
interests, liens, and other encumbrances on, in and against the
Partnership's properties; and
(12) causing the Partnership to have letters of credit issued for
the Partnership's account and on the Partnership's behalf.
(iii) Authorization. Grant special or limited authority to employees
-------------
and agents of the Partnership to make, execute, deliver and perform the
agreements described in paragraph (ii) of this subsection 7.1(b);
(iv) Investments. Invest and reinvest available funds of the
-----------
Partnership in Cash Equivalents in accordance with the terms of the
Security Deposit Agreement and subsection 6.4 hereof;
(v) Proceedings. Pursue or defend any claim, action, proceeding or
-----------
debt due to, owned by or asserted against the Partnership, by litigation or
otherwise; provided, however, that (1) the Managing General Partner shall
-------- -------
permit any Partner, at such Partner's sole option, to intervene and
participate in any arbitration proceeding under any Project Document and
(2) without the approval of the Preferred Limited Partner, the Managing
General Partner shall not initiate any lawsuit except to collect debts or
to enforce contractual obligations in the ordinary course of business or
unless the Managing General Partner reasonably determines that there exists
a threat of irreparable and immediate harm to the Project and the convening
of a meeting is not practicable. The Managing General Partner shall seek
ratification from the Preferred Limited Partner as soon as practicable
thereafter;
(vi) Accounts. Open, maintain and close depositories and bank
--------
accounts for the deposit and withdrawal of money and give signatory powers
to designated Persons in accordance with the terms of the Security Deposit
Agreement and subsection 6.4 hereof;
(vii) Advisors. Select, retain, direct, consult and discharge
--------
attorneys, accountants, engineers, financial advisors, consultants and
other experts, agents and advisors for the Partnership and determine their
compensation and the terms of their engagement on behalf of the Partnership
in accordance with the Operating Budget; and
(viii) Reports. Prepare and file any reports, returns, requests,
-------
applications or other filings relating to taxes, legal requirements or
governmental regulations pertaining to the Partnership or the business or
activities of the Partnership, and act as TMP.
48
7.2 Certain Management Duties and Responsibilities of the Managing
--------------------------------------------------------------
General Partner. Prior to the Flip Date (except with respect to paragraphs (e)
---------------
and (h) of this subsection 7.2), the Managing General Partner shall do the
following:
(a) Payment of Obligations. To the extent of available Partnership
----------------------
funds (including, without limitation, Working Capital Proceeds), pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all the Partnership's obligations and
liabilities of whatever nature, except when the amount or validity thereof
is currently being diligently contested in good faith by appropriate
proceedings timely instituted, cash reserves in conformity with GAAP with
respect thereto have been provided on the books of the Managing General
Partner or the Partnership, as the case may be, and the Partnership or the
Managing General Partner, as the case may be, is complying with the other
relevant provisions of paragraphs (b) and (1) of this subsection.
(b) Taxes: Charges: Laws. (i) To the extent of available Partnership
--------------------
funds (including, without limitation, Working Capital Proceeds), promptly
cause the Partnership to pay all applicable taxes except to the extent that
(1) such taxes are being diligently contested in good faith, by appropriate
proceedings timely instituted, (2) a bond has been posted and a cash
reserve in conformity with GAAP has been established in an amount at least
equal to such taxes and any interest and penalty that may be payable
thereon, (3) during the period of such contest the enforcement of any
contested item is effectively stayed and (4) such contest does not involve
any substantial danger of the sale, forfeiture or loss of any part of the
Project, title thereto or any interest therein and does not interfere with
the operation of the Facility; and (ii) comply and cause the Partnership to
comply with all Requirements of Law.
(c) Chief Place of Business. Maintain its chief place of business at
-----------------------
0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxx; not permit the Partnership to keep any
place of business outside of the States of New Jersey, New York and Texas;
not permit the Partnership to keep any assets outside of the States of New
Jersey, New York and Texas; not change its name; and not do business under
any name other than Cogen Technologies Linden, Ltd. (or Cogen Technologies
Linden, Limited Partnership), without, in each case, the prior written
consent of each of the Partners, which consent shall not be unreasonably
withheld.
(d) Performance of Obligations; Enforcement of Rights. Fully and
-------------------------------------------------
faithfully carry out all of its obligations, and cause the Partnership to
fully and faithfully carry out all of the Partnership's obligations, from
time to time under or in respect of the Basic Documents and the Operative
Documents, except to the extent that the failure to comply
49
therewith could not reasonably be expected to have a material adverse
effect on the business, properties, operations, condition (financial or
otherwise) or prospects of the Managing General Partner or the Partnership,
as the case may be, and, without limiting the generality of the foregoing,
to the extent of available Partnership funds (including, without
limitation, Working Capital Proceeds), pay all amounts payable by the
Partnership thereunder. The Managing General Partner will use its best
efforts to take any and all such action as may be necessary to enforce its
and the Partnership's rights and to collect any and all sums due it or the
Partnership under the Project Documents and will use its best efforts to
obtain all necessary Permits and other approvals of Governmental
Authorities to keep such Project Documents in full force and effect.
Without limiting the generality of the foregoing, it will:
(i) do or cause to be done all things reasonably necessary to
preserve and keep unimpaired in all material respects its and the
Partnership's rights and those of its assignees under the Project
Documents and to prevent any default under any thereof or any
termination, surrender, cancellation, forfeiture or impairment in any
material respect of any thereof, including, without limitation, all
things necessary to defend any appeal of the FERC Order; and
(ii) not receive or collect any payments under the Project
Documents in advance of the time when the same become due and payable
thereunder unless such money is held by the Security Agent or the
Escrow Agent pursuant to the Security Deposit Agreement until due and
payable.
(e) Maintenance of Existence. Preserve, renew and keep in full force
------------------------
and effect its and the Partnership's existence and to the extent of
available Partnership funds (including, without limitation, Working Capital
Proceeds), take all reasonable action to maintain all rights, privileges
and franchises necessary or desirable in the normal conduct of the
Partnership business and its business on behalf of the Partnership; comply
and to the extent of available Partnership funds (including, without
limitation, Working Capital Proceeds), cause the Partnership to comply with
all Requirements of Law and with all Contractual Obligations except to the
extent that the failure to comply with any such Contractual Obligation
could not reasonably be expected to have a material adverse effect on the
business, operations, financial or other condition or prospects of the
Managing General Partner, the Project or the Partnership or on the ability
of the Managing General Partner or the Partnership to perform its
obligations hereunder, under the other Operative Documents or under the
Basic Documents; and not merge or consolidate with any other Person nor
sell, convey or otherwise dispose of any part of its assets to any
50
Person except as permitted by the Basic Documents and the Operative
Documents.
(f) Maintenance of Property; Insurance. Keep all of the Partnership's
----------------------------------
material property useful and necessary in its business in good working
order and condition except for normal wear and tear; to the extent of
available Partnership funds (including, without limitation, Working Capital
Proceeds), maintain insurance on all the property of the Partnership in
accordance with the provisions of Schedule 8; comply and cause the
Partnership to comply in all material respects with all warranties,
covenants and agreements made, given or undertaken by it in favor of
insurers in connection with such insurance policies; and furnish to the
Limited Partner, upon written request, full information as to the insurance
carried for any purpose reasonably related to the interest of such Partner
as a partner in the Partnership.
(g) Further Assurances. Promptly and duly execute and deliver to each
------------------
Partner such documents and assurances to take such further action as any
Partner may from time to time reasonably request in order to carry out more
effectively the intent and purpose of the Operative Documents and the Basic
Documents and to establish, protect and perfect the right and remedies
created or intended to be created in favor of each Partner.
(h) Governmental Regulation. (i) Take all actions as may from time to
-----------------------
time be reasonably necessary so that none of the Partners, their respective
Affiliates or the Partnership will, as a result of the construction,
ownership or operation of the Project, the supply of fuel or water thereto
or the sale of steam or electricity therefrom or the entering into or
performance of any Operative Document or Basic Document or any transaction
contemplated hereby or thereby, become subject to the jurisdiction of any
federal, state or local Governmental Authority or regulatory commission or
group to whose jurisdiction the same would not otherwise be subject
(including, without limitation, the Securities and Exchange Commission, FERC
and any PUC) or be deemed to be, or be subject to regulation as, a public
utility, an electric utility, an electric company or a public utility
holding company under any Applicable Law (including, without limitation, the
Public Utility Holding Company Act of 1935, as amended, the Federal Power
Act and the laws under which any PUC is empowered to act) other than as an
operator of a "qualifying cogeneration facility" under PURPA, except where
(x) the effect of such determination would result only in the imposition of
reporting or safety requirements which, in the reasonable opinion of the
Limited Partner, are non-burdensome in nature and (y) in the event that
steam from the Project is supplied, directly or indirectly, to Persons other
than Exxon under the Steam Supply Agreement or otherwise, the Partnership
has obtained a declaratory order or other official assurance, in each
51
case in form and substance reasonably satisfactory to the Limited Partner,
from the New Jersey Board of Public Utility Commissioners to the effect
that such sales will not result in any Partner, Affiliate thereof or the
Partnership being deemed to be, or subject to regulation as, a "public
utility" under any Applicable Law (other than regulation of the nature
described in clause (x) above) and (ii) promptly and duly prepare and, if
necessary, execute and file, and prepare for execution and filing by any
Partner, any of its Affiliates or the Partnership, such notices,
applications and other documents as shall be necessary so that the
construction, ownership or operation of the Project, the supply of fuel and
water thereto and the sale of steam and electricity therefrom and the
entering into and performance of any Operative Document shall not subject
any such Partner, its Affiliates or the Partnership to any such regulation.
(i) Compliance with FERC Order, etc. At all times cause the
-------------------------------
Partnership to comply in all material respects with the terms and
conditions of the FERC Order and of each other license required for the
ownership or operation of the Project; not amend, modify, terminate,
transfer, pledge or otherwise dispose of, or forfeit, surrender, permit or
consent to the amendment, modification, termination, transfer, pledge,
other disposition, forfeiture, or surrender of, any such license; or take
any other action under any such license having a material adverse effect on
any Partner; provided, however, that the Managing General Partner shall
--------- -------
have the power to amend or modify any such license (other than the FERC
Order or any other order or license affecting the exemption of the Project
from regulation as a utility), (x) after providing the Limited Partner with
30 days' advance written notice of the proposed amendment or modification
and all information reasonably necessary to analyze the consequences
thereof (except, if the Managing General Partner reasonably determines that
there is an emergency requiring immediate action and the giving of such
notice is not practicable, the Managing General Partner shall give the
Limited Partner such notice not later than the close of business on the
Business Day immediately following the date of commencement of such
emergency), and (y) so long as such amendment or modification could not
reasonably be expected to have a material adverse effect on the business,
operations, property or financial or other condition or prospects of the
Partnership, the Managing General Partner or the Project, the projected
availability of Distributable Cash in excess of the distributions required
to be made to the Preferred Limited Partner and the Common Limited Partner
pursuant to subsection 4.3(a), or on the ability of the Managing General
Partner or the Partnership to perform its obligations under this Agreement
or any other Operative Document.
