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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN XXXXX X.X.
Dated
February 9, 1993
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
1.1 Defined Terms...................................................... 2
1.2 Other Definitions.................................................. 21
ARTICLE II
FORMATION AND CONTINUATION OF PARTNERSHIP
2.1 Formation of Partnership; Name..................................... 22
2.2 Purpose; Business of the Partnership............................... 22
2.3 Authorizations..................................................... 22
2.4 Principal Office; Offices; Addresses............................... 24
2.5 Further Filings.................................................... 25
2.6 Term............................................................... 25
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Partners and Contributions......................................... 25
3.2 Interest on Capital Contributions.................................. 25
3.3 Withdrawal of XxXxxx............................................... 25
ARTICLE IV
DISTRIBUTIONS
4.1 Distributable Cash................................................. 26
4.2 Distributions Prior to the Second Capital
Contribution Date................................................ 26
4.3 Distributions After the Second Capital
Contribution Date and Prior to the Flip Date..................... 26
4.4 Distributions Subsequent to the Flip Date.......................... 27
4.5 Arrears Account.................................................... 27
4.6 Tax Indemnity...................................................... 28
4.7 Net Cash From Sales or Refinancing................................. 28
4.8 Special Event ..................................................... 29
4.9 Failure to Make Second Capital Contribution ....................... 29
4.10 General Partner Term Loan.......................................... 29
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ARTICLE V
ALLOCATION OF CERTAIN PROFITS AND LOSSES
FOR BOOK AND TAX PURPOSES
5.1 Operating Profits Subsequent to the Initial
Capital Contribution Date and Prior to the
Second Capital Contribution Date................................. 30
5.2 Operating Profits Subsequent to the Second
Capital Contribution Date........................................ 30
5.3 Operating Losses................................................... 31
5.4 Depreciation....................................................... 31
5.5 Gains.............................................................. 32
5.6 Losses............................................................. 32
5.7 Qualified Income Offset............................................ 32
5.8 Minimum Gain Chargeback............................................ 32
5.9 Special Allocation of Certain Expenses............................. 33
5.10 Partner Nonrecourse Deductions..................................... 33
5.11 Curative Allocations............................................... 33
5.12 Tax Allocations.................................................... 33
5.13 Property Subject to 704(c) and 704(b).............................. 33
5.14 Gross Income Allocation............................................ 34
5.15 Limitations........................................................ 34
5.16 Ordering Rules..................................................... 34
ARTICLE VI
BOOKS OF ACCOUNT, RECORDS, REPORTS AND TAX MATTERS
6.1 Books and Records.................................................. 34
6.2 Information Kept by Managing General Partner....................... 35
6.3 Fiscal Year........................................................ 35
6.4 Partnership Funds.................................................. 36
6.5 Income Tax Elections/Return Preparation............................ 36
6.6 Tax Accounting Matters............................................. 36
6.7 Financial Statements............................................... 37
6.8 Computations....................................................... 39
6.9 Taxes and Tax Controversies........................................ 39
6.10 Inspection; Reports to Regulatory Authorities...................... 41
ARTICLE VII
MANAGEMENT
7.1 Appointment; Powers of the Managing General
Partner.......................................................... 41
7.2 Certain Management Duties and Responsibilities
of the Managing General Partner.................................. 44
7.3 Restrictions on Powers of the Managing General
Partner.......................................................... 52
7.4 Fee................................................................ 55
7.5 Limitations on Liability of Managing General
Partner.......................................................... 55
7.6 Partnership Information Meetings................................... 56
7.7 Limitations on the Partners........................................ 56
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7.8 Cooperation Regarding Permits and Power Agreement.................. 56
7.9 Time Devoted to Partnership........................................ 57
7.10 Other Business Activities.......................................... 57
ARTICLE VIII
CALLS FOR AND PAYMENT OF FUNDS....................... 57
ARTICLE IX
CONDITIONS PRECEDENT
9.1 Conditions to the Contributions on the Initial
Capital Contribution Date........................................ 57
9.2 Conditions to the Contributions on or prior to
the Second Capital Contribution Date............................. 58
ARTICLE X
TRANSFER AND ENCUMBRANCE
10.1 Transfer of Partnership Interest; General
Provisions....................................................... 58
10.2 Additional Partners................................................ 59
10.3 Revisions to this Agreement Upon Transfer or
Encumbrance...................................................... 60
10.4 Amendment to Certificate of Limited Partnership.................... 60
10.5 Voluntary Withdrawal by Limited Partners........................... 60
ARTICLE XI
OPTIONS TO PURCHASE
11.1 Fair Market Sales Value Purchase Options........................... 62
ARTICLE XII
NOTICES
12.1 Notices............................................................ 63
12.2 Addresses.......................................................... 63
ARTICLE XIII
WITHDRAWAL............................... 63
ARTICLE XIV
SPECIAL EVENTS AND DISSOLUTION; LIQUIDATION; TERMINATION
14.1 Special Events..................................................... 64
14.2 Certain Remedies Following Special Event........................... 69
14.3 Events of Dissolution.............................................. 72
14.4 Procedure in Dissolution and Liquidation........................... 72
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14.5 Disposition of Documents and Records............................... 73
14.6 Termination........................................................ 74
ARTICLE XV
RIGHT AND OBLIGATIONS OF LIMITED PARTNER
15.1 Management of the Partnership...................................... 74
15.2 Limitation on Liability of Limited Partners........................ 74
ARTICLE XVI
MISCELLANEOUS
16.1 Further Assurances................................................. 75
16.2 Amendments and Waivers............................................. 75
16.3 Successors and Assigns............................................. 75
16.4 Indemnification.................................................... 75
16.5 Incorporation By Reference......................................... 76
16.6 Severability....................................................... 76
16.7 Headings and Table of Contents..................................... 76
16.8 Counterparts....................................................... 76
16.9 Submission to Jurisdiction; Waivers................................ 76
16.10 GOVERNING LAW...................................................... 77
16.11 Entire Agreement................................................... 77
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Schedules
Schedule 1 Name; Addresses; Capital Contributions
Schedule 2 Tax Assumptions
Schedule 3 Permits
Schedule 4 Indebtedness
Schedule 5 Monthly Distributions
Schedule 6 Stipulated Redemption Value Distributions
Schedule 7 Insurance
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AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
CAMDEN XXXXX X.X.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement") of CAMDEN XXXXX X.X. (the "Partnership") is made and entered into
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this 9th day of February, 1993, by and among COGEN TECHNOLOGIES CAMDEN GP
LIMITED PARTNERSHIP, a Delaware limited partnership ("Cogen Camden", the
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"General Partner" or the "Managing General Partner"), XXXXXX X. XxXXXX
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("XxXxxx") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE
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Capital").