52
(j) Notices. Promptly (in the case of paragraphs (i) (y), (ii), (iv),
-------
(v), (vii), (ix), (x) and (xii)) and within five days (in the case of
paragraphs (i) (x), (iii), (vi), (viii) and (xi)) give notice to each Partner:
(i) of the occurrence of (x) any Special Event or (y) any
event which, with the passage of time or the giving of notice or both,
would constitute a Special Event;
(ii) of any default or event of default under any
Indebtedness, Guarantee Obligation or other Contractual Obligation of
the Managing General Partner or the Partnership, that, if not cured,
could have a material adverse effect on the business, operations,
property or financial or other condition or prospects of the
Partnership, the Managing General Partner or the Project, on the
projected availability of Distributable Cash in excess of the
distributions required to be made to the Preferred Limited Partner and
the Common Limited Partner pursuant to subsection 4.3(a) or on the
ability of the Managing General Partner or the Partnership to perform
its obligations under this Agreement or under any other Operative
Document;
(iii) of any litigation or proceeding affecting the
Partnership, the Managing General Partner or the Project in which the
amount involved is $2,000,000 or more and not covered by insurance or
in which injunctive or similar relief is sought;
(iv) of the receipt by the Partnership or the Managing General
Partner of any Environmental Notice or of any notice of any event that
creates a material likelihood of the occurrence of an Adverse
Environmental Event;
(v) of the following events, as soon as possible and in any
event within 30 days after the Managing General Partner knows or has
reason to know thereof: (x) the occurrence or expected occurrence of
any Reportable Event with respect to any Plan, or any withdrawal from,
or the termination, Reorganization or Insolvency of any Multiemployer
Plan, or (y) the institution of proceedings or the taking of any other
action by the PBGC or the Partnership or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan;
(vi) of the receipt by the Managing General Partner or the
Partnership of any material notice, demand or declaration from any
other party to any of the Project Documents relating to any default or
event
53
of default thereunder, the termination thereof or the renewal or
nonrenewal thereof;
(vii) of any request by a party to a Project Document for an
arbitration proceeding under and pursuant to the provisions of such
Project Document;
(viii) of the institution by FERC or any other Governmental
Authority of any proceeding to revoke or modify the FERC Order or any
other license required for the ownership or operation of the Project;
(ix) of the receipt by the Managing General Partner or the
Partnership of any notice or declaration by any Governmental Authority
which relates to, or could result in, Public Utility Status with
respect to the Partnership, the Managing General Partner, the Limited
Partner or any of their respective Affiliates;
(x) of any change which could reasonably be expected to have
a material adverse effect on the business, operations, financial or
other condition or prospects of the Partnership, the Managing General
Partner or the Project;
(xi) of any lien, other than a Permitted Lien, on the property
of the Partnership or the Managing General Partner; and
(xii) of any request made by Texas Eastern or any of its
Subsidiaries or Affiliates to pursue the feasibility and economic
viability of transmitting electrical power as described in the Texas
Eastern Letter Agreement and to provide each Partner with copies of
the results of any feasibility or other studies performed in
connection therewith.
Each notice pursuant to this paragraph (i) shall be accompanied by a
statement of the Responsible Officer of the Managing General Partner
setting forth details of the occurrence referred to therein and stating
what action the Managing General Partner proposes to take with respect
thereto.
(k) Operation and Maintenance. To the extent of available Partnership
-------------------------
funds (including, without limitation, Working Capital Proceeds), maintain
the Project in such condition that the Facility will have the capacity and
functional ability to perform, on a continuing basis (ordinary wear and
tear excepted), in normal commercial operation, the functions and
substantially all the ratings for which it was specifically designed in
accordance with the Plans and Specifications; operate, service, maintain
and repair all necessary or useful components thereof so that
54
the condition and operating efficiency thereof will be maintained and
preserved (ordinary wear and tear excepted) in all material respects in
accordance with (i) Prudent Utility Practice and good commercial practice
for items of a similar size and nature, (ii) such operating standards as
shall be required to enforce any material warranty claims against dealers,
manufacturers, vendors, contractors and subcontractors and (iii) the terms
and conditions of all insurance policies maintained by the Partnership or
the Managing General Partner in effect at any time with respect thereto;
and develop and maintain in accordance with Prudent Utility Practice, the
spare parts inventory specified in Schedule 6 hereto for the steam and gas
turbines, the heat recovery steam generator, the boiler feed pumps, the
step up transformers, the switchgear and the catalysts for the Project.
(l) Liens. To the extent of available Partnership funds (including,
-----
without limitation, Working Capital Proceeds), protect and defend the
Partnership's interest in the Project against any Lien for the performance
of work or the supply of materials filed against the Project, and remove
any such Lien, except to the extent that (i) the claim giving rise to such
Lien is being diligently contested in good faith, by appropriate
proceedings timely instituted, (ii) the Partnership has posted a bond and
established a cash reserve in an amount at least equal to such claim on the
books of the Partnership, (iii) during the period of such contest the
enforcement of any contested item is effectively stayed and (iv) such
contest does not involve any substantial danger of the sale, forfeiture or
loss of any part of the Project, title thereto or any interest therein and
does not interfere with the operation of the Facility.
(m) Gas Supply Arrangements. (i) Use and cause the Partnership to use
-----------------------
reasonable efforts to pursue a gas procurement policy which (x) takes into
consideration the gas purchasing policies of Con Ed so that on a long-term
basis the risk that the Project's weighted average cost of gas will exceed
the weighted average cost of gas of Con Ed is minimized and (y) provides
for reasonable diversity in the sources of supply of natural gas to the
Project; and prior to the execution of any Gas Purchase Agreement that has
a term of two years or more, use and cause the Partnership to use
reasonable efforts to obtain verification by an independent engineer of the
natural gas reserves of any supplier with whom the Managing General Partner
or the Partnership proposes to enter into a Gas Purchase Agreement (or any
group of Gas Purchase Agreements from the same or related suppliers)
representing more than 5% of the projected annual gas requirements of the
Facility; provided, however, that neither the Managing General Partner nor
--------- -------
the Partnership need obtain independent verification of the natural gas
reserves of any supplier which has an investment
55
grade rating and is a party to a Gas Purchase Agreement which does not
contain any limitation on recourse to such supplier other than limitations
on consequential damages and provisions for liquidated damages.
(ii) In connection with the obligation set forth in subsection (i)
(x) above, at the end of each Annual Period (as defined in the Power
Purchase Agreement), (x) review the gas procurement policy pursued during
such Annual Period to ascertain if such policy tracked the gas procurement
policy of Con Ed and (y) review the gas procurement policy for the
succeeding Annual Period to ascertain what adjustments, if any, will be
necessary to cause the Partnership and the Managing General Partner to
comply with the obligation set forth in subsection (i) (x) above. A
summary of the results of such review and proposed adjustments, if any,
shall be provided to the Preferred Limited Partner in partial satisfaction
of subsection (i) (x) above, together with any supporting data or
explanation of the methodology used which the Preferred Limited Partner may
reasonably request.
(n) Gas Purchase Plan. If the excess of the Partnership Fuel
-----------------
Component for any Annual Period (as defined in the Power Sale Agreement),
commencing with the second Annual Period to end after the Second Capital
Contribution Date, over the Fuel Component Ceiling (as defined in the Power
Purchase Agreement) for such Annual Period is equal to or greater than (x)
during the period from and including the date which is two Annual Periods
after the Second Capital Contribution Date to but excluding the date which
is six Annual Periods after the Second Capital Contribution Date, 8% of
Distributable Cash for such period, (y) during the period from and
including the date which is six Annual Periods after the Second Capital
Contribution Date to but excluding the date which is twelve Annual Periods
after the Second Capital Contribution Date, 10% of Distributable Cash for
such period or (z) on and after the date which is twelve Annual Periods
after the Second Capital Contribution Date, 12% of Distributable Cash for
such period, submit and cause the Partnership to submit a gas purchase plan
to the Preferred Limited Partner for its approval (such approval not to be
unreasonably withheld) not later than 30 days after the end of such Annual
Period.
7.3 Restrictions on Powers of the Managing General Partner. (a) The
------------------------------------------------------
Managing General Partner shall not do any of the following unless it shall have
the prior written approval of the Preferred Limited Partner and the Common
Limited Partner (unless otherwise provided herein):
(i) Certain Contracts. Prior to the Flip Date, enter, or permit the
-----------------
Partnership to enter, into any agreement or commitment specified in
subsection 8.19 or 8.20 of the Construction Loan Agreement; or appoint, or
permit, the Partnership to appoint, any operator of the Facility other
56
than the operator in exsistence on the Initial Capital Contribution Date;
provided, that the Limited Partner shall not unreasonably withhold its
--------
consent to the appointment of any operator which is financially capable of
performing its obligations as the operator of the Facility and has the
personnel, experience, equipment and other resources reasonably required to
perform its obligations as the operator of the Facility;
(ii) Contracts with Affiliates. Except as permitted by the General
-------------------------
Partner Credit Agreement, approve the terms of any agreement, contract,
instrument or other transaction between the Partnership and any Partner, or
between the Managing General Partner or the Partnership and any Affiliate,
in each case on terms more favorable to such Partner or such Affiliate than
would have been obtainable in an arm's-length dealing;
(iii) Sale of Assets. Authorize or permit any sale, lease, exchange,
--------------
transfer or other disposition of the Project or any other assets of the
Partnership, in each case with a value in excess of $1,000,000;
(iv) Indebtedness. Prior to the Flip Date, authorize the incurrence,
------------
assumption or guaranty by the Partnership of any Indebtedness, except the
Indebtedness in respect of the Reimbursement Agreement, Indebtedness in
respect of loans from the Managing General Partner pursuant to the General
Partner Credit Agreement for working capital purposes not in excess of
$10,000,000 at any time, Indebtedness contemplated by subsections 10.5 and
14.2 (g) hereof, Indebtedness under the Construction Loan Agreement and any
other Indebtedness which arises out of an emergency requiring immediate
action or is contained in a budget previously approved by the Preferred
Limited Partner Cany such Indebtedness permitted hereunder being "Permitted
---------
Indebtedness")
------------
(v) No Other Business. Engage prior to the Flip Date, or cause the
-----------------
Partnership to engage at any time, in any activity other than the
activities contemplated to be engaged in by it under the Operative
Documents, the Basic Documents or the General Partner Credit Agreement or
enter into, or permit the Partnership to enter into, any contract or
agreement other than as explicitly provided for herein, in the other
Operative Documents or in the General Partner Credit Agreement;
(vi) Liens. Create or otherwise allow any Lien to be on or otherwise
-----
to affect any property included in, the Project, except Permitted Liens;
(vii) No Amendments or Assignments. Except for change orders to or
----------------------------
final settlement of any EPC Contract and for which there will be no
recourse against the Project or the Partners and which do not affect in any
material respect the
57
operating capacity, performances, cost efficiency, utility, remaining
economic useful life, reliability, value or residual value of the
Project, amend in any material respect, modify in any material respect,
waive compliance with any material provision of, terminate, assign any
rights the Partnership may have under, consent to or permit the
assignment by any other Person of any right such Person may have under,
give consents or exercise rights under or agree to any such amendment,
modification, termination, consent or waiver of compliance with any
material provision of, or any such assignment or exercise of any rights
under, any project Document without the prior written consent of each of
the Partners. Each of the Partners shall respond to any request for its
consent under this paragraph (vii) within 30 days after receipt of all
information necessary to analyze the consequences thereof (or within such
shorter period as may be reasonably requested by the Managing General
Partner if the Managing General Partner reasonably determines that there
is an emergency requiring immediate action) and shall not unreasonably
withhold its consent to any such amendment, modification, waiver,
termination, assignment, consent, exercise or agreement which could not
have a material adverse effect on the business, operations, properties,
financial or other condition or prospects of the Partnership or the
Project or could not materially adversely affect the projected
availability of Distributable Cash in excess of the distributions
required to be made to the Preferred Limited Partner and the Common
Limited Partner pursuant to subsection 4.3 (a);
(viii) Private Placement. Take, or permit any of its Affiliates to
-----------------
take, any action which would subject any interest in the Partnership to
the provisions of Section 5 of the Securities Act of 1933;
(ix) Settlement of Proceedings. Compromise, settle or abandon any
-------------------------
claim, action, proceeding or debt due to, owned by or asserted against
the Partnership, in each case, in an amount equal to $1,000,000 or more;
and
(x) Gas Purchase Agreements. Prior to the Flip Date, (x) enter
-----------------------
into, or permit the Partnership to enter into, any Gas Purchase Agreement
(l) with any of their respective Affiliates on terms that are less
favorable than terms available with non-affiliated Persons or (2) which
provides for the payment of burdensome liquidated damages by the Managing
General Partner or the Partnership or (y) enter into, or permit the
Partnership to enter into, any Gas Purchase Agreement with a term
(including any renewal terms) of six months or more which (l) contains any
material restrictions on assignment by the Managing General Partner or the
Partnership or (2) contains any provision that would result in the
termination, cancellation or suspension of such Gas Purchase Agreement upon
the exercise by the
58
Preferred Limited Partner of any of its remedies hereunder or upon the sale
of the Facility.
(b) The Managing General Partner shall be prohibited from taking any
action in connection with the governance of the partnership which is
inconsistent with the express provisions of this Agreement, without the
approval of the Preferred Limited Partner.
(c) Notwithstanding anything to the contrary in this subsection 7.3,
the Partners hereby ratify the entering into by the Limited Partnership of
(i) each of the Operative Documents in effect on the date hereof and (ii) each
other written agreement, contract, commitment or undertaking in effect on the
date hereof, a copy of which has been delivered to and approved by the Agent.
7.4 Fee. The Managing General Partner shall be entitled to an annual
---
management fee equal to 1.5% of the annual gross revenues of the project (the
"Management Fee"), the Cost Portion (as defined below) of which shall be
--------------
payable in equal monthly installments during each twelve month period
commencing on the first day of the first month after the Second Capital
Contribution Date and the Profit Portion of which shall be payable in monthly
installments during each twelve month period commencing on the first month after
the Second Capital Contribution Date, provided, that no Special Event shall have
--------
occurred and be continuing, the Arrears Account shall not have a positive
balance and no amount shall be owed to the Limited Partner under subsection 4.6,
provided, however, that notwithstanding the occurrence of a Special Event, a
-------- -------
positive balance in the Arrears Account or the existence of any amount owing to
the Limited Partner under subsection 4.6, any substitute Managing General
Partner appointed pursuant to subsection 14.2 shall be entitled to reimbursement
for its reasonable costs and expenses in connection with management and
administration of the Project. The portion of such fee which represents costs
and expenses (the "Cost Portion") of the Managing General Partner in connection
------------
with management of the Project shall be set forth in the Operating Budget for
each fiscal year and shall be equal to $3,000,000 for each twelve month period
commencing on the first day of the first month after the Second Capital
Contribution Date, such amount (i) to be increased by $100,000 for the second
twelve month period and (ii) to be adjusted for each subsequent twelve month
period based on the Gross National Product deflator in effect during such
period. The Management Fee shall be paid in accordance with the terms of the
Security Deposit Agreement and this Agreement. In accordance with the foregoing,
the Profit Portion (i) for the first 144 months after the Second Capital
Contribution Date, shall be payable out of amounts otherwise distributable to
the General Partner pursuant to subsection 4.3(b) and (ii) thereafter, until the
Flip Date, shall be payable after distributions have been made pursuant to
subsection 4.3(b) and prior to distributions being made pursuant to subsection
4.3 (c) and (iii) on and after the Flip Date, shall be payable after
distributions have been made pursuant to subsection 4.4 (c)
59
and prior to distributions being made pursuant to subsection 4.4 (d). The
Managing General Partner may enter into a management agreement with and pay its
Management Fee or any portion thereof received by it in accordance with this
Agreement and the Security Deposit Agreement to Cogen Technologies Management
Company.
7.5 Limitations on Liability of Managing General Partner. Neither
----------------------------------------------------
the Managing General Partner, any Affiliate thereof nor the partners,
shareholders, directors, officers, employees or agents thereof or of any
Affiliate thereof (jointly and severally, the "Managing General Partner Group")
------------------------------
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or any other Partner for any loss, damage or liability sustained by
the Partnership or any such other Partner, including, without limitation, a loss
resulting from a breach of fiduciary duty, duty of care or duty of loyalty (a
"Loss"), arising out of (a) an error of judgment made, or an action taken or
----
omitted, which such Person in good faith reasonably believed to be in accordance
with Prudent Utility Practice, as applicable, and otherwise in accordance with
good commmercial practice, (b) the error of judgment made, action taken or
omitted, dishonesty or bad faith, of any agent or independent contractor
selected or retained in good faith in the reasonable exercise of the Managing
General Partner's duties hereunder, and in accordance with Prudent Utility
Practice, as applicable, and otherwise in accordance with good commercial
practice, other than independent contractors or agents which are Affiliates of
the Managing General Partner in which case the standards of clause (a) above
shall apply as to whether the Managing General Partner Group shall have
liability for a Loss, (c) action taken or omitted in good faith by any member of
the Managing General Partner Group in accordance with the advice of legal
counsel and accountants as to matters that such member reasonably believes to be
within such Person's professional competency or (d) in cases not involving
actions or failure to act comprising Prudent Utility Practice or good commercial
practice, actions taken or omitted in good faith by any member of the Managing
General Partner Group which such member reasonably believed to be in or not
opposed to the best interests of the Partnership, and not materially detrimental
to the best interests of any other Partner. The Partners further agree that (i)
unless the Managing General Partner Group's action or failure to act (including,
without limitation, breach of fiduciary duty, duty of care or duty of loyalty)
constitutes fraud or a willful and deliberate intent to cause injury to the
Partnership or any Partner, or any member of the Managing General Partner Group
shall have knowingly made a misrepresentation herein, in any other Operative
Document or in any certificate or other document delivered pursuant hereto or
thereto, any Loss shall include only actual damages suffered by the Limited
Partner, and shall not include special, punitive or other penal damages, lost
profits or damage to the general business reputation of the Limited Partner or
any of its Affiliates, and (ii) any liability of the Managing General Partner
Group for any Loss not involving fraud, a willful and deliberate intent to cause
injury to the Partnership or any Partner or knowing
60
misrepresentation the part of the Managing General Partner Group shall be
limited to the Managing General Partner's interest in the Partnership
7.6 Partnership Information Meetings. Following the Initial Capital
--------------------------------
Contribution Date and until the end of the first calendar quarter after the
commencement of commercial operation of the Facility, the Managing General
Partner shall once each calendar quarter, with the first such meeting to be
held during the first calendar quarter after the date hereof, call a meeting
with the Limited Partner to discuss and report on Facility operations.
Thereafter, the Managing General Partner shall call such a meeting at least
semi-annually.
7.7 Limitations on the Partners. No Partner other than the Managing
---------------------------
General Partner shall have any right or authority to act on behalf of or in
the name of the Partnership or to bind the Partnership in any manner except
with the prior written consent of the Managing General Partners, as provided
in Article XIV, as provided in any Recognition Agreement or as provided
pursuant to a contract approved as required under subsection 7.3. No Partner
shall have any right or authority to act for or bind the Partnership except as
expressly set forth herein. No Partner shall take any action in conflict with
the foregoing provisions of this subsection 7.7 or represent, directly or by
course of conduct, that it has any right, power or authority to take any such
action. Notwithstanding anything in this Agreement to the contrary, the
Limited Partner is hereby authorized to enter into any agreement under which
the Limited Partner has rights, duties or obligations relating to contracts
entered into by the Partnership, including any such agreement denominated as a
"Recognition Agreement," all without affecting the Limited Partner's limited
liability as a limited partner of the Partnership. The Managing General
Partner shall use its best efforts to cause the Partnership to cooperate to
the fullest extent necessary to assure the Limited Partner's ability to
perform under any recognition agreement relating to contracts entered into by
the Partnership.