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WHEREAS, Cogen Camden is the sole general partner and XxXxxx is
the sole limited partner of the Partnership, a limited partnership established
pursuant to the Agreement of Limited Partnership dated March 25, 1988 (as
heretofore amended, supplemented, restated or otherwise modified, the "Original
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Partnership Agreement") and Cogen Camden and XxXxxx desire to amend and restate
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in its entirety the Original Partnership Agreement in order to make GE Capital
the sole limited partner of the Partnership and Cogen Camden the sole general
partner of the Partnership; and
WHEREAS, pursuant to the Original Partnership Agreement, Cogen
Camden agreed to contribute $200 to the capital of the Partnership in exchange
for its General Partnership Interest (as hereinafter defined) in the Partnership
and XxXxxx agreed to contribute $100 to the capital of the Partnership in
exchange for its limited partner interest in the Partnership; and
WHEREAS, pursuant to the Original Partnership Agreement, Cogen
Camden may admit additional limited partners to the Partnership and upon such
admission XxXxxx shall withdraw from the Partnership; and
WHEREAS, pursuant to the Capital Contribution Agreement (as
hereinafter defined), GE Capital shall make a capital contribution to the
Partnership on the Initial Capital Contribution Date (as hereinafter defined) in
exchange for the Limited Partnership Interest (as hereinafter defined), and
agree, 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 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 GE Capital as a limited partner of the Partnership, XxXxxx shall
withdraw from the Partnership;
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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, XxXxxx shall cease to be a Partner, the
Partnership shall be continued between the General Partner and GE Capital and
the Original Partnership Agreement shall be amended and restated in its entirety
as follows:
W I T N E S S E T H:
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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 GE Capital) and the following terms shall have the following
meanings:
"Adjusted Capital Account Deficit" shall mean, with respect to
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any 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-l(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-
l(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" shall mean, with respect to any Person, (a) any
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Person which, 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
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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 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 GE Capital, as agent for the lenders parties
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to the Construction Loan Agreement, or any entity acting as successor
agent under the Construction Loan Agreement.
"Agreement" shall mean this Amended and Restated Agreement of
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Limited Partnership, as the same may be amended, supplemented, restated
or otherwise modified from time to time.
"Annual Period" shall mean a period of four consecutive fiscal
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quarters.
"Applicable Laws" shall mean all applicable laws, ordinances,
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judgments, decrees, injunctions, writs, orders, 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
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independent appraisers, one chosen by the Managing General Partner and
one by the Limited Partner, shall agree upon the determinations then
the subject of appraisal. The Managing General Partner or the 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)(ii) hereof and subsection ll(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)(ii) hereof and 10 days in the case of subsection
ll(b) of the Capital Contribution Agreement) after appointment of the
two appraisers they are unable to agree upon the amount in question, a
third independent appraiser shall be chosen within 10 days (5 days in
the case of subsection 14.2(g)(ii) hereof and
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subsection ll(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 ll(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 the Limited Partner;
otherwise the average of all three determinations shall be binding and
conclusive on the Managing General Partner and the Limited Partner. If
the Managing General Partner or the 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 the Limited Partner. The expenses of the appraisal
procedure shall be borne solely by the Partnership.
"Business Day" shall mean a day other than a Saturday, Sunday or
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other day on which commercial banks in New York City or Camden, New
Jersey are authorized or required by law to close.
"Capital Account" shall mean, with respect to any General Partner
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or 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 and 5.14 hereof.
5
(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-l(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-l(b), and shall be interpreted and applied in a manner
consistent with such Regulations.
"Capital Contribution" shall mean, with respect to any Partner, the
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amount 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.
"Capital Contribution Agreement" shall mean the Capital
------------------------------
Contribution Agreement dated as of the
6
Conformed Agreement Date, among the Partnership, Cogen Camden, the Agent and GE
Capital, as amended, supplemented, restated or otherwise modified from time to
time.
"Cash Equivalents" shall mean (a) obligations of, or guaranteed as
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to 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, however, that the aggregate amount at any one time so
invested (A) in open 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 Amended and
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Restated Certificate of Limited Partnership of the Partnership, dated July 26,
1991, filed with the Secretary of State of the State of Delaware on July 31,
1991, and all amendments thereto and restatements thereof.
"Code" shall mean the Internal Revenue Code of 1986, as the same
----
may be amended from time to time, or any corresponding provisions of succeeding
law.
"Commonly Controlled Entity" shall mean an entity, whether or not
--------------------------
incorporated, which is under common control with the Managing General Partner
within the meaning of Section 4001 of ERISA or is
7
part of a group which includes the Managing General Partner and which is treated
as a single employer under Code Section 414.
"Conformed Agreement Date" shall mean January 2, 1992.
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"Construction Loan Agreement" shall mean the Construction and Term Loan
---------------------------
Agreement dated as of the Conformed Agreement Date, 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 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
------------------
Contribution Date and the Second Capital Contribution Date.
"Depreciation" shall mean, for each fiscal year or other period, an
------------
amount 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.
"Distributable Cash" shall mean the gross cash proceeds from
------------------
Partnership operations (excluding Net Cash from Sales or Refinancing and any
Debt Service Account Interest, but including the interest and other income
earned on the other Accounts (as defined in the Security Deposit Agreement))
minus the portion of such cash proceeds used to pay, or establish reserves for,
all Partnership operating,
8
maintenance and improvement expenses, 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 (other than payments of
principal of, interest on and premium, if any, with respect to the Partnership
Term Loan and the first refinancing thereof), 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 Management Fee (including, without limitation, costs incurred
in connection with the procurement of gas for the Facility). "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 or effluent or emissions of any kind in violation of any Relevant
Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
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as amended from time to time.
"Fair Market Sales Value" shall mean, with respect to any interest in
-----------------------
the 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 upon such a determination, such Fair Market Sales Value
shall be determined in accordance with the Appraisal Procedure.
9
"Fair Market Sales Value of the Project" shall mean, with respect to
--------------------------------------
the Project, 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 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
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to the status of the Project as a Qualifying Facility.
"Financing Lease" shall mean (a) any lease of property, real or
---------------
personal, 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.