7.8 Cooperation Regarding Permits and Power Purchase Agreement. The
----------------------------------------------------------
General Partner agrees to cooperate fully with the Partnership and with the
Managing General Partner so as to keep the Permits (including, without
limitation, the FERC Order) and the Power Purchase Agreement in full force and
effect. As promptly as practicable after it is permitted by Applicable Law,
agreement or contract, as the case may be, the General Partner shall cause the
Partnership (and shall cooperate with the Partnership and the Managing General
Partner, to the extent necessary) to apply for a renewal of the Permits and a
renewal or replacement of the Power Purchase Agreement for the periods available
and to actively prosecute such application.
7.9 Time Devoted to Partnership. Each of the General Partner and the
---------------------------
Managing General Partner shall devote whatever time and attention to the
business, affairs and operations of the
61
Partnership is reasonably appropriate for Partnership purposes and is necessary
to carry out the provisions of this Agreement.
7.10 Other Business Activities. Except as expressly provided herein,
-------------------------
nothing in this Agreement shall be deemed to restrict in any way the right of
any Partner to manage, conduct, be employed by, operate, participate in or have
an interest in any other business, activity, venture or organization of any
nature or description independently or with others, without accountability to
the Partnership or any other Partner(s); provided, that each Partner shall
--------
conduct its business in a manner so as to avoid Public Utility Status as
described in subsection 10.5 hereof. Each Partner shall be entitled to receive
and hold, without being accountable to the Partnership or to any other Partner,
any fees, compensation, salary, income, dividends, share of profits or other
distribution, gain or income which it may receive from any other business,
activity, venture or organization.
7.11 Special Indemnity. Xxxxx Xxxxxx agrees to indemnify (from its
-----------------
own funds and not the funds of the Partnership) the Partnership for any loss,
liability or expense incurred by the Partnership pursuant to the letter, dated
August 24, 1992, from the Partnership to Chicago Title Insurance Company.
ARTICLE VIII
CALLS FOR AND PAYMENT OF FUNDS
------------------------------
Except as set forth in Articles III, X or XIV hereof, the Capital
Contribution Agreement, the General Partner Credit Agreement and the
Reimbursement Agreement, or as otherwise mutually agreed by the Partners, no
Partner shall make (or be required to make) a capital contribution or loan of
funds to the Partnership.
ARTICLE IX
CONDITIONS PRECEDENT
--------------------
9.1 Conditions to the Contributions on the Initial Capital
------------------------------------------------------
Contribution Date. The obligation of the Limited Partner to make a capital
-----------------
contribution to the Partnership on the Initial Capital Contribution Date in
respect of the Common Limited Partnership Interest is subject to the
satisfaction immediately prior to or concurrently with the making of such
contribution of the conditions precedent set forth in subsection 2(b) of the
Capital Contribution Agreement.
9.2 Conditions to the Contributions on or Prior to the Second Capital
-----------------------------------------------------------------
Contribution Date. The obligation of the Limited Partner (a) to make additional
-----------------
capital contributions to the
62
Partnership in respect of the Common Limited Partnership Interest on or prior to
the Second Capital Contribution Date and (b) to make a capital contribution to
the Partnership in respect of the Preferred Limited Partnership Interest on the
Second Capital Contribution Date is subject to the satisfaction immediately
prior to or concurrently with the making of such contributions of the conditions
precedent set forth in subsection 2(c) of the Capital Contribution Agreement.
ARTICLE X
TRANSFER AND ENCUMBRANCE
------------------------
10.1 Transfer of Partnership Interest: General Provisions. (a) Except
----------------------------------------------------
as security for the Indebtedness incurred pursuant to the Construction Loan
Agreement and the General Partner Credit Agreement, the General Partner may not
sell, assign, transfer, mortgage, pledge or otherwise directly or indirectly (by
merger, consolidation, sale of assets and business or stock, whether by
operation of law or otherwise) dispose of or encumber, or suffer the disposition
or encumbrance of, all or any portion of its interest in the Partnership unless
all of the other Partners consent to such transfer and the terms thereof.
Notwithstanding the foregoing, interests in the General Partner may be sold,
assigned, transferred or otherwise disposed of, so long as (i) Xxxxxx X. XxXxxx
or his wife or children shall own and control, directly or indirectly, a
beneficial interest of at least 8.2% in the General Partner for a period of
seven years after the Second Capital Contribution Date and (ii) either (x)
Xxxxxx X. XxXxxx or his wife or children or (y) an entity with a net worth of
not less than $100,000,000, shall own and control, directly or indirectly, a
beneficial interest of at least 8.2% of such interest thereafter. The Limited
Partner may sell, assign, transfer, mortgage, pledge or otherwise dispose of the
Preferred Limited Partnership Interest and/or the Common Limited Partnership
Interest; provided, however, that the transferee of any such interest will not
-------- -------
become a substitute limited partner in the Partnership unless the Managing
General Partner, in its sole and absolute discretion, consents to such
substitution.
(b) Notwithstanding any other provision of this Agreement, no Partner
shall transfer any interest in the Partnership, if any of the following would be
true:
(i) such transfer would violate any Permit;
(ii) such transfer would cause the Project to lose its status as a
"qualifying cogeneration facility" under PURPA or any similar statute of
the State of New Jersey;
(iii) such transfer would violate the terms of any agreement binding
upon the Partnership;
63
(iv) such transfer would violate any Applicable Law, including,
without limitation, applicable Federal or state securities laws or require
any registration under such securities laws;
(v) such transfer would cause the Partnership to be classified
otherwise than as a partnership for Federal income tax purposes;
(vi) the transferee has not agreed in writing to be bound by this
Agreement; or
(vii) such transfer would cause a dissolution of the Partnership under
the Partnership Act.
10.2 Additional Partners. (a) Except upon prior written consent of
-------------------
all the Partners, or as may be permitted by the next two following sentences and
by subsections 10.1 and 14.2 of this Agreement, no new Partners may be admitted
to the Partnership. Immediately prior to the sale of the Limited Partnership
Interests pursuant to subsection 10.5, 11.1 or 14.2(g), the Managing General
Partner shall have the right to cause one of its Affiliates to be admitted as a
limited partner of the Partnership upon terms and conditions mutually acceptable
to the Managing General Partner and the Limited Partner. If, by reason of the
exercise of remedies under any pledge or security agreement to which the General
Partner is a party, the General Partner's General Partnership Interest is
transferred to the pledgee or assignee of the General Partner, or any transferee
of such pledgee or assignee, the assigning General Partner shall cease to be the
General Partner hereunder upon such transfer and such pledgee, assignee or
transferee shall be deemed admitted as a General Partner of the Partnership
effective immediately prior to such transfer and is hereby authorized to
continue the business of the Partnership without dissolution. Any additional
Partner, whether such Partner obtained its interest from Xxxxx Xxxxxx or the
Owner Trustee or otherwise, shall expressly be bound by all the terms and
conditions hereof and shall expressly so acknowledge upon becoming a Partner by
execution of this Agreement or a counterpart hereof.
(b) Notwithstanding anything else in this Agreement to the contrary,
(i) upon the grant of any pledge, hypothecation, security interest, lien or
other encumbrance by a Partner against such Partner's interest in the
Partnership, such Partner shall continue to be a partner of the Partnership,
(ii) any transferee of an interest in the Partnership who satisfies the
requirements necessary to become a substituted or additional partner of the
Partnership (including the requirement that it receive the consent of the
General Partner) shall be admitted as a substitute or additional partner of the
Partnership immediately prior to the withdrawal of the withdrawing Partner, if
such Partner shall be withdrawing, and (iii) the Partnership shall not be
dissolved upon the withdrawal of a general partner of the Partnership if there
is at least one other remaining general partner of the
64
Partnership who is hereby authorized to and shall continue the business of the
Partnership, but the Partnership shall not be dissolved upon the withdrawal of
the last remaining general partner of the Partnership if within 90 days after
the occurrence of such event, all Partners unanimously agree in writing to
continue the business of the Partnership and to the appointment, effective as of
the date of such event, of one or more additional general partners who is
authorized to and shall continue the business of the partnership.
(c) Any transfer made by any Partner which violates any provision of
this Agreement shall be null and void and of no effect, and any such transferor
Partner shall remain and continue as a partner of the Partnership.
10.3 Revisions to this Agreement Upon Transfer or Encumbrance. If
--------------------------------------------------------
pursuant to the provisions of subsection 10.1, Xxxxx Xxxxxx is permitted to
sell, assign, or otherwise transfer, in whole or in part, any of its interests
in the Partnership, or, if additional Partners are admitted pursuant to
subsection 10.2 or otherwise, then contemporaneously with such sale, assignment,
transfer, or admission, the Capital Accounts of the Partners shall be adjusted
to accurately reflect the interests of each and every Partner.
10.4 Amendment to Certificate of Limited Partnership. If a Person has
-----------------------------------------------
otherwise qualified under this Agreement to become a substitute or new General
Partner, such Person shall become a General Partner upon the filing with the
Secretary of State of the State of Delaware of an amendment to the Certificate
of Limited Partnership in proper form, duly executed by such Person. Any such
admission shall be deemed to have occurred immediately prior to the withdrawal
of any General Partner who is withdrawing from the Partnership in connection
with the admission of a new General Partner.
10.5 Voluntary Withdrawal by Limited Partners. (a) If at any time,
----------------------------------------
any Limited Partner or any Affiliate of any Limited Partner, solely by reason of
its interest in the Partnership or any transaction contemplated by this
Agreement or any other Operative Document and not as a result of any other
interest or activity of such Limited Partner or such Affiliate, shall be deemed
by any Governmental Authority having jurisdiction to be an "electric utility" or
an "electric utility holding company" as such terms are used in PURPA and the
regulations thereunder (18 C.F.R. Part 292), or any wholly or partially owned
direct or indirect subsidiary of any "electric utility" or "electric utility
holding company", as such terms are so used, or any similar entity (including
without limitation a "public utility" as such term is defined in the Federal
Power Act, or a "holding company," a "subsidiary company," an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company" as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended)
subject to regulation under the Federal Power Act, the Public Utility Holding
Company Act of 1935, as amended,
65
the Department of Public Utilities Act of 1948, NJSA 48:1-1, et seq., or any
-- ----
other comparable federal, state or local law or regulation (any such
classification being called "Public Utility Status"), then, upon demand made by
---------------------
such Limited Partner to the Managing General Partner, the Partnership shall
forthwith redeem such Limited Partner's right, title and interest in the
Partnership for a redemption price equal to the higher of (i) the Stipulated
Redemption Value of its interest plus any Termination Expense (Benefit) and (ii)
the Fair Market Sales Value of its interest, in each case, as of the date of
redemption.
(b) If at any time, any Limited Partner or any Affiliate of any
Limited Partner, as a result of any interest or activity of such Limited Partner
or such Affiliate (other than its interest in the Partnership or any transaction
contemplated by this Agreement or any other Operative Document), shall be deemed
by any Governmental Authority having jurisdiction to have Public Utility Status,
then, upon demand by the Managing General Partner to such Limited Partner, the
Partnership shall have the right to call such Limited Partner's right, title and
interest in the Partnership for a call price equal to the lesser of (i) the
Stipulated Redemption Value of its interest and (ii) the Fair Market Sales Value
of its interest, in each case, as of the call date.
(c) The redemption price or the call price, as the case may be, shall
be paid with the proceeds of a loan to be made by such Limited Partner to the
Partnership on the proposed purchase date. Such loan will be evidenced by a note
which will mature on the earlier of (i) 15 years after the date thereof and (ii)
twenty-two years and six months after the Second Capital Contribution Date, be
payable in consecutive quarterly equal installments in the aggregate of
principal and interest for the period commencing with the first quarter after
the date of such note, and bear interest at a rate equal to that which the
Limited Partner in its reasonable discretion and after consultation with the
Managing General Partner and its advisors determines is the rate, and have other
terms and conditions which the Limited Partner in its reasonable discretion
determines to be, available from independent third parties for obligations
having a comparable tenor and a comparable structure. The loan will be secured
by a first (second so long as the Construction Loan Agreement or the General
Partner Credit Agreement is in effect) pledge of the interests of the General
Partner in the Partnership pursuant to a pledge agreement in form and substance
reasonably satisfactory to such Limited Partner and by a first (second so long
as the Construction Loan Agreement is in effect) priority lien on the assets of
the Partnership (including, without limitation, the Project) pursuant to a
security agreement and a mortgage, each in form and substance reasonably
satisfactory to such Limited Partner.
(d) In the case of a purchase of a Limited Partnership Interest by
the Partnership pursuant to this Agreement, an amount of the purchase price
equal to the portion of the goodwill of the
66
Partnership allocable to such Limited Partnership Interest shall be payment for
such portion of the goodwill, and the purchase agreement shall so provide,
unless the Limited Partner agrees otherwise.
ARTICLE XI
OPTIONS TO PURCHASE
-------------------
11.1 Fair Market Sales Value Purchase Options. (a) (i) Unless the
----------------------------------------
Preferred Limited Partner's or the Common Limited Partner's right, title and
interest in the Partnership shall have been previously sold or otherwise
disposed of in accordance with subsection 10.5, or unless a Special Event shall
have occurred and be continuing at the time of the proposed purchase, the
Managing General Partner shall have the option to purchase both of such Limited
Partners' right, title and interest in the Partnership on the twelfth (12th)
anniversary of the Second Capital Contribution Date, for a cash purchase price
equal to the greater of (i) the Fair Market Sales Value of each Limited
Partnership Interest as of such twelfth anniversary or (ii) an amount equal to
the sum of (x) an amount which, together with the amount of Limited Partner
Benefits received with respect to the Preferred Limited Partnership Interest as
of such date (taking into account any gain or loss recognized by the Preferred
Limited Partner on such sale) would equal the Preferred Limited Partner's Return
of and on Equity plus (y) an amount which, together with the amount of Limited
----
Partner Benefits received with respect to the Common Limited Partnership
Interest as of such date (taking into account any gain or loss recognized by the
Common Limited Partner on such sale) would equal the Common Limited Partner's
Third Level Return of and on Equity plus (z) any Premium on the date of sale.
----
(ii) In order to exercise the option provided for in this subsection
11.1(a), the Managing General Partner shall give the Limited Partner a Tentative
Purchase Notice of its interest in exercising any such option at least 360 days
prior to such twelfth anniversary, and shall give the Limited Partner a Purchase
Notice of its intent to exercise any such option at least 30 days prior to such
twelfth anniversary. The Managing General Partner and the Limited Partner
holding the Limited Partnership Interest which is the subject of the option
agree to negotiate in good faith to determine the Fair Market Sales Value of
such Limited Partnership Interest by mutual agreement following receipt of the
Tentative Purchase Notice from the Managing General Partner. If the Managing
General Partner and such Limited Partner shall fail to reach agreement within 30
days after receipt by such Limited Partner of the Tentative Purchase Notice from
the Managing General Partner, the Fair Market Sales Value of such Limited
Partnership Interest proposed to be purchased by the Managing General Partner
shall be determined by the Appraisal Procedure.
67
(b) (i) Unless the Common Limited Partner's right, title and
interest in the Partnership shall have been previously sold or otherwise
disposed of in accordance with subsection 10.5 or 11.1(a), the Managing General
Partner shall have the option to purchase the Common Limited Partner's right,
title and interest in the Partnership as of the date that the Common Limited
Partner has received an aggregate amount of Limited Partner Benefits with
respect to the Common Limited Partnership Interest equal to the Third Level
Return of and on Equity for a cash purchase rice equal to the Fair Market Sales
Value thereof.
(ii) In order to exercise the option provided for in this subsection
11.1(b), the Managing General Partner shall (x) deliver a written notice to the
Common Limited Partner as soon as practicable (but in any event not later than
10 days after such determination) after it shall have determined that the Common
Limited Partner has received the amount of Limited Partner Benefits described in
paragraph (i) above and (y) give the Common Limited Partner a Tentative Purchase
Notice of its interest in exercising any such option within 30 days after
delivery to the Common Limited Partner of the notice described in clause (x). If
the Common Limited Partner agrees with such determination made by the Managing
General Partner, it shall so notify the Managing General Partner in writing and
both parties shall negotiate in good faith to determine the Fair Market Sales
Value of the Common Limited Partnership Interest by mutual agreement following
receipt of the Tentative Purchase Notice from the Managing General Partner. If
the Managing General Partner and the Common Limited Partner shall fail to reach
agreement within 30 days after receipt by the Common Limited Partner of the
Tentative Purchase Notice from the Managing General Partner, the Fair Market
Sales Value of the Common Limited Partnership Interest shall be determined by
the Appraisal Procedure. The Managing General Partner shall give the Common
Limited Partner a Purchase Notice of its intent to exercise the option provided
for in this subsection 11.1(b) within 30 days after the Fair Market Sales Value
of the Common Limited Partnership Interest is determined, whether by the
Appraisal Procedure or by mutual agreement of the Managing General Partner and
the Common Limited Partner. If the Managing General Partner shall deliver such
Purchase Notice, it will purchase the Common Limited Partnership Interest for a
cash purchase price equal to the Fair Market Sales Value thereof within 120 days
after the date of determination of such Fair Market Sales Value. Any amount
distributed to the Common Limited Partner after it shall have received the
amount of Limited Partner Benefits described in paragraph (i) above shall be
applied against the cash purchase price for the Common Limited Partnership
Interest.
68
ARTICLE XII
NOTICES
-------
12.1 Notices. Any notice, request, demand or other communication
-------
which any Partner, the Managing General Partner or the Partnership is to give
under this Agreement shall be in writing and shall be sufficient for all
purposes hereof if delivered in person or by registered or certified mail, by
courier service, or by telecopier or telex, in each case addressed as provided
in subsection 12.2. Any such notice, request, demand or other communication
shall be deemed given and made effective on the date received.
12.2 Addresses. For the purposes hereof, the addresses are:
---------
In the case of Xxxxx Xxxxxx or the Partnership:
Cogen Technologies Linden, Ltd.
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxx
Telecopy: (000) 000-0000
In the case of the Owner Trustee, the Preferred Limited Partner or the
Common Limited Partner:
State Street Bank and Trust Company of
Connecticut, National Association
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Department
Telecopy: (000) 000-0000
Copies to:
General Electric Power Funding Corporation
Xxx Xxxxx Xxxx
Xxxxxxxx Xxx, Xxxx 000
Schenectady, New York 12345
Attention: Vice President - Investments
Telecopy: (000) 000-0000
and
General Electric Capital Corporation - TIFC
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Energy Project Operations
Telecopy: (000) 000-0000
Any party may upon written notice to the others given in accordance with this
Article XII change the address to which
69
notices, requests, demands or other communications are to be sent or add such
additional addresses as it may reasonably request.
ARTICLE XIII
WITHDRAWAL
----------
Except as otherwise provided in this Agreement, no Partner may
withdraw from the Partnership without the consent of each of the Partners. To
the fullest extent permitted by law, each Partner hereby waives any right or
remedy at law or in equity that it may have to obtain dissolution or to dissolve
the Partnership, except as provided in this Agreement. If the General Partner
shall withdraw, be removed, or an event occurs that causes the General Partner
to cease to be a general partner of the Partnership under the Partnership Act
and this Agreement, the Partnership shall be dissolved and its affairs shall be
wound up unless (i) at such time there is at least one other general partner of
the Partnership, who is hereby authorized to and shall continue the business of
the Partnership, or (ii) if there is no remaining general partner of the
Partnership, within 90 days after the occurrence of such event, all Partners
unanimously agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of such event, of one or more
additional general partners who is hereby authorized to and shall continue the
business of the Partnership.