"Flip Date" shall mean the date which is seventeen years after the
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Second Capital Contribution Date (unless at such time there is a positive
balance in any Arrears Account).
"Floating Rate" shall mean LIBOR or LIBOR (Reference Banks), as
-------------
applicable.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
"Gains" and "Losses" shall mean the gain or loss resulting from any
----- ------
disposition of Partnership property with respect to which gain or loss is
recognized for federal income tax purposes;
10
provided, however, that such gain or loss shall be computed by reference to
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Gross Asset Value rather than adjusted tax basis of such property.
"GE Capital" shall mean General Electric Capital Corporation, a New
----------
York corporation, or its successors or assigns.
"General Partner" shall mean Cogen Camden, its permitted successors and
---------------
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
----------------------------
Partner in the Partnership.
"Governmental Authority" shall mean any nation or government, any state
----------------------
or 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
-----------------
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;
(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, as of the following times:
(1) the acquisition of an additional interest in the Partnership by any
new or existing Partner (other than pursuant to the Capital
Contribution Agreement) in exchange for more than a de minimis Capital
-- -------
Contribution; (2) the 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 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
11
meaning of Regulations Section 1.704-l(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-l(b)(2)(iv)(m); provided, however, that Gross Asset Values shall
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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.
"Implicit Rate" shall mean a per annum rate equal to (a) 3.38% plus (b)
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the Ten Year Treasury Rate used in the calculation of the Tranche A
Distributions set forth on Schedule 5 multiplied by (1-.42).
"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
12
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.
"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
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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 ceased 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 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
13
of the foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Limited Partner" shall mean GE Capital or any of its designees or
---------------
assignees (including, without limitation, a grantor trust) 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.
"Limited Partner Benefits" shall mean, with respect to the Limited
------------------------
Partnership Interest, the sum of the following, determined at the beginning of
each month: (i) the cumulative cash distributions with respect to such Limited
Partnership Interest made by the Partnership after the Initial Capital
Contribution Date, plus (ii) 36% 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 beginning of such month, 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 beginning of such month, 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) 36% of the net
taxable income allocated with respect to such Limited Partnership Interest (or
realized with respect to a distribution on such Limited 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
beginning of such month.
"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.
"Management Fee" shall mean the management fee to be paid to the
--------------
Managing General Partner pursuant to subsection 7.4 hereof.
14
"Managing General Partner" shall mean Cogen Camden 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.
"Monthly Arrears Account" shall have the meaning assigned to such term
-----------------------
in subsection 4.5.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.
"Net Cash From Sales", "Net Cash From Refinancing" or "Net Cash From
-------------------------------------------------------------------
Sales or Refinancing" shall mean, as the context may require, 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(a) of the General
Partner Term Loan 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(c). 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(c).
"Operating Budget" shall have the meaning specified in subsection
----------------
6.7(b).
15
"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 adjustments:
(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-l(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
(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 and 5.14 hereof shall not be
taken into account in computing Operating Profits or Operating Losses.
"Operative Documents" shall mean collectively, this Agreement, the
-------------------
Capital Contribution Agreement, the Construction Loan Agreement, the General
Partner Term Loan Agreement, the Security Deposit Agreement, the other
Collateral Security Documents and the Project Documents.
"Organizational Expenses" shall mean organizational expenses as defined
-----------------------
under Code Section 709.
"Partner" shall mean Cogen Camden and GE Capital 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)(2).
"Partnership" shall mean the limited partnership governed by this
-----------
Agreement formed under and pursuant to the Partnership Act and known as "Camden
Xxxxx X.X.", as it may from time to time be constituted.
16
"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 Debt Service Account" shall have the meaning specified in
--------------------------------
the Amended and Restated Security Deposit Agreement.
"Partnership Term Loan" shall mean the "Term Loan" as such term is
--------------------- ---------
defined in the Construction Loan Agreement.
"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.
"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; (ii) Liens in favor of any Person (other than the General
Partner, XxXxxx 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
17
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 PSE&G Subordinated
Mortgage; (vii) the Lien in favor of Midlantic granted pursuant to the Security
Deposit Agreement; and (viii) 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.
"Power Purchase Agreement" shall mean the Power Purchase and
------------------------
Interconnection Agreement, dated April 15, 1988, between PSE&G and the
Partnership, as amended by the First Amendment thereto dated June 12, 1990 and
the Second Amendment thereto, and as the same may be further amended,
supplemented, restated or otherwise modified from time to time.
"Project" shall mean the Facility, the Site and all easements,
-------
leasehold interests, licenses, permits, contract rights and other real and
personal property interests now owned or hereafter acquired by Cogen Camden or
the Partnership or in which Cogen Camden or the Partnership or in which Cogen
Camden or the Partnership has any rights, other than the interest of any Partner
hereunder.
"Project Cost" shall mean the lesser of (a) all Certified Construction
------------
Costs and (b) $136,000,000.
"Project Documents" shall mean the collective reference to the Power
-----------------
Purchase Agreement, the Steam supply Agreement, the Gas Service Agreement, any
Gas Purchase Agreement, the Operation and Maintenance 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
18
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. 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.
"PSE&G" shall mean Public Service Electric & Gas Company,
-----
a New Jersey corporation.
"PUC" shall mean the State of New Jersey Board of Regulatory
---
Commissioners 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 Arrears Account" shall have the meaning assigned to such
-------------------------
term in subsection 4.5.
"Regulations" shall mean the temporary, proposed and final regulations
-----------
under the Code and any successor provisions thereto.
"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.
19
"Reorganization" shall mean, with respect to any Multiemployer Plan,
--------------
the condition that such Plan is in 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 in the case of the
-------------------
General Partner, the president or any vice president of the general partner of
the General Partner, or with respect to financial matters, the chief financial
officer of the general partner of the General Partner and in the case of any
Person which is a corporation, the president or any vice president of such
Person or with respect to financial matters, the chief financial officer 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 Amended and Restated
--------------------------
Security Deposit Agreement, to be entered
20
into among the Partnership, the Limited Partner, the General Partner, the Agent,
the Working Capital Lender (as defined in the Amended and Restated Security
Deposit Agreement) and the Security Agent in substantially the form of Exhibit B
to the Capital Contribution Agreement, as 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 have the meaning assigned to such
---------------------------
term in the Capital Contribution Agreement.
"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 the Limited Partner
--------------------
the sum of (i) the Tax Loss Amount, plus (ii) from the date of the Tax Indemnity
Event, the Implicit Rate, compounded monthly, 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 the 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.