ARTICLE XIV
SPECIAL EVENTS AND DISSOLUTION; LIQUIDATION; TERMINATION
--------------------------------------------------------
14.1 Special Events. Prior to the Flip Date, the occurrence of any of
--------------
the following events shall constitute a special event (each, a "Special Event")
--------------
hereunder:
(a) The General Partner shall violate any of the restrictions upon
its rights to transfer its partnership interest set forth in Article X of
this Agreement; or
(b) Any representation or warranty made by the General Partner in the
Capital Contribution Agreement or by the Partnership or any other Partner
in any other Operative Document (other than any Project Document) to which
it is a party, or any representation, warranty or statement in any
certificate, financial statement or other document furnished to any Limited
Partner by or on behalf of the Partnership or the General Partner hereunder
or the Partnership or any Partner under any Operative Document (other than
any Project Document) shall prove to have been false or misleading as of
the time made or deemed made; or
(c) The General Partner or the Partnership shall fail to perform or
observe any of its covenants contained in this
70
Agreement (other than that referred to in paragraph (a) above) or in any
other Operative Document (other than any Project Document) to which it is a
party and such failure shall continue unremedied for a period of 30 days
after written notice thereof from any Limited Partner to the General
Partner; provided, however, that if such Special Event is susceptible of
-------- -------
cure, such 30 day period shall be extended for such period of time (not to
exceed 60 days) during which the General Partner shall be diligently using
its best efforts to cure such failure; or
(d) (i) The General Partner, with respect to the General Partner
Credit Agreement, or (ii) the Partnership or the General Partner, with
respect to any other Indebtedness (other than the Reimbursement Agreement)
or Guarantee Obligation, the principal amount of which exceeds $500,000 and
a default in respect of which, if uncured, could reasonably be expected to
have a material adverse effect on the business, properties, operations,
condition (financial or otherwise) or prospects of the Partnership or the
General Partner, as the case may be, or could reasonably be expected to
materially adversely affect the ability of the Partnership or the General
Partner to perform its obligations under the Operative Documents to which it
is a party, shall (x) default in any payment of principal of or interest on
any such Indebtedness or Guarantee Obligation beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness
or Guarantee Obligation was created, or (y) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) or
the beneficiary or beneficiaries of such Guarantee Obligation (or a trustee
or agent on behalf of such beneficiary or beneficiaries) to cause, with the
giving of notice if required or the passage of time, or both, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(e) (i) Any Participant, other than the Partnership or the General
Partner, shall fail to perform or observe in any material respect any of its
covenants or obligations contained in any of the Project Documents to which
it is a party within the grace period, if any, provided for in such Project
Documents, which failure shall continue unremedied for a period of 30 days
after notice by any Limited Partner to the General Partner or (ii) (x) any
material provision of any Operative Document shall at any time for any
reason cease to be valid and binding or in full force and effect (other than
as a result of any action by any Limited
71
Partner) or any party thereto (other than a Limited Partner) shall so
assert in writing, (y) any material provision of any Operative Document
shall be declared to be null and void (other than as a result of any action
by any Limited Partner) or (z) any party thereto shall deny that it has any
further liability or obligation under any Operative Document to which it is
a party; provided that it shall not be a Special Event under this paragraph
--------
(e) if, (1) within 30 days after the occurrence of any of the foregoing
events with respect to any Project Document (other than the Site Lease
Agreement, the Power Sale Agreement or the Gas Transportation and Swing
Supply Agreement), the Managing General Partner shall have submitted a plan
to the Preferred Limited Partner to execute and deliver a document in
substitution for such Project Document, which plan shall be reasonably
satisfactory in form and substance to the Preferred Limited Partner, and
(2) within 90 days after the occurrence of any of the foregoing events with
respect to any Project Document (other than the Site Lease Agreement, the
Power Sale Agreement or the Gas Transportation and Swing Supply Agreement),
such Project Document shall have been replaced with another document (x)
which is executed and delivered by parties acceptable to the Preferred
Limited Partner in its reasonable discretion and (y) which has terms and
conditions similar to, and in the reasonable opinion of the Preferred
Limited Partner, at least as favorable to the Project as, the substituted
Project Document; or
(f) The Partnership or the General Partner shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part
of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Federal Bankruptcy Code (as now or hereafter in effect), (v)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding up, or composition or
readjustment of debts, (vi) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against such Person
in an involuntary case under the Federal Bankruptcy Code, or (vii) take any
partnership or corporate action for the purpose of effecting any of the
foregoing; or
(g) A proceeding or case shall be commenced without the application or
consent of the Partnership or the General Partner in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution,
winding-up, or the composition or readjustment of debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of
the Partnership or the General Partner under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts or (iii) a
72
warrant of attachment, execution or similar process against all or a
substantial part of the assets of the Partnership or the General Partner
and such proceeding or case shall continue undismissed, or any order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more
days, or any order for relief against such Person shall be entered in an
involuntary case under the Federal Bankruptcy Code (as now or hereafter in
effect); or
(h) A judgment or judgments for the payment of money in excess of
$1,000,000 shall be rendered against the Partnership or the General Partner
and such judgment or judgments shall remain in effect and unstayed and
unbonded for a period of 60 or more consecutive days; or
(i) During the period from and including the Initial Capital
Contribution Date to but excluding the date which is seven years after the
Second Capital Contribution Date, Xxxxxx XxXxxx or his wife or children
shall fail to own and control, directly or indirectly, a beneficial
interest of at least 8.2% in the General Partner and thereafter, Xxxxxx X.
XxXxxx or his wife or children or an entity with a net worth of at least
$100,000,000 shall fail to own and control, directly or indirectly, a
beneficial interest of at least 8.2% of such interest; or
(j) The Partnership shall abandon the Project or otherwise cease to
diligently pursue the development or construction of the Project for a
period longer than 30 consecutive days; or
(k) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan, or
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate any Single Employer Plan, which Reportable Event
or institution of proceedings is, in the reasonable opinion of the
Preferred Limited Partner, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, or (iv) any Single Employer Plan shall
terminate under Section 4041(c) of ERISA, or (v) the Managing General
Partner or any Commonly Controlled Entity shall, or is, in the reasonable
opinion of the Preferred Limited Partner, likely to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan, or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could subject the Managing General
73
Partner or the Partnership to any tax, penalty or other liabilities in the
aggregate material in relation to the business, operations, property or
financial or other condition of the Managing General Partner or the
Partnership; or
(1) (i) The Partnership shall fail to pay, satisfy or otherwise obtain
a release of any bond or lien for the performance of work or the supply of
materials filed against the Site within 20 days of the Managing General
Partner's becoming aware of the filing thereof unless, if any such Lien
arose in connection with a claim referred to in subsection 7.2(1), the
Managing General Partner shall be diligently contesting the same in
accordance with, and subject to, subsection 7.2(1) or (ii) any right, title
or interest of the Partnership in and to the Site or any beneficial
ownership interest of the General Partner in the Partnership shall be
levied upon, attached or seized pursuant to a court order and such order is
not vacated or stayed within 20 days of entry of such order; or
(m) The dissolution and liquidation of the General Partner without
the prior written consent of the Limited Partner unless (i) an entity
meeting the requirements of subsection 10.1 succeeds to the General
Partner's interest hereunder in accordance with subsection 10.2 or (ii) the
ultimate result of such dissolution and liquidation is the incorporation of
the General Partner and the ownership provisions of subsection 10.1 apply
to such corporation which shall be admitted as a general partner of the
Partnership in accordance with subsection 10.2; or
(n) The resignation or withdrawal of the General Partner from the
Partnership or the resignation of the General Partner as Managing General
Partner, in each case without the prior written consent of the Limited
Partner; or
(o) The Partnership shall cease to have a valid leasehold interest in
the Site or good and marketable title to the Project, in each case, free
and clear of all Liens other than Permitted Liens; or
(p) An Event of Loss described in clause (a) of the definition thereof
shall have occurred; or
(q) (i) The aggregate amount on deposit in the Arrears Account shall
be equal to or greater than 98% of the then applicable monthly distribution
described in subsection 4.3(a), multiplied by three or (ii) a positive
balance in the Arrears Account shall exist as of the end of two consecutive
Quarterly Periods or such a positive balance shall occur as of the end of
more than four Quarterly Periods; provided, that the Managing General
--------
Partner shall have the right to make capital contributions to the
Partnership to eliminate anticipated positive balances in
74
the Arrears Account as of the end of two consecutive Quarterly Periods and
positive balances in the Arrears Account as of the end of four cumulative
Quarterly Periods, but shall not otherwise have the right to eliminate,
directly or indirectly, any existing or anticipated positive balance in the
Arrears Account; or
(r) At any time, there shall fail to be an adequate supply of water to
the Facility to meet all reasonable requirements for the operation and
maintenance of the Facility; provided that it shall not be a Special Event
--------
under this paragraph (r) if the Managing General Partner complies with the
proviso to subsection 14.1(e) with respect to the Water Supply Commitment
in such a manner as will ensure, in the reasonable opinion of the Preferred
Limited Partner, that there will be such an adequate supply of water to the
Facility; or
(s) At any time, the Partnership shall fail to (i) keep in force the
insurance required by subsection 7.2(f) and Schedule 8 hereto and the Site
Lease Agreement or (ii) comply with and conform to all provisions and
requirements of the insurance policies and the insurers thereunder which
would affect the Partnership's ability to keep in force the insurance
required by subsection 7.2(f) and Schedule 8 hereto and the Site Lease
Agreement or to collect any proceeds therefrom; or
(t) If Exxon shall operate the Facility as set forth in Section
11.6B(ii) of the Steam Supply Agreement, unless such operation is pursuant
to an operating agreement to which the Preferred Limited Partner has given
its prior written consent in accordance with subsection 7.3(a) (i); or
(u) At any time, the Managing General Partner shall fail to follow any
gas purchase plan approved by the Limited Partner pursuant to subsection
7.2(n) hereof; or
(v) Any of Cogen Technologies, Inc., the General Partner or the
Partnership or any of their Affiliates shall enter into any agreement or
other arrangement in connection with the matters described in the Texas
Eastern Letter Agreement with Texas Eastern or any of its Subsidiaries or
Affiliates or any partnership or other venture in which any such party has
an interest without the prior written consent of the Limited Partners and
such agreement or arrangement shall continue for thirty days after the
General Partner shall have received written notice thereof from any Limited
Partner.
The Partners hereby agree that the Preferred Limited Partner may rely on the
provisions of Schedule 10 in determining whether or not a Special Event, or an
event which, with the passage of time or expiration of applicable grace periods,
would become a Special Event, has occurred under subsection 14.1(b) or 14.1(c).
75
14.2 Certain Remedies Following Special Event.
----------------------------------------
(a) If a Special Event occurs and is continuing, the Preferred Limited Partner
shall have the right, exercisable by notice to the Managing General Partner, to
appoint or become substitute Managing General Partner as provided in subsection
(b) hereof. Any substitute Managing General Partner is authorized to and shall
continue the business of the Partnership and shall be admitted to the
Partnership as a general partner of the Partnership in accordance with
subsection 10.2.
(b) (i) If a Special Event occurs and is continuing, the Preferred
Limited Partner may appoint a substitute Managing General Partner or designate
itself or its nominee as the substitute Managing General Partner, whereupon the
existing Managing General Partner shall cease to serve as such but shall
continue to be a General Partner. In the event the Preferred Limited Partner
appoints a substitute Managing General Partner said substitute Managing General
Partner shall have a 1% interest in the Partnership, and the interest of the
Preferred Limited Partner shall be reduced by the same amount. The interest of
said substitute Managing General Partner shall be a General Partnership Interest
in the Partnership and such substitute Managing General Partner shall succeed to
all the powers, privileges and obligations of a General Partner and of the
Managing General Partner under this Agreement, except to the extent accrued or
attributable to the period prior to the allocation of such interest and except
that the transfer and related provisions of Article X pertaining to the
Preferred Limited Partner shall be applicable to the substitute Managing General
Partner rather than those pertaining to the General Partner. The Managing
General Partner hereby consents to such a partial conversion of the Preferred
Limited Partnership Interest and hereby consents to the admission as a General
Partner of said substitute Managing General Partner so designated by the
Preferred Limited Partner.