"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
21
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 and interest expense 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 the 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 the 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 36% 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.
"Ten Year Treasury Rate" shall mean, as of any date of determination,
----------------------
the rate on ten year United States Treasury notes as reported in Federal
Statistical Release H.15(519), or any successor publication of the Federal
Reserve Board, on such date.
"TMP" shall have the meaning specified in subsection 6.9.
---
"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.
"Tranche A Distribution" shall have the meaning specified in subsection
----------------------
4.3(a).
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, schedule and exhibit references are to this Agreement unless
otherwise specified.
22
ARTICLE II
FORMATION AND CONTINUATION OF PARTNERSHIP
-----------------------------------------
2.1 Formation of Partnership; Name. The Partnership was formed on March
------------------------------
28, 1988 by the filing, pursuant to the Partnership Act, of the Certificate of
Limited Partnership. The Certificate of Limited Partnership was replaced by the
filing, on July 31, 1991, of the Amended and Restated Certificate of Limited
Partnership. The name of the Partnership is "Camden Xxxxx X.X."
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; 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:
(i) to design, plan, finance, construct, own, develop, maintain,
operate, lease and dispose of the Project, or any part thereof and to
23
engage 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, term loan and working capital agreements;
(2) notes, including, but not limited to, construction notes,
term notes and working capital 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 purchase contracts;
(7) equipment supply contracts;
(8) additional contracts, including, but not limited to, site
lease agreements, gas transportation agreements,
subordinated mortgages, steam supply agreements, gas service
agreements, gas sourcing agreements, gas purchase
agreements, turnkey contracts, operation and maintenance
agreements, water agreements and easement agreements;
(9) reimbursement agreements;
(10) recognition agreements;
(11) Midlantic Agreements;
24
(12) any (a) assignment, (b) consent to assignment, (c) consent
and agreement, and (d) consent and/or recognition agreement
relating to types of contracts, agreements, commitments,
arrangements or other undertakings set forth in this Section
2.3(b);
(13) certificates and notices, including, but not limited to,
construction loan borrowing certificates, term loan borrowing
certificates, completion certificates, cost certificates and
notices of borrowing;
(14) collateral agency agreements;
(15) tax indemnity agreements;
(16) Project Documents and Project Contracts;
(17) Operative Documents;
(18) letter agreements; and
(19) non-compete agreements; and
(iii) to have letters of credit issued for its account and on its
behalf.
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 Limited Partner pursuant to subsection 6.7(b).
25
(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 now 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.
ARTICLE III
CAPITAL CONTRIBUTIONS
---------------------
3.1 Partners and Contributions. The General Partner has agreed to make
--------------------------
a contribution of $200 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 on or
prior to 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 XxXxxx. XxXxxx agreed to make a contribution of $100
--------------------
in cash to the capital of the Partnership. If XxXxxx shall have made such cash
capital contribution to the Partnership prior to the Initial Capital
Contribution Date, such capital contribution will be returned to XxXxxx
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
26
the admission of GE Capital as a limited partner of the Partnership, at which
time the Managing General Partner and the Limited Partner hereby consent to
XxXxxx'x withdrawal of its capital contribution and at which time XxXxxx shall
withdraw as a limited partner of the Partnership. The Managing General Partner
and the Limited Partner hereby waive and release XxXxxx from any liability and
from any right, claim or action that they or the Partnership may have against
XxXxxx for such withdrawal or as a result of his status as a Partner of the
Partnership. XxXxxx is not entitled to receive any other amount or payment upon
or by reason of the withdrawal of XxXxxx from the Partnership or by reason of
XxXxxx having been a limited partner of the Partnership.
ARTICLE IV
DISTRIBUTIONS
-------------
4.1 Distributable Cash. Beginning with the end of the second month
------------------
following the Second Capital Contribution Date, the Managing General Partner
shall distribute Distributable Cash to the Partners no less frequently than the
end of each month in the manner provided in this Article IV.
4.2 Distributions Prior to the Second Capital Contribution Date. (a) So
-----------------------------------------------------------
long as the aggregate amount distributable to the General Partner under this
Section 4.2 does not exceed the Development Fee, Distributable Cash in respect
of the period prior to the Second Capital Contribution Date (without regard to
whether such Distributable Cash was actually received by the Partnership during
such period) shall, within 30 days after the Second Capital Contribution Date
(but not before the Second Capital Contribution Date but in no event later than
December 31, 1993), be distributed 30% to the Limited Partner and 70% to the
General Partner.
(b) Distributable Cash in respect of the period prior to the Second
Capital Contribution Date which is in excess of the amounts distributed to the
General Partner and the Limited Partner which results in the distribution to the
General Partner of an amount equal to the Development Fee shall not be
distributed to the General Partner and the Limited Partner, but shall instead be
applied to the repayment of the Construction Loans on the Second Capital
Contribution Date.
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),
----------------
commencing with the second calendar month after the Second Capital Contribution
Date, Distributable Cash for each month after
27
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, 99% to the 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 set forth in Schedule 5
hereto (the "Tranche A Distribution")[provided, however, that in determining
---------------------- -------- -------
the amount of Distributable Cash to be paid to the Limited Partner, there
shall be deducted amounts of principal of and interest on the Partnership
Term Loan (or any refinancing thereof pursuant to Section 12 of the Capital
Contribution Agreement) paid by the Partnership during the month most
recently ended.]
(b) Second, 99% to the General Partner and 1% to the Limited 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 90% to the General Partner and 10% to the Limited Partner.