(c) If a Special Event occurs and is continuing, in addition to the
other remedies available to the Preferred Limited Partner pursuant to this
subsection 14.2, the Preferred Limited Partner shall receive 98% of all
Distributable Cash, and the Preferred Limited Partner's allocable share of
Operating Profits, Gain and other items of income and gain shall be 98% (in both
cases, subject to reduction to 97% under subsection 14.2(b), and with the
remaining 2% of such items going 1% to the Common Limited Partner and 1% to the
General Partner), until the earlier of (i) the date of receipt by the Preferred
Limited Partner of its Limited Partner's Return of and on Equity together with
any Termination Expense (Benefit) and (ii) the date on which such Special Event
has ceased to exist, provided, that, at such time, the Arrears Account does not
--------
have a positive balance.
(d) If a Special Event occurs and is continuing, in addition to the
other remedies available to the Preferred Limited Partner pursuant to this
subsection 14.2, the Preferred Limited Partner may elect by written notice to
the General Partner that
76
all powers of the General Partner (including the Managing General Partner)
hereunder with respect to any matter shall thereupon vest in the Preferred
Limited Partner.
(e) Upon the occurrence of a Special Event that may be cured, the
Preferred Limited Partner shall be entitled to, but shall have no obligation to,
cure such Special Event and all costs and expenses incurred by the Preferred
Limited Partner in connection therewith shall be in the form of a demand loan to
the Partnership.
(f) If a Special Event occurs and is continuing, the Preferred Limited
Partner may appoint, in the name and on behalf of the Managing General Partner
and the Partnership, a project manager to construct, equip, maintain, manage,
control, operate and repair the Project. The reasonable fees of any such project
manager shall be an operating expense of the Partnership.
(g) (i) If a Special Event occurs and is continuing and the Preferred
Limited Partner shall have exercised any of its remedies pursuant to this
subsection 14.2, the General Partner or its nominee shall have the right to
purchase the Preferred Limited Partner's right, title and interest in the
Partnership for a cash purchase price equal to the greater of (A) the Fair
Market Sales Value of such interest as of such purchase date and (B) an amount
which, together with the amount of all Limited Partner Benefits received by the
Preferred Limited Partner with respect to the Preferred Limited Partnership
Interest as of the proposed purchase date (taking into account any gain or loss
recognized by the Preferred Limited Partner on such sale), would equal the sum
of (1) the Capital Contributions of the Preferred Limited Partner, (2) a return
on the unrefunded amount of such Capital Contributions at the Minimum Rate for
the period from and including the Initial Capital Contribution Date to but
excluding the date of occurrence of such Special Event, (3) a return on the
unrefunded amount of such Capital Contributions at the Minimum Rate, plus 1%,
for the period from and including the date of occurrence of such Special Event
to but excluding the date of purchase plus (4) any Termination Expense
(Benefit). The calculations set forth in clause (B) (1), (2) and (3) above shall
deem each receipt of Limited Partner Benefits to be applied first to the return
of the Capital Contributions of the Preferred Limited Partner and the balance,
if any, to the accrued return on the unrefunded amount of such Capital
Contributions at the applicable rate set forth in clauses (B) (2) and (3) above.
(ii) If the General Partner or its nominee shall elect to purchase the
Preferred Limited Partnership Interest pursuant to paragraph (i), it shall be
required to purchase the Common Limited Partner's right, title and interest in
the Partnership for a cash purchase price equal to the Fair Market Sales Value
of such interest as of such purchase date.
(iii) In order to exercise the option provided in paragraph (i)
above and to effect the purchase required in
77
paragraph (ii) above, the General Partner or its nominee shall give each Limited
Partner the Tentative Purchase Notice to such effect within 10 days of the
General Partner's receipt of notice of the exercise by the Preferred Limited
Partner of any of its remedies pursuant to subsection 14.2. The General Partner
and each Limited Partner agree to negotiate in good faith to determine the Fair
Market Sales Value of the Preferred Limited Partnership Interest and the Common
Limited Partnership Interest by mutual agreement following receipt of the
Tentative Purchase Notice from the General Partner. If the General Partner and
the Limited Partner shall fail to reach agreement with respect to the Preferred
Limited Partnership Interest or the Common Limited Partnership Interest within 5
Business Days after receipt by the Limited Partner of the Tentative Purchase
Notice from the General Partner, the Fair Market Sales Value of such Limited
Partnership Interest shall be determined by the Appraisal Procedure. If the
General Partner or its nominee intends to exercise such purchase option, it
shall give the Purchase Notice within 5 Business Days of the earlier to occur of
(a) the General Partner and the Limited Partner agreeing to the Fair Market
Sales Value and (b) the completion of the Appraisal Procedure. If the General
Partner or its nominee shall deliver such Purchase Notice, it shall complete the
purchase of the Preferred Limited Partnership Interest and the Common Limited
Partnership Interest within 180 days of the date of the Tentative Purchase
Notice.
(iv) To the extent that the Fair Market Sales Value of the Preferred
Limited Partnership Interest exceeds the amount set forth in clause (B) of
paragraph (i) above, such excess shall be paid with the proceeds of a loan to be
made by the Preferred Limited Partner to the Partnership on the proposed
purchase date. Such loan will be evidenced by a note which will mature on the
earlier of (x) 15 years after the date thereof and (y) twenty-two years and six
months after the Second Capital Contribution Date, be payable in consecutive
quarterly equal installments in the aggregate of principal and interest for the
period commencing with the first quarter after the date of such note, and bear
interest at a rate equal to that which the Preferred Limited Partner in its
reasonable discretion and after consultation with the Managing General Partner
and its advisors determines is the rate, and have other terms and conditions
which the Preferred Limited Partner in its reasonable discretion determines to
be, available from independent third parties for obligations having a comparable
tenor and a comparable structure. The loan will be secured by a pledge of the
interests of the General Partner in the Partnership pursuant to a first (second
so long as the Construction Loan Agreement, the General Partner Credit Agreement
or any agreement pursuant to which the General Partner obtains financing to
purchase the Limited Partnership Interests under this subsection 14.2(g) is in
effect) pledge agreement in form and substance reasonably satisfactory to the
Preferred Limited Partner.
(h) The rights of the Limited Partner hereunder are not the exclusive
remedies upon the occurrence of a Special Event
78
but are in addition to any other remedies which may at the time be available
hereunder, at law or in equity.
(i) In the event that a Special Event occurs and is continuing, the
Preferred Limited Partner's right to exercise remedies pursuant to this
subsection 14.2 shall not be delayed or deferred by the election by the General
Partner to exercise its purchase option pursuant to subsection 14.2(g); provided
--------
that neither the Limited Partner nor any substitute Managing General Partner
appointed pursuant to subsection 14.2(b) shall sell or otherwise dispose of all
or substantially all of the assets of the Project until the expiration or
termination of the General Partner's right to exercise such purchase option.
14.3 Events of Dissolution. The Partnership shall be dissolved and its
---------------------
affairs shall be wound up in the event that:
(a) the Partners agree in writing to terminate the Partnership;
(b) the sale, transfer or other irrevocable disposition of all or
substantially all of the property of the Partnership;
(c) the Partnership is terminated in accordance with the terms of this
Agreement; or
(d) dissolution is otherwise required by law (except as (S) 17-402 of
the Partnership Act is modified by the provisions of this Agreement) or by
a decree of judicial dissolution.
Notwithstanding the preceding provisions of this subsection 14.3, upon
dissolution of the Partnership as a result of the withdrawal of the last
remaining general partner of the Partnership, the business of the Partnership
shall not be terminated and its affairs wound up if, within 90 days after such
event, all remaining Partners unanimously elect in writing to continue the
business of the Partnership and shall designate a substitute Managing General
Partner and/or General Partner(s), as the case may be, in the manner set forth
in subsection 14.2(b) and in accordance with subsection 10.2, in which event the
further provisions of said subsection 14.2(b) shall be fully applicable, except
the Managing General Partner shall not continue to be a general partner of the
Partnership. In the event that the Partners so agree to continue the Partnership
with a substitute Managing General Partner and/or General Partner, as the case
may be, the substituted Managing General Partner and/or the General Partner is
hereby authorized to and shall continue the business of the Partnership under
the terms of this Agreement.
14.4 Procedure in Dissolution and Liquidation. (a) Winding Up. Upon
----------------------------------------- ----------
dissolution of the Partnership pursuant to subsection 14.3 hereof, the
Partnership immediately shall
79
commence to wind up and liquidate the affairs and business of the Partnership in
an orderly manner.
(b) Management Rights During Winding Up. During the period of the
-----------------------------------
winding up of the affairs of the Partnership, the rights and obligations of the
Partners set forth herein with respect to the management of the Partnership
shall continue. For purposes of winding up, and subject to subsection 14.2
hereof, the Managing General Partner shall act as liquidator to wind up the
Partnership and shall make all decisions relating to the conduct of any business
or operations during the winding up period and to the sale or other disposition
of the Partnership assets with the advice of the Limited Partner, except that if
the dissolution results from the occurrence of a Special Event, the Preferred
Limited Partner shall act as liquidator and make all such decisions.
(c) Distributions in Liquidation. The assets of the Partnership shall
----------------------------
be applied or distributed in liquidation in the following order:
(i) First, to the payment and discharge of all of the Partnership's
debts and liabilities, including the establishment of any reasonably
necessary reserves;
(ii) Second, to the Partners in accordance with the positive balances
in their respective Capital Accounts as determined after taking into
account all adjustments to Capital Accounts for the year during which the
liquidation occurs.
(d) Non-Cash Assets. Every reasonable effort shall be made to dispose
---------------
of the interest of the Partnership in the assets of the Partnership, so that the
distribution may be made to the Partnership in cash. If at the time of the
Liquidation of the Partnership, the Partnership owns any assets in the form of
notes, deeds of trust or other non-cash assets, such assets, if any, shall be
distributed in kind to the Partners, in lieu of cash, in accordance with
subsection 14.4(c), in proportion to their right to receive the assets of the
Partnership on an equitable basis reflecting the net fair market value of the
assets so distributed.