4.5 Arrears Account. The partnership records shall contain a monthly
---------------
arrears account (the "Monthly Arrears Account") and a Quarterly Arrears Account
-----------------------
(the "Quarterly Arrears Account") with respect to the Limited Partnership
-------------------------
Interest. If, on any Transfer Date (as defined in the Security Deposit
Agreement) that occurs after the Second Capital Contribution Date, the
distributions to the Limited Partner pursuant to subsection 4.3(a) (without
giving effect to the proviso in subsection 4.3(a)) are less than an amount equal
to 99% of the Tranche A Distributions, such deficit shall be entered as an
increase to the balance of the Monthly Arrears Account. The balance of the
Monthly Arrears Account shall bear interest at the Implicit Rate which shall be
computed monthly on each succeeding Transfer Date and entered as an increase to
the balance of such account. On any Transfer Date in which the Monthly Arrears
Account has a positive balance, then notwithstanding subsection 4.3(b) hereof,
Distributable Cash otherwise distributable pursuant to subsection 4.3(b) after
application of subsection 4.3(a), or amounts that would otherwise have been
payable to the General Partner as the Management Fee, shall instead be
distributed 99% to the Limited Partner and 1% to the General Partner until the
Limited Partner shall have received a distribution equal to the then balance of
the Monthly Arrears Account and the balance of the Monthly Arrears Account shall
be decreased by the amount so distributed to the Limited Partner. On the first
day of each calendar quarter, any positive balance in the Monthly Arrears
Account shall be transferred to the Quarterly Arrears Account. The balance of
the Quarterly Arrears Account shall accrue interest
28
each calendar quarter at the lesser of (x) the Eurodollar Rate (as defined in
the General Partner Term Loan Agreement) in effect on the first Working Day of
such calendar quarter plus 4.20% per annum and (y) the Prime Rate (as defined in
the General Partner Term Loan Agreement) in effect on the first Business Day of
such quarter plus 3% per annum, in either case compounded quarterly and entered
as an increase to the balance of such account on the first day of the succeeding
calendar quarter. In the event that the Quarterly Arrears Account has a positive
balance on any Transfer Date, then prior to the making of any distribution to
the Limited Partner pursuant to the third sentence of this subsection 4.5 and
notwithstanding subsection 4.3(b) hereof, Distributable Cash otherwise
distributable pursuant to subsection 4.3(b) 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 99% to the Limited Partner and
1% to the General Partner until the Limited Partner shall have received a
distribution equal to the then balance of the Quarterly Arrears Account and the
balance of the Quarterly Arrears Account shall be decreased by the amount so
distributed to the Limited Partner.
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 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 Limited
Partner until (i) the balance in the Tax Indemnity Account equals zero or, at
the election of the Managing General Partner, (ii) the Limited Partner 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) Any Net Cash from Refinancing which results from the refinancing
described in Section 12 of the Capital Contribution Agreement shall be
distributed 100% to the Limited Partner;
(b) On or prior to the Flip Date, any Net Cash from Sales or
Refinancing (other than pursuant to the refinancing referred to in
subsection 4.7(a) above) shall be distributed 99% to the Limited Partner and
1%
29
to the General Partner until the Partners have received pursuant to this
subsection 4.7(b) an aggregate amount equal to the amount set forth in
Schedule 6 hereto and any Net Cash from Sales in excess of such amount shall
be distributed 10% to the Limited Partner and 90% to the General Partner
until the Partners shall have received pursuant to this subsection 4.7(b) an
aggregate amount equal to 125% of Project Cost and any Net Cash from Sales
in excess of such amount shall be distributed 1% to the Limited Partner and
99% to the General Partner; provided, however, that in determining the
-----------------
amount of Net Cash from Sales to be paid to the Limited Partner, there shall
be deducted from such cash proceeds the portion thereof applied to the
repayment of the principal of and accrued interest on the Partnership Term
Loan and any refinancing thereof; and
(c) Subsequent to the Flip Date, any Net Cash from Sales shall be
distributed 10% to the Limited Partner and 90% to the General Partner until
the Partners shall have received pursuant to this subsection 4.7(c) an
aggregate amount equal to 125% of Project Cost and any Net Cash from Sales
in excess of such amount shall be distributed 1% to the 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
contribution 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 5/69ths (or such greater numerator over
69 if the Limited Partner has at such time already contributed more than
$1,000,000 of its 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 Limited Partner under this Agreement.
4.10 General Partner Term Loan. For the avoidance of doubt, it is
-------------------------
expressly understood that for all purposes of this Agreement (and
notwithstanding anything to the contrary contained herein) (a) all amounts paid
on the General Partner Term Loan by the Partnership, on behalf of the General
Partner, shall be deemed paid by the General Partner from cash distributed to it
and (b) the Partnership has no right,
30
title or interest in the funds, or any interest or other income earned from the
funds, on deposit in the General Partner Required Payments Reserve Account.
ARTICLE V
ALLOCATION OF CERTAIN PROFITS AND LOSSES
----------------------------------------
FOR BOOK AND TAX PURPOSES
-------------------------
5.1 Operating Profits Subsequent to the Initial Capital Contribution
----------------------------------------------------------------
Date and Prior to the Second Capital Contribution Date. Operating Profits of the
------------------------------------------------------
Partnership subsequent to the Initial Capital Contribution Date and prior to the
Second Capital Contribution Date shall be allocated among the Partners as
follows:
(a) First, 30% to the Limited Partner and 70% to the General Partner
until the Partners have been allocated Operating Profits in an amount equal
to the amount of Distributable Cash distributed pursuant to subsection
4.2(a).
(b) Second, 100% to the Limited Partner.
5.2 Operating Profits Subsequent to the Second Capital Contribution
---------------------------------------------------------------
Date. Operating Profits of the Partnership subsequent to the Second Capital
----
Contribution Date shall be allocated among the Partners as follows:
(a) First, 99% to the Limited Partner, and 1% to the General Partner
until the 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) hereof plus the amounts of
principal (other than interest) paid by the Partnership with respect to the
Partnership Term Loan or any refinancing thereof.
(b) Second, to the extent Operating Losses have been allocated pursuant
to subsection 5.3(b) hereof, to the Limited Partner to the extent of such
Operating Losses.
(c) Third, 100% to any Partner until each 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.
31
(d) Fourth, 99% to the General Partner and 1% to the Limited Partner
until the Flip Date.
(e) Fifth, after the Flip Date, 90% to the General Partner and 10% to
the Limited Partner.
5.3 Operating Losses. Operating Losses of the Partnership 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.
(b) Second, 100% to the Limited Partner until the Capital Account of
the Limited Partner equals 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 Limited Partner until the Capital Account
balance of the Limited Partner equals zero.
(ii) Second, 100% to the Limited Partner to the extent of the
Nonrecourse Deductions or Partner Nonrecourse Deductions with regard to the
Project.
(iii) Third, 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 99% to the General Partner and 1% to the
Limited Partner with respect to an asset purchased prior to the Flip Date
and 90% to the General Partner and 10% to the Limited Partner with respect
to an asset purchased subsequent to the Flip Date.
(c) Notwithstanding paragraph (a) of this subsection 5.4, if the
Gross Asset Value of the tangible assets of the Project is attributable to
either capital contributions of, or net income allocated to, the General
Partner, the General Partner will be allocated an amount of the total
Depreciation with respect to such asset in each
32
period based upon the ratio of (i) its contributions or income described above
to (ii) the Gross Asset Value of the asset, both as adjusted from time to time.