14.5 Disposition of Documents and Records. All documents and records
------------------------------------
of the Partnership, including, without limitation, all financial records,
vouchers, cancelled checks and bank statements, shall be delivered to the
Managing General Partner upon termination of the Partnership. Copies thereof
shall be prepared, by microfiche process if requested, and made available to
each Partner as requested for any purpose reasonably related to the interest of
such Partner as a partner in the Partnership and at such Partner's cost and
expense. Unless otherwise approved by the Partners, the Managing General Partner
shall retain such documents and records for a period of not less than seven
years and shall make such documents and records
80
available for any purpose reasonably related to the interest of a Partner as a
partner in the Partnership during normal business hours to any other Partner for
inspection and copying at such other Partner's cost and expense; provided,
--------
however, that if there is an audit or threat of audit, such documents and
-------
records shall be retained until the audit is completed and any tax liability
finally determined. Said documents and records shall be available for
inspection, examination and copying by the Managing General Partner upon
reasonable notice.
14.6 Termination. Upon the completion of the liquidation of the
-----------
Partnership and the distribution of all Partnership funds, the Partnership shall
terminate. The Managing General Partner shall execute and file a Certificate of
Cancellation of the Certificate of Limited Partnership as well as any and all
other documents required to effect the dissolution and termination of the
Partnership.
ARTICLE XV
RIGHTS AND OBLIGATIONS OF LIMITED PARTNER
-----------------------------------------
15.1 Management of the Partnership. Except as provided in Article XIV
-----------------------------
and the Recognition Agreements, a Limited Partner in its capacity as such shall
not (a) take part in the management or control of the business of the
Partnership or transact any business in the name of the Partnership, (b) have
the power or authority to bind the Partnership or to sign any agreement or
document in the name of the Partnership, or (c) have any power or authority with
respect to the Partnership except insofar as the consent of such Limited Partner
shall be expressly required. Notwithstanding anything herein to the contrary,
after the Flip Date, the rights specified in clauses (a), (b) and (c) above
shall not be applicable to, or exercisable by, the Preferred Limited Partner and
the Preferred Limited Partner shall cease to be a Limited Partner unless it is
the Common Limited Partner.
15.2 Limitation on Liability of Limited Partners. Except as otherwise
-------------------------------------------
provided by law, the liability of a Limited Partner shall be limited to its
Capital Contribution as and when it is payable under the provisions of the
Capital Contribution Agreement. A Limited Partner, in its capacity as such,
shall have no other liability to contribute money to, or in respect of the
liabilities or obligations of, the Partnership, nor shall any Limited Partner be
personally liable for any obligations of the Partnership. Except as provided in
subsection 10.5, Article XIV and the General Partner Credit Agreement and the
Reimbursement Agreement, no Limited Partner shall be obligated to make loans to
the Partnership.
15.3 Limitation on Liability of Owner Trustee. The parties hereto
----------------------------------------
agree that, except as hereinafter set forth, any claim or liability under this
Agreement asserted against the
81
Owner Trustee by any of them shall be limited to satisfaction out of, and
enforcement against, the Trust Estate (as defined in the Trust Agreement).
Notwithstanding anything to the contrary contained herein or in any other
document, certificate or instrument executed by the Owner Trustee pursuant
hereto or thereto, each of the parties hereto hereby acknowledges and agrees
that neither the Owner Trustee, Linden Owner Partnership nor any officer,
employee, partner, servant, controlling Person, manager, agent, authorized
representative or Affiliate of the Owner Trustee or Linden Owner Partnership
(collectively, the "Non-Recourse Persons") shall have any liability to all or
--------------------
any of them (such liability, including such as may arise by operation of law,
being hereby expressly waived) for the performance of any of the obligations of
the Owner Trustee contained herein or therein or shall otherwise be liable or
responsible with respect thereto, except as hereinafter set forth. If any claim
of any party hereto against the Owner Trustee or alleged liability to any party
hereto of the Owner Trustee shall be asserted under this Agreement, each party
hereto agrees that, except as hereinafter set forth, they shall not have the
right to proceed directly or indirectly against the Non-Recourse Persons or
against their respective properties and assets (other than the Trust Estate) for
the satisfaction of any such claim or liability (except to the extent
enforceable out of the Trust Estate) in respect of any such claim or liability.
Notwithstanding any of the foregoing, it is expressly understood and agreed,
however, that nothing contained in this subsection 15.3 shall in any manner or
any way (a) affect or diminish any obligation, covenant or agreement of any Non-
Recourse Person made expressly in its individual capacity under any certificate
executed by such Non-Recourse Person on its own behalf or any right or benefit
of any party hereto under any such certificate or (b) affect or diminish any
rights of any Person against any other Person arising from misappropriation or
misapplication of any funds or for such other Person's fraud, gross negligence
or willful misconduct. The foregoing acknowledgements, agreements and waivers
shall survive the termination of this Agreement and shall be enforceable by any
Non-Recourse Person.
ARTICLE XVI
MISCELLANEOUS
-------------
16.1 Further Assurances. Each Partner shall execute and deliver such
------------------
other certificates, agreements and documents, and take such other actions as may
be reasonably requested by the Managing General Partner or any Limited Partner
in connection with the formation of the Partnership and the achievement of
its purposes and the placement of any debt and equity relating to the Project
authorized pursuant to this Agreement (whether by or on behalf of the
Partnership).
16.2 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended only with the written consent of all the
82
Partners. The observance of any term of this Agreement may be waived only if
such waiver is in writing signed by the Partner waiving such term.
16.3 Successors and Assigns. Subject to the provisions of Article X,
----------------------
the terms and provisions hereof shall be binding on and inure to the benefit of
and be enforceable by the successors and assigns of the parties hereto, whether
so expressed or not.
16.4 Indemnification. To the fullest extent permitted by law, the
----------------
Partnership agrees to pay, indemnify and hold each Partner and its Affiliates,
directors, officers, successors and assigns harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement, the other Basic Documents, the
other Operative Documents or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby, or as a result of
such Partner's acting as a partner of the Partnership hereunder, (all of the
foregoing, collectively, the "indemnified liabilities", provided, that, with
----------------------- --------
respect to the Managing General Partner Group, "indemnified liabilities" shall
not include the liabilities set forth in subsection 7.5 for which the Managing
General Partner Group is liable), provided, that the Partnership shall have no
--------
obligation hereunder to any such Person with respect to indemnified liabilities
arising from (i) the gross negligence, fraud or willful misconduct of any such
Person, (ii) legal proceedings commenced against any such Person by any security
holder or creditor other than in its capacity as a security holder or creditor
of the Partnership arising out of and based upon rights afforded any such
security holder or creditor solely in its capacity as such security holder or
creditor, or (iii) legal proceedings commenced against any such Person by any
assignee of such Person's interest herein. The agreements in this subsection
shall survive the making by each Partner of its initial capital contributions to
the Partnership and the termination of the Operative Documents.
16.5 Incorporation By Reference. The provisions of the Capital
--------------------------
Contribution Agreement are hereby incorporated by reference herein with the same
effect as if such provisions were fully set forth herein.
16.6 Severability. If any term or provision of this Agreement or the
------------
application thereof to any circumstance shall be held invalid or unenforceable,
to any extent, by a court of competent jurisdiction, the remainder of this
Agreement, other than that portion determined to be invalid or unenforceable,
shall not be affected thereby, and each valid provision hereof shall be enforced
to the fullest extent permitted by law.
83
16.7 Headings and Table of Contents. The headings in and the table
------------------------------
of contents of this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.
16.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute on instrument.
16.9 Submission to Jurisdiction; Waivers. (A) Each Partner hereby
-----------------------------------
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Document, or
for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the States of New York
and Delaware, the courts of the United States of America for the Southern
District of New York and for the District of Delaware, and appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that any
such action or proceeding was brought in any inconvenient court and agrees
not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Partner at its address set forth in subsection 12.2 or any such other
address of which the other Partners shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect the
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction.
(B) Each Partner hereby irrevocably and unconditionally waives trial
by jury in any legal action or proceeding referred to in paragraph (A) above.
16.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
16.11 Entire Agreement. This Agreement sets forth the entire
----------------
agreement of the parties hereto with respect to its subject matter, and
supersedes all previous understandings, written or oral, with respect thereto.
84
16.12 Arbitration of Gas Purchase Plan Disputes. In the event that
-----------------------------------------
the Preferred Limited Partner does not approve any gas purchase plan submitted
to the Preferred Limited Partner pursuant to subsection 7.2(n) hereof by the
date which is 30 days after the date of such submission, the dispute shall be
referred to an arbitration panel comprised of three persons having knowledge and
experience in connection with gas purchase arrangements. Such panel shall (i) be
selected within 60 days of the date of submission of such gas purchase plan to
the Preferred Limited Partner, (ii) be comprised of (x) one member selected by
the Preferred Limited Partner, (y) one member selected by the Managing General
Partner and (z) one member jointly selected by the members selected pursuant to
clauses (x) and (y) of this clause (ii) and (iii) conduct any arbitration
proceeding in accordance with procedures established by the American Arbitration
Association. The decision of such panel shall be issued within 60 days of the
selection of its members and such decision shall be binding on the Partners.
85
The Initial Limited Partner joins in this Agreement for the sole
purpose of evidencing his receipt of the greater of the return of his Capital
Contribution to the Partnership or his capital account balance and his
withdrawal as the Initial Limited Partner. The Initial Limited Partner, having
so withdrawn, shall have no continuing obligation or liability with respect to
the Partnership or this Agreement.
INITIAL LIMITED PARTNER:
/s/ Xxxxxx X. XxXxxx
----------------------------------------
Xxxxxx X. XxXxxx
IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership has been executed as of the date and year first above written.
GENERAL PARTNER:
COGEN TECHNOLOGIES LINDEN, LTD.
By: Cogen Technologies, Inc.,
its general partner
By [SIGNATURE ILLEGIBLE]
-------------------------------------------
Title:
PREFERRED LIMITED PARTNER:
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity
but as Owner Trustee
By [SIGNATURE ILLEGIBLE]
-------------------------------------------
Title: Assistant Vice President
COMMON LIMITED PARTNER:
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity
but as Owner Trustee
By [SIGNATURE ILLEGIBLE]
-------------------------------------------
Title: Assistant Vice President