5.5 Gains. Upon the sale, transfer or other disposition of any property
-----
the proceeds from which are distributed pursuant to subsection 4.7(b) or (c)
hereof, any Gain realized by the Partnership shall be allocated as follows:
(a) First, 100% to the Limited Partner until the Capital Account
balance of the Limited Partner equals the amount of Net Cash from Sales to be
received by such Limited Partner pursuant to subsections 4.7(b) or 4.7(c) hereof
plus the principal of the Partnership Term Loan repaid in connection with the
receipt by the Partnership of such Net Cash from Sales.
(b) Second, 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, to the Limited Partner until the Capital Account of the
Limited Partner equals 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 or
partner nonrecourse debt minimum gain (determined in accordance with the
principles of Regulation Sections 1.704-2(b), 1.704-2(d) and 1.7042(i)(4),(5)
during any Partnership taxable year, the Partners shall be specially allocated
items of Partnership income and
33
gain for such year (and, if necessary, subsequent years). The items to be so
allocated shall be determined in accordance with Regulations Section 1.704-2(f).
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 Special Allocation of Certain Expenses. Organizational Expenses,
--------------------------------------
deductions for amortization or deductions otherwise resulting from payments
described in section 5.2(a), shall be allocated 100% to the Limited Partner
until such allocation creates an Adjusted Capital Account Deficit of the Limited
Partner.
5.10 Partner Nonrecourse Deductions. Notwithstanding subsection 5.4
------------------------------
hereof, nonrecourse deductions attributable to otherwise nonrecourse debt with
respect to which a Partner or an Affiliate of a Partner described in Regulations
Section 1.752-4(b) is the creditor or otherwise bears the "economic risk of
loss" as defined in Regulations Section 1.752-2 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-l(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. Notwithstanding anything within this subsection
5.11, no curative allocation shall be made hereunder with respect to a minimum
gain chargeback (under subsection 5.8) attributable to or arising in connection
with the Partnership Term Loan.
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
34
(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(c) 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 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 (iii) 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.
5.15 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.
5.16 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
35
engaged in businesses of like character. Except as otherwise provided in this
Agreement, all 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.
36
6.4 Partnership Funds. The funds of the Partnership shall be deposited
-----------------
in the relevant accounts maintained by the Security Agent 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. 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 interest expenses or 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
37
notwithstanding the fact that the Partnership shall also maintain books and
records in accordance with GAAP.
(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 120 days after the
end of each fiscal year of the Partnership and the Managing General Partner,
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 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 fiscal quarters
of each 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),
38
a certificate of the independent certified public accountants
reporting on such financial statements stating that in 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 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 three succeeding
fiscal years, such Operating Budget to be approved by the 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
39
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 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 Limited Partner how the Partnership will comply
with the provisions of subsection 7.2(m); and
(viii) 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.
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
40
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 Partner. In the
event of any audit or administrative or judicial proceeding, with respect to
taxable
41
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 Cogen Camden as the
initial Managing General Partner. Cogen Camden 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
42
contained in this Agreement, shall have full and exclusive power 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, and amendments thereto, 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, term loan and working capital agreements;
(2) notes, including, but not limited to, construction notes, term
notes and working capital 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 and security agreements, pledge agreements,
assignments regarding contracts and consents to assignments
regarding contracts;
(6) power purchase contracts;
(7) equipment supply contracts;
(8) additional contracts, including, but not limited to, site lease
agreements, gas transportation agreements, steam supply
agreements, gas service agreements, gas sourcing agreements, gas
purchase agreements, turnkey contracts, operation and maintenance
agreements, water agreements and easement agreements;
43
(9) recognition agreements;
(10) reimbursement agreements;
(11) the granting, on behalf of the Partnership, of security
interests, liens, and other encumbrances on, in and against the
Partnership's properties;
(12) causing the Partnership to have letters of credit issued for
the Partnership's account;
(13) Midlantic Agreements;
(14) any (a) assignment, (b) consent to assignment, (c) consent and
agreement, and (d) consent and/or recognition agreement relating
to types of contracts, agreements, commitments, arrangements or
other undertakings set forth in this Section 7.1(b);
(15) certificates and notices, including, but not limited to,
construction loan borrowing certificates, term loan borrowing
certificates, completion certificates, cost certificates and
notices of borrowing;
(16) collateral agency agreements;
(17) tax indemnity agreements;
(18) Project Documents and Project Contracts;
(19) Operative Documents;
(2O) letter agreements; and
(21) non-compete agreements.
(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,
44
to intervene and participate in any arbitration proceeding under any Project
Document and (2) without the approval of the 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
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.
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, 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.
45
(b) Taxes; Charges; Laws. (i) To the extent of available Partnership
--------------------
funds 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 Camden Xxxxx X.X. or Cogen Technologies Camden GP
Limited Partnership, or in the State of New Jersey, Camden Cogen Limited
Partnership or, with respect to the Gas Service Agreement, Camden Cogen
Inc., 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 Operative Documents, except to the
extent that the failure to comply 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, proceeds of loans under the Midlantic
Agreements or under such other working capital facility as may be approved
by the Limited Partner), 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
46
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 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, proceeds of loans under the
Midlantic Agreements), 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,
proceeds of loans under the Midlantic Agreements or under such other working
capital facility as may be approved by the Limited Partner), 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 or under the other Operative Documents; and not merge or
consolidate with any other Person nor sell convey or otherwise dispose of any
part of its assets to any Person except as permitted by 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, proceeds of loans under the
Midlantic Agreements or under such other working capital facility as may be
approved by the Limited Partner), maintain insurance on all the property
47
of the Partnership in accordance with the provisions of Schedule 7; 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 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 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 the
Steam Host under the Steam Supply Agreement or otherwise, the Partnership has
obtained a declaratory order or other official assurance, in each case in form
and substance reasonably satisfactory to the Limited Partner, from the New
Jersey Board Regulatory 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
48
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 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.
(j) Notices. Promptly (in the case of paragraphs (i)(y), (ii), (iv),
-------
(v), (vii), (ix) and (x)) and within five days (in the case of paragraphs
(i)(x), (iii), (vi) and (viii)) give notice to each Partner:
49
(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 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
$1,000,000 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 of default thereunder, the
termination thereof or the renewal or nonrenewal thereof;
50
(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; and
(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.
Each notice pursuant to this paragraph (j) 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 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 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.
(l) Liens. To the extent of available Partnership funds (including,
-----
without limitation, proceeds of loans under the Midlantic Agreements), protect
and defend the
51
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 PSE&G 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 PSE&G 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
grade rating and is a party to a Gas Purchase Agreement which contains a
"keep-whole" provision, reasonably acceptable to the Limited Partner, with
respect to the supplier's failure to deliver the nominated quantity of gas.
(ii) In connection with the obligation set forth in subsection (i)(x)
above, at the end of each Annual Period, (x) review the gas procurement policy
pursued during such Annual Period to ascertain if such policy tracked the gas
procurement policy of PSE&G 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 Limited Partner in partial satisfaction of subsection (i)(x) above, together
with any supporting data or
52
explanation of the methodology used which the Limited Partner may
reasonably request.
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 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 than the operator in existence 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 Term Loan 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 listed in Schedule 4, Indebtedness
contemplated by subsections 10.5 and 14.2(g) hereof or Sections
12 and 15 of the Capital Contribution Agreement and any other
Indebtedness which arises out of an emergency requiring immediate
action or is contained in a budget previously approved by the
Limited Partner (any such Indebtedness permitted hereunder being
"Permitted Indebtedness");
----------------------
53
(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 or the General Partner Term Loan 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 Term Loan
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 operating capacity,
performance, 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
54
to the 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
$500,000 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 (1) 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 (1) if the price which
the Partnership is obligated to pay for gas thereunder is fixed
for a period of six months or more unless the Partnership can
demonstrate to the Limited Partner's reasonable satisfaction
that PSE&G has entered into a gas purchase agreement or
agreements (i) for a term coincidental with such Gas Purchase
Agreement and (ii) with respect to a quantity of gas which bears
the same proportion to PSE&G's total gas requirements for the
period of such agreements as the quantity of gas subject to such
Gas Purchase Agreement bears to the Facility's total gas
requirements for the period of such Gas Agreement and (iii)
which otherwise contains substantially similar terms and
provisions of such Gas Purchase Agreement, (2) which contains
any material restrictions on assignment by the Managing General
Partner or the Partnership or which (3) contains any provision
that would result in the termination, cancellation or suspension
of such Gas Purchase Agreement upon the exercise by the Limited
Partner of any of its remedies hereunder or by the Agent under
the Construction Loan Agreement or upon the sale of the
Facility.
55
(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 Limited Partner. In furtherance of the foregoing, except as permitted by
subsections 7.3 and 7.7 of the General Partner Term Loan Agreement, neither the
Managing General Partner, nor the General Partner shall, after the Second
Capital Contribution Date, make any loans or capital contributions to the
Partnership without the express prior written consent of the Limited Partner.
7.4 Fee. The Managing General Partner or its designee shall be entitled
---
to the payment each month of a management fee equal to 1.51 of the gross
revenues of the Project for such month (the "Management Fee").
--------------
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
commercial 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
56
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 misrepresentation on 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 Partner, 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
57
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 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.
ARTICLE VIII
CALLS FOR AND PAYMENT OF FUNDS
------------------------------
Except as set forth in Articles III, VII, X or XIV hereof, the Capital
Contribution Agreement, the General Partner Term Loan Agreement and the
Construction Loan 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 GE Capital to
----
58
make a capital contribution to the Partnership on the Initial Capital
Contribution Date 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 GE Capital to make additional capital
-----------------
contributions to the Partnership in respect of the Limited Partnership Interest
on or prior to 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 (i) the Construction Loan
Agreement and (ii) prior to the Second Capital Contribution Date, as security
for the Linden GP Term Loan Agreement and any refinancing thereof and the
General Partner Term Loan 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
$100,000,00O, 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 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:
59
(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;
(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. Any additional Partner, whether
such Partner obtained its interest from Cogen Camden or GE Capital 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,
60
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 Managing 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 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, Cogen Camden 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
61
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, 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 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)
seventeen years 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
62
structure. The loan will be secured by a first (second so long as the
Construction Loan Agreement or the General Partner Term Loan 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 or any refinancing thereof 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 the 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 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) Unless the 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 the Limited Partners' right, title and interest in the Partnership on
the seventeenth (17th) anniversary of the Second Capital Contribution Date, for
a cash purchase price equal to the Net Cash from Sales that would be payable to
the Limited Partner upon the sale of the Project at a price equal to the Fair
Market Sales Value of the Project as of such seventeenth anniversary.
(b) In order to exercise the option provided for in this subsection
11.1, 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 seventeenth 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 seventeenth anniversary. The Managing General Partner and the Limited
Partner agree to negotiate in good faith to determine the Fair Market Sales
Value of the Project by mutual agreement following receipt of the Tentative
Purchase Notice from the Managing General Partner. If the Managing General
Partner and the Limited Partner shall fail to reach agreement within 30 days
after receipt by the Limited Partner of the Tentative Purchase Notice
63
from the Managing General Partner, the Fair Market Sales Value of the Project
shall be determined by the Appraisal Procedure.
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 Cogen Camden or the Partnership:
Cogen Technologies Camden GP Limited Partnership
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxx
Telecopy: (000) 000-0000
In the case of the Limited Partner:
General Electric Capital Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Vice President Energy Project
Operations -- Transportation
and Industrial Division
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 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
64
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 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 the 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 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 the 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
65
diligently using its best efforts to cure such failure: or
(d) (i) The General Partner, with respect to the General Partner Term
Loan Agreement, or (ii) the Partnership or the General Partner, with respect
to the Construction Loan Agreement or any other Indebtedness or Guarantee
Obligation, the principal amount of which exceeds $500,000 and a default in
respect of which, if incurred, 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 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
66
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 Power Purchase Agreement or the Gas
Service Agreement), the Managing General Partner shall have submitted a plan to
the 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 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
Power Purchase Agreement or the Gas Service Agreement), such Project Document
shall have been replaced with another document (x) which is executed and
delivered by parties acceptable to the Limited Partner in its reasonable
discretion and (y) which has terms and conditions similar to, and in the
reasonable opinion of the 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
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
67
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 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
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 Partner or the Partnership to any tax, penalty
or other liabilities in the aggregate material in relation to the
68
business, operations, property or financial or other condition of
the Managing General Partner or the Partnership; or
(l) (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 good and marketable title to
the Project and the Site, 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 Quarterly Arrears
Account shall be equal to or greater than 99% of the then applicable monthly
distribution described in subsection 4.3(a) (without giving effect to the
proviso thereto), multiplied by three or (ii) a positive balance in the
Quarterly Arrears Account shall exist as of the end of two consecutive
calendar quarters or such a positive balance shall occur as of the end of
more than four calendar quarters; provided, that the Managing General
--------
Partner shall have the right to make
69
capital contributions to the Partnership to eliminate anticipated
positive balances in the Quarterly Arrears Account as of the end of two
consecutive calendar quarters and anticipated positive balances in the
Quarterly Arrears Account as of the end of four cumulative calendar
quarters, but shall not otherwise have the right to eliminate, directly or
indirectly, any existing or anticipated positive balance in the Quarterly
Arrears Account; or
(r) At any time, the Partnership shall fail to (i) keep in force the
insurance required by subsection 7.2(f) and Schedule 7 hereto 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 7 hereto or to collect any proceeds therefrom.
14.2 Certain Remedies Following Special Event. (a) If a Special Event
----------------------------------------
occurs and is continuing, the Limited Partner shall have the right, exercisable
by, and effective upon, 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, without any act or deed by any Person, 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 Limited
Partner may appoint a substitute Managing General Partner or designate itself or
its nominee as the substitute Managing General Partner, whereupon, without any
further act or deed by any Person, the existing Managing General Partner shall
cease to serve as such but shall continue to be a General Partner. In the event
the 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 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, without any further act or deed by any Person, 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 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 Limited Partnership Interest
and hereby consents to the admission as a General Partner of said
70
substitute Managing General Partner so designated by the Limited Partner.
(c) If a Special Event occurs and is continuing, in addition to the
other remedies available to the Limited Partner pursuant to this subsection
14.2, the Limited Partner shall receive 99% of all Distributable Cash (after
deducting from such amount all payments of principal and interest made by the
Partnership with respect to the Partnership Term Loan and the first refinancing
thereof since the previous distribution of Distributable Cash), the Limited
Partner's allocable share of Operating Profits, Gain and other items of income
and gain shall be 99% (in both cases, subject to reduction to 98% under
subsection 14.2(b), and with the remaining 1% of such items going to the General
Partner), until the earlier of (i) the date of receipt by the Limited Partner of
99% of Stipulated Redemption Value 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 Limited Partner pursuant to this subsection
14.2, the Limited Partner may elect by written notice to the General Partner
that all powers of the General Partner (including the Managing General Partner)
hereunder with respect to any matter shall thereupon, automatically, and without
any further act or deed by any Person, vest in the Limited Partner.
(e) Upon the occurrence of a Special Event that may be cured, the
Limited Partner shall be entitled to, but shall have no obligation to, cure such
Special Event and all costs and expenses incurred by the 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 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 Limited
Partner shall have exercised any of its remedies pursuant to this subsection
14.2, the General Partner shall have the right to purchase the 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) the amount by which the sum of (x) the positive balance,
if any, in the Arrears Account plus (y) 99% of Stipulated Redemption Value as of
such purchase date exceeds the principal of and accrued interest on the
Partnership Term Loan.
71
(ii) In order to exercise the option provided in paragraph (i) above,
the General Partner shall give the 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 Limited Partner of any of its remedies pursuant to subsection
14.2. The General Partner and the Limited Partner agree to negotiate in good
faith to determine the Fair Market Sales Value of the 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 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 the Limited
Partnership Interest shall be determined by the Appraisal Procedure. If the
General Partner 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 shall
deliver such Purchase Notice, it shall complete the purchase of the Limited
Partnership Interest within 180 days of the date of the Tentative Purchase
Notice."
(iii) To the extent that the Fair Market Sales Value of the 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
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) seventeen years 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 pledge of the interests of the General Partner in the Partnership pursuant
to a first (second so long as the Construction Loan Agreement, the Midlantic
Agreements, the General Partner Term Loan Agreement or any agreement or any
refinancing thereof 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
Limited Partner and by a first (second as long as the Construction Loan
Agreement or any refinancing thereof is in effect) priority lien on the assets
of the Partnership (including, without
72
limitation, the Project) pursuant to a security agreement and a
mortgage, each in form and substance reasonably satisfactory to the Limited
Partner.
(h) The rights of the Limited Partner hereunder are not the exclusive
remedies upon the occurrence of a Special Event but are in addition to any other
remedies which may at the time be available hereunder, at law or in equity.
14.3 Events of Dissolution. The Partnership shall be dissolved and its
---------------------
affairs shall be wound up:
(a) if, the Partners agree in writing to terminate the Partnership;
(b) upon the sale, transfer or other irrevocable disposition of all or
substantially all of the property of the Partnership;
(c) if, the Partnership is terminated in accordance with the terms of
this Agreement;
(d) if, 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; or
(e) on December 31, 2031 unless the Partners agree in writing to extend
the term of the Partnership beyond such date.
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. 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 commence to wind up and liquidate the affairs and
business of the Partnership in an orderly manner.
73
(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 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 interests 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. A11 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 available for any purpose reasonably related to
the interest of a Partner as a partner in the Partnership during normal business
74
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 Limited Partner. If a Limited
Partner is a lender, in exercising its rights as a lender, including in making
its decision on whether to foreclose on property of the Partnership, such lender
will have no duty to consider (i) its status as a partner of the Partnership,
(ii) the interests of the Partnership, or (iii) any duty (including fiduciary
duties, if any) it may have to any Partner or the Partnership.
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, the General Partner Term Loan Agreement, the
Construction Loan Agreement, or the Capital Contribution Agreement, no Limited
Partner shall be obligated to make loans to the Partnership.
75
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 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
76
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.
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
77
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.
78
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
GENERAL PARTNER:
COGEN TECHNOLOGIES CAMDEN GP LIMITED
PARTNERSHIP
By: Cogen Technologies Camden, Inc., its
general partner
By: /s/ [ILLEGIBLE SIGNATURE]
-------------------------------------
Title: Vice President/Treasurer
LIMITED PARTNER:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------------
Title:
78
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
GENERAL PARTNER:
COGEN TECHNOLOGIES CAMDEN GP LIMITED
PARTNERSHIP
By: Cogen Technologies Camden, Inc., its
general partner
By:
----------------------------------
Title:
LIMITED PARTNER:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ [ILLEGIBLE SIGNATURE]
----------------------------------
Title: Operations Manager
